There is an interesting new “issue” on the philanthropic horizon emerging at the moment. Called the Coto bill, this recently introduced California legislation was pushed by the Greenlining Institute – a progressive advocacy outfit that sometimes treads on the toes of the powerful in their drive to make racial justice a central topic of debate. In this case, disturbed by the paltry sums of foundation grant dollars directed to organizations whose boards and executives are persons of color. No one would or could argue with the tiny proportion of grants that go to such organizations. The question is why.
The Greenlining approach has been to shed the light of day on current practices by requiring that every foundation with over $250 million in assets be required to collect and publish demographic data on both themselves and their grantees. Interesting. The premise, I’d imagine, is that by requiring this, large foundations will be embarrassed into doing better in this area. What’s emerged, of course, is a semi-hysterical response that government is again intruding into the private affairs of private philanthropy, and that they may well incur substantial costs in such a process. Even the much vaunted Council on Foundations has issued a call to its members decrying the proposed legislation and calling for its defeat, hoping that if the barons of philanthropy, and the families behind the biggest foundations, can raise the alarm, then the CA state legislature, and certainly the Governator, will see the light and stop the outrage. Outrage? Hmmm.
I think it fair to say that the delicate question of how to balance private, monied interests with the public benefit that foundations are expected to provide by virtue of their privileged status is rarely discussed. Few in the field would be rewarded to do so, either jeopardizing their future careers in philanthropy, or risking ill will among the doyennes of the check-books. It is, though, a fascinating question.
The way it works now is that individuals and families who have accumulated vast wealth can exercise control over great portions of that wealth long after the accumulators die. More than a century has passed since the vaunted and respected Rockefeller fortune was assembled. Today, the grandchildren, great-grandchildren, and, very likely, great-great-grandchildren populate numerous boards of philanthropies established by their families decades ago. These permanent structures invest their funds for returns in the capital markets and are obliged to spend but 5% annually in the form of grants to non-profits.
The legal premise that permits the families to continue to control these foundations requires them to avoid any personal financial benefit. But of course, there are many non-financial benefits that accrue from being in decision-making roles and handing out grants. The quid pro quo is that society benefits from having a flow of resources, which are controlled by neither government nor private business interests. Whether this exchange works to the benefit of society as a whole is the question. Clearly private cultural, educational, and health related organizations scoop up vast sums of untaxed money from generous donors. And, to some degree, they can be seen as benefiting all of society. But religious institutions are by far the largest beneficiary of private philanthropy and personal giving, and, as we become a more spiritually diverse society, questions may arise about how much the government should bless them with untaxed largess.
Personally, I see the role of philanthropy as extraordinarily privileged. Foundations, and the groups they support, live outside the tax system, and yet benefit enormously from all that taxes support, all the infrastructure of government and social systems that enable the accumulation of the very fortunes that create philanthropies. It seems to me that whatever the government might want in terms of transparency is the least we can provide. And, can it really be that difficult to collect and share this information? Really.
There are a lot of fights worth fighting when government proposes restrictions on the sector, like when they try to keep non-profits from advocating for improvements in public policy or social programs. That, in contrast, can be seen as our role. But worrying about the demographics of our grants programs? That’s another kettle of fish.
Videos: Greenlining Institute in Action
