American philanthropy under threat 

Despite its long history, American philanthropy is still a fragile institution — and that institution is currently under threat.

In 2008, a polarizing event occurred when California Assemblyman Joe Coto and state Sen. Mark Ridley-Thomas introduced AB 624 in the California Senate. This legislation addressed a perennial issue in the world of private philanthropy: transparency in the operation of private foundations.

It would have required the largest private California foundations (those with $250 million or more in assets) to report publicly the ethnic and racial composition of their boards of trustees and of their paid staff members.

In addition, they would have been required to report annually on the number of grants and on the percentage of total grant dollars awarded to organizations serving racial-minority communities and  organizations led by ethnic-
minority boards and staffs.

The foundations targeted in the legislation were clearly concerned by the prospect of government mandates affecting their operating procedures.

In an 11th-hour deal, a group of 10 (ultimately nine) of the targeted private foundations, calling themselves the Foundation Coalition, offered to create a new pool of dedicated funding to support the operations and professional development of minority-led, nonprofit groups in California. AB 624, in turn, was not acted upon in the state Senate.

The Foundation Coalition agreement led to about $30 million in commitments to address capacity-building in minority-led organizations in the state.

This legislation was sponsored by the Greenlining Institute, a California-based policy and advocacy group critical of private foundations. The thinking behind the bill can be found in a series of reports issued by the institute during the past five years.

The reports offer variations on a Greenlining theme: Private foundations — whether “national independent, California independent, or California community foundations,” to use the Greenlining categories — give fewer grants and a smaller percentage of their total donations to minority-led organizations than the Greenlining Institute views as appropriate.

The institute is not the only organization critical of today’s private foundations. Another group charging that foundations do not adequately meet the needs of the poor and marginalized is the National Committee for Responsive Philanthropy.

The NCRP advocates that private foundations devote 50 percent of their annual spending to organizations working to benefit marginalized groups.

Yet under the NCRP plan, some of the greatest losers would end up being these very groups. For instance, these populations have a disproportionately high risk for diabetes, late-identified cancers, and infant and maternal mortality. They are more likely to seek need-based scholarships for higher education.

But funding medical research and higher education, unless narrowly focused on marginalized groups, would not satisfy the NCRP idea of “Philanthropy at its Best,” a term the NCRP trademarked.

As well, the definition of marginalized groups includes women, gays, the disabled, the elderly, the poor and the imprisoned. Taken together, this group would make up more than 70 percent of the American population. This broad-brush definition defeats the concept of “marginalized,” which is too important to be treated so carelessly.

In addition, the vast richness of causes supported would be endangered by the approaches of both Greenlining and NCRP, causes such as clean air and water, rich biodiversity, and the preservation of ancient languages, art and artifacts.

Investments in causes such as these are important to us all as co-heirs of human history and our planet. No good plan to help the poorest would detract from the plurality of philanthropic investments now served.

Other dangers lie ahead for philanthropy. We will explore them tomorrow.

Excerpted from “Generosity Unbound: How American philanthropy can strengthen the economy and expand the middle class.” Claire Gaudiani is a fellow of the American Academy of Arts and Sciences and the author of four books on philanthropy.

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Claire Gaudiani

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