Defending a Foundation’s Decision to Withdraw Money

To the Editor:

In response to William Schambra’s article “Grant Makers Should Encourage Debate, Not Dictate It” (April 23), we reject the characterization that by canceling our foundation’s membership grant to the National Committee for Responsive Philanthropy we attempted to express our “dissatisfaction with a grant recipient’s point of view … by abruptly withdrawing financial support” following the release of the committee’s report “Criteria for Philanthropy at its Best.”

This is simply not true. To the contrary, as shared with Mr. Schambra during his interview with me, I absolutely support the right of NCRP or any other organization to take any positions they deem appropriate. I also respect his individual right to draw conclusions or take positions on issues.

However, missing from Mr. Schambra’s commentary is key information I thought I shared with him when he interviewed me: When NCRP provided us with an early draft of its report to seek our endorsement, it included recommendations promoting a regulatory agenda that our foundation and many in our field reject. The first draft of the report stated:

“Watchdogs like NCRP will use the criteria to praise field leaders and criticize those that do not measure up. Policymakers may find the criteria valuable when considering regulations or legislation that affect institutional grant makers.”

We strongly disagree with this approach and did not want to be perceived as endorsing it by continuing our membership. We respect diversity in the philanthropic sector and the independence of private foundations to honor donor intent, mission, and strategy. We do not endorse a “one-size-fits-all approach” or benchmarks for all foundations.

Since its founding in 1992, the California Wellness Foundation has funded hundreds of millions in grant dollars to nonprofit organizations engaged in advocacy and policy efforts, which have included paradigm-challenging and sensitive public positions on health and wellness issues. We have never rescinded a grant because we disagreed with the nonprofit organizations’ positions, nor would we do so now. In fact, we recently opposed legislation sponsored by one of our grantees and we did not rescind its grant.

The overwhelming majority of the estimated $50-million we make annually in grants is not for institutional memberships, as was the case with the $10,000 membership grant to NCRP. The majority of our grant making is for core operating and project support reaching diverse, underserved communities in California. They are not membership grants that can imply tacit endorsements of organizations’ positions or public actions. We believe there is a difference.

It serves no useful purpose to selectively glean information when an honest disagreement has been aired and settled between two parties. More troubling is Mr. Schambra’s characterization of the withdrawal of a small membership grant as “nuclear” when the head of NCRP, in providing information to the news media, contradicts him by stating: “It’s not that big a deal.”

Hyperbole aside, there are far more important issues for grant makers to discuss today. The severe economic recession comes to mind. A recent survey by the Foundation Center indicates that nearly two-thirds of foundations plan to reduce their grant making in 2009. Despite heavy losses in our investment portfolio, we intend to make approximately $50 million in grants this year — the same as we did in 2008. As has been the case for more than 15 years, TCWF grants will go to hard-pressed health and human-service providers as well as advocacy organizations.

In my opinion, this is the paramount issue facing the philanthropic sector today, about which I would like to see more conversation and commentaries: using our reduced portfolios as effectively as possible to alleviate the increased strains facing an already overburdened nonprofit sector.

Gary L. Yates
Chief Executive Officer
California Wellness Foundation Woodland Hills, Calif.

To the Editor:

Given the “less than balanced” presentation of the National Committee for Responsive Philanthropy matter in the April 23 Chronicle edition, I thought some additional points were worth noting.

First, I don’t think you’ll find a foundation more respected by applicants and grantees than the California Wellness Foundation. It sets the standard in terms of being accessible, transparent, and respectful of grant seekers. Independent surveys confirm that fact.

Second, the committee was not just engaged in presenting another critique of philanthropy. Rather, it was engaged in a direct attack on philanthropic governance, a fact not mentioned in Mr. Schambra’s article.

The draft of the report, which was widely circulated, indicated that policy makers might find the recommendations useful in crafting future legislation to regulate philanthropy. Aaron Dorfman, head of NCRP, deleted this reference in the final report, as a result of the criticism it generated. This did not stop him, however, from inviting Congressional representatives to the press conference announcing the report. Since then his comments on this matter have been less than convincing. [Editor’s note: Mr. Dorfman’s article “Foundations Need to Think Hard About Their Blind Spots” also appeared in the April 23 issue.]

Until he publicly states that he will oppose any legislation resulting from the recommendations in the report, a reasonable person might conclude he still has a legislative agenda. This seems like a very good reason to cancel membership in his organization. Why not withhold resources from an organization that appears committed to harming philanthropy with unnecessary mandates and regulation?

Fred Ali
Chief Executive Officer
Weingart Foundation
Los Angeles