Sarcasm Is No Substitute for Sound Analysis of House Bill

To the Editor:

The William and Flora Hewlett Foundation is among the group of foundations that Pablo Eisenberg criticizes for opposing the provision of HR 7 that excludes administrative costs from the required 5-percent payout and for retaining a lobbyist to help us communicate our position effectively to Congress (“Foundations Unleash Ugly Tactics to Protest House Bill,” July 24).

I can say with certainty about the Hewlett Foundation and with near certainty about my colleagues in the group that we do not view the provision as a conspiracy by anyone, right or left, and that we have not explicitly or implicitly threatened our grantees with reprisals if they take positions opposed to ours. We assume that those supporting the provision are doing so with the public interest in mind, but we believe that they are missing some important facts and we are seeking to remedy that. As for reprisals, some of us fund the National Committee for Responsive Philanthropy, an organization founded by Mr. Eisenberg and on whose board he sits, which has often argued for increased payout and which is advocating passage of this provision.

Although Mr. Eisenberg is a strong advocate for nonprofit organizations’ right to effect change through advocacy, he implies that there is something wrong with foundations lobbying against the payout measure, or at least wrong in retaining a lobbyist with conservative credentials. The foundations’ goal here was simply to establish lines of communication with Congressional decision makers, and we chose a person we thought could do this effectively.

Mr. Eisenberg’s only allusion to the merits of the issues is his dismissive comment that the foundations’ “assertions that the provision threatens the perpetuity of foundations would be laughable if it weren’t so pitiful.” In fact, major studies, undertaken by researchers at two respectable investment-banking houses, indicate that 5 percent is the maximum payout that a foundation can make and maintain its endowment over time. Surely there is room for disagreement about this conclusion and, indeed, about whether foundations should be permitted to exist in perpetuity. But sarcasm is not a substitution for analysis.

HR 7 is intended to put pressure on foundations to reduce administrative costs, and it may have that effect. Like many other foundations, the major administrative costs at the Hewlett Foundation are for the salaries of our personnel — most importantly our program staff, who undertake the strategic planning, due diligence, and evaluation essential for responsible grant making. The greatest beneficiaries of this work are the relatively small organizations that seek to effect social or environmental change. The easiest way to reduce administrative costs is to make large grants to large, safe organizations like universities and museums. It is ironic that the National Committee for Responsive Philanthropy, which criticized the Hewlett Foundation for making a major gift to Stanford University on the ground that the gift was unimaginative and did not aid the neediest, is advocating legislation that would push foundations in just this direction.

Paul Brest
President
The William and Flora Hewlett Foundation
Menlo Park, Calif.