A Challenge to Step Up AIDS Grants

U.N. chief implores U.S. funds to help finance a global attack

When United Nations Secretary General Kofi Annan urged U.S. grant makers to become partners in a global battle against AIDS by helping to amass an international war chest of as much as $10-billion a year, he received a standing ovation from those gathered here at the Council on Foundations’ 52nd annual meeting.

Now comes the hard part. American foundations must decide whether they will give new money to combat the disease, and if so, how much. Even if many foundations do shift their giving priorities, many observers predict that Mr. Annan will see far less from foundations than he hopes for.

Speaking to many of the 2,400 attendees at the conference, Mr. Annan said: “Let’s be in no doubt. The world has the resources to defeat this epidemic, if it really wants to.”

Ten billion dollars, he said, “is actually less than you, the charitable foundations of a single country, are giving away each year.” Mr. Annan added, “And the world’s governments spend more than a hundred times that amount each year on their military forces.”

The speech was the latest in Mr. Annan’s push to create a global health partnership among governments, corporations, and foundations. His strategy, unveiled at a meeting with African leaders in April, calls on the governments of the world’s richest countries to take the lead in devoting $7- to $10-billion annually — in addition to the estimated $1-billion a year already being spent to combat AIDS. He said the global fund would be used to help those living with or orphaned by the disease and to find a cure for AIDS, as well as other diseases such as tuberculosis.

How the fund will be managed and the money distributed has not yet been decided, factors that could keep foundations from committing any dollars at least until details are worked on at a U.N. meeting next month in New York.

Mr. Annan, in his keynote speech to the Council on Foundations members, said of the AIDS fund that “clearly, it must be organized in a way that corresponds to the needs of the affected countries and people. And clearly, it must draw on the best expertise wherever it is to be found.”

While AIDS has afflicted people across the United States and the world, nowhere is the plague more acute than in Africa, where an estimated 25 million people are living with the disease. In Africa, AIDS has orphaned millions of children. And future generations are at risk, because in Africa girls are six times more likely than boys to get AIDS, Mr. Annan said.

“More than 36 million people around the world are today living with H.I.V. or AIDS, the vast majority of them in sub-Saharan Africa, but the pandemic is now spreading at an alarming rate in Asia and Eastern Europe, too,” he said. “Last year alone, three million died from the virus — the highest annual total to date — and five million became infected, an average of 13,000 a day. It is as though the population of two cities the size of Philadelphia had been wiped out in a single year.”

Mr. Annan said the battle against AIDS could not be won without major help from U.S. foundations. “You have the flexibility to provide funds quickly, and use them to plug gaps, where other institutions may be held back by political considerations, or by the terms of their mandates,” he said.

Some foundation leaders, however, later expressed skepticism about how large a role grant makers can play in the plans. “Clearly, governments will have to do the heavy lifting on this,” said Terry Odendahl, executive director of the National Network of Grantmakers. “Most foundations don’t have the kind of money he needs.”

Paul A. Di Donato, executive director of Funders Concerned about AIDS, believes American foundations could easily double their AIDS-related giving this year. Currently, U.S. philanthropies give an estimated $60-million to $100-million annually to AIDS-related projects domestically and internationally, he said. But he fears that some foundations may be reluctant to give to an international fund that they can’t easily monitor, while others may feel the need to choose between supporting AIDS projects at home and giving to Mr. Annan’s fund.

“I don’t think we should rob Peter to pay Paul, so I don’t think the increase in global AIDS philanthropy should come at the expense of domestic giving,” Mr. Di Donato said. “There must be an increase in philanthropic resources going to AIDS efforts — at home and abroad.”

Some foundation executives and trustees attending the conference said they would consider contributing. Others said that they can’t afford to give internationally, or are not permitted to under their giving guidelines. “I’d like to, but we can’t,” said Toni Pappas, trustee of the Norwin S. & Elizabeth N. Bean Foundation, a trust of the New Hampshire Charitable Foundation that limits its grant making to that geographic area. “But he sure made me feel as if we should help.”

But some foundation officials say they hope Mr. Annan’s message will inspire even small foundations to find a way to help by paying for AIDS projects in towns and cities near where their foundations are located.

“Every foundation in the world should be thinking about how they can help,” said Trevor Neilson, director of special projects for the Bill & Melinda Gates Foundation. “Unless business, government, and foundations together commit unprecedented resources, we are not going to stop H.I.V./AIDS.”

The Gates Foundation was cited by Mr. Annan as among the “several American foundations that have already shown real leadership in the battle against AIDS.” Mr. Neilson said the foundation has given nearly $300-million to AIDS-related projects in the United States and Nigeria.

Still, the Gates Foundation has not yet decided how it will respond to Mr. Annan’s appeal. “We think it is important to be at the table for this new worldwide fight,” Mr. Neilson said. “But we haven’t yet determined what our support will be.”

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One issue that some foundation leaders feel was given short shrift in the Council’s conference agenda was attempts by Congress to repeal the estate tax. Studies have concluded that the tax provides a strong incentive to leave charitable bequests. Elimination of the tax, according to some estimates, could cut bequests to foundations by $5-billion a year. But the Council on Foundations has not taken a public stand on the issue.

At the conference, several foundation presidents decided to take matters into their own hands by bringing up the issue for debate during sessions on other topics. They also persuaded the Council on Foundations’ president, Dorothy S. Ridings, and other board members to reconsider the Council’s take-no-stand policy on the estate-tax repeal at the organization’s executive board meeting June 24.

Leading the effort were two relatively new leaders of long-established New York foundations: Stephen B. Heintz, who in February became president of the Rockefeller Brothers Fund, and Lance E. Lindblom, who became president of the Nathan Cummings Foundation in December.

“The repeal presents a clear and present danger to philanthropy,” Mr. Heintz told Council members during one session.

The efforts by Mr. Heintz, Mr. Lindblom, and others were seen by some foundation observers and conference participants as a welcome departure from past Council meetings, which they say have been marked by very little public dissent by Council members.

“You had credible, respected, mainstream foundations speaking out — that’s what made this so different,” said Rick Cohen, president of the National Committee for Responsive Philanthropy.”Generally, any challenges are raised by the progressive funders or progressive funder networks.”

Mr. Heintz and Mr. Lindblom said in interviews after the meeting that they urged the Council to take a stand on the estate tax because they feel the repeal would hurt philanthropy and many Americans. Mr. Lindblom said 98 percent of taxpayers aren’t wealthy enough to pay estate taxes, but those people could end up having to pick up any shortfall in revenue if the tax were repealed.

“This is one of the most important issues to philanthropy in a long time,” Mr. Lindblom said. “We thought it was important that the Council take a leadership position, not only because it affects philanthropy, but in general it affects all charitable institutions.”

Mr. Lindblom argued that foundations must oppose the repeal effort because it is hard for the heads of charities to do so. “Because charitable institutions have a number of wealthy people on their boards, it is uncomfortable for them to oppose the repeal,” he said. “They would be taking a stand on an issue that directly affects the individual wealth of their donors and potential donors.”

But the Council may find itself in the uncomfortable spot of balancing the conflicting interests of its members when it revisits the issue. John Edie, senior vice president and general counsel, said the organization would seek comments from its members on how best to proceed.

Some members, like P. Russell Hardin, vice president of the Robert W. Woodruff Foundation, in Atlanta, believes the Council should stick to lobbying only on issues that have a direct impact on foundations and stay clear of general tax issues.

“The policy of the council is well considered,” said Mr. Hardin, “and I don’t think there is a problem with it.”

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A group of small and rural foundations met to discuss plans for establishing the National Rural Funders Collaborative to draw attention to the needs of persistently poor rural communities. In one of the biggest turnouts at a preconference session, more than 80 grant makers packed a small room to discuss the partnership.

Sidney Armstrong, executive director of the Montana Community Foundation and one of the speakers, said rural grant makers, like the communities they serve, often suffer from a lack of money and a sense of isolation.

The collaborative hopes to raise $100-million over 10 years from individuals, community groups, foundations, governments, and corporations. So far, the collaborative has received nearly $1.5-million in pledges from the Mary Reynolds Babcock, Fannie Mae, Ford, F.B. Heron, and W.K. Kellogg Foundations.

“We had a seating capacity for only 50, but people kept coming in,” said Jim Richardson, the organizing consultant for the collaborative who will serve as its executive director upon its formation next month. “It’s a sign of real hunger among regional funders in rural areas for some kind of chance to work together. They want to unify their work and push larger policy issues on a national level.”

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Foundations that prepare their informational tax returns with only an Internal Revenue Service auditor in mind had better broaden their thinking, speakers told conference participants.

Carol A. Stabler, communications director at the Meadows Foundation, in Dallas, urged foundations to think of their Form 990 or 990-PF as the world’s window on their organizations.

She added, “The general public, the media, and grant seekers are all looking” at the tax returns, especially now that I.R.S. rules require foundations to make copies of the forms for the three most recent tax years available to the public. The rules took effect last year (The Chronicle, January 27, 2000).

Ms. Stabler advised foundations to attach a page to the tax forms to help explain any numbers that might not be clear without an explanation, such as if administrative expenses appear high or if the amount paid out in grants is unusually low for a given year because of an unusual circumstance.

Said Ms. Stabler: “Take these statements and turn them into communication tools so people better understand who you are and what you do.”