Philanthropy Should Focus on Gap Between Rich and Poor, Report Says

Non-profit groups should encourage Americans to give a greater share of their income to charities, and foundations and corporations should also give much more to organizations that help the poor, says a draft of a report written by a group of about 100 grant makers, charity leaders, government officials, and academics who met at the $1-billion Getty Center here last month.

The report identified the growing economic gap between the haves and the have-nots in this country and abroad, and the plight of the world’s poor children, as the two most urgent problems for philanthropy to tackle.

A final version of the report was scheduled to be published soon by the American Assembly, a non-profit group affiliated with Columbia University, which organized the meeting along with the Indiana University Center on Philanthropy. The assembly, founded by President Dwight D. Eisenhower in 1950, conducts periodic meetings intended to have participants reach some consensus and make recommendations to policy makers and others on a range of issues, such as the arts, community development, and foreign policy.

Among the draft report’s recommendations:

* Charities and foundations should encourage the development of “specific strategies” to get Americans to give 3 per cent of their personal income to charity. Each year in recent decades, charitable gifts by individuals have amounted to about 2 per cent of personal income.

* Foundations should consider increasing their grant making “above typical levels,” especially to support programs that help alleviate poverty or help shore up local, grassroots organizations. Foundations are required by law to spend a minimum of about 5 per cent of their investment assets each year.

* Corporations should be encouraged to give at least 2 per cent of their pre-tax earnings to charity. At present, companies give less than 1 per cent of their pre-tax income to charity, on average, according to the Conference Board, a New York research group.

* Non-profit groups should feel free to expand their advocacy roles within the bounds of lobbying laws.

* Charities should make a greater effort to collaborate with for-profit businesses and to apply business principles and techniques to their own activities.

* The informational tax returns filed by charities, called Forms 990, should be expanded to require more information on an organization’s program activities and accomplishments. The completed forms also should be made available to the public on the Internet.

* Charities and foundations should improve their methods for self-evaluation and self-regulation.

The last time the assembly tackled the subject of philanthropy was 26 years ago, when it brought together a group to discuss and write about private foundations. The 1972 report focused on ways that foundations could remain viable organizations in the face of government’s expanding role into the social-policy areas in which the grant makers traditionally worked and in light of new tax laws that were seen as discouraging the establishment and growth of foundations.

Since then, tax laws and the role of government have changed to the extent that much of the foundation report is considered no longer relevant. In the intervening years, said the organizers of last month’s meeting, new challenges for philanthropy have emerged. They said, for example, that charities face rising demands to be more accountable to the public and confusion over the blurring of the lines between for-profit and non-profit organizations.

The draft report is missing what may be considered the most far-reaching recommendation to be debated at the meeting: that a new federal agency be created to oversee charities and foundations.

That recommendation was offered in a paper presented to the participants before the gathering. The paper — perhaps with some changes — will appear, along with about two dozen others commissioned by the American Assembly, in a book to be released by the end of the year.

In the controversial paper, Joel L. Fleishman, professor of law and public policy at Duke University, proposed the creation of the U.S. Charities Regulatory Commission, which, he wrote, would serve as a complement to the Exempt Orga nizations Division of the Internal Revenue Service. The new agency would have the power to initiate and investigate civil and criminal charges and to impose penalties. Such an agency is needed, Mr. Fleishman wrote, because the present oversight arrangements at the state and federal levels are inadequate to detect, deter, or punish illegal actions by non-profit groups.

But participants at the meeting rejected Mr. Fleishman’s proposal. Some disputed the need for more oversight, arguing that current anti-fraud laws and their enforcement are sufficient. Others were simply not willing to support an idea that would add yet another layer of bureaucracy with which charities and foundations would have to deal.

In the end, the draft report simply stated that “the sector should promote the strengthening” of state charity offices and the Exempt Organizations Division of the I.R.S.

While some observers were disappointed that the report did not make any dramatic recommendations for change, many of the meeting’s participants and organizers said they did not expect the document to be any more hard-hitting. They emphasized instead that it was the process — the discussions during the four days, the interaction among representatives from foundations, charities, government, business, and academe — that made the gathering successful.

But some participants and observers said the process may have been damaged by a lack of diversity among participants.

Rodney M. Jackson, publisher and editor of Black Philanthropy, a newsletter based in Vienna, Va., said there was not enough racial and ethnic diversity among participants at the meeting.

“I would like to have seen more people of color at this meeting,” said Mr. Jackson, who was one of a handful of blacks who attended. “The discussion would have been different.”

Mr. Jackson and others also remarked on the irony of holding a meeting about charity at the Getty Center’s lavish 110-acre mountaintop facility, overlooking Los Angeles. “It would have been a different discussion, too, if it had been held at the bottom of the hill instead of the top,” said Mr. Jackson.

Even though the meeting included representatives from neighborhood-based groups, some people worried that there could be a perception of elitism, or an unfair focus on the concerns of big foundations, like the J. Paul Getty Trust. The trust, which is housed in one of the center’s 11 Italian-limestone buildings, was the host of the meeting. Fifteen other foundations provided a total of about $400,000 to help pay for the conference.

The hilltop gathering was heavy with grant makers, particularly representatives from the nation’s wealthiest foundations. Academics who study charities and officials from large non-profit groups were also there in numbers. A handful of participants represented small, local charities.

David Mortimer, vice-president of the American Assembly, said that every effort was made to invite more than what he called “the usual gray-haired eminences” and to encourage young people and people from different backgrounds to attend the meeting.

One neighborhood-group leader who was invited, the Rev. Jerry E. Hill — an Episcopalian minister in Dallas who is the director emeritus of the Austin Street Shelter — said that the discussions were clearly weighted toward foundations. And, he said, he’s not sure foundation officials learned what he felt was most important: that grant makers need to communicate better with the charities they support.

“I’m disappointed that the fact that foundations need to be more user-friendly didn’t get into the report,” Father Hill said. “For many of us, the fear of delivering a grant proposal to a foundation office is worse than the fear of going to the dentist.”

Peter Dobkin Hall, acting director of Yale University’s Program on Non-Profit Organizations, said that the closed-door policy of the meeting calls the event into question. Mr. Hall, who was not invited to attend, said that other meetings of this type usually include an open call for papers so that scholars and others have the oppor tunity to share their perspec tives.

In any case, he said, since the non-profit world has grown so large and diverse, it is nearly impossible to select a group of individuals who can speak for the entire field.

“Any effort like this to come up with one vision for a universe that has become so extremely diverse is going to have problems,” Mr. Hall said. “There are so many competing visions, I don’t think anyone can put it into a single bundle.”

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For a free copy of the final report, contact the American Assembly at 475 Riverside Drive, New York, 10115-0456; (212) 870-3500. The full text of the report is also expected to be available on the group’s World-Wide Web siteat http://www.columbia.edu/cu/amassembly. The book of related papers will be published by the Indiana University Press at 601 North Morton Street, Bloomington, Ind., 47404-3797; (812) 855-4203.