Some Blunt Advice for Foundations From a Key Senate Aide

Dean Zerbe, senior counsel to Senator Charles E. Grassley — the Iowa Republican who chaired the Senate Finance Committee until the Democrats took over Congress this year — is known for his blunt opinions on where the charitable world is going wrong. He did not disappoint at the Council of Foundations annual conference of community foundations in San Francisco.

While emphasizing that he spoke for himself, and not Senator Grassley, Mr. Zerbe pronounced his thoughts on a range of nonprofit issues, including:

Good governance. “Too often it’s too easy to say, ‘Well, the lawyers have blessed it. My lawyer said that’s okay.’ Well lawyers, they’ll bless just about anything coming down the pike. . . . Stop thinking about what the lawyer says is okay; this is the beginning of trouble. Start thinking: How will this really look? How do I feel about this? How am I going to explain this to the local paper?”

Community-foundation leadership. “We would like to see community foundations being placed in a stronger role, as a leading role in their communities. . . . There seem to be a never-ending stream of books about getting government to do more for charities, advocating for government. That’s fine, but what seems to be completely lost is charities actually trying to get other charities to do good deeds.”

Nonprofit hospitals. “Nonprofit hospitals are sitting on billions and billions and billions of dollars of assets and resources with no requirement statutorily . . . to provide charity care. A lot of them say they do, a lot of them do do it, don’t get me wrong. But a lot of them quite frankly are more sitting in the wagon than pulling the wagon. . . . Just getting nonprofit hospitals to do more in helping low-income poor folks will do more than all the grants that folks can give out.”

The Council on Foundations. “Organizations have two roles, to make it simplistic. One is to just serve as a traditional association. An association tends to just be, ‘We’re just going to represent our members, whatever our members want.’ . . . I think the other path you can take is to really show leadership. What I mean by that is having the strength to deal with problem actors in your own organization and say, ‘We’re not going to do that. We’re not going to abide by that. That’s how you’ve done things, but that’s not how we’re comfortable doing it.’”

“It far too often feels like a conventional list of whines and moans that are common at the council. The leadership needs to show, to say here’s our priorities, here’s what we need to be done. It ultimately hurts the council when they have a laundry list. . . . Come to me with one thing you really want.”

Donor-advised funds. “The [Internal Revenue Service] has labeled donor-advised funds as one of the most abusive areas in the entire tax code. The ‘dirty dozen,’ donor-advised funds is in there. . . . The council needs to be engaged. It cannot just kind of whistle by the graveyard saying, ‘Well, that’s fine.’

“We get concerned when we get the council coming in saying, . . . ‘We have a donor-advised fund where the donor wants to have them buy garbage bags from them for community cleanup day.’ . . . We get very concerned about the whole concept that a donor-advised fund is going to be purchasing goods or services from a donor. This opens up an entire can of worms of abuse that we are trying to shut down.”