Change in Pew’s Structure Is in the Public Interest

To the Editor:

Healthy debate and discourse are cornerstones of our democracy, but so is getting it right with accurate and factual information. In his recent op-ed in The Chronicle (“Pew’s Shift to Charity Status Goes Against What Is Best for the Public,” December 11), Pablo Eisenberg is certainly entitled to share his opinion about the Pew Charitable Trusts’ new public-charity status, but he also has a responsibility to factually represent his case.

The following are corrections to a number of his assertions:

Assertion: Mr. Eisenberg questions the Internal Revenue Service’s decision last April to approve the Trusts as a public charity, saying it was based “on a legal technicality.”

Fact: Wrong. The Trusts sought to become a public charity because our board believed it would significantly improve our effectiveness and opportunities to serve the public interest, and because we meet the “public support” test required of public charities. The IRS agreed. This isn’t a “legal technicality,” but the law, established by Congress and implemented by the IRS.

Assertion: Mr. Eisenberg also says the IRS decision sets a “bad precedent for foundations,” and suggests that now any rich couple and their child could qualify their family trusts as a public charity.

Fact: We have been very forthright in saying we think few foundations will follow our course, in significant part because of the Trusts’ legacy from the 1950s of being set up as seven individual trusts by Pew family siblings. Each trust is considered a separate legal entity by the IRS and therefore fulfills the requirement that public charities receive funds from a variety of sources. In addition, we are obliged to seek funds from a broader donor base and diversify our board. These are not tests that are easily met, nor are they meant to be, and certainly not by the scenarios Mr. Eisenberg envisions.

Assertion: The Trusts will be subject to much less oversight, particularly since “self dealing” rules no longer apply.

Fact: Public charities are legally regulated by the intermediate-sanctions rules, which have most of the same restrictions as “self dealing” rules and apply to an even broader set of individuals than rules governing foundations. In addition, any grants to individuals or payments to government officials must satisfy IRS requirements to ensure that such payments serve a charitable purpose.

Assertion: The Trusts will no longer be required to pay out a minimum 5 percent of net assets to charities, as do private foundations.

Fact: We have committed publicly, and represented to the courts and state attorney general, that we would not diminish our level of support for charitable activities. We are proud of our stewardship and resolute about fulfilling this commitment.

Assertion: The Trusts’ board will continue to be controlled by a majority of Pew family members.

Fact: We have committed to expanding our board to include additional community leaders with broad interests and expertise. When that is completed in early 2004, Pew family members will be a minority of the board.

Assertion: As a public charity, the Trusts can “devote a substantial amount of money to lobbying.”

Fact: We have made no decision to engage in lobbying. Other large grant makers that are public charities (e.g., the Howard Hughes Medical Institute and United Nations Foundation) have this same flexibility, as do universities, hospitals, churches, and think tanks.

Assertion: Our support for the initiative to relocate the Barnes Foundation art collection was a “quid pro quo” to help the Trusts’ public-support test.

Fact: False. Any role we might play with the Barnes, should the courts approve its petition, was not a factor in our seeking public-charity status. We will assist the Barnes and donors in administering contributions if asked.

Assertion: The Trusts will be able to wield even more power and influence than it previously did, with little in the way of checks and balances.

Fact: Improving our ability to serve the public interest is our primary responsibility. To do less is simply unacceptable. We will continue to work collaboratively with our partners and donors to attract additional support for efforts that address the myriad issues facing our country. We will continue to employ the highest standards in all of our work and fulfill our commitments to the IRS, state attorney general, the courts and, most important, the public we serve.

We’re very excited about what the future holds. As a public charity, the Trusts will continue to work with our partners to pursue our overriding objective — informing and advancing the debate on issues that matter to the long-term health and happiness of the American people. That’s an additional fact you can count on.

Rebecca W. Rimel
President and CEO
Pew Charitable Trusts
Philadelphia