Creating Foundations: Businesses Miss the Point

To the Editor:

The fascinating article “21st Century Sell” (February 20) raises fundamental and provocative questions about the meaning of philanthropy and the role of independent-sector leaders in an age of higher technology.

By reducing elements of cost and complexity, Mr. Mellinger and Mr. Tappe are indeed making private foundations available for mass consumption. However, as neophytes in the charitable sector with a distinct for-profit bias, they appear to see only half the equation.

Mr. Mellinger’s analogy of foundation customers “expecting a Mercedes or a W Hotel” is in itself fundamentally flawed, because good philanthropy involves an exchange of values and high-touch, human interaction that Foundation Source and Fidelity Private Foundation Services by design cannot deliver. Alas, while Mercedes and W Hotel should be distinctive in part because of impeccable personal service, this can be found neither in software nor on Web sites.

Budding “philanthropists,” whose only desire is to avoid high foundation start-up costs, legal complexities, investment chores, and high taxes, will find hollow relief on the Internet.

Many moderately affluent Americans, making up a significant sector of the prospective family-foundation market, face the probability of up to 50 percent of their family wealth passing to the IRS via estate taxes after death. Yet the foundations they might create could not afford the administrative expenses requisite for effective due diligence and fulfillment of their philanthropic goals.

So where is a moderately affluent, aspiring philanthropist to turn?

Community foundations offer a highly attractive alternative, hence their accelerating growth in recent years. They deliver all of the advantages that Web sites and financial institutions do, plus the donor services that truly make charitable giving a reassuring and exhilarating experience. From the strong community foundation, the serious philanthropist can expect a well-honed and focused grant-screening process, donee accountability based on objective, prioritized measurement, and as much hands-on, direct involvement with grant recipients as the donor might like.

An interesting variation on this theme is our Foundation for United Way of Sarasota County, which is essentially a community foundation for support of local health and human service needs.

Our United Way Allocations Committee of some 80 experienced, community-leader volunteers provides a brain trust on both local needs and local charitable organizations. Moreover, not an insignificant feature for our endowment donors is the assurance that their charitable instructions will be carefully followed long after their passing — a donor service that is often lost in family foundations.

Local models, which have proven their value to serious philanthropists, should be replicated nationally, as opposed to looking for technology and big business to solve the human challenge of exercising the philanthropic spirit.

The for-profit, megacorporation business model offered by Foundation Source and Fidelity may serve their investors well, but serious philanthropists of all sizes will be left with only half of the solution.

William C. Austin
Director
The Foundation for United Way of Sarasota County
Sarasota, Fla.

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To the Editor:

Your article leaves the impression that Fidelity and Foundation Source are unique in offering Internet-enabled access to accounts along with trust administration and creation of private foundations.

I would like to point out that Renaissance Inc. was founded in 1987 and has offered these services for many years. The services we offer are comparable if not better than those of Fidelity and Foundation Souce, which your reporter treated with such a “gee whiz, look here” approach — only we’ve been there for 16 years. This level of service was unique when we were founded, but not so novel in 2003 as your story would make it appear to be.

Elizabeth Bassett
President
Renaissance
Indianapolis