How Can Foundations Best Serve People in Need?

To the Editor:

Having now served for two years as president and chief executive officer of the Council on Foundations, I marvel at how quickly thoughts and ideas concerning philanthropy are exchanged within the public landscape. While I am encouraged by the possibilities for dialogue and collaboration in the marketplace of ideas, I also offer caution.

We respectfully disagree with many of the claims prominently featured in the Chronicle of Philanthropy opinion piece titled, “Are Foundations Doing Enough for Society?” (February 21).

Are foundations doing enough? Of course not.

I’ve yet to meet a foundation professional or board member who does not seek to enhance the impact of their work to advance the common good. The real question is: How can we enhance our impact and effectiveness — especially in addressing the needs of the underserved among us?

Let’s start with the facts. It was noted that an estimated $40-billion to $80-billion annual subsidy is lost as a result of tax benefits to the philanthropic sector. This figure, though often quoted, is frankly inaccurate. The costs to the federal government for all charitable donations — from our gifts at church, to the local cancer fund raiser, to philanthropy — comprise this number.

The 2006 edition of Giving USA reports that gifts to foundations amount to approximately 10 percent of total charitable giving. Thus, a $4-billion tax expenditure today results in over $40-billion in annual foundation giving. If the government could only achieve the same return of $10 in public service for every $1 invested, we’d all be better off.

Nor do foundations operate today in a world of secrecy. Transparency already exists. Foundations are required to file an annual 990 with the Internal Revenue Service. This report includes important financial data on grant-making activities, salaries, investments, and expenses. Most foundations now go far beyond the federal mandates in their commitment to transparency.

The spirit of California’s A.B. 624 [a measure passed by the California Assembly] is to collect and report specific data about the demographic makeup of our philanthropic organizations, our grantees, and our vendors.

But there is a basic problem with this request: If this is just about headcounts, we all lose. If we don’t focus on our lack of progress on literacy, health care, poverty, and other quality-of-life issues, we will never address the legitimate issues facing our communities.

Let’s all admit that we are not doing enough for diversity and the underserved. But as we move forward to enhance our work in this area, let us not become paralyzed by numbers over progress.

Through the years, foundation grants have helped fund research and initiatives that benefit everyone. How then should we categorize the dollars that foundations have invested in cancer and diabetes research? In work-force investment? In community organizing and civic engagement?

The Council on Foundations…is committed to enhancing diversity in philanthropy, and we take our leadership role seriously. We have a director of diversity and inclusive practices working to implement the recommendations of our Committee on Inclusiveness.

So let’s move forward. Let’s begin by recognizing that philanthropy can do more to address the needs of underserved and/or diverse populations. But let’s not waste valuable time over headcounting and arguments about legislative mandates on where foundations must give their money.

Rather, let’s move forward together, building new strategies for new investments to new populations in ways that really do serve society. Philanthropy will never achieve its full potential in service and effectiveness until our boards, our staff, and our giving reflect the communities we seek to serve. You have that commitment today. And we don’t need legislative mandates to confirm it.

Steve Gunderson
President
Council on Foundations
Arlington, Va.

Editor’s note: The Chronicle should have asked the authors of the column to explain in their piece how they arrived at their estimate of foundation tax subsidies. The Greenlining Institute says that it is taking into account the earnings of foundations, which have more than $600-billion in assets, plus their exemptions from local and state taxes on their buildings and other assets — not just the tax-deductible gifts Americans donate to foundations each year.