Is the Goal of Philanthropy Simply Redistributing Money to the Poor?

Few recent pieces of legislation affecting philanthropy have attracted as much attention as a measure passed last month by the California State Assembly to force the state’s wealthiest grant makers to disclose details about the diversity of their grant making and operations.

The legislation, which is now awaiting action in the State Senate, would require California foundations with assets of $250-million or more to provide the public with information about the racial, ethnic, and gender composition of their boards and staffs, as well as how much of their grant making supports organizations run by or serving minority groups.

To its backers, like the Greenlining Institute, a Berkeley, Calif., advocacy group that helped lawmakers draft the provisions, enactment of the legislation would be a step toward increasing the percentage of dollars going to “communities of color” by focusing more attention on foundation grant making.

But to its opponents, which include major philanthropic groups in California, as well as national organizations like the Philanthropy Roundtable, the legislation would create excessive reporting burdens, be overly intrusive, and potentially curtail the growth of philanthropy by threatening a foundation’s ability to operate as its donor intended.

What’s more, they add, it’s not necessary: Grant makers are already committed to diversity and have been expanding their efforts to engage minority groups on their own accord.

That might just be the problem.

For some time, many leaders in the philanthropic world have endorsed the idea that grant making should chiefly try to redistribute resources from the haves to the have-nots, and especially to disadvantaged minority groups.

As a result, they left themselves vulnerable to charges from groups like the Greenlining Institute that they were not doing enough.

Moreover, if after years of trying, they are still falling short in the eyes of such critics, the argument for new legislation is harder to refute, despite the impositions and burdens that new reporting rules would create.

However, there’s another case that could have been made, but generally was not. It is that philanthropy’s purposes are broader than redistributing money to the poor and minority groups.

Foundations should be held accountable on the basis of how well they use their assets to create value for society, not how much they give to particular groups.

Philanthropy, in short, is more about fostering pluralism, multiple ways of achieving the public interest, than about diversity, responding to the needs of particular socioeconomic, racial, ethnic, or gendered groups.

This was once the conventional view. At a time that the scope of government was much more limited than it is today, the value of foundation underwriting for a wide range of important public institutions — libraries, museums, schools, hospitals, parks, and many others — was evident.

In addition, by giving to causes that reflected their own interests, but also appealed to people from middle-class and low-income backgrounds, philanthropists might be serving themselves, to be sure, but also contributing to overcoming social and economic divisions.

Not least important, a pluralist approach to philanthropy made dealing with the inevitable ambiguities of racial, religious, ethnic, gender, and other identities in American life much easier.

If a particular program or institution did not focus on the concerns of a particular group, the solution was straightforward: Create a new program or institution.

If one size did not fit everyone (as was all but certain in the fluid social structure of the United States), foundations and other donors could, in theory, be enlisted to develop new sizes.

But, according to the Greenlining Institute, philanthropy has not been as responsive as it should be to minority groups, largely because its boards and staffs are insufficiently diverse.

However, apart from questions that California foundations have raised about the accuracy of Greenlining’s figures and research, that criticism suggests that a standard for an acceptable amount of support (or board membership) for minority groups exists.

Such a proposition is not only dubious (how many dollars should be allocated to organizations serving transgender white Protestants with Asian partners?), but also implicitly endorses quotas in grant making, with all the discriminatory potential they have always entailed.

In American life, government is the institution that is expected to reflect the diversity of the population. And though it has not done so perfectly, it has developed a variety of procedures and rules, designed to ensure that a wide range of groups is involved in its deliberations and that its actions accommodate their interests.

Watchdog groups, like the Greenlining Institute, play a useful role in trying to ensure that government lives up to its responsibilities.

Philanthropy is different. While its purpose is to serve the public, its methods are not meant to be representative (though some donors have tried to make them so), but rather to reflect whatever vision of how to help society their boards and staffs might possess.

To insist that foundations look more like the people they are supposedly trying to serve (without elections and other safeguards to ensure that they really do) is to ask them to become more like governments — and to risk the very distinctiveness that makes them valuable.

To be sure, philanthropy does receive considerable tax subsidies, leading to charges that grants not given to help needy people are a waste of government resources.

Yet, not all organizations that receive tax breaks — religious ones are the most conspicuous example — conduct activities that government would otherwise do, and most deductions, like those for mortgage interest and higher education, give the bulk of their benefits to people who are not poor or members of minority groups.

In any case, the history of tax policy toward philanthropy suggests that its aim is to encourage a variety of public-serving gifts, not just those specifically designated to advance certain causes or groups.

This makes good sense as policy. As billions of dollars of government and foundation grants have shown over many decades, the most effective ways to help the poor and disadvantaged remain elusive.

By giving philanthropy the ability to try a wide variety of approaches, including those that government is unable or unwilling to undertake or which hope to achieve broad social benefits, like research and conservation, the chances of finding unexpected ways to help minorities may be greater.

The Greenlining Institute and its allies are right to call attention to American philanthropy’s record in working with such groups.

But its proposed solution would not only add to the burdens facing foundations, and more important, diminish the kind of philanthropic pluralism that is especially valuable in an increasingly diverse society.

Leslie Lenkowsky is professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. His e-mail address is llenkows@iupui.edu.