It seems that foundations are destined to relearn the lessons of the past.
During the McCarthy-era hearings, in response to questions about the openness and transparency of foundation activity, the chair of the Carnegie Corporation of New York said, “We think that the foundation should have glass pockets.”
In the years since, foundations have largely embraced the values of diversity, accountability, and openness as a way of recognizing and protecting the enormous freedom and flexibility that foundations enjoy to do their work.
A new Florida law heralded by its supporters as protecting the freedom of private foundations has done just the opposite: It has raised questions about what values foundations operate under and thereby could raise new limits on the tax deductions enjoyed by donors to those foundations.
The new law prohibits the State of Florida or local governments from requiring foundations to disclose certain demographic data about board and staff members, as well as grantees, without the written permission of those involved and prohibits the state from requiring a diverse board or requiring a foundation to make grants based on demographic information. The demographic data covered by the new law include “race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, sexual orientation, and political-party registration of its employees, officers, directors, trustees, members, or owners.”
Clearly, government should not be in the business of deciding who sits on foundation boards or which nonprofit organizations receive grants based on demographics. However, the idea that government is prohibited from requesting diversity data as it relates to board composition, staffing, and nonprofit grantees undermines the promise that foundations have made to the American public that they are committed to diversity, inclusiveness, accountability, and transparency in their operations.
Unchallenged, the Florida law will inevitably undermine public support for philanthropy.
That is because the new law calls into question what had heretofore been accepted about the virtue and value of transparency as promoted by key organizations that set standards for foundations: the Council on Foundations, Foundation Center, and Independent Sector.
For example, the Council on Foundations, which represents about 2,000 foundations, states: “In carrying out their philanthropic activities, our members embrace both the letter and spirit of the law. Our members seek diversity and inclusiveness in order to reflect the communities they serve and to ensure that a range of perspectives contribute to the common good and the development of their mission in a changing society.”
Similarly, the Foundation Center, a research organization that collects information on grant makers, states: “Transparency and accountability are key to earning the public trust.”
And Independent Sector, which represents charities and foundations, advises “open and timely sharing of financial, governance, and program information.”
These words lose all meaning unless these organizations speak forcefully to the dangers inherent in the Florida law.
The Florida law appears to succumb to the strategy that it is better not to collect information because doing so might uncover uncomfortable information that we might be asked to act upon. The overreaction by some grant makers to California’s proposed legislation, introduced in 2007, that foundations be required to collect data on the race and ethnicity of their boards, staff members, and grantees was in response to a simple requirement to collect data. Some grant makers feared that the public would learn something from such data that might lead to potential regulation.
Imagine if a law such as the new Florida law applied to the financial and banking industry.
Would we think that banks should not be required to disclose data about the racial or gender demographics of customers who received or were denied loans? Would we accept a law that prohibited government from asking these institutions to collect and publicly disclose racial, ethnic, gender, or socioeconomic data? Would we allow these institutions to suggest that such data could be revealed only with the written permission of those involved? Do we really think that such a perspective serves the public interest and ensures effective best practices for foundations or any industry? The answer is of course not.
Part of the problem is an unwillingness by some private foundations to recognize that a foundation’s assets are not private but instead money for the benefit of society. It is not unreasonable to assume that, in exchange for receiving a tax benefit, individuals accept responsibility to direct charitable funds to broadly benefit all of us.
Voters—and, more important, their elected representatives—are unlikely to continue to provide charitable tax deductions to institutions that have little commitment to transparency and accountability. Some policy makers have already suggested that the current tax deduction for charitable giving be limited so that more money is available for government programs. Unfortunately, the Florida law only strengthens such thinking.
At a time when the public is demanding ever greater levels of transparency and accountability from business, from government, and from philanthropy, this law suggests that foundations are above requirements to share any information about the demographics of their board, staff members, or the nonprofit organizations that receive grant support. Such a law simply raises the question for all to ask, which is what are these powerful and influential institutions hiding? Are they so out of touch with the direction of society that they believe the public is requiring less rather than more disclosure?
For decades, foundations have successfully used their stated commitment to the values of diversity, openness, and accountability to avoid onerous federal and state regulation and legislation. Our success has occurred even though research from the Council on Foundations and Foundation Center has shown that the actions of foundations have not yet matched their words.
Unfortunately, the Florida law is likely to create a state-by-state battleground that will lead to the need for a federal law. It is now time for foundation leaders to determine whether our stated commitment to values of diversity, accountability, and transparency has any real meaning. If we do not forcefully respond to this challenge, we should not be surprised when there are Congressional hearings and our claims of “glass pockets” fall on deaf ears.
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Comments
1. hraattama - June 11, 2010 at 04:07 pm
would someone be kind enough to share the statutory reference so we might decide on our own
2. stacyepalmer - June 11, 2010 at 05:21 pm
For more details about the Florida law, see our article: http://philanthropy.com/blogPost/Fla-Adopts-Legislation-to-/24434/
Stacy Palmer, The Chronicle of Philanthropy
3. philapa - June 11, 2010 at 05:35 pm
It seems odd that Mr. Carson, a resident of California, could refer to the proposed 2007 law in that state as being merely "in response to a simple requirement to collect data." The law was the stalking horse of the Greenlining Institute, which didn't make much of a secret of the fact that they wanted to shame foundations into supporting the preferred causes of Greenlining, if not actually require them to spend specific amounts on underserved communities and social services. There's nothing wrong with helping underserved communities (in fact, it's a very worthy thing), but it's not for everyone, nor should it be. What if a donor sets up a foundation to fund Jewish causes, or Asian American causes, or the performing arts? The strength of the volunteer sector is that it's just that - voluntary.
The Florida law is an example of people looking at California and going too far in the other direction. Like all knee-jerk reactions, it is probably bad law. Maybe this was passed because Greenlining was setting up to take a run at Florida too. I would still prefer bad law to the killing off of what little is left of donor intent (see: the Ford Foundation, the Pew Charitable Trusts, the Barnes Foundation, the Leona Helmsley estate). Nothing is more corrosive to fundraising than the thought that your donation may go to something unrelated to the cause that you want to support, because someone thinks that they know better than you.
4. fmcrctampa - June 11, 2010 at 07:30 pm
This comment is for philapa:
Your comment of helping underserved communities as "very worthy thing" shows your lack of sensibility towards the suffering of others. Fighting poverty as a "worthy cause", fighting crime as a "worthy cause", fighing loss of hope as a "worthy cause" and on and on and on...in short what we are doing is building a more vibrant and economically strong country. How in the hell is this going to happen when minorities in Florida account for over 40% of the population but for only less than 5% of the GDP???? To legitimize racially economic walls is not the answer and we will not only embrace what CA is doing, I will fight to the gates of hell and back against those whom lack the sensibility towards the suffering of others such as those who support this new FL law. Al Pina Chair, Florida Minority Community Reinvestment Coalition
5. philapa - June 12, 2010 at 06:24 pm
First of all, yes, I truly believe that supporting things like social services is a worthy thing. In fact, I really, really, *really* believe that it's a worthy thing. (I guess that I could throw some profanity in there as an intensifier, but this is a professional forum, and I think that you get the idea.) But I don't believe that it's worthiness diminishes the worthiness of other charitable causes, and I think that this is what the issue is with Greenlining et.al.
You are obviously passionate about your cause, and that is laudable (that's understatement again - please assume that I really, truly mean it). You have the sort of fire that gets people motivated to work for your cause and give money to it, and it sounds like your organization is lucky to have someone that cares so deeply about its issues. But that doesn't mean that other organizations should have to fund your projects - they have their own projects to fund, and people associated with them that have the same passion for their causes as you have. It may seem like giving money to a ballet, a private school, or an animal rights organization is a bad use of resources in these times (and funding of social services tends to rise in bad times, so you are not alone), but to their donors they are *just as important* as your organization is to its donors. Social service organizations need everything they can get in a recession, but if they are falling short then the answer is to raise more money from private and public sources, not to go after the money of other charities.
Finally, I'm not so sure that people's support of the Florida law is somehow linked to their "lack[ing] the sensibility towards of the suffering of others." It's entirely possible for people to feel deep empathy for the suffering of others without thinking that the best way to remedy that suffering is to take a racial headcount of the board of directors, or even the population served, and to use that as a yardstick of how well they are doing. In fact, some might see that as the "legitimiz[ing] racially economic walls" that you deplore.
6. jaqaliah - June 12, 2010 at 11:02 pm
"However, the idea that government is prohibited from requesting diversity data as it relates to board composition, staffing, and nonprofit grantees undermines the promise that foundations have made to the American public that they are committed to diversity, inclusiveness, accountability, and transparency in their operations."
The real question is: Why should NPOs be required to be committed to diversity, inclusiveness, accountability, and transparency in their operations? Why should an NPO founded to promote the health and welfare of say, immigrant Nigerians, be required to be inclusive of Neo-Nazis to assist in running their organizations? Why should pro-life religion organizations be required to employ pro-abortionists? Further, diversity is only the act of being different. Being different does not by nature also mean being correct, right, better...
The problem with identifying racially economic walls is that to do so you must first be prejudiced enough to see people as something other than American. Until one ceases to practice "check-your-box" racism, sexism, ethnicity, etc. then one enforces the very prejudices they intended to remove. What one should be identifying is "economic walls."
7. ppcllc - June 15, 2010 at 12:11 pm
I'm sick to death of these racial pimps like Carson, Jackson, Sharpton and Farrakhan. We've already gone way beyond color-blindness. The pendulum has swung so far, we wound up with the emptiest suit in history as the "leader" of the free world.
8. saxxon57 - June 20, 2010 at 09:09 pm
Dr. Carson has been recognized as one of the most innovative CEOs in the philanthropic sector. His analysis bears a great deal of truth and is something that is worth considering beyond uninformed emotional reacting. The California legislation to which he is referring was initiated by the Greenlining Institute however; it is important to understand their deeper motives in pushing this legislation through. It was far from being self-serving. When one looks critically at the volume of funds that the overall philanthropic sector actually invests in remediating poverty, inequality, and other worthy social causes vs. the symphony, the opera, and larger (already rich) institutions...then one has a better understanding of the intent behind the legislation and its demand for greater philanthropic transparency and disclosure. Foundations benefit from enormous tax breaks and have a binding contract with America. Many have long forgotten their original calling and need to be regulated. In this case, as is the reality of many opinions, one really needs to look at the hard dollar facts. Then, hopefully, much of the hysteria that is baseless will cease. The law recently passed in Florida flies in the face of all that philanthropy reports to embrace. It is self-serving and will perpetuate the already ubiquitous structural inequality that thrives in Florida.
Larry
9. fashionmakeupbrush - July 01, 2010 at 11:44 am
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