Philadelphia

At the closing session of the Council on Foundations meeting on Tuesday, a majority of people voted to do away with the charitable deduction and other tax breaks that benefit foundations.

OK, not really.

It was all part of a mock trial the council put together—with philanthropy as the defendant—to debate whether foundations are fulfilling their mission of advancing the common good.

The sentence for philanthropy, if found guilty of falling short on its mission: losing its tax-exempt status.

Acting as prosecutor, Gara LaMarche, president of the Atlantic Philanthropies, argued that philanthropy has failed in three key ways.

First, it too often acts in its own self-interest. One example: Foundation leaders’ opposition to President Obama’s proposal to cap the charitable deduction, which the president floated as a way to help pay for a health-care overhaul. Mr. LaMarche said that for foundation leaders to push back against a key way to pay for the health-care bill, which seeks to narrow the yawning gulf between rich and poor people, “seems to me to be plainly wrong.”

Second, he said, philanthropy doesn’t take nearly enough risks and tends to shy away from the biggest issues of today, such as poverty, inequality, and climate change.

He added: “Even when we do take risks and stumble, we’re like Eddie Haskell job applicants, who, when pressed to name their weaknesses in job interviews, say they really ought to get more sleep and not spend 80 hours at the office.”

Finally, Mr. LaMarche argued that foundations aren’t sufficiently committed to diversity within their organizations and that they don’t reflect the people they serve.

Philanthropy’s ‘Greatest Hits’

Serving as philanthropy’s defense lawyer, Ralph Smith, executive vice president for the Annie E. Casey Foundation, sought to remind the crowd of what philanthropy has accomplished.

The hospice system, the 911 emergency call system, white lines on highways, the Hubble telescope, “Sesame Street,” microfinance, disease research: All of those advances were enabled by philanthropic dollars, Mr. Smith said.

The foundation world is likewise full of exceptional grant makers, people like Vartan Gregorian, Emmett Carson, and Sherece West, he said.

Even if you abhor the causes that some donors choose to support, Mr. Smith said, society is better off because of philanthropy’s pluralism.

“Ralph’s argument amounts to a greatest hits of philanthropy,” said Mr. LaMarche, when it was his turn for a rebuttal.

Mr. Smith, in turn, conceded that philanthropy hasn’t made as much progress as he’d like on diversity and other issues but that its performance today is better than a decade ago. “Our job is to continue the progress, even if it’s incremental,” he said.

Meanwhile, both men joked about how they were strong-armed into their roles as prosecutor and defender by Steve Gunderson, the council’s president, and acknowledged that their arguments were exaggerated.

The trial resulted in a hung jury: Of the panel of twelve audience members, 10 voted that  philanthropy was guilty of falling short of its mission and two dissented.

Perhaps grant makers will get to see a retrial at next year’s council meeting. But on Tuesday, they headed back to their hometowns, where many will continue to make the case for philanthropy’s privileged status to deficit-minded lawmakers.