Philanthropy experts are debating the nature of charitable dollars — are they public or private funds?
The discussion is not new, but has become more important lately as it is key to the question of how the government should regulate foundations and whether it should force them to give more to the poor and other disadvantaged populations.
The Philanthropy Roundtable, a Washington association of grant makers, released this month a new report that attacks the idea that philanthropy is public money because donors receive a tax deduction and grant makers are tax-exempt.
“The ‘public-money’ claim is not well founded in legal authority,” says the report, How Public is Private Philanthropy: Separating Myth from Reality. The report, which was the subject of a recent discussion at the Bradley Center for Philanthropy and Civic Renewal, goes on to say about the tax benefits, “There is no evidence that these benefits were meant to give government other types of control over philanthropies.”
The public-money argument, the report says, threatens the independence of philanthropy, which is key to its success. There is “strong authority in favor of charitable independence, the contributions of foundations and other charities to American society under the traditional, limited philanthropy-government relationship, and the serious consequences that greater government control could have for this relationship.”
The National Committee for Responsive Philanthropy, a foundation watchdog in Washington, disagrees.
“The authors asked the wrong questions and their conclusions miss the mark,” Aaron Dorfman, executive director of the committee, writes on the group’s Web site.
Mr. Dorfman says that taxpayers should have a partial say in how foundation assets are spent. And instead of discussing the public or private nature of philanthropy, he says that the authors should look at more important questions. For example, “Is the status quo in philanthropy good enough? Is the current regulatory framework, combined with current practices, producing the results we as a society expect from our philanthropic institutions?”
Under the argument that philanthropic money is in part public money, Mr. Dorfman’s organization is pushing foundations to make changes in their giving. The proposals have been heavily criticized, especially the recommendation that foundations should give at least 50 percent of their grant dollars to disadvantaged populations.
While the committee has said it does not want lawmakers to require foundations to comply with those ideas, members of Congress have shown interest in them.
What do you think? Where do you side in the debate and why?
