September 10, 2008
Freddie, Fannie, and Philanthropy
The federal government’s takeover of mortgage giants Freddie Mac and Fannie Mae has been viewed largely as a business and government story.
But some observers say the failure of these two institutions also raises major questions for those who care about philanthropy.
The central question, reports the Wall Street Journal, is whether Freddie Mac and Fannie Mae put profit ahead of their stated social mandate of helping low-income homeowners.
“Even those who argue Fannie and Freddie should remain under some form of government control say the companies need to do more to fulfill their affordable-housing goals,” the Journal reports. “Critics say the companies have too often put shareholder profit and executive compensation over broader societal needs.”
That question is particularly important given the recent trend of social-enterprise, charity-business hybrids, writes Sean Stannard-Stockton on the blog Tactical Philanthropy.
“While this in no way discredits the concept of for-profit firms having social missions, the fact that these unique ‘social enterprises’ have failed cannot be ignored by the philanthrocapitalist set,” Mr. Stannard-Stockton writes.
The Freddie and Fannie meltdown is also a major concern for charities that had been supported by their philanthropy.
Freddie Mac, through its charitable foundation, had contributed nearly $350-million to charitable causes, according to the Washington Post.
For charities that relied on that money for their operations, Freddie Mac’s failure is a significant loss, writes the anonymous fund raiser who publishes the blog Don’t Tell the Donor.
“A fellow fund raiser once told me that the only news worse than hearing that a major donor has been indicted is that a major donor has declared bankruptcy,” she writes. “Trust me. I have experience with this one… it’s not always easy making a bankrupt corporate donor make good on a charitable pledge.”
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