January 30, 2008
California Assembly Votes to Make Foundations Disclose Key Information on Diversity
By Suzanne Perry
The California Assembly on Tuesday approved legislation to require big foundations to disclose the composition of their boards and employees by race, gender, and sexual orientation, as well as information about the grants and business contracts they award to organizations that help specific minority groups.
The bill, which now goes to the State Senate, was promoted by the Greenlining Institute, a public-policy organization in Berkeley that says foundations are too secretive about their giving and award too few dollars to organizations that are led by African-Americans, Asian-Americans, Hispanics, and members of other minority groups.
But several California and national grant-makers associations are fighting the move, arguing that it would impose onerous reporting requirements on both foundations and their grant recipients and interfere with the traditional right of foundations to make their giving decisions without government pressure.
The legislation, known as AB 624, would require foundations with more than $250-million in assets to post specific information on the Internet and in their annual reports. In addition to data about their boards and staff members, they would have to disclose:
- The number of grants and percentage of dollars going to organizations where at least 50 percent of the board, of staff members, are members of ethnic minorities, or are lesbians, gays, bisexuals, or transgender people.
- A breakdown of the number of grants and percentage of dollars that go to organizations that serve different ethnic groups or sexual orientations, as well as the percentage of contracts awarded to businesses owned by members of those groups.
Before the bill passed, Southern California Grantmakers, San Diego Grantmakers, and Northern California Grantmakers wrote a letter urging the assembly to hold off. They argued that they were taking firm steps to strengthen philanthropic support for minority groups on a voluntary basis, including conducting research on giving by the state’s top 50 foundations, creating an advisory body to make recommendations, and consulting minority leaders.
The Philanthropy Roundtable, in Washington, an association of mostly conservative grant makers, has also protested the law.
Persuading foundations to devote more money to specific causes cannot be “mandated by legislative fiat,” Adam Meyerson, the group’s president, said in a statement. “It instead has to be inspired by persuasion, example, and appeals to the philanthropic imagination of donors.”
But Orson Aguilar, associate director of the Greenlining Institute, said the California law is just the first step in the group’s plans to get lawmakers involved. “We’re definitely going to be putting pressure on Congress and the new [president] to look at this,” he said.
One possibility, he said, would be to require foundations to answer questions about diversity issues on their informational tax forms.
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Non-Californians can be grateful that they’re not faced with the possibility of having to comply with this proposed legislation. Will AB 624 provide foundations with an effective means of forcing grant recipients and contractors to disclose the sexual orientation of their boards and staff?
— Kevin Morrison Jan 31, 01:29 PM #
Foundations have well-documented their need for transparency. Grantees in CA and elsewhere have long been required to demonstrate board and staff diversity by most major foundations. Studies published in the Chronicle repeatedly document the lack of funding for diverse-led organizations. This bill would not be necessary if more pro-active steps were taken by foundations to demonstrate their commitment to the plurality that is today’s nonprofit world.
— Maria Gitin Jan 31, 03:11 PM #
I imagine that if this bill passes the California senate, the State will immediately be hit by a slew of lawsuits brought by gay and lesbian groups (and others as well) contesting the right to privacy on behalf of the board, staff, and other stakeholders of all Califoria foundations. Let’s hope that if Mr. Swartzenegger signs this ill-thought out piece of legislation, he is prepared for a long, hard fight. And gee, perhaps it time for Assemblyman Joe Coto, the bill’s author, to reveal his sexual orientation. After all, he’s a public servant. Shouldn’t we have the right to know everything there is to know about him?
— Anonymous Jan 31, 04:50 PM #
David A. Lehrer and Joe R. Hicks have a well thought out critique of the bill in the LA Times here:
http://www.latimes.com/news/printedition/opinion/la-oe-nulehrer31jan31,0,213071.story
— Patrick Jan 31, 06:10 PM #
What this article fails to note is foundations currently enjoy $30 billion dollars in tax subsidy from the government. Don’t the tax payers have a right to know where their money is being spent?
— anon Feb 1, 02:55 PM #
Beyond education, particulary higher education and a few cultural initiatives, how many of the Top 500 foundations provide grants to outcome based minority institutions who have proven their public benefit. Kudo’s to California for their attempt to open the door for grassroot African-American, Asian-American, Hispanic-American institutions, leaders, and those that they serve
— Ken Marsenburg, Jr. Feb 2, 02:11 PM #
I read the Greenlining report and it’s terrible research designed to create a false issue. Read any foundation’s list of grants – most are on their websites, and you’ll see that high proportions of their grants are focused on minority and low-income populations. I rarely agree with the WSJ’s editors, but on this issue I agree completely with them. Foundations need to defend themselves against false accusations, and they need to defend the right of private philanthropy to act in ways that the boards and staff feel are appropriate to their missions. Do we really want elected officials to be dictating how to use these funds? As if they’ve done such a great job with public monies?
— Mattie Blanchard Feb 4, 01:13 PM #