posted on: Thursday, August 18, 2005

The Urban Institute’s Center on Nonprofits and Philanthropy, along with Guidestar and the Foundation Center, recently released an interim report on foundation administrative expenses, a hot button issue in the foundation sector and Congress since the summer of 2003, when the House took up H.R. 7, The Charitable Giving Act of 2003. This bill would have removed foundation operating and administrative costs from the 5 percent foundation payout requirement, essentially creating an all-grants payout rate. NCRP supported this legislation for a variety of reasons, and conducted three studies on its impact, which can be found at http://www.ncrp.org/publications/index.asp#Closing. H.R. 7 died in conference when the 108th Congress ended.

The report, Foundation Expenses and Compensation, is available at http://www.urban.org/UploadedPDF/411195_expenses_compensation.pdf, and precedes a larger and more in-depth study set to come out later this year. If readers can make it through the sea of densely packed tables, charts, and figures that make up the bulk of the report, they will find some thoughtful recommendations at its end. The suggestions for improving IRS Forms 990 and 990-PF are especially relevant, and could help the Senate Finance Committee as it crafts legislation to improve foundation and nonprofit accountability.

Ideally, a report of this nature wouldn’t have the close involvement of two of the nation’s largest foundations, which would be impacted by any legislation related to changing the composition of foundation payout, but staff members of both the Ford Foundation and the C.S. Mott Foundation are thanked in the report’s Acknowledgements section. We hope that the project’s advisors were slightly less potentially biased individuals, and that they’re named in the final version of the report.