posted on: Friday, December 23, 2005

According to the LA Times (see Robin Fields’ December 21, 2005 article “Nonprofit Panel Puts Getty on Probation”), it seems like the Council on Foundations is getting a lesson in the limits of self-regulation.

In the wake of widespread media reports of corruption at the Los Angeles-based J. Paul Getty Trust (Council member), the Council demanded a wide range of documents from the Trust. The Council requested the materials in June 2005, and when the Trust failed to deliver the documents this month, the Council placed the Trust on probation. This case is apparently the first time the Council has taken such actions.

It’s not clear what next steps the Council might take with Getty. The Council (or any other self-regulatory body) has no power to impose fines on its members or terminate a member’s tax-exempt status. At worst, the Council could terminate Getty’s membership with the Council, which would mean…well…um…what would it mean?

Getty will still benefit from the Council’s lobbying work on the Hill, as any of the approximately 64,000 foundations that aren’t members of the Council can attest to. Perhaps it might have to pay a slightly higher fee to attend Council meetings and conferences as a non-member, but considering that the Trust has nearly $10 billion in assets, that shouldn’t be too big of a hardship. Plus, those costs would be offset by the several thousand dollars that Getty saves in annual Council membership fees.

Hmmmm...maybe other foundations should try for probation and eventual disbarment?