Ward Connerly and a Small Lesson in Nonprofit Accountability
posted on: Wednesday, May 17, 2006
In the May 16th issue of The Hill, a leading member of the Republican Study Committee, the group of ultra-conservative legislators probably best known to the American public for proposing a host of draconian cuts in social programs to pay for the federal government’s response to the devastation of Hurricane Katrina, penned a missive to House/Senate conferees discussing differing tax reconciliation bills, the Senate version containing some provisions calling for new standards of accountability for donor-advised funds and the relatively unknown form of private foundations known as “supporting organizations”, the House version lacking anything.
No surprise, but the agreed upon tax bill lacked any charitable governance provisions (except for one small item dealing with questionable tax shelters) or any charitable giving incentives, consistent with the RSC letter. To be fair, although the original drafts of the letter were generated and circulated within the ultra-conservative body, the final letter was issued by the office of Congressman Mark Souder (R-IN), with the cover that it was his personal initiative, attracting the support of a number of RSC members, and not an official position of the RSC.
Also, to be fair, Republicans were hardly the only opponents to the charitable accountability provisions. Although generated by the Senate Finance Committee, after two years of hearings investigating scandals involving the United Way of the National Capital Region, the American Red Cross, the Nature Conservancy, and American University, under the guidance of Iowa Republican Senator Chuck Grassley, the charitable accountability provisions drew consistent opposition from fellow Republican and budding philanthropist Rick Santorum and from New York’s Democratic Senator, Chuck Schumer.
Nonetheless, the Souder letter to the House/Senate conferees and a similar earlier letter from Santorum addressed to his Senate Finance Committee colleagues basically give lie to the scare tactic of some foundations and charities that the Senate Finance Committee hearings and the resulting legislation were simply stalking horses for a right wing strategy of “defunding the left”. Remember that in 2003, a bipartisan House bill introduced by Tennessee Democrat Harold Ford and Missouri Republican Roy Blunt that would have reined in some lavish foundation expenditures and boosted private foundation grantmaking levels was scuttled not by the intervention of liberal Democrats, but by then House Majority Leader Tom DeLay, the result of some furious lobbying by foundations.
Why mention all of this? The Sacramento Bee just published a list of the highest paid nonprofit executives in the metropolitan Sacramento region. Who popped up on the list making more than $1,000,000 in salary alone? His salary actually role from $216,000 in 1999 to more than $1,000,000 in 2004. Conservative (actually libertarian) activist Ward Connerly, known for his opposition to affirmative action as a form of racism, his successful Proposition 209 ballot initiative against affirmative action in California, and his Prop 54 campaign to prevent the state from collecting and using data by race, ethnicity, or national origin for the purposes of public education, contracting, and employment. According to the Bee, half of the $2.2 million raised by Connerly’s 501(c)(3) nonprofit, the American Civil Rights Institute, went to Connerly or to Connerly’s consulting firm. In addition to his seven figure salary and benefits, Connerly also pocketed another $716,000 in expenses and other allowances. Despite being the executive director of his nonprofit and therefore the signatory of the organization’s Form 990 filing, Connerly said that the 990 overstated his salary, but he was still worth it anyhow.
Let’s not forget that conservatives have been a strong voice against strengthening the laws and regulations governing the accountability of nonprofits and foundations. The fact that Connerly runs a nonprofit where he and his outside consulting firm absorb half the revenues points out that some conservatives would just as well like to keep the Senate Finance Committee, despite its Republican chairperson, from putting some new muscle into the nation’s nonprofit statutes. (RC, 5/17/06)
No surprise, but the agreed upon tax bill lacked any charitable governance provisions (except for one small item dealing with questionable tax shelters) or any charitable giving incentives, consistent with the RSC letter. To be fair, although the original drafts of the letter were generated and circulated within the ultra-conservative body, the final letter was issued by the office of Congressman Mark Souder (R-IN), with the cover that it was his personal initiative, attracting the support of a number of RSC members, and not an official position of the RSC.
Also, to be fair, Republicans were hardly the only opponents to the charitable accountability provisions. Although generated by the Senate Finance Committee, after two years of hearings investigating scandals involving the United Way of the National Capital Region, the American Red Cross, the Nature Conservancy, and American University, under the guidance of Iowa Republican Senator Chuck Grassley, the charitable accountability provisions drew consistent opposition from fellow Republican and budding philanthropist Rick Santorum and from New York’s Democratic Senator, Chuck Schumer.
Nonetheless, the Souder letter to the House/Senate conferees and a similar earlier letter from Santorum addressed to his Senate Finance Committee colleagues basically give lie to the scare tactic of some foundations and charities that the Senate Finance Committee hearings and the resulting legislation were simply stalking horses for a right wing strategy of “defunding the left”. Remember that in 2003, a bipartisan House bill introduced by Tennessee Democrat Harold Ford and Missouri Republican Roy Blunt that would have reined in some lavish foundation expenditures and boosted private foundation grantmaking levels was scuttled not by the intervention of liberal Democrats, but by then House Majority Leader Tom DeLay, the result of some furious lobbying by foundations.
Why mention all of this? The Sacramento Bee just published a list of the highest paid nonprofit executives in the metropolitan Sacramento region. Who popped up on the list making more than $1,000,000 in salary alone? His salary actually role from $216,000 in 1999 to more than $1,000,000 in 2004. Conservative (actually libertarian) activist Ward Connerly, known for his opposition to affirmative action as a form of racism, his successful Proposition 209 ballot initiative against affirmative action in California, and his Prop 54 campaign to prevent the state from collecting and using data by race, ethnicity, or national origin for the purposes of public education, contracting, and employment. According to the Bee, half of the $2.2 million raised by Connerly’s 501(c)(3) nonprofit, the American Civil Rights Institute, went to Connerly or to Connerly’s consulting firm. In addition to his seven figure salary and benefits, Connerly also pocketed another $716,000 in expenses and other allowances. Despite being the executive director of his nonprofit and therefore the signatory of the organization’s Form 990 filing, Connerly said that the 990 overstated his salary, but he was still worth it anyhow.
Let’s not forget that conservatives have been a strong voice against strengthening the laws and regulations governing the accountability of nonprofits and foundations. The fact that Connerly runs a nonprofit where he and his outside consulting firm absorb half the revenues points out that some conservatives would just as well like to keep the Senate Finance Committee, despite its Republican chairperson, from putting some new muscle into the nation’s nonprofit statutes. (RC, 5/17/06)
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Ideology, Philanthropy, and the Council on Foundations
posted on: Friday, May 05, 2006
When a nonprofit magazine devotes the equivalent of two full pages of nearly fawning coverage to a leader of a national nonprofit trade association, there are going to be lots of kernals of insight that warrant a dissonant comment here and there. So it is with the cover article about the new CEO of the Council on Foundations, Steve Gunderson, in the May 1st issue of the NonProfit Times (http://www.nptimes.com/May06/news-050106_1.html).
Some of the quotes in the article are a bit difficult to interpret, and one shouldn’t be too nit-picky about statements that might have been better expressed had the interviewees not been asked to respond on the spot or given a chance to edit the quotes attributed to them after the fact. But both Gunderson as CEO of the Council on Foundations and Emmett Carson in his capacity as chair of the Council’s board of directors make some statements in the article that should hopefully stimulate dialogue among foundations and nonprofits.
For example, Carson is quoted as viewing Gunderson’s “lack of ideological perspective” as “very refreshing.” It’s hard to figure out quite what Carson means regarding a lack of ideological perspective. Some interpretations probably are unfair to Gunderson. The American Heritage Dictionary gives two definitions of ideology (http://www.answers.com/topic/ideology): “1. The body of ideas reflecting the social needs and aspirations of an individual, group, class, or culture. 2. A set of doctrines or beliefs that form the basis of a political, economic, or other system.” The originator of the term “ideology”, the 18th century French philosopher, Count Destutt de Tracy, thought of ideology as the “science of ideas,” characterized by “a more or less comprehensive theory of society, a political program, anticipation of a struggle to implement that program (thus requiring committed followers), and intellectual leadership,” according to the Count’s write-up in the Encyclopedia Brittanica (http://www.britannica.com/ebc/article-9367775?query=Destutt%20de%20Tracy&ct=).
Or course Gunderson has some sort of ideological perspective. He was a Republican Congressman for some years. You can find his name associated with a number of domestic policies due to his tenure as a leading moderate Republican legislator until he retired from Congress in the late 1990s.
What Carson may actually mean, though we don’t intend to speak for him in this column, is that Gunderson, as a moderate Republican, isn’t strongly aligned with the left or right wings of American political ideology, or that within philanthropy, Gunderson’s moderate Republican political history enables him to listen to and work with foundation leaders of diverse and sometimes contradictory political visions.
However, the article quotes Gunderson himself on political issues affecting philanthropy that suggests that he is hardly bereft of a coherent set of doctrines on which to base his ideas. The NPT article quotes Gunderson, after suggesting that “Government’s in retreat, whether you like that or not, on domestic issues”, making this somewhat difficult comment:
“I think when you look at the needs of society and you look at the federal deficit, I don’t think we oughta (sic) be in the business of putting philanthropy out of business because I think we’re going to need a significantly greater participation from philanthropy in addressing society’s needs in the future.”
It’s not clear who Gunderson thinks is trying to put “philanthropy out of business” or by what means. The article makes it clear that both Carson and Gunderson see the former Congressman’s leadership of the Council as focusing attention on “what we’re doing” and “not on the ‘mechanics of how we do so much,’” meaning potentially that they want to show foundations as societal problem solvers as government attention (and program revenues) ebb. Gunderson asserts that he wants to limit government regulation of philanthropy to “a minimum”, consistent with a sotto voce push among the nation’s philanthropic and nonprofit trade associations against even the minimal charitable governance reforms contained in the legislation that passed the U.S. Senate (in S.2020) last fall (for foundations, concerning penalties for self-dealing, new transparency and accountability standards for donor-advised funds and supporting organizations, a change in the calculation of the private foundation excise tax, cf. http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN02020:@@@D&summ2=m&;).
Pushing foundations to be better, to pay attention to the “mechanics” of their grantmaking, meaning increased standards of transparency and accountability and bolstered government oversight and enforcement, doesn’t mean “putting philanthropy out of business.” Better yet, nonprofits might want to remind the new COF CEO that rather than foundations putting more assets into responses to society’s needs, they might want to turn their attention to the government retreat that Gunderson describes, and mobilize their constituents, their donors, their supporters, and their dollars to advocate that government do its job in addressing society’s social problems, and not try to use philanthropic money to plug the gaps in government program cuts. If the Council were to take a leading role in that campaign, then the sector might join and endorse COF board chair Emmett Carson in focusing on what foundations are doing and achieving for the public good. (RC, 5/5/06)
Some of the quotes in the article are a bit difficult to interpret, and one shouldn’t be too nit-picky about statements that might have been better expressed had the interviewees not been asked to respond on the spot or given a chance to edit the quotes attributed to them after the fact. But both Gunderson as CEO of the Council on Foundations and Emmett Carson in his capacity as chair of the Council’s board of directors make some statements in the article that should hopefully stimulate dialogue among foundations and nonprofits.
For example, Carson is quoted as viewing Gunderson’s “lack of ideological perspective” as “very refreshing.” It’s hard to figure out quite what Carson means regarding a lack of ideological perspective. Some interpretations probably are unfair to Gunderson. The American Heritage Dictionary gives two definitions of ideology (http://www.answers.com/topic/ideology): “1. The body of ideas reflecting the social needs and aspirations of an individual, group, class, or culture. 2. A set of doctrines or beliefs that form the basis of a political, economic, or other system.” The originator of the term “ideology”, the 18th century French philosopher, Count Destutt de Tracy, thought of ideology as the “science of ideas,” characterized by “a more or less comprehensive theory of society, a political program, anticipation of a struggle to implement that program (thus requiring committed followers), and intellectual leadership,” according to the Count’s write-up in the Encyclopedia Brittanica (http://www.britannica.com/ebc/article-9367775?query=Destutt%20de%20Tracy&ct=).
Or course Gunderson has some sort of ideological perspective. He was a Republican Congressman for some years. You can find his name associated with a number of domestic policies due to his tenure as a leading moderate Republican legislator until he retired from Congress in the late 1990s.
What Carson may actually mean, though we don’t intend to speak for him in this column, is that Gunderson, as a moderate Republican, isn’t strongly aligned with the left or right wings of American political ideology, or that within philanthropy, Gunderson’s moderate Republican political history enables him to listen to and work with foundation leaders of diverse and sometimes contradictory political visions.
However, the article quotes Gunderson himself on political issues affecting philanthropy that suggests that he is hardly bereft of a coherent set of doctrines on which to base his ideas. The NPT article quotes Gunderson, after suggesting that “Government’s in retreat, whether you like that or not, on domestic issues”, making this somewhat difficult comment:
“I think when you look at the needs of society and you look at the federal deficit, I don’t think we oughta (sic) be in the business of putting philanthropy out of business because I think we’re going to need a significantly greater participation from philanthropy in addressing society’s needs in the future.”
It’s not clear who Gunderson thinks is trying to put “philanthropy out of business” or by what means. The article makes it clear that both Carson and Gunderson see the former Congressman’s leadership of the Council as focusing attention on “what we’re doing” and “not on the ‘mechanics of how we do so much,’” meaning potentially that they want to show foundations as societal problem solvers as government attention (and program revenues) ebb. Gunderson asserts that he wants to limit government regulation of philanthropy to “a minimum”, consistent with a sotto voce push among the nation’s philanthropic and nonprofit trade associations against even the minimal charitable governance reforms contained in the legislation that passed the U.S. Senate (in S.2020) last fall (for foundations, concerning penalties for self-dealing, new transparency and accountability standards for donor-advised funds and supporting organizations, a change in the calculation of the private foundation excise tax, cf. http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN02020:@@@D&summ2=m&;).
Pushing foundations to be better, to pay attention to the “mechanics” of their grantmaking, meaning increased standards of transparency and accountability and bolstered government oversight and enforcement, doesn’t mean “putting philanthropy out of business.” Better yet, nonprofits might want to remind the new COF CEO that rather than foundations putting more assets into responses to society’s needs, they might want to turn their attention to the government retreat that Gunderson describes, and mobilize their constituents, their donors, their supporters, and their dollars to advocate that government do its job in addressing society’s social problems, and not try to use philanthropic money to plug the gaps in government program cuts. If the Council were to take a leading role in that campaign, then the sector might join and endorse COF board chair Emmett Carson in focusing on what foundations are doing and achieving for the public good. (RC, 5/5/06)
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Competitive Grantmaking and Responsive Philanthropy: The Interpretation of the Council on Foundations
The current issue of the NonProfit Times (May 1, 2006) has a long and flattering article (http://www.nptimes.com/May06/news-050106_1.html) about former Wisconsin Republican Congressman Steve Gunderson, the new CEO of the Council on Foundations, the nation’s philanthropic trade association. Lacking any critical commentary, the article merits some contrary perspectives from at least someone, doesn't it? Like NCRP?
It’s clear that Gunderson’s charge is to boost the Council’s visibility and membership, and as a corollary, the Council’s effectiveness on Capitol Hill. The article has an odd quote from Gunderson which he must have been insistent on making, because it is quoted twice nearly verbatim, on his plan to change the Council’s membership criteria to attract more members. Here’s one version, criticizing what he refers to as the “old 50-percent rules”: “Anyone engaged in competitive grantmaking can and ought to be a member of the Council on Foundations…And that’s really the criteria.”
Let’s parse this for a second. According to the Council on Foundations website, this rule applies to the eligibility of “public foundations” for Council membership, that is, grantmakers such as community foundations and others that raise their money from the public to support their grantmaking. The exact membership criterion is this: “To be eligible for membership in the Council, a public foundation…must dedicate at least 50 percent of its organizational budget to a competitive grantmaking program” (http://www.cof.org/Content/General/Display.cfm?contentID=120#c). To qualify, public foundations, besides the 50 percent test, must have grantmaking as their “primary focus.”
By all appearances, Gunderson seems to be tossing out the Council’s focus on organizations primarily dedicated to grantmaking in favor of a lower threshold of public or private charities that engage in at least some grantmaking. Certainly the 50-percent test never disqualified private operating foundations whose grantmaking slice of their operations might not have been anywhere near 50 percent. The interesting term in the criteria, of course, is “competitive grantmaking”. What’s that?
If it means something like grants that nonprofits can actually apply to receive, whether as unrestricted or field or interest grants, there are probably lots of Council on Foundation members that don’t meet the 50-percent test, public foundations and private foundations alike. For example, some community foundations with significant proportions of donor-advised and donor-directed funds conceivably might have relatively little funding available for “competitive grantmaking”, especially after subtracting special projects, philanthropic services, and unrelated administrative and investment costs.
For private foundations, not only would a number of operating foundations fail to meet the competitive grantmaking test, but an increasing number of private foundations that do not accept unsolicited proposals and actually make grants to a pre-selected catalogue of favored recipients would not appear to be paragons of competitive grantmaking either.
Gunderson’s reduced focus on the amount of grantmaking to qualify as a grantmaker is consistent with shift in focus that COF board chair, Emmett Carson, sees in Gunderson’s leadership, an emphasis on “’what we’re doing’ and not the ‘mechanics of how we do so much.’”
What might be the nonprofit sector’s take on this? Maybe the Council might consider doing some field testing with nonprofits to gauge their reaction to the increasing numbers of foundations rejecting unsolicited grant proposals, not to mention the reactions to foundations devoting funds to foundation-directed initiatives and programs. Philanthropy can and should have a symbiotic relationship with the nonprofits that function as the delivery system for the foundation’s charitable value to society and the public. When foundations close their doors to nonprofit input in the form of unsolicited applications and implicitly dismiss the importance of the imprecisely defined practice of “competitive grantmaking”, foundations unwittingly alienate the nonprofits that should constitute institutional philanthropy’s most important constituency.
It’s a “trust us” approach, that suggests to nonprofits and the public that foundations closed to external ideas expressed through unsolicited grant proposals are as valuable to the public as foundations that openly look to front-line nonprofits for ideas, knowledge, and, yes, grant proposals. It says that foundations that largely run their own programs and engage in little “competitive grantmaking” are equivalent to foundations that put their money out to nonprofits seeking the innovations and solutions that nonprofits themselves are testing and implementing.
“Competitive grantmaking” is sometimes discussed in the literature as “responsive grantmaking”, sort of like “responsive philanthropy”. NCRP ought to keep pushing COF to live up to a notion of responsive philanthropy, else NCRP isn’t being true to its own mission. (RC, 5/4/06)
It’s clear that Gunderson’s charge is to boost the Council’s visibility and membership, and as a corollary, the Council’s effectiveness on Capitol Hill. The article has an odd quote from Gunderson which he must have been insistent on making, because it is quoted twice nearly verbatim, on his plan to change the Council’s membership criteria to attract more members. Here’s one version, criticizing what he refers to as the “old 50-percent rules”: “Anyone engaged in competitive grantmaking can and ought to be a member of the Council on Foundations…And that’s really the criteria.”
Let’s parse this for a second. According to the Council on Foundations website, this rule applies to the eligibility of “public foundations” for Council membership, that is, grantmakers such as community foundations and others that raise their money from the public to support their grantmaking. The exact membership criterion is this: “To be eligible for membership in the Council, a public foundation…must dedicate at least 50 percent of its organizational budget to a competitive grantmaking program” (http://www.cof.org/Content/General/Display.cfm?contentID=120#c). To qualify, public foundations, besides the 50 percent test, must have grantmaking as their “primary focus.”
By all appearances, Gunderson seems to be tossing out the Council’s focus on organizations primarily dedicated to grantmaking in favor of a lower threshold of public or private charities that engage in at least some grantmaking. Certainly the 50-percent test never disqualified private operating foundations whose grantmaking slice of their operations might not have been anywhere near 50 percent. The interesting term in the criteria, of course, is “competitive grantmaking”. What’s that?
If it means something like grants that nonprofits can actually apply to receive, whether as unrestricted or field or interest grants, there are probably lots of Council on Foundation members that don’t meet the 50-percent test, public foundations and private foundations alike. For example, some community foundations with significant proportions of donor-advised and donor-directed funds conceivably might have relatively little funding available for “competitive grantmaking”, especially after subtracting special projects, philanthropic services, and unrelated administrative and investment costs.
For private foundations, not only would a number of operating foundations fail to meet the competitive grantmaking test, but an increasing number of private foundations that do not accept unsolicited proposals and actually make grants to a pre-selected catalogue of favored recipients would not appear to be paragons of competitive grantmaking either.
Gunderson’s reduced focus on the amount of grantmaking to qualify as a grantmaker is consistent with shift in focus that COF board chair, Emmett Carson, sees in Gunderson’s leadership, an emphasis on “’what we’re doing’ and not the ‘mechanics of how we do so much.’”
What might be the nonprofit sector’s take on this? Maybe the Council might consider doing some field testing with nonprofits to gauge their reaction to the increasing numbers of foundations rejecting unsolicited grant proposals, not to mention the reactions to foundations devoting funds to foundation-directed initiatives and programs. Philanthropy can and should have a symbiotic relationship with the nonprofits that function as the delivery system for the foundation’s charitable value to society and the public. When foundations close their doors to nonprofit input in the form of unsolicited applications and implicitly dismiss the importance of the imprecisely defined practice of “competitive grantmaking”, foundations unwittingly alienate the nonprofits that should constitute institutional philanthropy’s most important constituency.
It’s a “trust us” approach, that suggests to nonprofits and the public that foundations closed to external ideas expressed through unsolicited grant proposals are as valuable to the public as foundations that openly look to front-line nonprofits for ideas, knowledge, and, yes, grant proposals. It says that foundations that largely run their own programs and engage in little “competitive grantmaking” are equivalent to foundations that put their money out to nonprofits seeking the innovations and solutions that nonprofits themselves are testing and implementing.
“Competitive grantmaking” is sometimes discussed in the literature as “responsive grantmaking”, sort of like “responsive philanthropy”. NCRP ought to keep pushing COF to live up to a notion of responsive philanthropy, else NCRP isn’t being true to its own mission. (RC, 5/4/06)
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