The Challenges to Democratizing Philanthropy
posted on: Wednesday, July 30, 2008
Below is a copy of the speech given by Christine Ahn, senior fellow at the Korea Policy Institute and member of NCRP's board, during a session on foundation giving trends at the "Raising Change: A Social Justice Conference" sponsored by the Grassroots Institute for Fundraising Training (GIFT) and the Grassroots Fundraising Journal.
Christine also wrote "Democratizing Philanthropy: Challenging Foundations and Social Justice Organizations" in the fall 2007 issue of Responsive Philanthropy, NCRP's quarterly publication.
Thank you for inviting me to be on the panel. I always feel like an imposter talking about philanthropy since I have never worked at a foundation. But as someone who has worked in the citizen sector for over 15 years, I have certainly written my fair share of grant proposals and received ample rejection letters (and the occasional acceptance letter). I have also served on the board of the National Committee for Responsive Philanthropy (NCRP) for over 4 years. But my real claim to knowing anything about philanthropy is my having been mentored by the infamous Pablo Eisenberg when I was a graduate student at Georgetown. He’s without a doubt the toughest critic of philanthropy today, and although many of you may not agree with his approach, it’s hard to dispute his unshakeable positions.
So, here we are. It’s the second GIFT biannual conference and there are more and more people interested in figuring out the 12-step plan to being free from the nonprofit industrial complex. I’m still in remission but trying to be part of the cure. And as with any search to find a cure, we need to get to the root causes and understand the landscape. With that said, let’s take a step back and put some trends in context.
- There is much grumbling among social justice activists that 501c3 nonprofit organizations are more concerned today about longevity than achieving true, systemic change.
- Many young people are leaving the nonprofit sector after working a few years due to burnout and low-pay. We as a sector are facing a crisis in leadership since many baby boomers that founded and headed nonprofit organizations must hand over the mantle of leadership, and fewer and fewer younger folks want to take over as executive directors because of the endless responsibility to raise funds.
- Most foundation dollars remain in the realm of elite institutions. Studies show that in the last 30 years, despite the doubling in the number of foundations, the quadrupling of foundation assets, and the increase in foundation grantmaking by 425%, grant support for those most in need (unemployed, homeless, low-income people) received disproportionately less than other broad program areas.
- We are in bad shape as a nation. We are in a war, in a recession, and hundreds of thousands of low and middle-income families have lost their homes to foreclosures caused by deregulation of the banking and financial services industry. The poor are poorer than they were since 1975 with over one-third of adults living in poverty among the working poor. This is against the backdrop of global warming, an energy crisis, and a global food crisis.
Given this scenario, social justice activists have been having more systematic conversations about whether 501c3 nonprofits have become a barrier or a vehicle to achieving social justice. In 2005, INCITE organized the "Revolution Will Not be Funded" conference at UC Santa Barbara, then the Raising Change conference held a debate in 2006, and then the US Social Forum held workshops by INCITE timed with the release of its book. In every setting, the room was packed and the heat on. As more and more funding goes to providing direct services as public services are slashed, there is less money to fund organizing—at a time when more civic engagement and community organizing is needed.
On the one hand, there are people who are so disgusted with the whole world of institutionalized philanthropy and the lack of accountability by foundations. They don’t see much hope for positive reform. Many of these are our friends here who espouse grassroots fundraising as the answer, and their critique is spot on that we need to think about building grassroots political power independent of tainted money. And trust me, I have experienced the difficulty of raising money for a Korea policy thinktank and running into all the challenges of trying to raise money from foundations largely run by white people who largely fund organizations largely run by white people. So I hear the grassroots fundraising people when they say enough is enough. And then on the other hand are those who say let’s take the money and run! We’re just playing the game and while we know that the game isn’t fair, we have to suck it up and play nice so that we can do the real work. The problem is that this conversation is very immobilizing. We need to do more than just walk away from foundation money, and we need to more than just take the money and run. We need to start democratizing institutionalized philanthropy through education, organizing and advocacy. And if there is resistance to accountability and transparency, then we need to reform the tax laws that gave the super-rich this public benefit in the first place.
So let’s think about the super-rich and the tax benefits they get. In 2006, Warren Buffet donated $30 million to the Bill and Melinda Gates Foundation. Three trustees—Bill, Melinda and Mr. Buffett—along with Bill Senior and now the new President of the Foundation—will decide how to allocate $3 billion-plus that the foundation is required to payout each year (Plus because Buffet mandated that his funds be spent down). Mr. Buffet gets huge tax write-offs, the Gates Foundation a huge infusion, and the public? We get to see how the Gates Foundation will invest in solving social problems.
The danger that this poses was seen in 2006 when the Gates and Rockefeller Foundations committed $150million to the Alliance for a Green Revolution in Africa (AGRA). The way that the Gates Foundation cast this biotechnology initiative as “attaining the best yields in the diverse environments of Africa and work to make sure these high-quality seeds are delivered to farmers who need them the most.” In the view of the Gates Foundation, agricultural biotechnology is the silver bullet to solve hunger and malnutrition in Africa. Just because the Gates Foundation believes the solution to problems of low agricultural productivity rests on technology doesn’t mean it’s the one shared by millions of peasant farmers whose lives and livelihoods will be affected most by the Green Revolution in Africa. At the 2007 World Social Forum in Nairobi, 70 African civil society organizations from 12 African countries issued a statement that, “AGRA is putting over $150 million towards shifting African agriculture to a system dependent on expensive, harmful chemicals, monocultures of hybrid seeds, and ultimately genetically modified organisms” and “under-represent the real achievements in productivity through traditional methods, and will fail to address the real causes of hunger in Africa.”
Even Michael Edwards from the Ford Foundation writes that philanthrocapitalism, a term coined by the Economist to describe the harnessing of business and the market to the goals of social change, is dangerous. He writes, “The increasing concentration of wealth and power among philanthrocapitalists is unhealthy for democracy. It’s time for more accountability.”
And so the Greenlining Institute’s recent push to pass California Bill AB 624 to try to push for greater transparency and information of how foundation dollars are being allocated is a prime example of how much resistance there is from foundations to being held more publicly accountable. But the fundamental problem is that these institutions see themselves as private. But are they?
According to the Joint Committee on Taxation, charitable deductions cost the Treasury Department $40 billion in lost tax revenue in 2006. In fact, it is estimated that at least 45 percent of the $550 billion dollars in assets that foundations have belong to the American public. As Akash Deep at Harvard and Peter Frumkin at University of Texas note, “When a foundation is created, the burden of lost tax revenue is borne by citizens today in the form of a tax expenditure” with the promise that it will be paid out in the future. The realization that foundations are partially public dollars is starting to raise the ire of more elected officials.
In an interview with Rick Cohen, former executive director of NCRP, California Congressman Xavier Becerra from Los Angeles and member of the House Ways and Means Committee said, “If you’re getting a tax subsidy, another taxpayer must make up for what you’re not paying. That subsidy should serve a good purpose. What are we getting for some $32 billion in lost revenues lost to the federal treasury in paid taxes? Is it serving a good public purpose? Statistics I’ve seen suggest that only 1 in every 10 dollars are serving poor people or disadvantaged people. I have to wonder where the other 9 dollars are going.”
While this signals potentially greater oversight over foundations, when push comes to shove, I don’t think Congressman Becerra or the current Congress have the courage to push for philanthropic reform. But that says less about what is the right and just course of action and more about the cozy relationship today between Washington and Wall Street.
Here in California, despite their valiant effort, AB 624 ended with a statement signed by 10 foundations promising to build the capacity and increase technical assistance support to minority-led and grassroots community based organizations that serve primarily minority and low-income communities. It was a good step, but it still leaves the monitoring to foundations. And it doesn’t resolve the issue of the government’s right to know about diversity or other matters related to the public good. Even universities are mandated to report to Congress how more diverse students are beneficiaries of these public institutions.
That’s why it’s really incumbent upon all of us, not just the Greenlining Institute, which played a catalyzing role, to challenge this lack of democratic accountability among foundations. AB 624 was a litmus test of how much resistance there is among foundations to transparency and public accountability and how far we are from being the strong, independent and courageous nonprofit sector we need to be. As we set off on the long and arduous path to rebuild all the damage that has been wreaked upon our nation and world over the last few decades, we must not look away from the essential challenge to democratize philanthropy.
Do you agree with Christine that social justice activists should engage foundations more than they are doing now? Do you agree with her assessment of the danger posed by mega-gifts? What do you think are the effective ways to address the lack of "democractic accountability" among foundations?
Labels: diversity, Foundations supporting advocacy and organizing
Christine also wrote "Democratizing Philanthropy: Challenging Foundations and Social Justice Organizations" in the fall 2007 issue of Responsive Philanthropy, NCRP's quarterly publication.
Thank you for inviting me to be on the panel. I always feel like an imposter talking about philanthropy since I have never worked at a foundation. But as someone who has worked in the citizen sector for over 15 years, I have certainly written my fair share of grant proposals and received ample rejection letters (and the occasional acceptance letter). I have also served on the board of the National Committee for Responsive Philanthropy (NCRP) for over 4 years. But my real claim to knowing anything about philanthropy is my having been mentored by the infamous Pablo Eisenberg when I was a graduate student at Georgetown. He’s without a doubt the toughest critic of philanthropy today, and although many of you may not agree with his approach, it’s hard to dispute his unshakeable positions.
So, here we are. It’s the second GIFT biannual conference and there are more and more people interested in figuring out the 12-step plan to being free from the nonprofit industrial complex. I’m still in remission but trying to be part of the cure. And as with any search to find a cure, we need to get to the root causes and understand the landscape. With that said, let’s take a step back and put some trends in context.
- There is much grumbling among social justice activists that 501c3 nonprofit organizations are more concerned today about longevity than achieving true, systemic change.
- Many young people are leaving the nonprofit sector after working a few years due to burnout and low-pay. We as a sector are facing a crisis in leadership since many baby boomers that founded and headed nonprofit organizations must hand over the mantle of leadership, and fewer and fewer younger folks want to take over as executive directors because of the endless responsibility to raise funds.
- Most foundation dollars remain in the realm of elite institutions. Studies show that in the last 30 years, despite the doubling in the number of foundations, the quadrupling of foundation assets, and the increase in foundation grantmaking by 425%, grant support for those most in need (unemployed, homeless, low-income people) received disproportionately less than other broad program areas.
- We are in bad shape as a nation. We are in a war, in a recession, and hundreds of thousands of low and middle-income families have lost their homes to foreclosures caused by deregulation of the banking and financial services industry. The poor are poorer than they were since 1975 with over one-third of adults living in poverty among the working poor. This is against the backdrop of global warming, an energy crisis, and a global food crisis.
Given this scenario, social justice activists have been having more systematic conversations about whether 501c3 nonprofits have become a barrier or a vehicle to achieving social justice. In 2005, INCITE organized the "Revolution Will Not be Funded" conference at UC Santa Barbara, then the Raising Change conference held a debate in 2006, and then the US Social Forum held workshops by INCITE timed with the release of its book. In every setting, the room was packed and the heat on. As more and more funding goes to providing direct services as public services are slashed, there is less money to fund organizing—at a time when more civic engagement and community organizing is needed.
On the one hand, there are people who are so disgusted with the whole world of institutionalized philanthropy and the lack of accountability by foundations. They don’t see much hope for positive reform. Many of these are our friends here who espouse grassroots fundraising as the answer, and their critique is spot on that we need to think about building grassroots political power independent of tainted money. And trust me, I have experienced the difficulty of raising money for a Korea policy thinktank and running into all the challenges of trying to raise money from foundations largely run by white people who largely fund organizations largely run by white people. So I hear the grassroots fundraising people when they say enough is enough. And then on the other hand are those who say let’s take the money and run! We’re just playing the game and while we know that the game isn’t fair, we have to suck it up and play nice so that we can do the real work. The problem is that this conversation is very immobilizing. We need to do more than just walk away from foundation money, and we need to more than just take the money and run. We need to start democratizing institutionalized philanthropy through education, organizing and advocacy. And if there is resistance to accountability and transparency, then we need to reform the tax laws that gave the super-rich this public benefit in the first place.
So let’s think about the super-rich and the tax benefits they get. In 2006, Warren Buffet donated $30 million to the Bill and Melinda Gates Foundation. Three trustees—Bill, Melinda and Mr. Buffett—along with Bill Senior and now the new President of the Foundation—will decide how to allocate $3 billion-plus that the foundation is required to payout each year (Plus because Buffet mandated that his funds be spent down). Mr. Buffet gets huge tax write-offs, the Gates Foundation a huge infusion, and the public? We get to see how the Gates Foundation will invest in solving social problems.
The danger that this poses was seen in 2006 when the Gates and Rockefeller Foundations committed $150million to the Alliance for a Green Revolution in Africa (AGRA). The way that the Gates Foundation cast this biotechnology initiative as “attaining the best yields in the diverse environments of Africa and work to make sure these high-quality seeds are delivered to farmers who need them the most.” In the view of the Gates Foundation, agricultural biotechnology is the silver bullet to solve hunger and malnutrition in Africa. Just because the Gates Foundation believes the solution to problems of low agricultural productivity rests on technology doesn’t mean it’s the one shared by millions of peasant farmers whose lives and livelihoods will be affected most by the Green Revolution in Africa. At the 2007 World Social Forum in Nairobi, 70 African civil society organizations from 12 African countries issued a statement that, “AGRA is putting over $150 million towards shifting African agriculture to a system dependent on expensive, harmful chemicals, monocultures of hybrid seeds, and ultimately genetically modified organisms” and “under-represent the real achievements in productivity through traditional methods, and will fail to address the real causes of hunger in Africa.”
Even Michael Edwards from the Ford Foundation writes that philanthrocapitalism, a term coined by the Economist to describe the harnessing of business and the market to the goals of social change, is dangerous. He writes, “The increasing concentration of wealth and power among philanthrocapitalists is unhealthy for democracy. It’s time for more accountability.”
And so the Greenlining Institute’s recent push to pass California Bill AB 624 to try to push for greater transparency and information of how foundation dollars are being allocated is a prime example of how much resistance there is from foundations to being held more publicly accountable. But the fundamental problem is that these institutions see themselves as private. But are they?
According to the Joint Committee on Taxation, charitable deductions cost the Treasury Department $40 billion in lost tax revenue in 2006. In fact, it is estimated that at least 45 percent of the $550 billion dollars in assets that foundations have belong to the American public. As Akash Deep at Harvard and Peter Frumkin at University of Texas note, “When a foundation is created, the burden of lost tax revenue is borne by citizens today in the form of a tax expenditure” with the promise that it will be paid out in the future. The realization that foundations are partially public dollars is starting to raise the ire of more elected officials.
In an interview with Rick Cohen, former executive director of NCRP, California Congressman Xavier Becerra from Los Angeles and member of the House Ways and Means Committee said, “If you’re getting a tax subsidy, another taxpayer must make up for what you’re not paying. That subsidy should serve a good purpose. What are we getting for some $32 billion in lost revenues lost to the federal treasury in paid taxes? Is it serving a good public purpose? Statistics I’ve seen suggest that only 1 in every 10 dollars are serving poor people or disadvantaged people. I have to wonder where the other 9 dollars are going.”
While this signals potentially greater oversight over foundations, when push comes to shove, I don’t think Congressman Becerra or the current Congress have the courage to push for philanthropic reform. But that says less about what is the right and just course of action and more about the cozy relationship today between Washington and Wall Street.
Here in California, despite their valiant effort, AB 624 ended with a statement signed by 10 foundations promising to build the capacity and increase technical assistance support to minority-led and grassroots community based organizations that serve primarily minority and low-income communities. It was a good step, but it still leaves the monitoring to foundations. And it doesn’t resolve the issue of the government’s right to know about diversity or other matters related to the public good. Even universities are mandated to report to Congress how more diverse students are beneficiaries of these public institutions.
That’s why it’s really incumbent upon all of us, not just the Greenlining Institute, which played a catalyzing role, to challenge this lack of democratic accountability among foundations. AB 624 was a litmus test of how much resistance there is among foundations to transparency and public accountability and how far we are from being the strong, independent and courageous nonprofit sector we need to be. As we set off on the long and arduous path to rebuild all the damage that has been wreaked upon our nation and world over the last few decades, we must not look away from the essential challenge to democratize philanthropy.
Do you agree with Christine that social justice activists should engage foundations more than they are doing now? Do you agree with her assessment of the danger posed by mega-gifts? What do you think are the effective ways to address the lack of "democractic accountability" among foundations?
Labels: diversity, Foundations supporting advocacy and organizing
posted by NCRP at
3:59 PM
4 Comments:
I'm going to go out on a limb and guess that the organization that the author works for, the Korea Policy Institute, receives foundation funding. As does the NCRP, on whose board she serves.
Of course foundations represent a tiny percentage of charitable giving in America, but they're easy targets because they're large institutions.
The real debate is whether charitable contributions by individuals should be tax deductable. The government, in its wisdom, makes it very easy for Americans to give to the cause of their choice, whether it's a church, an animal shelter, or the ACLU, and that's an extremely good thing.
Philanthropy in America is a special institution, but we mess with it at our peril.
By
Anonymous, at 10:41 AM
I'll extend the "limb" of anonymous and say that the problem is not really with the professional staffed foundations. There are problems among them, true.
But the bigger issue in terms of accountability is the so called "desk drawer" foundations that aren't even staffed. Many of them give to local operas, hospitals, churches or other pet causes--perhaps even benefit enuring to the founders. It's not clear that there is bang for the public buck with these types of entities. At least with the larger staffed foundations, there is an attempt to spend dollars well (mostly)--there is just disagreement over the best approaches. Some prefer to have the Korea Policy Institute's of the world tell them what the most important issues are and why they should be funded. The Gates Foundation types hire "experts" who will tell you what they think is the best way. The public may actually agree with the Gates method. They may not actualy think that Rick Cohen's work or the Institute's advocacy should be funded with tax sheltered dollars. So again, as anonymous indicated, be careful what you ask for.
By
Anonymous, at 2:14 PM
What I do not like is the entitlement some people have to another person or groups resources.
Further, I am no fan of do-gooder entitlement, such as the tone expressed in this and other articles of this ilk.
Also, I find it odd bedfellows, when you have these calls for democratization, even if it means circumventing the will of the foundation funder's intent.
If you (meaning grassroots organizers, bureaucrats, or advisory boards and panels) start dictating how foundations dole out their money, then we are destined to have a debacle, and think of all the other causes left wanting because some ACORN-type has different priorities.
Also, the term social justice is an idiotic pleonasm. Since when is justice asocial, private and / or internal. The answer: Justice is by it's nature social, hence a court, lawyers, juries, awards, damages, punishment, sentencing, Greta Van Sustern and Nancy Grace, etc....
By
Anonymous, at 5:44 PM
I dread the world in which, to maintain tax-advantaged status, at least 5.83% of grant funds need to be given to organizations with at least one minority board member, 2.79% to organizations with gay and lesbian causes, 4.42% to community organizations in government-designated disadvantaged areas.
As an alternative, I propose the introduction a one-time "mandatory foundation fairness incentive surcharge" of 99% and have the government distribute the revenue as it sees fit. This ensures that only the most deserving causes are funded and that there is minimal waste. Alternatively, if we don't trust the government with all that money, we can put distribution specialists in charge of it. ACORN, the Greenlining Institute and others are supremely qualified to determine the most deserving recipients of foundations' (former) assets. These champions of the disadvantaged have excellent staff members who know that all the money going into basic research at WASPy universities and medical research facilities is never going to benefit the truly needy. Museums and opera houses serve only rich people and do not deserve further support either. Or have you ever seen a museum allow a homeless person to sleep in the exhibit area?
What better way to fund a revolution than with the current establishment's expropriated money? I'm sure the people at INCITE would be happy to take a rich, old, white male's money that he had intended to donate to the salvation army (church alert!!) to put more black, radical feminists on the payroll to help spread the new gospel.
Finally, the poor youngsters who burn out doing good. I would have recommended that they enter a productive profession, make a fortune, and donate their wealth to a worthy cause. They would have been careful guardians of the money, making sure that it lasts a long time and benefits the people they really care about.
But I guess under the new regime that approach is no longer going to be an option.
By
Anonymous, at 6:32 PM
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