posted on: Monday, March 15, 2010

By Aaron Dorfman

“If I were running the country, I would …” We’ve all thought of this phrase at least once in our lives.

On Tuesday and Wednesday, hundreds of grantmakers will converge on our nation’s capital to educate Members of Congress and their staffs on the critical role that philanthropy plays in our society, and to advocate on key issues that affect the sector. The Foundations on the Hill (FOTH) event is organized by the Council on Foundations and the Forum of Regional Associations of Grantmakers.

I hope that legislators and their staffers will use this opportunity to learn what they can about the important and varied ways that philanthropy is serving communities across the country. There is, no doubt, some great philanthropy being practiced: some funders are creatively supporting direct services during the recession, others are investing in research to solve important problems, and still others are building nonprofit capacity so organizations can be more effective at meeting the needs of our communities.

But we all know that there are many ways that foundations fall short of their potential, too. So FOTH got me thinking: If I were a legislator or Hill staffer meeting grantmakers from my district or state, what questions would I ask?

I invited several colleagues to share their questions.

From Akaya Windwood, president and CEO of Rockwood Leadership Institute, a nonprofit that provides training on leadership and collaboration to individuals, organizations and networks for social change:

• Legislators have feedback mechanisms called elections. If politicians don't meet the needs and expectations of their constituencies, they tend to lose their jobs. What are the feedback mechanisms by which foundations insure that the needs and expectations of their consituencies are met?


• If philanthropists are the venture capitalists of the social sectors, what are ways in which foundations can become bold and nimble enough to support risky but potentially breakthrough ideas?

From Daniel Dodd, executive director of Step Up Savannah, a collaborative of organizations, businesses, and government agencies that seeks to move families toward economic self sufficiency:

• How are foundations working to ensure that grantees are involving low income individuals and minorities into the decision making process when developing poverty reduction strategies or programs?
  
• How are foundations ensuring that funds are being allocated evenly geographically across the country? (It has been our experience that the South is particularly overlooked.)

From Steven Mayer, director of Effectiveness Communities LLC, and architect of Justphilanthropy.org, a website that presents six pathways for philanthropy to be more intentional in its support of racial and social justice:

• Using a metaphor to present an opportunity for exploring the role of philanthropy… If it’s raining cats and dogs and you discover that society’s roof is leaking, do you believe foundations and nonprofits have a role in fixing the roof, or should they be concerned only with cleaning up the mess? Should they (or shouldn’t they) partner with local or national government in their response?
  
• What percentage of a foundation’s or nonprofit’s endowment should be invested in ways consistent with its charitable purposes? (or at least not inconsistent with it)?

From Bill Watanabe, executive director of the Little Tokyo Service Center, a neighborhood-based social service nonprofit that serves Asians and Pacific Islanders of L.A. County:

• How do you define success in the effective use of your foundation grant dollars? Some foundations seem to think that funding systemic change is the ultimate success and direct services is only "band-aid."

From Jan Masaoka, editor of Blue Avocado, an online magazine for community nonprofits:

• Why is that you foundations always talk about all the public good you do in the world, but the main thing that gets you riled up with Congress is when we talk about changing estate taxes, charitable contribution taxes, and other things that would basically tax the rich people that control foundations? Are you more about the public good you say you do, or the private good that you actually advocate for?

These terrific questions speak to the concerns that many of us have on the critical role that philanthropy plays in our society. The points raised by Akaya, Jan, Bill, Daniel and Steven allude to the critical rights and responsibilities of foundations and other institutional funders, and the difficult but necessary task of striking a balance between the two when developing grantmaking strategies.

Bill’s question on the value of direct services, juxtaposed with Steven’s question about fixing the roof, serves as an important reminder that foundations need to look at ways to meet the immediate needs of vulnerable communities while also working towards more lasting solutions to complex social problems.

Both of Daniel’s questions give voice to the frustration felt by those who get left out, and who aren’t often the beneficiaries of philanthropic giving.

Jan’s question speaks to the real frustration that many have with how foundations position themselves when advocating on the Hill.

Here are 3 questions I would add:

• How has your foundations responded to the economic crisis? Did you maintain a steady grants payout, or did you increase or decrease your giving? Why?
  
• How do you think about diversity at your institution? How diverse is your board and staff?
  
• Do you provide your grantees multiyear and general operating support? Why or why not?

What do you think of the questions posed in this commentary?

If you were a legislator or congressional staffer meeting with foundation executives, what questions would you ask?

Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy (NCRP).

Photo by Danilo Rizzuti/Freedigitalphotos.net

posted on: Friday, March 27, 2009

By Aaron Dorfman

A few days ago, Stephanie Strom of the New York Times reported on a bill that would change the excise tax structure for foundations to stimulate more grantmaking. The bill, sponsored by Democratic senators Charles E. Schumer of New York, and Debbie Stabenow and Carl Levin, both of Michigan, would replace the current 2-tiered system with a single revenue-neutral tax rate of 1.32 percent.

NCRP has long supported a reduction or simplification of the excise tax. Not only is the current system confusing, it is also a disincentive to increasing grantmaking. Some funders who might choose to pay out at higher rates, especially in times of crises, don't do so out of a desire to avoid paying the higher excise tax in future years. The country is in a full-blown recession, and a majority of Americans are feeling the fallout. Many nonprofits now, more than ever, need foundation grants to help meet the skyrocketing demand for their services.

This new senate measure also reminds us to think about what the excise tax is for, and how it should be used. The original intent for taxing foundation investment income was to pay for the cost for the IRS to oversee tax-exempt organizations. And yet, the income from the excise tax is diverted to the general treasury, and the funding that gets budgeted for the IRS Tax Exempt Division is insufficient to cover its oversight duties.

NCRP will be following this issue as it progresses.

What are your thoughts about the proposal?

Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy.

posted on: Wednesday, March 25, 2009

The Hill is alive with the sound of grantmakers.

Yesterday, the Council on Foundations and the Forum of Regional Associations of Grantmakers kicked off this year’s “Foundations on the Hill” event. “Foundations on the Hill” is an “annual opportunity for grantmakers to meet with their federal lawmakers.” The two-day event includes briefings on the economy and discussions of upcoming legislation followed by meetings with legislators on Capitol Hill.

Today, meeting with their Senators and Representatives in Congress, grantmakers will be advocating around a host of issues, including itemized charitable deductions, the IRA Charitable Rollover, the excise tax and program-related investments to so-called “low-profit limited liability companies” (For more on the Council’s stances, see the Council’s prepared issue papers on each topic.)

As foundations take this opportunity to inform and educate Congress about philanthropy, NCRP seeks to similarly inform legislators of what we consider exemplary practice. As we note in Criteria for Philanthropy at Its Best, an exemplary grantmaker:

• Contributes to a strong, participatory democracy that engages all communities;


• Invests in the health, growth and effectiveness of its nonprofit partners;


• Demonstrates accountability and transparency; and,


• Engages a substantial portion of its assets in pursuit of its mission.

NCRP is not advocating any legislative action on these issues, but Foundations on the Hill presents an important opportunity for foundations and lawmakers to discuss social inclusion, effectiveness and accountability in addition to charitable giving incentives.

We hope that Congress takes note of the exemplary leaders and practices found in our report and uses this opportunity to challenge grantmakers to strengthen communities at this critical time.

Kevin Laskowski is field associate at the National Committee for Responsive Philanthropy.

posted on: Friday, August 03, 2007

On Thursday, the Senate voted overwhelmingly to pass the Honest Leadership and Open Government Act of 2007, the same bill that was passed in the House earlier this week. By a vote of 83-14, the Senate voted for the measure that would provide the first substantive effort in years to reform the ethics procedures in Congress.

The bill is now headed to the desk of President Bush, where it will either be vetoed or signed into law. With enough votes in both chambers to override any possible veto, the prospects for passage of the bill remain highly promising.

The bill would force lawmakers to detail on a quarterly basis where donations are coming from by making the information accessible on the Internet. In addition, “pork projects,” or funds that are appropriated with more respect to Congressmen and their district rather than actual need, would face stronger scrutiny and disclosure measures. The bill also prevents Congressmen from receiving certain perks, including discounted rides on private planes, and would prohibit members of Congress from receiving gifts from lobbyists.

We are calling on President Bush to sign the legislation into law, to bring about a significant and long-overdue change to the ethical procedures of Congress.

The Honest Leadership and Open Government Act of 2007 is one of the bills NCRP supports that is up for debate in the 110th Congress. For an overview of the bills that directly affect NCRP and the non-profit sector as a whole, click here.

posted on: Wednesday, August 01, 2007

Yesterday the House of Representatives passed a comprehensive and sweeping ethics reform package that is now headed for the Senate, where support for the measure looks promising. The first substantive ethics package in years, the Honest Leadership and Open Government Act of 2007 is designed to curb the influence of lobbyists and special interests in Washington, and is strongly supported by NCRP.

Designed to curb the impact of lobbyists and special interests in Washington, the bill, which passed by a vote of 411-8, would force lawmakers to detail, on a quarterly basis, where donations are coming from by making the information accessible on the Internet. In addition, “pork projects,” or funds that are appropriated with more respect to Congressmen and their district than actual need, would face stronger scrutiny and disclosure measures. These earmarks, which cost taxpayers tens of billions of dollars every year, would be readily available for scrutiny before passage of any bill that includes them.

As the bill heads to the Senate, we hope that both political parties can come together and vote for the legislation.

The Honest Leadership and Open Government Act of 2007 is one of the bills NCRP supports that is up for debate in the 110th Congress. For an overview of the bills that directly affect NCRP and the non-profit sector as a whole, click here.