Standard (Mal)Practice

Written by: Dan Petegorsky

Date: July 27, 2016

Updated 9/2/2016 2:25 PM EDT with additional attribution for image used.

A few years back I was speaking with the manager of corporate giving for a firm high on the Fortune 500 list. While we didn’t agree much on a range of issues, we were in surprising agreement on what constituted good grantmaking practice. Much to his chagrin, his giving program was situated solidly within the firm’s public relations department and this constrained him from carrying out those practices in his own funding.

For example, we agreed that multi-year grants are superior to annual grants. But from the public relations perspective, multi-year grants don’t cut the mustard: Awarding a three-year grant to a community group gives the company just one press opportunity to promote itself in the community, while annual grants give three. So it goes.

Many nonprofits accommodate such imperatives when seeking funding, whether from corporate giving programs or, indeed, from foundations. But the tradeoffs are often less benign and can present serious ethical and organizational dilemmas.

Recently, for example, Philip Rojc and David Callahan wondered whether certain groups’ dependence on grants from bank giving programs compromised their work. I encountered these concerns firsthand when staffing a Wall Street accountability campaign: groups working on community development and housing were key allies and yet were constrained in taking certain public actions because, in addition to receiving support from the banks, bank representatives sat on their boards of directors.

“When nonprofits working on economic equity issues get in bed with corporate donors, they may be inclined to moderate their views on these issues and be less critical of private-sector actors,” Rojc and Callahan wrote. “In this case, we’re talking about a financial services industry that has famously engaged in a range of predatory or abusive practices, some of which are ongoing. It stands to reason that asset building groups may be less inclined to call out the present or future bad behavior of banks if they depend on the largesse of these institutions. Yet such groups would seem to be obvious and critical watchdogs in this space.”

A recent case in Oregon illustrates the most serious kind of conflict: Threats of discontinued funding from companies whose bottom line becomes threatened by public policies their grantees support.

Standard Insurance Company, known as The Standard, has been (up until its recent purchase by a Japanese insurance group) a locally based Oregon corporation with an active community relations and giving program. Along with other corporate givers, however, The Standard has recently drawn sharp rebukes for trying to intimidate grantees and community groups into backing off their support for a November ballot measure that will increase corporate taxes to support Oregon’s perennially underfunded education system and social services. Oregon’s business taxes are tied for the lowest in the nation. Along with other major corporations, The Standard will see its taxes raised if the initiative passes, and it has been among the top contributors to the campaign to defeat the measure.

Several of those who’ve seen this intimidation by corporate givers firsthand have gone public, as reported by Willamette Week. Among them:

  • The Standard threatened to withhold future support from Children First for Oregon. As Willamette Week reported, “The Standard’s top government affairs official, Justin Delaney, acknowledges the company threatened in June to withhold support from Children First for Oregon, a Portland nonprofit.” While the company ultimately relented, the paper reports that Delaney wants grantees to think twice before they champion the initiative: “Nonprofits ought to give their corporate partners a hearing before reflexively supporting Measure 97.”
  • Intel, one of the top employers in Oregon and the beneficiary of enormous tax breaks, curtailed support for the Oregon League of Conservation Voters’ annual gala due to its potential backing of the measure. “Intel has been a longtime sponsor of OLCV’s annual fundraising dinner … providing amounts ranging from $2,500 to $25,000 in previous years.” This year, however, they provided zero dollars. As OLCV Director Doug Moore reported, they made it clear that if “the league was even thinking about supporting what would become Measure 97, Intel would not support this year’s event.”

When it comes to supporting ballot measure advocacy, NCRP is most frequently asked by both funders and nonprofits about the legal aspects of the work: How can they become involved and stay right with the IRS? We hear less frequently about this kind of direct financial impact from funders seeking to use their charitable giving as a cudgel. We hope that public exposure can counter this kind of intimidation. As Our Oregon’s Ben Unger puts it, “With state funding shrinking, many of these nonprofits have no choice but to fill the service gap by seeking funding from the very corporations that are not paying their share in taxes,” Unger says. “That any company would use that leverage to attempt to silence nonprofits is unacceptable.”

Dan Petegorsky is senior fellow at the National Committee for Responsive Philanthropy (NCRP), leading a civic engagement initiative. Follow @NCRP on Twitter.

CC image by wp paarz and http://www.weisspaarz.com/, modified under Creative Commons license.