He is a kind of Society for th’ Prevention of Croolty to Money. If he finds a man misusin’ his money, he takes it away fr’m him an’ adopts it.
—MR. DOOLEY

Charity is said to be a virtue without compare, and yet we all know that it arouses suspicion-about the giver’s display of his generosity, the recipient’s dependency, some essential inequity that the gift only reinforces. Perhaps for this reason, Maimonides argued that the highest level of charity was not charity at all but rather helping the needy find the means by which to earn their own living.

In democratic America, what charity is and what it ought to do have been redefined in this spirit from the bestowing of alms to the performance of public-spirited works of all sorts by voluntary associations of citizens. Over the past century, such associations have grown and gradually coalesced into an economic “sector” of their own, albeit one that is not dedicated to the pursuit of profit. The chamber of commerce, the soup kitchen, churches and synagogues, the Berlioz Society, the university, Commentary-these are all voices in the chorus of American nonprofits, which collectively account for 11 percent of the overall U.S. economy.

Charitable organizations have suffered along with everyone else from the present economic crisis. Estimates by the Independent Sector, a philanthropic umbrella group, are that charitable assets are collectively down by nearly a third. Some organizations have shut their doors, and the survivors have had to make painful adjustments, let go of staff, abandon projects, and scale down ambitions for years to come, at precisely the moment when their services and patronage are needed most.

It was therefore surprising, and instructive, that at the same time the Obama administration was extending bailouts to troubled industries thought to be systemically or strategically important, it also presented for national consideration a change in tax policy that seemed like nothing less than a direct assault on the ravaged coffers of nonprofits.. For almost a century, about as long as the U.S. has levied a significant tax on income, government policy has encouraged charity by exempting donated dollars from its reach. But in February, the administration announced that it would seek to raise revenue for its ambitious spending programs by reducing the charitable deduction for the highest two income-tax brackets by as much as 30 percent-this, when their marginal rates will already rise respectively to 36 and 39.6 percent in 2011.

When a reporter at a press conference in March suggested that this was effectively a tax on charity, Obama held fast, insisting

if it’s really a charitable contribution, I’m assuming that [the tax exemption] shouldn’t be the determining factor as to whether you’re giving that $100 to the homeless shelter down the street. And so this provision would affect about 1 percent of the American people. They would still get deductions. It’s just that they wouldn’t be able to write off 39 percent. In that sense, what it would do is it would equalize. When I give $100, I’d get the same amount of deduction as when some, a bus driver who’s making $50,000 a year, or $40,000 a year, gives that same $100. Right now, he gets 28 percent; he gets to write off 28 percent. I get to write off 39 percent. I don’t think that’s fair.

Nor was this the only virtue of the proposal, for it would also present the American people with a new pot of money to direct toward worthy societal aims:

I think it is a realistic way for us to raise some revenue from people who’ve benefited enormously over the last several years. And, you know, ultimately, if we’re going to tackle the serious problems that we’ve got, then, in some cases, those who are more fortunate are going to have to pay a little bit more.

Thus, the plan would eliminate an unfair privilege for the rich without hurting the poor-or, at least, without hurting the poor who receive charity from entirely selfless people who are certain to maintain their level of giving no matter what the federal government does. “There’s very little evidence,” Obama concluded, “that this [program] has a significant impact on charitable giving.”

Casually dismissing the role of incentives in altruism may strike those of a more hardnosed bent as fanciful, and as an empirical matter, according to the economist Martin Feldstein,

A substantial body of economic research shows that, on average, each 10 percent reduction in the cost of giving raises the amount that a person gives by about 10 percent. So, the 35 percent reduction implied by current deductibility rules raises the amount of charitable giving by about 35 percent. . . . [The administration's plan] raises the cost per dollar of giving from 65 cents to 72 cents, an increase of 10.8 percent that can be expected to reduce the total giving of these donors by about 10 percent.

In other words, the President’s proposal would reduce the amount of money given to charity by at least 10 percent. That would be “a significant impact” in anyone’s book. Peter Orszag, director of the White House Office of Management and Budget, seemed to concede the point when he offered in mitigation that “contained in the recovery act, there’s $100 million to support nonprofits and charities as we get through this period.”

More interesting than his empirical assertion, at any rate, was the moral attitude Obama projected toward the nonprofit sector, in which he himself had worked for many years of his professional life. His argument made little of the fact that a donor does not consume a single penny of the charitable donation that is currently exempted from taxes. Financially, one is best off keeping the money. The supposed “benefit” only accrues when one gives it away, and only by lowering the “cost of giving” imposed by our progressive tax system, which already derives a majority of income taxes from the highest earners. Only givers would be penalized under the new plan-the situation for the uncharitable rich would remain the same-and yet the President’s critique suggested that the system needed to be corrected in the name of “fairness.”

In one of its rare acts of defiance this year, Obama’s otherwise compliant Congress did not vote his reduction proposal into law. But this does not mean it is gone forever; he will be in a position to submit it again, especially if, as seems likely, the Treasury finds itself short of revenue. Certainly the idea of fairness underlying the proposal is very much a part of the administration’s outlook, and it fits neatly with a liberal suspicion of charity that has gained traction in recent years, and that withholds even two cheers from American philanthropy as it is now practiced. This is a matter that should be of concern to everyone, not just those who work for and support nonprofit institutions, and not just givers who rightly feel themselves the implicit objects of improper Oval Office criticism. The war on philanthropy that appears to be developing is a challenge to the vitality of our civil society and a serious threat to the non-governmental “mediating institutions” (as sociologists call them) that have always been a particular hallmark and glory of American society.

The specific indictment against private philanthropy goes something like this: Because the Treasury forfeits some $30 billion every year in various tax exemptions for charity, government has a responsibility to see that this “subsidy” (as Representative Xavier Becerra of California calls it) is justified by the use to which the money is put. Government, in this view, should not be in the business of subsidizing, say, gifts to the San Francisco Opera by residents of posh Hillsborough Heights, or the vanity projects of a closely-held family foundation, or additions to Harvard’s multibillion dollar endowment so that (wink, wink) it will admit a donor’s child. Former Labor Secretary Robert Reich argues instead that the deduction system should be calibrated so that givers receive a full deduction for poverty charities and only half a deduction for the Public Theater. According to Peter Singer of Princeton University, gifts to the arts cannot be justified at all while other problems exist in the United States.

Sure, the argument continues, private charities and civil-society foundations do a lot of good, but all too often they are vehicles for money laundering or dressed-up consumption that do not benefit the truly disadvantaged. This anarchic system needs to be nudged in the right direction-a little more redistribution here, a little more regulation there-to ensure the best kind of outcome. Taxing charity, according to Peter Orszag, would be paid back to society and the struggling nonprofits themselves in the coin of national health care. The critics seem to feel that there is enough wealth in this country to alleviate social problems and still leave plenty of money left over to pay for gilded plaques at the overcapitalized opera house.

The most notable campaign against the philanthropic status quo has been waged by the California-based Greenlining Institute, a nonprofit that seeks greater “racial and economic justice” by attempting to force greater minority representation in government, commerce, and higher education, mostly by publicly shaming or suing companies into doing the right thing. (The institute’s name is a play on the practice by banks of “redlining” poor neighborhoods as bad credit risks; “most of our money,” its director has boasted, comes not from donations but “from lawsuits.”)

After a Greenlining study found that a mere 3 percent of private grant money in California went to minority-led causes, the group waged a concerted campaign on behalf of state legislation to require foundations with assets over $250 million to disclose the race, gender, and ethnicity of board members, staff, business contacts, and individual grantees (at one point sexual orientation was also included), and to report the amount and percentage of grants to organizations in which 50 percent or more of board members and staff were minorities.

The bill passed the California state assembly and was being debated in the state senate when a settlement was reached with the Foundation Coalition, an umbrella group of California’s largest foundations. It dutifully pledged to support “capacity-building” and “leadership-development activities” of minority-led institutions to the tune of several hundred million dollars over the next few years. With this triumph secured, Greenlining has promised to undertake similar efforts in a number of states and on the federal level.

Critics had pointed to egregious flaws in the Greenlining study. The sample size was far too small, and an enormous gift to the United Negro College Fund by the Gates Foundation that would have represented an increase of ten percentage points was excluded. There were also numerous absurdities. The work of some of the targeted groups had no conceivable connection to race. (An environmental conservation group was one of them. Why? “Communities of color suffer most from global warming, if you look at asthma rates,” said Greenlining’s director.) A group that served minority communities could be targeted just for having too many staff members of the “wrong” color. All groups would have to spend heavily on compliance-data collection, administration, and the like. Yet none of this was enough to move the Foundation Coalition to stand up for itself against a pernicious campaign solely concerned with counting by race.

Nor is this moral weakness confined to beleaguered foundations. The National Committee for Responsive Philanthropy (NCRP) is a privately funded nonprofit organization that conducts research on and advocacy within the philanthropic sector. As a leading voice that is often called upon for authoritative opinions, NCRP released a report in March entitled “Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact.” The public “has a legitimate interest in the use of philanthropic resources,” the report opens, since “donors receive the privilege of tax deduction for charitable donations and tax exemption on investments.”

Among the guidelines are unobjectionable principles like “disclose information freely” and “act ethically.” But then come the ideological mandates. Nonprofits should provide at least 50 percent of their grant dollars to benefit lower-income communities, communities of color, and other marginal groups. At least 25 percent should go to “advocacy, organizing, and civic engagement to promote equity and social justice.” The majority of grant money should also go to multiyear projects. When it comes to managing endowments, at least 25 percent of assets should be invested in ways that support the organization’s charitable mission. So, to sum up: divestiture from tobacco or other such malevolent companies, not too much oversight of grantees, and a view of America as sorely in need of at least 25 percent more “equity” and “social justice.”

Thus, one element of the nonprofit sector-the element that has set itself up as the sector’s ethical policeman-is now seeking to impose its ideological view on other nonprofits through new rules that guarantee not diversity but an iron-grip orthodoxy. Rather than encouraging the proliferation of views and ideas in the nonprofit world, they seek instead a stultifying sameness.

Even before Obama’s rise, philanthropists and nonprofits were feeling the heat from Washington and governments at the state and local level. In the 2006 Pension Protection Act, Congress issued hundreds of new rules on philanthropic entities, covering everything from the proper valuation of gifts of taxidermy property to exemptions for blood-collecting organizations from regular excise taxes on heavy vehicles and fuel.

Especially notable was a limit on the tax exemption for gifts to “donor-advised funds” from Individual Retirement Accounts (IRAs). This was a victory for those who dislike these increasingly popular vehicles that give a say on precise charitable allocation to donors who do not want to expend the cost and effort to set up their own foundations. Meanwhile, religious organizations, like Catholic hospitals, that receive government funding in the form of Medicaid reimbursements are coming under pressure to provide family-planning services to which they conscientiously object, else they risk a major source of funding. Other regulations are being floated in the Senate, like requiring nonprofit hospitals further to prove their bona fides by bestowing a greater percentage of their services on the poor.

Numerous states have adopted versions of the administration’s limits on charitable deductions on the state level, and several are now levying property and other taxes on charitable organizations. New York’s governor, David Paterson, has proposed a series of taxes on foundations whose investments “jeopardize the institution’s ability to carry out its charitable mission.” Even board members and foundation leaders themselves would be penalized as individuals.

The costs of complying with such onerous regulations are enormous, and draw away resources that would be better spent on actual works. The new imposts and distractions are especially demoralizing to smaller groups that do not have a bureaucratic apparatus. And this gets us closer to the unavoidable point: The role of private institutions in providing public works is something that discomfits the public sector, which time and again finds itself shown up by the competition.

The hundreds of billions of dollars that the government transfers every year to alleviate social problems have not solved the problem of poverty; government does not do it well, and often the act of subsidizing poverty has the unfortunate effect of exacerbating rather than ameliorating it. Virtually wherever public and private groups take up the same task, the private group outperforms, whether it is the Federal Emergency Management Agency versus the Red Cross in post-Katrina New Orleans, Meals-on-Wheels before and after it was adopted by the federal government, or church-run rehab clinics achieving better recovery rates than government clinics that spend ten times more per patient. This is hardly surprising, given that the private sphere enjoys the energy of individuals passionate about their work, and has greater flexibility than a bureaucracy to be nimble, to take risks, to adjust, to weed out corruption, and to move on to the next pressing task.

For these and other reasons, the role of private philanthropy in the United States has been a matter of concern for the Left going back decades. Leftists believe these tasks are justly the responsibility of government, and that leaving them in private hands is a way of keeping the public sector from performing its true function as the administrator of social justice.

The value of private philanthropy should not be measured solely by the dollars and cents that are raised and distributed. Philanthropy is a key element in the sustenance of a civil society in which a free people are free to invest their energies in the causes that animate them-including operas and museums and, yes, magazines, which have been known to be part of a flourishing culture and which some poor people and minorities have been known to enjoy. Even Harvard has been known to conduct medical research benefiting all society. The civil-rights movement grew out of private-and privately-funded-activism against a governmental status quo. It is impossible to predict where and when society at large will benefit, and central planning will only make it more difficult for the unexpected discovery, the unanticipated social or cultural advance, to take place.

Over the past nine months, the federal government has been extending its reach into the private workings of the United States to a degree never before seen. It is precisely at a time of accelerated growth in the public sector that voluntary associations and civic institutions are most crucial. Churches, charities, think tanks, universities-these are not just sources of good works and interesting ideas. They also function as alternate sources of social cohesion, acting as a bulwark against the hunger of politicians and bureaucrats to enhance their power and freedom of action.

In this light, the President’s proposal to limit the tax deductibility of charitable contributions while increasing the amount of money government receives in the form of tax receipts takes on a more ominous coloration. It suggests that Barack Obama believes it would be fairer for all if the government were to do as much as possible, and that the tasks of helping the less fortunate and keeping the national conversation as full-throated and diverse as possible would be better managed under the auspices of Washington.

The purposeful encroachment of the public sector on the private, therefore, will not end with the banking system or the automobile companies if the President has his way. This is why he and others who share his ideological predilections are staging a war on philanthropy from inside and out, and why they must not be allowed to succeed.

A new report states it in black and white: Color is lacking on the boards of directors of the 46 largest independent foundations in the United States.

The Greenlining Institute has found that although a quarter of all board directors of the 46 foundations are African-American, Hispanic or Asian-American, 28 percent of the foundations examined do not have a single person of color on their boards.

The statistics for Hispanics are more disheartening: 56.5 percent of the foundations have no Latino directors.

In other notable results, the institute found that the more diverse the board, the more grant-making there is to people of color. And the staffs for the foundations are vastly more diverse than their board leadership.

“Whatever the mission of the foundation, the board should actively seek qualified candidates of color with influence in their communities in order to bring in the perspective necessary to increase their influence in communities of color,” Christian Gonzalez-Rivera, Greenlining’s research program manager and author of the report, told HispanicBusiness.com.

The study noted that people of color comprise 34 percent of the population of the United States, with 15 percent Latinos, 12.8 percent African-Americans and 4.4 percent Asian-Americans.

Yet despite such diversity in the U.S., 13 of the 46 largest foundations have no people of color on their boards, according to Greenlining, which identified them as: Annenberg Foundation, The Brown Foundation, Bill & Melinda Gates Foundation, Gordon and Betty Moore Foundation, The Michael and Susan Dell Foundation, The Moody Foundation, Lilly Endowment, The Samuel Roberts Noble Foundation Inc., McKnight Foundation, W.M. Keck Foundation, Richard King Mellon Foundation, Walton Family Foundation, Inc. and Robert W. Woodruff Foundation.

The U.S. Census has projected that Hispanics will comprise half of the nation’s population by 2050. “If American philanthropy is to respond to these very real demographic changes, it needs to ensure that diverse voices, opinions, and cultural competency are well-represented in positions of influence,” Gonzalez-Rivera said.

The positive news is that 33 of the 46 foundations studied have people of color on their boards, led by the California Wellness Foundation, whose goal is to improve the health of Californians. In its boardroom, 70 percent of the directors are people of color, with 30 percent Latino.

Previous research by Greenlining has shown that there is a strong correlation between foundations with diverse boards and their investments in organizations led by people of color. While Greenlining stressed that a diversified board “is not the sole panacea that will lead to greater diversity in a foundation’s grant-making process,” it said that such diversity would help “to build the cultural capital necessary to truly be responsive” to grant-making opportunities involving people of color.

A particular challenge discovered by Greenlining is diversifying the boards of directors of family foundations. Traditionally, those positions are held by family and close associates.

“Strategically selected non-family board members can bring with them knowledge and skills that represent values that the foundation wishes to embody,” the report stated.

Greenlining cited New York City-based Jessie Smith Noyes Foundation, whose aim is to promote a sustainable and just social and natural system, as one that has made the commitment to diversity. Ten of its 16 board members are from outside of the family. Its Web site states that it values a diverse board because it can better respond to the variety of groups seeking grants; it can be more accountable to the grantees and the communities they serve; and its perspective on the economic, political and social problems it seeks to resolve is broadened.

Gonzalez-Rivera said foundations would do well to consider how their work can be more effective by serving communities of color.

“This consideration does not have to be limited to foundations that fund social justice,” he said. “A foundation that supports medical work can fund pipeline programs for underserved communities interested in nursing programs, for example, or foundations that support environmental causes can fund environmental justice organizations, or organizations that bring underserved youth in contact with the natural environment.”

Greenlining also found that foundation staffs were much more diverse than their boards. “It is typical at most institutions that hold wealth and influence that the higher you go in the ranks, the less people of color you will see,” Gonzalez-Rivera said. “Foundations need a commitment to the importance of diversity to their mission right from the top,” he said, “and only with that understanding will they include more people of color with diverse experience in their ranks.”

Diversity on foundation boards today is not a luxury, Gonzalez-Rivera said,
but a necessity.

“Diversity cannot continue to be a liberal afterthought in our nation’s influential institutions,” he said. “Diversity is also not a ‘minority issue.’ The future of America lies in ensuring that people of color have equal opportunity to advance and succeed, since people of color are the new majority in America.”

The full report can be found here.

Source: HispanicBusiness.com (c) 2009. All rights reserved.

Foundations are failing to recruit diverse board leadership, with Hispanics being the most under represented compared to their growing number in
American society, according to a new report.The report, by the Greenlining Institute, a public-policy advocacy group in Berkeley, Calif., that has pushed foundations to give more to minority causes,
said a quarter of the board members at the 46 wealthiest foundations in America are Hispanic, black, or Asian. Thirteen of the grant makers — 28
percent — had no board members from the three racial and ethnic populations.

The percentages of people on foundation boards who are black or Asian are roughly equal to their part of the American population — roughly 12 and 4
percent, respectively.

But Greenlining said Hispanics, which are the fastest-growing minority group in the country, represent 15 percent of the population, but only 8 percent of
the 46 organizations’ board members. More than half the foundations examined do not have one Hispanic board member, it added.
“The example of placing value on diversity begins at the board level, and extends to the decisions made at the staff level,” the report says. “Given the
increasingly multicultural and multiethnic nature of American society, foundations cannot continue to fall behind as the future moves towards
greater inclusiveness.”

Mr. Frank, a Democrat from Massachusetts, sent a letter last week to federal regulators that said financial institutions in the Troubled Assets Relief Program, or TARP, should provide charitable contributions and continue their Community Reinvestment Act efforts.

“Given that one of the goals of the TARP was to help stabilize communities, including traditionally underserved communities, I urge you to make it clear to banks that they should continue their CRA-related lending activities, including philanthropy,” Mr. Frank wrote in a letter dated April 17.

Mr. Frank’s letter was sent to Ben S. Bernanke, chairman of the Federal Reserve Board; Sheila Blair, chairwoman of the Federal Deposit Insurance Corporation; John C. Dugan, who heads the Office of the Comptroller of the Currency; and John E. Bowman, acting director of the Office of Thrift Supervision.

Several nonprofit leaders have raised concerns that TARP banks will sharply reduce their giving and lending to poor people because the companies are receiving federal assistance.

While many banks may be forced to decrease such efforts because of their precarious financial situations, they shouldn’t use TARP as an excuse, said Adam Briones, legislative coordinator at the Greenlining Institute, a public-policy advocacy group in Berekely, Calif.

Greenlining asked Mr. Frank to encourage financial institutions to continue their community-development efforts despite receiving bailouts. “We asked Chairman Frank to clarify this,” Mr. Briones said.

He said Greenlining would be checking to make sure banks honor their charitable and Community Reinvestment Act commitments.

TARP recipients include some of the corporate world’s largest donors. They include Citigroup, which awarded $145-million in 2007, and Bank of America, which gave $211-million, according to The Chronicle’s most recent survey of corporate philanthropy.

- Ian Wilhelm

According to a study that Mr. Piña commissioned from the California-based activist group Greenlining, Publix gave only 2.81% of its grants in 2006 to “minority-led organizations.” Minority-led is defined as groups whose staff and board of directors are 50% racial minority and whose mission and programs “are aimed predominantly towards communities of color.” Overall, Florida’s top 10 foundations (as measured by asset size) didn’t fare much better, giving on average 5.48% of their grants to minority-led outfits.

But who cares? Doesn’t it matter more what these groups accomplish rather than who runs them? Mr. Piña is outraged by the suggestion. “No one can convince me that United Way provides better service directly to minorities than a minority-led organization,” he told us recently. “We’re in the trenches. There is no way that [nonminorities] can connect and have more traction and effect than organizations with leaders who live in those communities day in and day out.”

Mr. Piña’s claim would seem, at the very least, in need of some statistical validation. But then Greenlining’s survey doesn’t ask where the leaders of “minority-led” organizations reside. We’d guess that plenty of them live comfortably outside of Florida’s worst neighborhoods. The Florida report, like the studies Greenlining has done in other states, makes clear that the agitation for “diversity in philanthropy” isn’t about donating to causes that help minorities. It’s a jobs program for college-educated minorities who want to work in nonprofits.

As for foundations that focus on nonminority causes, Mr. Piña says they need to rethink their priorities. “We need to create a leadership shift, to change how foundations view inner-city revitalization versus giving to the opera versus giving to protect the Everglades.” Philanthropies like the Turner Global Foundations, whose cash goes largely to environmental protection, had better get with the program. That means you, Ted.

To accomplish this redistribution of charity, Greenlining says Florida foundations “should track diversity information for grantee organizations, either voluntarily or through legislative mandates.” Last year, Greenlining almost succeeded in getting such legislation passed in California. It was stopped only when California’s largest foundations agreed to pay off California’s minority-led organizations. This month the foundations announced the details and cost of that plan — to the tune of about $30 million. Greenlining’s director, Orson Aguillar, told us “that’s a good start” but the money isn’t “a substitute for legislation.”

Mr. Piña worries that his own philanthropy shakedown won’t be as successful. He says the Florida legislature’s “extreme right-wing methodology” will make it difficult to force this issue into law. So Mr. Piña is heading to the U.S. Congress, and especially the Black, Hispanic and Asian Caucuses, to gin up support. It’s about time that leaders of the foundation world — those who care about results more than politics — stand up and call this the race-baiting money grab it is.

A new compromise from foundations might be cause for some optimism.

The everyday challenges faced by the people in many neighborhoods seem far removed from the American Dream these days: the lack of good housing and jobs, poor health, immigration raids, the foreclosure crisis, failing schools and all-too-common homicides.

As advocates for economic empowerment and racial equality, my peers and I struggle daily to find homegrown solutions to these problems. We spend our time, often with limited resources, working nights and weekends to address the social and economic hardships faced in our communities. Most of us spend countless hours fundraising, often with limited success, to address the challenges we face. We wonder why we are all so broke while billionaires spend upwards of $40 million to take a trip to outer space.

Advocates for racial justice who struggle for years or decades at a time to bring opportunities to our nation’s underserved communities should have hope. It appears that just beyond the desert there is a rainforest flowing with philanthropic dollars. Consider this statement from the Foundation Center’s website: “The country’s more than 72,000 grantmaking foundations increased their giving to $42.9 billion in 2007, an estimated 10 percent gain over 2006.” The Foundation Center goes on to report that there was a 12 percent growth in foundation assets in comparison to the previous year.

Unfortunately, communities of color did not receive their fair share of this $42.9 billion.

While there is no available data on grant-giving to communities of color for 2007 yet, there have been numerous studies and reports over the years showing that foundations are not serving people of color on an equitable basis. Steve Gunderson, a former Republican congressman and now president and CEO of the Council on Foundations, admitted in a 2006 video on philanthropy that “foundations do not adequately serve minorities on a percentage basis.” What Gunderson meant in his interview was that foundation dollars are not equally distributed amongst all U.S. residents and that some groups, in this case communities of color, were being short-changed by the foundation community. Some would call this the equivalent of receiving a check marked “insufficient funds.”

In fact, the Applied Research Center published a study in 2004 entitled Short Changed: Foundation Giving and Communities of Color. A major finding in the study was that “grants to communities of color fell from a peak of nearly 10 percent of all grants in 1998 to 7 percent in 2001.” The findings coincide with data from the National Committee for Responsive Philanthropy and with the work of former Secretary of Labor Robert Reich, who estimates that a mere 10 percent of philanthropic dollars reach the poor and underserved. The Greenlining Institute, a multi-ethnic public policy institute in California where I am the incoming executive director, followed up with a report in 2006 that found a mere 3.6 percent of grants in 2004 invested in organizations led by people of color.

Despite this history, the foundation community has disputed these studies, attacking them on the grounds of what they call poor methodology and unreliable data. At Greenlining, we requested meetings with foundations on numerous occasions to determine what the best methodology would be for tracking grants to communities of color, but we didn’t receive a response. And on many occasions, we requested diversity data from foundations, only to be turned away or completed ignored. These, of course, being the same foundations that demand diversity data from prospective grantees.

Given the methodology disputes and lack of cooperation from foundations in sharing data, leaders in the California state legislature introduced The Foundation Diversity and Transparency Act (A.B. 624) that would have required foundations with assets of $250 million and more to report basic diversity data on an annual basis. Had it passed, it would be the first of its kind in the nation. Instead, a compromise was brokered in June. Ten of California’s largest foundations agreed to come up with a plan by the end of this year to invest millions in nonprofit organizations that are led by and that serve people of color. They also agreed, at least on paper, to diversity and to nurturing a new generation of leaders from communities of color.
Yes, many of you might be rightly asking, “Where are the details?” I agree. The details are vague, but the promise and commitment from the 10 foundations are strong, and I will be one of many who will work diligently to ensure that this historic partnership is not for communities of color but rather with communities of color. This is an important distinction that will lead either to the success or failure of this important campaign.
But the journey to reach this compromise is telling. Philanthropy groups hired three lobbyists to kill A.B. 624 even though the legislation would have been consistent with other pieces of state legislation that require government bodies and corporations to track and disclose race and ethnic data.

Philanthropy’s frenzied response to A.B. 624 was surprising, to say the least. We witnessed respectable community advocates use terms such as racial mandates, racial quotas and affirmative action-as if Ward Connerly has succeeded in making that a negative concept-to describe A.B. 624. Foundations withheld funds to organizations supporting A.B. 624, and some were creating a campaign of terror by threatening to pull funds from the fortunate few organizations that receive grants, saying they would leave California altogether if A.B. 624 passed.

Fortunately, the debate around A.B. 624 has led to other positive developments. The Council on Foundations, the premier association representing foundations, hosted a historic super summit in May with discussions on race as a strategic focus. In addition, the Northern California Grantmakers has commissioned its first study on race in philanthropy. The results were expected to be released this summer as this issue went to print. These may be described as baby steps, but nevertheless, they are good steps.

Other states are responding as well. Community leaders in Florida, New York and New Jersey are urging their lawmakers to introduce similar legislation, and lawmakers in Pennsylvania are currently conducting background research to determine if a similar bill would be appropriate for their state. We hope these efforts across the country will encourage the U.S. Congress to take the next step and make this a national public policy issue.

While many feel sadness and anger at philanthropy’s efforts to kill A.B. 624, and some are naturally wary of what is to come from the new compromise, we are optimistic that these difficult debates and discussions might give birth to a new philanthropic reality that offers a better future. Foundation leaders who are ready to embrace racial equity will find many new allies like us ready to join them in building a new and more effective philanthropic movement that will once and for all fix our schools, stop the killings and make our country a symbol for how communities can live together without large disparities in health, wealth and opportunities.