Thursday, March 12, 2009

CHARITIES HIT BY CHANGE

Of the many groups and individuals who find themselves damaged by the tax hikes changes announced by President Obama, charitable organizations are among the foremost losers. Nevertheless, the activists’ objective is to get the foundations to ignore the intent of their founders and do “social justice.”

Blows are being leveled at the charities. To begin with, tax deductions for contributions are being limited. Formerly (and still, for the moment) contributors to charities could deduct $396 from their income tax for each $1000 contribution. Under Obama’s redistribution plan, contributors will be able to deduct only $280. This limitation will discourage some contributions (one estimate is by 40%) in normal times; and at a time of severely falling stock prices, the impact is likely to make a significant difference to charities’ survival. The restriction on contributions applies to recipients of income of $250,000 (gross?) a year. Small contributors, the “non wealthy,” earning less, are also affected. What are the non-wealthy charitable organizations to do? They have important, useful, and needy causes.

It gets worse. The social justice activists believe that organizations’ boards of directors should be widened to include members of “the community.” They believe that the grants should take explicit account of the needs of the community.

Take away much of the charities’ income, take away their right to decide how to distribute their grants, take away their freedom of choice of directors, and what are they left with? A question: a question of whether they should stay in business, wither away, or disband outright. These are non-wealthy individuals chafing to continue operating their charities under President Obama’s announced tax increases. (The change would not take place till 2011.)

And what about the intention of the founders of the foundations? Are they to be ignored? Is their property to simply be stolen and redistributed?

These are extraordinary changes in the recent history of American philanthropy. The National Council of Responsive Philanthropy (NCRP), after studying 800 of the largest foundations, concluded they are “eschewing the needs of the most vulnerable in our society.” Accordingly, their report states that foundations must “provide at least 50 percent of grant dollars to benefit lower income communities, communities of color, and other marginalized groups, broadly defined.” The NCRP report also urges that 25 percent of the grants of each foundation should be for “advocacy, organizing and civic engagement to promote equity, opportunity and justice in our society.” Every foundation is to become a change agent to promote redistribution.

After all that, it is no surprise to learn that the Council on Foundations, Philanthropy Roundtable and other philanthropy watch-dogs are critical of the NCRP report. Nor is it any surprise to learn that the NCRP, on its website homepage, says “Happy Birthday Saul Alinsky,” radical community organizer and teacher of community organizers in Chicago.

The NCRP guidelines are not original with NCRP. A California organization named Greenlining urged state legislation that requires foundations to report the percentage of their grants given to minority groups. They stopped their lobbying when some foundations promised to donate to Greenlining’s preferred groups but are working their way in several other states.

Meanwhile, some foundations are voluntarily falling in line with NCRP. Thus, the W.K.Kellogg Foundation announced it will strive to be “an anti racist institution.” The Jesse Smith Noyes Foundation boasts that a majority of its board is women and 41 percent is minorities. Another foundation announced with pride that it was giving grants for Gay and Lesbian issues.

A few decades ago, philanthropic watchdog organizations saw their role quite differently. One of the much discussed issues of the time was whether foundations should continue in existence for only a certain specific period before giving away all their assets. At the time, Congress adopted the requirement that five percent of their endowment be annually given in grants. The problem was that foundations have tended to move far from the intent of their founders, then an undesirable, improper situation (today the NCRP goal). Within memory, a descendant of the Ford family resigned his position as a director of the Ford Foundation when he could no longer tolerate the direction in which the Ford Foundation was going with its grants.

Back in those times, no one was telling foundations that they should take away the founders’ property by forcing the foundations they set up to redistribute their wealth.

Who is it who urges this control of redistribution of wealth? The National Council of Responsive Philanthropies (NCRP). The changes are embodied in its report issued March 3 (though 15 pages of it had been circulated) entitled “Criteria in Philanthropy at Its Best, Measurable Bench-marks to Assess Foundation Performance.”

That is not what it is, asserts critic Heather Higgins, Co Chairman of Philanthropy Roundtable. It is to “criticize those who do not measure up.” The NCRP report calls itself “a guidelines that will help foundations and other institutional grantmakers operate efficiently and maximize the impact of their decisions.” Mrs. Higgins notes that Acorn is a member of the NCRP.

NCRP’s proposed changes have not (yet) been implemented. Congress has not—not yet—adopted them. It may never, if there are enough charitable organizations tele-phoning their representatives asking, “Why are they doing this to us?”

As Heather Higgins writes: "The diversity of interests and freedom of action of our private, voluntary philanthropic charitable sectors is one of the most unique and powerful features of American society; particularly at a time like this, upending its efficacy for political ends is advocacy at its most irresponsible."

By Natalie Sirkin
c2009
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