Tuesday, May 24, 2005

Leave it to the professionals

Emmett D. Carson, CEO of the Minneapolis Foundation and chairman of the Council on Foundations, has "An Easy Way to Curb Foundation Abuses" in this week's Chronicle of Philanthropy: "require donors to contribute at least $1 million if they want to create a foundation." It's an op-ed so riddled with condescension and even contempt for smaller and family-run foundations that I think Minneapolis and the Council ought to seriously rethink their relationships with him. Instead of seeing recent regulatory and media scrutiny as an opportunity for needed self-examination, Carson sees it as an opportunity to self-servingly reinvent the sector by jettisoning the 70% of the sector he thinks simply isn't up to the task. Carson overlooks better solutions to industry woes, creates a small foundation straw man, and then attacks it with all the arrogance that grantees, small foundations, and infrastructure organizations have come to expect from philanthropoids like Carson.

Carson conveniently overlooks the fact that there is a reason the IRS cannot oversee the vast charitable sector. Excise taxes paid by the nonprofit sector have become general revenue. The government has grown into this revenue stream, and, hence, any mention of putting more money toward IRS enforcement has been termed a "political non-starter," despite the fact that the money already exists for full enforcement and is taxed for that purpose. Carson overlooks the fact that any abuse that has been found has been found because somebody somewhere took a look at the Form 990's that these organizations fill out. The solution, then is to pay someone to look at those 990's, i.e., fully fund IRS enforcement. From the December 15, 2003 Nonprofit Times:
"While the public's trust with our field depends on government oversight, we have practically no oversight," said Dorothy S. Ridings, president of the Council on Foundations, an organization that must balance demands for further scrutiny with the interests of its members. The excise tax that the IRS levies on excessive compensation was originally designed to fund enforcement of nonprofit foundation rules. Instead, the tax revenue has been routinely diverted to other government programs since its inception in 1969.

"It's been an absolute farce to say that the excise tax has anything to do with oversight of the industry," Ridings said.

Admittedly, this is an old source, but I cite it to demonstrate that Dot Ridings is aware of this even if Carson doesn't want to see it. The solution begins with greater oversight of the sector we have. It is interesting that Carson would rather reinvent the sector.

Carson paints a startingly inaccurate portrait of small foundation work, proceeding by assertion rather on the evidence. I challenge Carson to produce serious evidence showing that, despite having only 5% of the wealth, the smaller foundations are responsible for the majority of foundation abuses. Carson claims:
Philanthropies with $1-million or less in assets seldom have staff members, typically do not produce annual reports or grant-making guidelines, and usually offer no means by which grant seekers can contact them. What's more, most of those foundations do not join national or local professional associations so they do not often get exposed to training sessions and educational materials that would help them understand changes in laws governing nonprofit organizations and learn how well-respected, effective grant makers operate.

Where to begin? Smaller philanthropies do typically have little or no staff; they have competent volunteers, sometimes highly trained businesspeople or lawyers by profession, sometimes simply people that care to make a difference. They're volunteers - the people that built the voluntary sector, and Carson should show more respect. He conveniently omits the fact that many of his vaunted big foundations aren't the greatest about regular annual reports or connecting with grantees, and they wouldn't consider themselves any less a foundation for opting not to publish an annual report. Carson's claims would be laughable if they weren't so gallingly self-serving. Carson doesn't need to trumpet the value of the Council by denigrating the contribution of hard-working, passionate volunteers who might not have the time or resources for the Council's annual conferences and the like. After seeing his op-ed, many foundations may have just found the reason why they avoided such places. He just told smaller grantmakers and the organizations that serve them, the Association of Small Foundations, the National Center for Family Philanthropy, and dozens of other infrastructure organizations, that they're all simply not doing a good enough job. Carson just told 70% of the nation's foundations to go to hell, that they don't know what it is to be a "well-respected, effective grantmaker."

I'm not so sure the larger grantmakers do either, though. Remember the man who paid for his daughter's wedding with foundation assets? The Paul & Virginia Cabot Charitable Trust, The Bielfeldt Foundation, The Kimbell Art Foundation, the James Irvine Foundation, The James Beard Foundation, foundations at the middle of the scandals, these weren't small foundations. Read this. Smaller foundations were not the target of so much of the media scrutiny of recent years. Again, I challenge Carson to provide serious evidence that asset size has anything to do with recent foundation abuses.

True, creating a $1-million floor for foundations wouldn't prevent people from giving, but it would prevent smaller grantmakers from participating in foundation discourse, a discourse that is increasingly professional, bureaucratic, and jargon-laden. Small foundations don't have a place in our high-falutin' foundation discourse, says Carson, what with our collaborative convenings, our targeted partnerings, and our social venture leverage. You may give generously through that precious donor-advised fund of yours or indulge in checkbook philanthropy, but you will never be quite the grantmaker we are. The condescension is appalling. Pat the smaller grantmakers on the head, and send them off to bed. Leave philanthropy to the philanthropoids. I'm sorry but philanthropy is far too precious to be left to the likes of Carson.

Carson wants to codify the difference between professionalized, organized, big money philanthropy and small-scale, volunteer philanthropy, allow the big foundations to retreat from the vitality and responsiveness that 50,000 new and different voices would provide. This is readily apparent at the end of Carson's piece where he demonstrates that experts say it's not worth it to create a foundation with less than $1 million. Instead of allowing people make their own philanthropic choices, Carson, knowing that there's no good reason to exclude smaller grantmakers, now attempts to say that they should exclude themselves. It's in your interests, Carson says, not to give as a foundation. The professionals say so, says Carson.

It's akin to telling women or blacks they shouldn't be allowed to vote because it would just be too hard for them. They're not up to the privilege. If women and blacks were uneducated, that wasn't their fault; they were systematically denied educational opportunities. Similarly, if smaller foundations aren't educated grantmakers, as Carson maintains, it's because people like Emmett Carson, with their baseless preference for larger, professionalized institutions, have routinely excluded them from mainstream philanthropic discourse to the detriment of the sector.

It boggles the mind that Carson is actually proud to restrict foundation status to the top 30% to the point of publishing this op-ed. Carson's $1-million floor would nothing but exacerbate claims that the foundation community is an isolated, elitist clique of well-to-do, arrogant, paternalistic technocrats - you know, like Carson. Carson ought to be wary of wanting to boot 70% of the foundation world. That 70% may respond in kind.

1 comment:

Thomas said...

In keeping with your conclusions, it might be worth Carson's time to remember that IRS enforcement now is a political non-starter, much like accounting practices for large corporations was at one point. However, it was not a corrupt small business that changed that--it was a set of large entities, like Enron, AAA, and Freddie Mac. Before he advocates booting the smaller 70% of philanthropies, he should make sure he has his own backyard in order, because it won't be the smaller organizations that draw public ire for wasting what little funds they have.

By the way, do you have a copy of the article that is not restricted to Chronicle subscribers? I'm afraid I've left mine lapse, since I only gave $999 thousand last year...