It seems that foundations are destined to relearn the lessons of the past. During the McCarthy-era hearings, in response to questions about the openness and transparency of foundation activity, the chair of the Carnegie Corporation of A new Florida law heralded by its supporters as protecting the freedom of private foundations has done just the opposite: It has raised questions about what values foundations operate under and thereby could raise new limits on the tax deductions enjoyed by donors to those foundations. These words lose all meaning unless these organizations speak forcefully to the dangers inherent in the
Emmett Carson, head of a
In the years since, foundations have largely embraced the values of diversity, accountability, and openness as a way of recognizing and protecting the enormous freedom and flexibility that foundations enjoy to do their work.
The new law prohibits the State of
Clearly, government should not be in the business of deciding who sits on foundation boards or which nonprofit organizations receive grants based on demographics. However, the idea that government is prohibited from requesting diversity data as it relates to board composition, staffing, and nonprofit grantees undermines the promise that foundations have made to the American public that they are committed to diversity, inclusiveness, accountability, and transparency in their operations.
Unchallenged, the
That is because the new law calls into question what had heretofore been accepted about the virtue and value of transparency as promoted by key organizations that set standards for foundations: the Council on Foundations,
For example, the Council on Foundations, which represents about 2,000 foundations, states: “In carrying out their philanthropic activities, our members embrace both the letter and spirit of the law. Our members seek diversity and inclusiveness in order to reflect the communities they serve and to ensure that a range of perspectives contribute to the common good and the development of their mission in a changing society.”
Similarly, the
And Independent Sector, which represents charities and foundations, advises “open and timely sharing of financial, governance, and program information.”
The
Imagine if a law such as the new
Would we think that banks should not be required to disclose data about the racial or gender demographics of customers who received or were denied loans? Would we accept a law that prohibited government from asking these institutions to collect and publicly disclose racial, ethnic, gender, or socioeconomic data? Would we allow these institutions to suggest that such data could be revealed only with the written permission of those involved? Do we really think that such a perspective serves the public interest and ensures effective best practices for foundations or any industry? The answer is of course not.
Part of the problem is an unwillingness by some private foundations to recognize that a foundation’s assets are not private but instead money for the benefit of society. It is not unreasonable to assume that, in exchange for receiving a tax benefit, individuals accept responsibility to direct charitable funds to broadly benefit all of us.
Voters—and, more important, their elected representatives—are unlikely to continue to provide charitable tax deductions to institutions that have little commitment to transparency and accountability. Some policy makers have already suggested that the current tax deduction for charitable giving be limited so that more money is available for government programs. Unfortunately, the
At a time when the public is demanding ever greater levels of transparency and accountability from business, from government, and from philanthropy, this law suggests that foundations are above requirements to share any information about the demographics of their board, staff members, or the nonprofit organizations that receive grant support. Such a law simply raises the question for all to ask, which is what are these powerful and influential institutions hiding? Are they so out of touch with the direction of society that they believe the public is requiring less rather than more disclosure?
For decades, foundations have successfully used their stated commitment to the values of diversity, openness, and accountability to avoid onerous federal and state regulation and legislation. Our success has occurred even though research from the Council on Foundations and
Unfortunately, the