The Freedom of Charity

Posted: Mar 25, 2009 6:23 PM
The Freedom of Charity

The National Committee for Responsive Philanthropy just finished a two-day lobbying spree on Capitol Hill, waging another small battle in the growing war over the dwindling charity dollars available to America’s nonprofits.

At stake is the freedom of donors to choose who is on the receiving end of their generosity. A highly-publicized paper released this month by the NCRP detailed criteria for the “best” form of philanthropy, which amounts to the NCRP determining which groups of people are best suited to receive money or services from an organization.

“There's a trend toward regulation that's overreaching,” said Sue Santa, Senior Vice President for Public Policy at the Philanthropy Roundtable, which among other objectives, safeguards “the freedom of the sector to carry out diverse charitable goals and missions.”

Specific recommendations from the NCRP call for 50% of grants to be directed at marginalized communities, 25% directed towards advocacy and 5% of governing boards to be composed of people from “diverse” backgrounds. The NCRP claims that since charities are awarded tax subsidies, the “tax subsidies provided to donors and to foundations make the government and the public partners with philanthropists in pursuit of the public good.”

Critics have pointed out that many arts, educational, or cultural charities may by definition be in violation of NCRP’s guidelines. Their fears may become more urgent if Democratic legislators act on their stated skepticism towards the worthiness of specific causes – such as art museums – as the Philanthropy Roundtable claims. Some lawmakers “remain convinced that private foundations must be more heavily regulated to avert waste, fraud and abuse,” according to the Philanthropy Roundtable.

The NCRP maintains that their suggested regulations are voluntary, but its efforts on the Hill today and yesterday seem to signal a trend towards at least some legislative involvement. NCRP organized meetings between members of its organization and “Senators and Representatives in Congress” to advocate “around a host of issues, including itemized charitable deductions, the IRA Charitable Rollover, the excise tax and program-related investments.” A breakfast meeting was also held with Members of Congress, and NCRP’s stated intent is to “encourage Congress to view foundations as resources on key public policy issues.”

And even if the NCRP maintains that no official legislative action should take place, an organization that works side by side with NCRP does support codifying its philanthropic recommendations into public law. Greenlining Institute put its weight behind a bill in California last year that required charities to report race, gender and sexual orientation of the individuals and corporations they are involved with on every level. The bill didn’t make it through, but it did invite a frenzy of action in satellite locations and spur the dissemination of information by similarly motivated groups.

This philanthropy infighting may be inevitable. With a declining economy, less money for social services are available, and so turf wars over private donations increase. Combined with the high-profile Bernie Madoff scandal, which disproportionately affected non profit organizations, and an increasingly regulation-friendly Congress, the possibility of government regulation is a high priority item for free-market charity groups.