Tough questions in store for foundations

By Rick Cohen

Congressional attention to nonprofit accountability isn’t quite over.

The House Ways and Means Committee is rumored to be scheduling hearings this spring to ask nonprofits to demonstrate why they merit their tax-exempt status and what they do to help the poor.

A Committee staff attorney working for the chair, New York City Democrat Charles Rangel, suggested these hearings would be “more sympathetic” with nonprofits than the scrutiny led by Republicans before the elections.

Nonprofits shouldn’t be sanguine that Rangel won’t ask hard questions and expect answers about how nonprofits, particularly foundations, deliver for the constituencies he has represented in Harlem and nationally.

His Senate counterpart, Montana Democrat Max Baucus, has surfaced the concerns of rural nonprofits, and foundations are responding.

Why wouldn’t Rangel do the same?  What might he raise as his agenda for U.S. philanthropy?

Rangel might not be assuaged by statements of concern and commitment from foundation witnesses, but might question broader patterns of foundation grantmaking and governance around his longstanding concerns:

* The proportion of foundation grant dollars — from some 1,150 larger foundations counted by the Foundation Center — targeted to economically disadvantaged populations dropped from 20.3 percent in 2004 to only 15.7 percent in 2005.

* In 2000, $216.7 million in grants from larger foundations went to civil rights organizations; in 2005, despite a massive increase in overall foundation grants, grantmaking to civil-rights organizations dropped to $190.4 million.

* Even though total foundation grantmaking increased hugely between 2002 and 2005, grant dollars for African-Americans rose minutely from $307.4 million to $315.5 million.  Between 1998 and 2005, the proportion of larger foundations’ grant dollars for African Americans has decreased from 3.5 percent to 1.9 percent.

* Larger foundation grantmaking for employment and workforce development programs dropped in absolute dollars by 22.5 percent, from $147.6 million to $114.4 million, between 2001 and 2005.

* Survey data from the Council on Foundations and from various corporate sources shows foundation boards as less diverse in racial and ethnic terms than the boards of Fortune 100 and Fortune 500 corporations. African Americans, for example, represent 6.7 percent of foundation board members, compared to 9.1 percent of Fortune 500 boards and 10 percent of Fortune 100 boards.

Rangel, who is coming to the end of a very long and distinguished career in public life, is unlikely to satisfied with some good foundation success stories and a few strategic grants to his favorite local charities.

He’s likely to ask foundations to ante up, not for Harlem, but for the economically disadvantaged and disenfranchised throughout urban America.

Rick Cohen is national correspondent for The Nonprofit Quarterly.

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