Imagine that the president comes knocking at your door. He informs you that when you took a mortgage interest deduction from your taxes last year, you received a federal subsidy.
As a consequence, you have to now meet new federal demands – renovating a kitchen, for example, would require union labor. The upstairs den would have to become a living room.
A group of liberal activists is trying to do just that to charitable organizations. The National Committee for Responsible Philanthropy (NCRP) outlined its plan in a March report called “Criteria for Philanthropy at its Best,” penned by a former staffer for the left-wing non-profit group Media Matters for America.
The NCRP report argued that “foundation dollars should be viewed as ‘partially public’,” and that “the generous tax subsidies provided to donors and to foundations make the government and the public partners with philanthropists in pursuit of the public good.”
The document’s original draft urged policymakers to use it as a blueprint for new laws on foundations, apparently to steer more of their money toward liberal non-profits.
For example, at least 50 percent of a foundation’s annual grant money would be required to go to non-profits that “benefit lower-income communities, communities of color, and other marginalized groups” and 25 percent to promote “advocacy, organizing and civic engagement to promote equity, opportunity and justice.”
Only after using half of the grant money to pay off these non-profits, could a foundation pursue its own goals as cleaning the Chesapeake Bay, curing sickle-cell anemia, or promoting the arts.
Such provisions, if made law, would command vast sums of foundation money toward liberal non-profits (think ACORN). Additionally, foundations would have no say in how the money would be used – it would have to go toward non-profits’ “general operating support” as opposed to specific projects. These two items represent a radical departure from what is done now at 80 percent of all charitable foundations.
Can foundations’ tax status justify such government meddling? The Washington-based Philanthropy Roundtable says no in its new report released today, “How Public is Private Philanthropy?”
In addition to the mortgage interest and other personal tax breaks, the report notes that government routinely grants research tax credits but “does not thereby claim to be entitled to determine the nature of the underlying research, strategies for its exploitation…or choices about whether the board should have five or nine directors.”
The laws governing 501c(3) foundations already require them to “abstain from political campaigns and substantial lobbying,” and to disclose their donors’ information in filings with the Internal Revenue Service. For foundations seeking to improve the nation in a wide variety of ways, that should be enough.
Even some liberals have objected to NCRP’s attempted shakedown of America’s foundations. But Pablo Eisenberg, a member of NCRP’s board, followed up on the group’s March document by making more explicit threats of bringing Congress down on foundations’ heads.
“If foundations don’t move soon to satisfy the concerns of their grantees and the public,” he wrote in yesterday’s issue of the Chronicle of Philanthropy, “they will face a flurry of efforts to influence Congress by nonprofits no longer willing to wait for grantmakers to make changes on their own. Foundations should not forget that, while they have the money, nonprofit groups have the power of numbers.”
That’s the Tony Soprano fundraising pitch: Nice foundation you have there. It would be a shame if something were to happen to it.
David Freddoso is a commentary staff writer for The Washington Examiner.
