Part four of a five-part series American philanthropy is under threat. The current declines in municipal real estate alone might suggest to lawmakers to impose new taxes on endowments as a way of balancing depleted public budgets. But what a shortsighted idea! Private foundations are . . . private entities. And foundation endowments are private property held for the public benefit according to the donor’s intent.
Tax deductions for charitable donations were wisely established to provide an incentive to sustain citizen-to-citizen generosity. Deductible contributions do not, however, make foundation endowments any more “public” than are the homes of citizens who deduct their mortgage-interest payments from their taxes. The nation works on a rule of law.
Approaches promoted by the Greenlining Institute and the National Committee for Responsive Philanthropy would likely inspire foundations to give less, close down, or to move offshore.
Few citizens will thank legislators for reducing the number of foundations in their communities. In addition, if newly wealthy citizens see these punitive acts toward foundations, they are likely to step back from acts of voluntary generosity, including the creation of their own foundations.
Threats often provoke counterthreats. One defensive action has already occurred. Florida’s legislature has already declared its state a sanctuary state for foundations wanting protection from legislative incursions on the freedoms they have always had.
So I would encourage our legislators and advocacy groups to balance the many competing interests in the legislative process and act wisely to protect the future of our American philanthropic tradition so it can operate with optimism and idealism and even inspire new approaches to address the needs of American poor.
Capital is mobile. Many foundation leaders quietly warn that they are prepared to spend down their endowments and close their foundations if their time and money were going to be spent litigating the right to operate as private entities.
Others have begun to explore moving their foundations offshore in order to preserve their freedom. It seems strange for groups dependent on philanthropy to launch strategies based so plainly on “biting the [private] hand that feeds.”
American citizens are the most generous people on Earth. And we work best when we are free to respond to the call when our help is needed. Our generosity feeds mutuality and engenders patriotism. These values were important to Benjamin Franklin and Thomas Jefferson and they are just as important today.
Those of us in the philanthropic sector have a leadership opportunity to strengthen these values. We need to share our knowledge of our nation’s history and the role that philanthropy has played in the creation of our national prosperity under the rule of law.
We need our legislators and public servants to understand the contribution and the cultural importance of the tradition of generosity. In a time of fragmentation and politicization in public discourse, our country needs collaborative civic leadership from private foundations.
This work can gradually remind the nation of our Founders’ intent as expressed in the Declaration of Independence — our national mission statement, left for us to complete. This work can also reassert America’s most important power, her moral leadership.
I am hopeful that legislators will see the wisdom of rejecting any initiatives that threaten to weaken our philanthropic tradition. People of color who are leaders of philanthropies are a particularly important audience, because some of these leaders represent significant numbers of lower-income citizens. Philanthropy must be a partner, not a problem, for minorities and low-income people.
It is important, in this vein, to understand what freely offered citizen-to-citizen generosity has done over the last 230 years to help make the words of the Declaration of Independence a reality for Americans of all races and income levels.
We will look at the Declaration Initiative tomorrow.
Excerpted from “Generosity Unbound: How American philanthropy can strengthen the economy and expand the middle class” by Claire Gaudiani. She is a fellow of the American Academy of Arts and Sciences, and the author of four books on philanthropy.
