Our colleagues at Philantopic have been posting major foundations’ statements on the current economic situation. With the happy exception of the Gates Foundation, the words “grow our payout” are conspicuous by their absence from these statements–and even Gates modifies the phrase with the unwelcome word “less.” Typical of the statements is the one from the Voldemort Foundation [name changed to protect the guilty], which leads with the all-important question, “How is the Foundation doing?” As though the health of our nation’s repositories of unspent private wealth really were–or should be–everyone else’s most pressing concern.
Which leads the Nonprofiteer to wonder, not for the first time, why our sector pays any attention to anything written by a foundation executive which omits the words “Pay to the order of.” If now is not the time to increase foundation payouts–when governments are strapped, businesses are shaky and individuals are tapped out–when would be? And if it’s never time to spend more than 5% of charitable money on charity, what is the justification for the foundations’ tax-favored status?
This point was made several months ago more calmly and thoroughly by Steven M. Teles at the Reality-Based Community (a broad-spectrum policy blog edited by the Nonprofiteer’s brother). He was right then, and he’s righter now, when he pointed out that increased payouts are only a bad idea “if your basic mission is to stay in business forever. That’s not the purpose of charitable foundations. Their purpose is to support groups and causes that reflect the objectives of those who endowed the foundation in the first place.”
Mr. Teles advocated “shaming” foundations into assuming this component of their responsibility. Absent any evidence that foundations feel shame, the Nonprofiteer advocates taxing them into it.
If not now, when? And if not the foundations, who?