Foundation Friday: What goes up must come back but apparently what goes in needn’t come out

Interesting report noted on PubHub, the Foundation Center‘s publications site: giving by community foundations rose 13-plus percent last year.  This is cause for celebration til we note that giving TO community foundations rose 45 percent. 

So are community foundations treading in the footsteps of Harvard, which continues to seek endowment while sitting on $35 billion in endowed funds already–a number so huge that its expenditure would make tuition unnecessary?  And/or are the gifts to community foundations all in the form of quiescent donor-advised funds, that is, money put aside for tax purposes but not (or barely) expended for charitable purposes?  And if so, is it likely that Congress will start to put some brakes on the breaks the tax code offers to the said funds?

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2 Responses to “Foundation Friday: What goes up must come back but apparently what goes in needn’t come out”

  1. Rick Cohen Says:

    You’ve raised a crucial issue that no one seems willing to address in philanthropy. The question of spending rates of univeristy endowments and foundation endowments is an important issue of public policy that no one wants to seriously tackle, and that applies to both political wings. Among the conservatives, the notion of “mandating” a higher spending rate (or any spending rate) for endowments is close to anathema. Among liberals, they fall prey to thiking that a payout rate of 5% is a strategy of the right wing to force “liberal” founations to spend down and go out of business. There are foundations and their consultants who have turned the 5% minimum spending rate on private foundations (remember, community foundations face NO minimum spending rate) into something akin to a biblical commandment (some actually think 5% is too high a spending rate, and realize that 5% of assets “spent” doesn’t mean 5% of assets “granted out”, since spending includes most of foundations’ admin. If progressives are concerned about issues such as this nation’s concentration of wealth (whether personal, corporate, or university/foundation tax-exempt), if progressives buy into even half of the transfer of wealth stuff coming from the likes of Schervish and others, if progressives remember that conservative foundations routinely spend well about 5% for their nonprofit causes (because they put their money into the hands of groups carrying their ideological message), they ought to be concerned about the massive amount of foregone tax dollars sitting in tightly guarded university and foundation endowments.

  2. Nonprofiteer Says:

    If progressive foundations actually think an increased payout is a plot by the right wing to put them out of business, the crisis of math education in this country is even worse than we thought! It would take a damn long time to spend down foundation assets even at twice the current rate; and, as you point out, we’d make a lot more progress if liberal foundations spent their money as readily as conservative ones do.

    The university situation seems even less defensible. Wouldn’t it be amazing if Harvard formed the Harvard University Foundation and paid out 5%–or even, gasp, 10%–of its endowment to institutions of higher learning that are less flush than the Crimson?

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