Foundation Friday: ‘Fess up or pay up

Our colleague Jack Siegel is up in arms because some California foundations headed off legislative action on diversity issues by making additional grants to minority agencies. He regards this as extortion, and thunders that the foundations should have left the state rather than either comply with legislative demands for disclosure of their diversity [or lack thereof] or give grants to agencies the foundations wouldn’t otherwise have funded. Why? Because “Foundations are private corporations and their assets are private property.”

Piffle. Foundations are tax-privileged institutions whose tax privileges rest on an assertion that they’re operating in the public good. If they refuse to disclose the ethnic composition of their staffs, Boards and grantees, legislators can reasonably infer that the composition is tilted toward the white; from which they can further reasonably infer that minority communities might be underserved by foundations, in violation of the public good.

It seems utterly reasonable for foundations to say, “No, our lack of diversity doesn’t interfere with operation in the public interest, including the portion of the public interest that requires attention to matters of racial equity. And we’ll prove it, by funding additional agencies representing or serving the minority community.”

Confronted with a reasonable legislative demand that they ‘fess up or pay up, the foundations chose the latter. Perhaps that suggests something rather unattractive about the results of their much-touted efforts at diversity; but if the public doesn’t get the benefits of diversity, at least it gets the benefits of diversified funding. The Nonprofiteer salutes the California legislature for having built such a fine pair of horns for this dilemma, and for its success in impaling foundations thereon.

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