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Summit for Leaders Recap

ACR convened over 70 philanthropic and non-profit leaders in Washington D.C. to discuss public policy.

If donors are to retain their freedom to give, the philanthropic sector needs to speak up for itself. It needs to stand up for philanthropic freedom, demonstrate the effectiveness of private solutions for national problems, and showcase its results.

As threats to this freedom percolate in Washington and in state legislatures, philanthropic leaders came together in the capital to share the story of philanthropy with their members of Congress—and participate in a Summit for Leaders held on March 16, 2010, sponsored by the Alliance for Charitable Reform.

Session I: UPDATE FROM CAPITOL HILL

The Summit for Leaders opened with a legislative update from senior staff members for four prominent members of Congress: Jeff Hamond, Chief Economic Policy Advisor to Senator Charles Schumer (D-NY), Evan Liddiard, Chief Tax Advisor to Senator Orrin Hatch (R-UT), Amy O’Donnell, Chief of Staff for Congressman John Larson (D-CT) and Jonathan Traub, Chief of Staff for the U.S. House Ways and Means Committee.

At the request of the senior staffers, all comments were made off- the- record. Topics covered included:
• Prospects for health care reform
• Prospects for reinstating the estate tax
• Prospects for tax reform and implications for the foundation community

Session II: THREATS TO PHILANTHROPIC FREEDOM

Most of the morning was dedicated to a spirited conversation about philanthropic freedom and threats to it, starting with a look at one past threat that may emerge again.

Transparency
Wendy Garen, president of the Ralph M. Parsons Foundation in Los Angeles, highlighted greater calls for transparency from foundations as a major threat. She spoke about her experience with AB 624, a bill in the California State Legislature advanced by the Greenlining Institute in 2008 that would have called for foundations to disclose information about the race, ethnicity, gender, and, in early drafts, the sexual orientation of its board members, staff, and grantee leadership. “It was an outright attack on civic and cultural grantmaking,” Garen said. “It’s nefarious, because it’s not about doing a better job, it’s about political power.”

ACR and the Roundtable support the current level of transparency required by the IRS, but are concerned that demands for greater transparency may veil another agenda. John Tyler, general counsel of the Ewing Marion Kauffman Foundation, noted Greenlining’s admission that most of their revenue comes from litigation. Their efforts to gather diversity data from their targets (banks and foundations alike) are not done so much with a goal of transparency. “It’s with an eye toward –at best– public pressure; at worst, litigation and shakedown,” said Tyler.

Elizabeth Boris of the Urban Institute addressed this issue from a different perspective. “I think about the transparency needs of the sector,” she said. “If you stand by your mission and your values, there’s nothing to fear. I think Americans have a right to know what foundations are funding.”

Panelist Marcus Owens, an attorney at Caplin & Drysdale and former Director, Exempt Organizations Division, IRS, noted that the foundation sector should invest effort into educating policymakers; currently, they are not a known entity.

The transparency issue triggered a vigorous debate among attendees at the summit. “Transparency is frequently demanded and used by those organizations that are intending to misuse it,” said Heather Higgins of the Randolph Foundation. She argued that some philanthropic work is better done privately as it allows a greater freedom of action and shields donors from reprisal. That reprisal can range from heckling for supporting an unpopular issue to threats of harm for funding work on matters of national security.

Tyler summed up the transparency discussion with a riff on other panelists’ references to sunlight as a great disinfectant: “We now know that sunshine can cause cancer… Too much sunshine can be dangerous.”

Governing Board for Philanthropy
Boris and Owens both raised the idea of establishing a body or quasi-public board or licensing agency to accredit foundations and nonprofits and mandate best practices for the sector, much like the National Association of Securities Dealers.

Tyler expressed his skepticism citing historical evidence of the self-perpetuating nature of such agencies and the flawed notion that what works for a particular industry will work for philanthropy. “The ultimate effort with the securities industry is truly market based,” said Tyler. “Those issues don’t translate to the charitable sector. The charitable sector is so wonderfully diverse and pluralistic, that there’s a threat of overregulation, of one-size-fits-all approaches.”

Other issues discussed
Marcus Owens raised the lack of IRS regulation of electronic records, noting that foundations and charities have not been given appropriate guidance on how to handle such data. “The key is to come up with a policy, and then adhere to that policy.”

The categorization of what should be considered charitable and what shouldn’t be was a concern expressed by Garen. “‘Charitable’ is increasingly being defined by policymakers as services to the impoverished—and nothing else.” Such a narrow view excludes funding for the arts, higher education, animal welfare, environmental issues among many other causes that philanthropy supports.

Finally, panelists discussed the growing calls of public-private partnerships between foundations, nonprofits and government. This can cultivate among policymakers the notion that philanthropy exists to pay for services that government wants to mandate but not fund itself. “We’re not willing to tax ourselves to pay for the services that we would like to have for our communities, so let’s bring philanthropy, let’s bring the nonprofits and let’s see if someone else will pay for it,” said Boris.

The panel concluded with final thoughts on how the sector should prepare for the affects of these threats in the future. Foundations should be mindful, watchful, and engaged in regulatory, legislative and policy processes as they relate to the sector by lending their voice and support and building relationships with key lawmakers.

Session III: HOW TO TALK ABOUT PHILANTHROPY TO LAWMAKERS

The morning concluded with former Congressman Robin Hayes (R-NC) and communications expert Jonathan Gallagher offering advice on how to build relationships and communicate effectively with policymakers.

Gallagher offered these four tips

1. Talk to legislators but about them not about you; put your issues in terms that have meaning to legislators.
2. Create a “value intersection”: Demonstrate to them how what you want helps them achieve what they want for their constituents.
3. Listen to get to know your legislators thoroughly in order to understand what to communicate to them.
4. It’s an on-going communication, not single yes/no transaction.

These tips may take time to fully implement, but the investment pays off.

Representative Hayes also reminded attendees that foundations provide a benefit that government cannot; foundations identify needs and innovative solutions and enact them in a more quickly than government ever could.  Because of non-profits’ “unique” value-add,” he urged those at the Leadership Summit to communicate regularly with their members of Congress and create a lasting relationship that will be helpful to both the member of Congress and the foundation.

This final panel provided a great message for the ACR Leadership Summit:
The best way to protect philanthropic freedom is for leaders in the foundation community to share impactful stories of their work with policymakers and their staff.