Thursday, January 8, 2009

I'm from the government, and I'm here to help you

It's astonishing, but some people are willing to cede control of just about everything to the Federal government.

Martin Kearns cites a nameless foundation staffer who suggests that the Obama administration should use the coercive power of the Internal Revenue Service to force U.S. foundations to spend ten percent of their assets in each of the next three years. Most are currently granting about five percent annually. The Chronicle of Philanthropy recaps Kearns' proposal and invites your comments.

There are several problems with this kind of panicky, reactive policy:
  1. Honoring donor intent. In many cases, donors have given assets to foundations with the express intent of preserving the corpus and spending only a portion of the earnings, thereby assuring giving ability in perpetuity. Spending ten percent of asset value annually, even for a limited period of time, would violate the donor's wishes.
  2. Ownership of the money. Claiming a need to further supplement the Federal government's apparently limitless "economic stimulus" resources, this anonymous person glibly suggests that a great deal of cash is lying unused in foundation safe deposit boxes. Foundations hold these funds in trust, with specific instructions on how to invest and grant the money. These assets do not belong to U.S. taxpayers, nor do Federal bureaucrats have any right to control how or when the money is spent.
  3. Federal control. Where in the United States Constitution does it say that the Federal government is the ultimate arbiter of all things philanthropic? (Hint: The correct answer is "Nowhere.") Donors and the foundations they create/support, with rare exceptions, make a huge difference in the betterment of our society. It's laughable to suggest stronger Federal involvement in the charitable sector. The government can barely manage to provide me with a driver's license and fill potholes. Even those functions could probably be done more efficiently by private, for-profit businesses.
The government should leave donors and foundations alone. Every American citizen has the right to use philanthropy for the common good - without Federal interference.

For his/her own good, I hope this nameless foundation officer remains anonymous and enrolls quickly in a Principles of Philanthropy and Development course.

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