- The Washington Times - Wednesday, April 15, 2009


Americans are unrivaled in their generosity. In 2007, Americans gave away a staggering $306 billion. That includes more than $100 billion for religious organizations, $43 billion for education, nearly $30 billion for human services and $23 billion for health-related charities.

Private and community foundations accounted for $42.9 billion of that giving and also supported a wide range of nonprofits, from $10 billion for education-related programs to $2.6 billion to support environmental and animal welfare efforts. American giving reflects the rich diversity that makes our country great.

Incredibly, in this time of economic crisis, the underpinnings of our charitable sector are under assault by Washington lawmakers and certain special-interest groups. They want to regulate donors in ways that would have at least three dangerous consequences:

(1) It would politicize philanthropy, making it subject to groups with political power and influence.

(2) It would wreck philanthropy's independence both as a check on government and as an alternative to government funding.

(3) It would destroy any incentive for donors to create foundations.

Simply stated, philanthropy operates best when it is free, independent, creative and diverse. This intrusive movement will destroy those underpinnings.

For example, President Obama proposes reducing the charitable deduction for those with high incomes, a most ineffective bit of class warfare because the poor will lose as wealthy contributors scale back their giving. Last year, Rep. Xavier Becerra, California Democrat, compared private foundations' tax-exempt status to a “$32 billion earmark” and ominously warned of his obligation to ensure that those funds advance “the public good.”

Recently, the National Community for Responsive Philanthropy (NCRP), a self-described watchdog for foundations, released a report, Philanthropy at Its Best. It outlines criteria for evaluating foundations based on NCRP's conception of how resources are “best” used. Many of the recommendations reflect NCRP's ideological bias and a flawed assumption that there is one best approach to philanthropy - in effect “one size fits all.”

For example, NCRP would require all foundations to give at least “25 percent of its grant dollars for advocacy, organizing, and civic engagement to promote equity, opportunity, and justice in our society.” NCRP also would require all foundations to designate at least 50 percent of their grants to “lower-income communities, communities of color, and other marginalized groups broadly defined.” These two requirements alone would drastically alter and reduce charitable giving.

Increasing the amount spent on “advocacy” and soliciting government for policy changes means less charitable resources available for other worthy enterprises, such as disease-related research, educational initiatives and the arts.

Moreover, for many foundations and donors, government advocacy is contrary to their core beliefs. Indeed, many give because they think it's not the job of government - but of private citizens - to assist people in need. Whether or not one agrees, the fact is that donors deserve the right to try their own solutions with their own resources and should not be strong-armed into funding government activists.

Abating poverty is one of the primary goals of much of philanthropy and a focus of numerous foundations. Yet addressing poverty isn't the only role for philanthropy. Indeed, the governing law providing for a charitable deduction specifies a host of qualifying activities - from giving to religious institutions to social services to health programs. Lawmakers' intentions were to support a broad range of activities.

NCRP superficially acknowledges this but offers the 50 percent requirement nevertheless. Yet who determines what activities most benefit society's poor? Many activities not directly related to serving the poor have important long-term benefits for the disadvantaged.

Investment in disease research, for example, may not be viewed naturally as benefiting low-income communities, but a cure for a major illness benefits everyone and often particularly low-income communities, which are more vulnerable to many ailments and have less access to cutting-edge treatments. Programs encouraging entrepreneurship have effects that ripple through society: The entrepreneur's race, gender or background doesn't matter if the result is a thriving business and new jobs.

We don't need to agree on society's most pressing problems or the most promising solutions. We just have to respect one another's judgments. NCRP is itself a private charity that uses its resources to evaluate what other charities do. Personally, I believe other activities would have more impact. However, it is the organization's donors, not outsiders, who have the right to judge.

William E. Simon Jr. is a businessman, philanthropist and co-Chairman of the William E. Simon Foundation and of William E. Simon & Sons, LLC.

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