Tuesday, October 14, 2014
by Ronna Brown, President, Philanthropy New York and Leisle Lin, SVP, Finance & Operations, Alfred P. Sloan Foundation and Chair of the Board, Philanthropy New York This post was written as a Letter to the Editor for recent New York Times op-ed, "A Better Way to Encourage Charity."
Ray D. Madoff’s “A Better Way to Encourage Charity” (October 5, 2014) contains several inaccuracies masquerading as statements of fact. The excise tax, designed to fund the IRS nonprofit division, in its current form limits the ability of foundations to easily respond to disasters by giving more in a short period. The revenue neutral proposal to flatten the tax will support greater giving during times of crisis.
A more critical error underlies Madoff’s entire piece and is stated outright in the last line of the piece, “the purpose of foundations is not to live forever, but to live a life with meaning.” In fact, our laws allow, and many say encourage, foundations to live in perpetuity, so that their good work does not artificially come to an end before the social problems they are dedicated to addressing abate.
Many foundations regularly pay out significantly more than 5 percent, and many spend down their assets and eventually close shop. Philanthropy New York, the regional association of grantmakers in NYC, has several innovative members like Atlantic Philanthropies that do just that. But we also have many member organizations like The Rockefeller Foundation, the Russell Sage Foundation and the Altman Foundation that have recently celebrated centennials and continue to do essential work decade after decade.
None of these foundations are charity-starving fiends. Philanthropy New York conducted a symposium last March called “What Is the Case for Foundations Living in Perpetuity” in which leaders from Edward W. Hazen Foundation, Rockefeller and Altman noted their reoccurring reflections on whether or not they should immediately spend out more assets to address pressing societal challenges. But their boards conclude, time and time again, that the long arc of social change demands organizations – and dedicated funds – over the long haul. We all benefit from the long term fight of foundations like those, like the Ford Foundation, and many others, who work tirelessly, over long periods of time, to address inequality, poverty, and the forces working against democracy as well as improve the quality of life here and around the world.
Ronna Brown
President, Philanthropy New York
Leisle Lin
SVP, Finance & Operations, Alfred P. Sloan Foundation
Chair of the Board, Philanthropy New York