I welcome attention to my article of a few weeks ago by Mr. Aguilar, executive director of the Greenlining Institute, and Mr. Mirken, its media relations coordinator. Their response, however, seems to bypass my point. I wrote that the practice of “greenlining” threatens the voluntary character of philanthropic giving. And faced with that threat, many will give less or not at all, or take their giving someplace where they can choose their beneficiaries rather than have them chosen by someone else.
Greenlining in this context is the effort to force philanthropic foundations to have a certain percentage of minority members on their boards and staffs; to give a certain percentage of grants to minority-controlled organizations; and to ensure that a certain percentage of grants are directed to programs that serve minority communities. My commentary was based in large part on Claire Gaudiani’s new book, Generosity Unbound. Greenlining supervenes the principles of philanthropic giving that have been in place for some two hundred years in the U.S. It breaks the trust that donors have placed in foundations to carry out their lawful wishes. Under greenlining, their wealth is diverted for purposes they never intended, and future philanthropists would find their choices constrained.
Greenlining is a close parallel to what ACORN did in the 1980s when it exploited the Community Reinvestment Act to force banks to make more loans to low-income and otherwise unqualified borrowers. The banks, with the intervention of Fannie-Mae, eventually made peace with the practice of subprime mortgages. They were able to push the high-risk mortgages off on others as an “investment.” But that story didn’t come to a happy ending, and neither would the proposal put forward by the Greenlining Institute to shake down the philanthropic world. ACORN and the Greenlining Institute are both instances of public advocacy aimed basically at plundering institutions that the advocates think can afford it.
Greenlining might succeed—in the short run. It already succeeded in California to the extent that in 2008, nine separate philanthropic foundations calling themselves the Foundation Coalition “voluntarily” set aside an additional $30-million to assist minority-led organizations in the state. The price of such success, however, is certain to be negative in the longer term. Foundations ought to be free to “greenline” themselves if they want to but the aim of the greenlining movement has not been to persuade the philanthropic world; the aim has been coercion via law and regulation.
Mr. Aguilar and Mr. Mirken spend much of their essay defending the concept of “diversity” and praising those who agree with them that “diversity” should be considered a great boon to fund-raisers and others. This opens up a topic not even glanced at in my original article. I gather Mr. Aguilar and Mr. Mirken have spent some time doing opposition research and discovered that I published a book in 2003 titled Diversity: The Invention of a Concept, in which I offered an anthropological history of the idea of “diversity” and a critique of some of its contemporary uses. I’d be happy to say more about diversity as a general topic at an appropriate point, but I don’t want to concede to a tactic aimed at changing the subject.
Is coercive greenlining good for American philanthropy? Is it good for higher education? Is it good for America?
I don’t see anything in Mr. Aguilar’s and Mr. Mirken’s essay that defends this kind of greenlining. They point out that the president of Stanford University likes “diversity.” So? Do we therefore conclude that all philanthropic foundations in the U.S. should be forced to pay “diversity” dues according to the formula that the Greenlining Institute has devised?
As to Stanford’s commitment to “diversity” having strengthened its fundraising, perhaps. I wouldn’t stake very much on the protestations of any university president when it comes to this matter. Most of them owe their jobs in part to their success in persuading search committees that the pursuit of diversity is their fondest wish, and virtually every university in the country embraces diversity as a “positive value.” A look at The Chronicle’s 2010-2011 Almanac issue shows college and university endowments of $250-million or more with mostly double-digit losses for 2009. Stanford registered a 26.7-percent decline. Of course, the stock market and general decline in investment values were at work. The decline had nothing to do with Stanford’s embrace of “diversity.” But that’s my point. Factors much larger than the fashionable ideological posturing an institution adopts determine how well a university attracts funds. Embracing “diversity” might attract some donors and deter others. I would suppose the key reason why people give to Stanford is because they admire its academic excellence. It stands out as exceptional in that regard. It is indistinguishable from every other college and university when it comes to “diversity.”
If greenlining is such a good idea and so many organizations are willing to embrace it on its merits, why does the Greenlining Institute support coercive legislation to force it on philanthropic foundations?
Mr. Aguilar and Mr. Mirken do have an answer: “[B]ecause [philanthropic foundations] are exempt from federal (and usually state) income taxes, charitable foundations receive a massive subsidy from taxpayers.” It is worth looking at that answer closely. It amounts to saying that philanthropic foundations don’t really own their own resources. Because they receive favorable tax treatment, their assets really belong to the public. The foundations have their wealth on sufferance from the federal and state governments that allow them to hold on to dollars that otherwise belong to the government. That’s not a novel argument, but it is one that the American people have long and emphatically rejected.
We don’t hold wealth at the sufferance of the government on the condition that we spend it as the state and federal bureaucracies stipulate. That’s one model of government, but so far, not ours. Private property is still private in the United States, even when it receives favorable tax treatment. Take the favorable tax treatment away and fairly quickly the private philanthropy will wither too.
We have made a choice as a nation that we like what private philanthropy can do. It has often out-performed government-sponsored research and public welfare programs. But it is a choice and not a fact of life and it cannot survive a great deal of state intervention. Those who doubt that can examine the record of philanthropic foundations in Europe and elsewhere. It won’t take long.
The diversity argument is truly a red herring. If it is right to coerce philanthropic foundations to support the Greenlining Institute’s agenda, it will be just as right to impose a tax on philanthropies for any number of other causes that politicians decide are public priorities. They can be tree-lined to support sustainability; vet-lined to support military veterans; road-lined to support highway construction; gun-lined to support Second Amendment rights, and so on without end. Except there will be an end. Men and women of wealth will just decide there are better ways to support the values they care most about.
2 Responses to Who Owns Philanthropy?
chuckkle - December 7, 2010 at 7:45 am
Where is the coercion here? Aguilar and Mirken say they are asking for data. To have that information available to the public doesn’t force any foundation to do anything. Wood’s fevered fantasies are too much. Watch out for bogeymen!
Chuck Kleinhans
marktropolis - December 7, 2010 at 9:05 am
One man’s coercion is another man’s democracy. We have on the one hand, the Greenlining Institute, whose mission is “to empower communities of color and other disadvantaged groups through multi-ethnic economic and leadership development, civil rights, and anti-redlining activities.” On the other hand, we have Peter Wood, who has made a career out of making the argument that diversity doesn’t matter, and IHE’s spend too much time and energy on it.
And let’s not forget that when all else fails, it’s ACORN’s fault. You always have to remember that the whole housing debacle (the one we’re still in the middle of) was caused by ACORN forcing banks to give money to folks who didn’t deserve it. Of course, that argument only works if you conveniently forget the fact that the a good chunk of the housing debacle had more to do with people who could afford their mortgages (i.e., relatively wealthy) over-extending their equity (because the banks let them) and then the entire credit structure evaporated because Wall Street was having too much fun with credit default swaps. But I wouldn’t expect a self-described anthropologist to have a sturdy handle on the ins and outs of Wall Street.
It’s interesting to me that Wood wants to punt on the discussion of the importance of diversity, even though that’s what the entire discussion pivots on. Obviously, if you have a fundamental disagreement with the entire notion of diversity, you’re going to have a problem with anyone who thinks differently. And vice versa (obviously). But it does all come down to evidence. And Wood doesn’t have any.
What I took away from Greenlining’s response was that they believe (and they’ve got Fortune 500 companies to back them up) that diversity is good for business. And that’s even leaving aside for the moment that there’s a social justice argument. Diversity pays for itself. And there’s evidence for that – both in IHEs and in traditional businesses.
And since Wood doesn’t have any evidence, he has to trot out ACORN. Please, Mr. Wood, before you go down that street again, do a little bit of research on the current economic crisis, and try to to rely on those talking points from Fox.
You want philanthropists to have the freedom to spend their money how they want to. Until they want to spend their money on something you don’t like. Maybe you should pull together a set of funders who want to focus solely on conservative (i.e. anti-diversity) causes? Oh that’s right, they already exist – it’s called the Philanthropy Roundtable.