Generosity, Trussed

This article was originally published on the Chronicle of Higher Education's Innovations blog.

American higher education depends profoundly on philanthropy, and whatever threatens philanthropy threatens American higher education. The threat that perhaps looms largest at the moment is the steep drop in interest rates and the declining value of the portfolios of many foundations. But there is actually a more serious threat that was much in the news before the great banking and Wall Street fiasco and hasn’t been discussed much since: the effort to force foundations to “greenline” their philanthropy.

Greenlining in this context is essentially an effort to intimidate foundations into channeling a higher percentage of their resources to “minority” concerns. Greenlining also calls on foundations to add members of minority groups to their boards and staffs. It bears some similarity to the tactics that ACORN used to bully banks into giving loans to unqualified borrowers. We know how that worked out.

The effort to greenline foundations surfaced in 2005 when the California-based advocacy group the Greenlining Institute published the first of several reports, "Fairness in Philanthropy." The theme enunciated in the report and expanded over subsequent iterations is that minorities are scanted by foundations. By the Greenlining Institute’s logic, minority-led nonprofits deserve a share of every foundation’s philanthropy, a greater number of individual grants, and a higher percentage of total disbursements. The Greenlining Institute itself dates back to the 1970s and used the concept of “greenlining” (investing in low-income, minority, and disabled communities) in several other contexts before setting its sights on philanthropic foundations.

Anyone can demand anything. The Greenlining Institute’s agenda wouldn’t warrant a further thought except that in 2008 a California assemblyman and a state senator introduced a bill, AB 624 (in the California Senate) that would have required foundations that have $250-million or more in assets to report the racial compositions of their boards and staff, and to report on their grants to organizations serving minorities and organizations led by ethnic minority boards and staff.

AB 624 didn’t pass but the mere prospect that it would be considered was sufficient to scare nine private foundations, calling themselves the Foundation Coalition, to set aside an additional $30-million to assist minority-led organizations in California. And in the wake of this a new national organization emerged to further the greenlining agenda, the National Committee for Responsive Philanthropy (NCRP).

The story has fallen from the headlines but we have a timely reminder of it in the opening chapter of Claire Gaudiani’s new book, Generosity Unbound.  As Gaudiani, former president of ConnecticutCollege, sees it, the legislation and the Greenlining Institute’s broader goals would undermine the guiding spirit of private philanthropy. Public giving, she says, is driven by “the combination of personal virtue and personal freedom.” Greenlining etiolates both. Greenlining means that someone else—someone other than the donor—gets to decide what causes are worthy to support, so the “virtuousness” of the act is bleached out. And greenlining likewise drains the lifeblood of personal freedom from the act of giving. Donors would find a significant portion of their bounty directed to organizations and causes outside of and sometimes against their preferences.

The world of higher education readily supplies examples of what happens when donors feel their preferences have been superseded.  In 1995, Yale returned a $20-million gift to Lee Bass after a long dispute over how the University would implement a new program in Western civilization. The Robertson family took back a portion of Maria Robertson’s 1961 gift to Princeton of $35-million on the grounds that the University had been misallocating the funds. Vanderbilt tried and failed to change the name of a building deeded to it from the United Daughters of the Confederacy to escape the awkwardness of having a “Confederate Memorial Hall.” A foundation in California sued UCLA for spending on other ailments the money it had contributed for a chair in cardiothoracic surgery.

Philanthropy depends on trust. When the beneficiaries interpret the rules a little too warmly to their own interests, that trust can be forfeit. How much more would it be forfeit if we told the donors that they have no say over how to disburse a significant portion of their funds?

The Greenlining Institute sees its work as a matter of “democratizing philanthropy.” But the practical effect of its proposals would be to send a lot of foundations and would-be philanthropists looking for out-of-state or off-shore alternatives. So is greenlining foundations a bad idea that had its small moment on the stage and is now gone for good?

Maybe. But our economic hard times have given rise to what could be a second wave of greenlining fervor. Foundations and the wealthy Americans who contribute to them are a tantalizing target for all sorts of people and organizations that feel the pain of declining support from state budgets. Some $300-billion flows voluntarily from Americans to non-profit charities. The idea of capturing some of that philanthropy by means of legislative intervention is awfully tempting. That’s one way to think about the current debate in Congress over extending the Bush-era “tax cuts” on those who earn more than $250,000. Whatever gets taxed away certainly won’t be given away.