Charitable Views From Congress? : Nonprofit Groups Urged to Promote Their Good Works

Congressmen don’t think much about charities--and when they do they don’t think much of them.

Rockefeller Foundation President Richard Lyman, who holds that view, was in town last week to urge that not-for-profit organizations actively promote their good works to Congress.

Foundations, museums, private colleges and other nonprofit organizations depend on tax-deductible donations. Lyman said that whether the winds of tax simplification blow well or ill for organized philanthropies in general and foundations in particular will depend on how charitably they are viewed by Congress.

Lyman, a historian who was president of Stanford University in the ‘70s, outlined his views in the keynote address to the Southern California Assn. for Philanthropy’s annual conference. His audience was composed of executives from foundations and corporations whose job, like Lyman’s, is to give away other people’s money.

Lyman said foundations are divided over whether to take an activist stance and lobby for favorable legislation or to maintain a low profile, believing “benign neglect” from Congress is best.

‘On Receiving End’

“When foundations become involved in politics they are usually on the receiving end of some attack. . . . Usually because one or more of us (grant makers) has done something that angered one or more of them (lawmakers),” Lyman said.

With 22,000 private foundations, “it is not difficult to find someone who behaves cavalierly or imprudently,” he said.

To critics on the left, he said, foundations are “pillars of the Establishment” opposing all but marginal changes in order to sustain the power of the wealthy. To critics on the right, foundations are the “artful architects of the welfare state,” Lyman said.

“Both sets of critics can find support for their positions,” he said, adding that he believes foundations reflect a diversity of values and interests that serve democratic notions of pluralism.

Except for a few big names, foundations are little known to the public and lawmakers, Lyman said. (Last year individual Americans made $53.9 billion in tax-deductible gifts while foundations gave away more than $3 billion.)

Lyman noted that the first chapter in philanthropic critic Waldemar Nielsen’s 1979 book, “The Endangered Sector,” is titled “The Sector Nobody Knows,” and that Urban Institute economist Lester Salamon, who has probed how Reagan Administration actions affect nonprofits, refers to the “invisible sector.”

Can’t Expect Support

“So long as such sobriquets are appropriate, we cannot expect people to rise to our defense when our interests are threatened,” Lyman said.

He said some congressional critics of foundations want to “punish” them by changing tax laws that affect both gifts to foundations and how foundations handle and disburse their funds. But Lyman said such proposals will not hurt the foundations so much as damage nonprofit organizations that need foundation grants because they will make less money available.

Lyman said that while the people who run nonprofit organizations see themselves as dedicated to the public good, to Congress they are just another special interest.

Organized philanthropies are perceived as special interests, he said in an interview, because of “a catastrophic and perhaps irreversible decline in civic mindedness in this country, a decline in the belief that anyone may be speaking for anything broader than the interest he or she represents.”

Lyman noted the “sober estimates” that nonprofits can expect a 21% drop in donations under the Treasury Department’s tax simplification. But he said this was an overall average and that some nonprofits would fare far worse.

Would Prove Devastating

Lyman said proposals to disallow gifts of property at full value would be devastating to private colleges and universities, museums and other institutions that rely on such gifts for 40% to 50% of their donations.

Of particular concern to Lyman are proposals to reduce tax breaks for gifts of property that have increased in value. Critics say that allowing an individual to give away stocks or other property that were bought cheaply and are now much more valuable at the higher value without paying a tax on the increased value is an indefensible tax loophole. They add that givers should be required to sell an appreciated asset, pay the capital gains tax and then give cash.