Most people's charitable donations are so small that their dollars fall like drops into a bucket. But the rich, and Big Business, give differently: Their gifts buy the buckets. These two books are about the bucket buyers, the foundations and corporations whose pockets are deep enough that they can create institutions that will promote their favorite causes, curry favor with powerful allies or co-opt potential enemies.
The latest "Foundation Directory" is classic digging journalism, full of details painstakingly culled from foundation tax returns (which are public record) and other sources to give grant seekers and others a picture of how much each major foundation has and gives away, the areas each targets and the names of directors and key officers.
"Patterns of Corporate Philanthropy" is a shallow polemic, a patina of scholarly research laid atop planks in the New Right political agenda.
Together foundations and corporations will give away more than $10 billion in 1988, a tiny fraction of the more than $90 billion individuals are expected to donate. But because foundations and corporations give in big lumps, often carefully targeted for maximum impact, they leverage their dollars into great influence over the nature of American life by affecting which ideas rise to prominence.
The country's 25,000 tax-exempt endowments, which give money away to other charitable causes, are the curious product of American notions about great wealth. Most people must render onto Uncle Sam as he demands, leaving to the presumed wisdom of Congress and the President how to spend their money.
But our tax laws grant the most successful capitalists--the 200,000 people Ferdinand Lundberg described in his classic work "The Rich and the Super Rich" (Lyle Stuart)--the option of creating a foundation in lieu of paying death taxes, retaining for their heirs, friends and associates the decisions on how that wealth will be used. In effect, our laws grant the very rich the right to decide how their tax dollars will be spent.
Indeed, our laws look so favorably upon great wealth that some estate lawyers advise the very rich that Congress will actually pay them to create a foundation! With careful planning (none dare call it manipulation), it is possible to leave less to a charitable endowment than would have been paid in death taxes.
Creating a charitable endowment offers the donor's family enormous benefits, benefits not available to taxpayers. The foundation's grants can become a charity expense account, helping family members and other directors buy their way into elite circles. Foundations can control companies, able to hold up to 20% of a corporation's stock (and through a special kind of foundation called a public-supporting organization an endowment can own 100%). Further, grants, contracts and staff jobs can be handed out to benefit friends and cement business relationships.
Despite these enormous privileges, the law requires little disclosure. Most foundations wrap themselves in veils of secrecy; some have unpublished telephone numbers.
Many corporate giving programs are even more secretive. While a few firms like Arco seek accountability by publishing detailed grant lists and guidelines to help grant seekers, many companies will not even tell shareholders, their presumed owners, to which charities they give grants.
For more than 20 years the Foundation Center has been rending the veil of secrecy with its increasingly detailed and sophisticated "Foundation Directories." The latest biennial effort, based largely on foundation tax returns (which are public record) and information from the few foundations that seek accountability, offers important new insights.
The 11th edition suggests that foundations may not have fallen out of favor with the rich, as was suggested in "America's Wealthy and the Future of Foundations," a fascinating recent book by Yale University's Theresa Odendahl, also published by the Foundation Center, about the attitudes of rich and their financial advisers.
The directory's researchers found that in this decade creation of foundations with $1 million or more in assets is occurring at the rate of 74 per year, up 12% from the 1970s. And data show that since the last directory was issued two years ago the assets of independent foundations rose by nearly $23 billion or 43%, a figure that reflects the stock market before this year's rise and fallback. As the Forbes 400 grow ever richer, the future for mega-foundations blossoms.
Marvin Olasky's book is not about foundations in general but only about corporate giving. He claims to have uncovered an "ideological pattern" in Big Business contributions to charities, a bias favoring "government-oriented pressure groups" and others he dislikes. He believes some gifts reflect the biases of corporate giving officers, but he offers no proof of this and only speculates that other gifts are intended to placate corporate critics. Olasky offers little data to support any of his claims, and the numbers he does provide show that the dollars involved are hardly significant.
Nor does he give much thought to the notion that companies which depend in large part on business from minorities and women may find it in their self-interest to make grants to causes favored by large numbers of minorities and women.
Strangely, for a University of Texas journalism professor, Olasky has done little digging. When companies like Anheuser-Busch spurned his requests for lists of grantees, Olasky simply gave up and dug no deeper. Surely the contributions of companies that for some reason seek to conceal what they are giving are worthy of inquiry on that very ground.
Of the $1 billion Olasky estimates the 77 companies he looked at give away annually, $890 million goes to education, social welfare and the arts. Just $10 million or about 1% of the total goes to what he calls public affairs groups and of these he estimates $7 million went to what he calls anti-business and left-of-center groups. He defines these to include the World Wildlife Federation, Planned Parenthood and the Council on Foreign Relations.
Olasky throws about labels like "radical feminist" and "litigious environmentalists" to demean charities whose views he dislikes, rather than building a case based on facts. In one case, Olasky is just plain wrong, saying Hands Across America was "ostensibly" organized to help the starving overseas when in fact it helped the homeless in America.
But Olasky's claims, widely circulated among corporate officers and directors, seem destined to have a significant impact on corporate giving by discouraging donations intended to help a broader segment of American society develop a stake in that society so all of us can have a stable future.