Tuesday, July 09, 2002

Philanthropy and public policy
The philanthropic industry is scared of regulation. Foundations have shied away from proactive relationships with legislators and regulators at the federal level, and they continue to act this way at the state level. This non-strategy is going to cost the industry when the time comes - once again - for regulatory review of philanthropy. We have every reason to believe some policy maker is soon going to "discover" philanthropy as a ripe source for investigation - with the corporate governance scandals of late, the crisis in the Catholic Church, regulatory concerns raised over September 11 giving, public disenchantment with nonprofit action in the wake of September 11, and the continuing growth of endowed, tax exempt funds as public budgets shrink, it is only a matter of time. We strongly believe that the most important regulatory moves will be made at the state level, and that foundations in most states are woefully unprepared to speak their truth to the legislators and regulators who matter.

Its not that we think new regulation or oversight is a bad thing. In fact, we believe there is a lot of positive change that new regulations could make happen. We also believe that the interest groups within philanthropy - foundations, financial service firms, individuals, and others - are at very different places when it comes to working with legislators and regulators to make the industry work to their advantage. So when the time comes, those interests that have built relationships, proposed legislation, and worked the policy machine will be at a distinct advantage. Their advantage, not necessarily the advantage of all institutional philanthropy.

A strong network of informed policy analysts and advocates working on behalf of philanthropy is needed. At the state level in all fifty states. National resources can assist by providing access to technology that can make tracking legislation asier. But local relationships and access matter more. These must be built at the state level before hearings are called or a scandal emerges. Philanthropy in America exists by virtue of government sanction - its high time the industry actively participated in the system that maintains those sanctions.

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