If you are thinking of donating money to create a charitable foundation, you may want to consider establishing your philanthropic corporation or trust in the state of Florida.
That’s because Florida has enacted legislation making it clear that the Sunshine State welcomes grantmaking foundations and respects their freedom and independence in carrying out their charitable goals and missions. The new law, signed by Gov. Charlie Crist on May 27, passed unanimously in both houses of the legislature. The law guarantees donors the freedom to give to the charities they care about and in the manner they consider most effective.
The law affirms four important principles that have historically governed the American public policy framework for philanthropy, but that have come under assault in recent years.
First, the Florida law preserves the wide discretion that foundations and other grantmakers have traditionally enjoyed to give to a broad range of public charities consistent with their mission and their donor intent. In recent years, there has been growing political pressure to narrow the charitable deduction, for instance, to apply only to programs serving low-income or marginalized communities. The new law prohibits Florida state agencies and local governments from requiring private foundations or other charitable organizations to distribute their funds to organizations based on the race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, sexual orientation, or political party registration of an organization’s employees and board members, or based on the populations, locales, or communities served by an organization, except as a lawful condition on the expenditure of funds imposed by a donor.
Second, the Florida law protects the historic right of donors to establish family foundations. It prevents state and local governments from requiring non–family members to serve on family foundation boards, or from prohibiting foundation board service by individuals based on their family status.
Third, the Florida law protects the historic right of private organizations to select their own boards and staff, consistent with civil rights and other employment laws. While allowing voluntary initiatives to advance racial, ethnic, and other forms of demographic diversity, the Florida law prohibits government mandates of demographic standards for foundation board and staff composition. More specifically, the law prohibits a Florida state agency or local government from requiring that the governing board or officers of a charitable organization or private foundation include individuals of any particular race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, sexual orientation, or political party registration.
Fourth, as one would expect from the “Sunshine State,” the Florida law is consistent with high standards of transparency and accountability for foundations and other grantmakers. Foundations under federal law have to continue to disclose their grantees, their investments, and their compensation of executives and trustees, in order to ensure that foundation assets are used for genuinely charitable purposes and not, for example, for self-dealing or partisan politics.
What the Florida law prohibits are government invasions of personal privacy and government-imposed disclosure requirements unrelated to the goal of ensuring that foundation assets are used for charitable purposes. More specifically, the law prohibits state and local governments from requiring private foundations and other grantmakers to disclose the race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, sexual orientation, or political party registration of their staffs and boards, and those of their grantees, without the prior written consent of the individuals involved.
The Florida law thus stands in dramatic contrast to a bill that passed the California State Assembly in 2008. That bill would have required foundations to collect and disclose racial, ethnic, gender, and sexual orientation data. However, as the lawmakers pushing the bill made clear, they weren’t interested only in data; they were pressing for specific kinds of grantmaking. The activist group behind the legislation, the Greenlining Institute, said that contributions to Stanford University and the opera were examples of inappropriate use of the charitable deduction. Greenlining also said it would be pushing for similar legislation in other states.
Florida legislators have now protected charitable giving in their state from this kind of political interference. Legislators in other states, including Virginia, have signaled that they are contemplating similar protection. Florida State Sen. Mike Fasano summarized it well: “In these troubling economic times we need to encourage more giving to these charitable organizations that are helping our most vulnerable, and governments should do nothing to get in the way of the good work they do.”
Adam Meyerson is president of The Philanthropy Roundtable.