Summer 2012 – President’s Note

The Case Against Mandatory Counting

The Philanthropy Roundtable and our legislative arm, the Alliance for Charitable Reform, actively opposed California legislation in 2008 that would have required foundations to disclose the racial, ethnic, gender, and sexual orientation composition of their grantees. And we were part of a broad coalition that helped to enact legislation in Florida in 2010 prohibiting the government from requiring grantmakers to disclose such demographic information.

We are now seeing renewed pressures on grantmakers to collect and disclose detailed demographic data. For instance, our colleagues at the Foundation Center—which routinely requests extensive data on grantmaking, including demographics, from funders—recently reported that only 1.3 percent of foundation funding goes to benefit Hispanics.

The Foundation Center, which historically has earned a reputation for careful research, acknowledges that this report was based on incomplete data—grants were coded as benefiting Latinos only if the grantees had names suggesting this purpose or if the foundation’s formal grant description indicated it was specifically intended to help Hispanic populations. The report thus ignored the many grants for health care, the arts, education, medical and scientific research, environmental protection, and many other charitable causes that serve a larger population including Latinos. To gather more accurate information, the Foundation Center is asking individual grantmakers to disclose more detail about the percentage of their grants that go to benefit different demographic groups. 

This sounds reasonable at first: who, after all, can object to the collection of more accurate data?  So this is a good time to reiterate why The Philanthropy Roundtable strongly opposes any effort to require or put political pressure on foundations and other donors to count by race, ethnicity, gender, and other demographic categories. There are four principal reasons for our opposition.

First, as became clear in the California legislative debate of 2008, demographic disclosure requirements are almost never simply requests for data. Rather, they are accompanied by legislative and non-legislative campaigns by political leaders to direct philanthropic spending to the politicians’ favorite causes and grantees. The primary champion of the California bill, the Greenlining Institute, threatened lawsuits if foundations did not meet certain demographic targets. The legislature also asked Greenlining to submit a report monitoring certain foundations’ commitments to increase funding to minority-led nonprofits. Such political interference is a serious threat to the historic freedom American donors and foundations have enjoyed to choose where to donate their charitable contributions. 

Second, demographic data requirements are inconsistent with the wonderful pluralism and diversity of purposes in American philanthropy. Donors in America are motivated by thousands of charitable objectives, and in many if not most of these cases, a one-size-fits-all ethnic and racial data requirement would be a costly and intrusive burden.

Measurement in philanthropy can be very helpful to donors—and to their grantees—when the metrics reinforce the giver’s mission and strategy. For this reason, many donors and foundations voluntarily seek racial, ethnic, and income data. As an example, K–12 funders whose mission is to raise achievement among low-performing student populations often pay close attention to the test scores and graduation rates of students at the schools they support compared with other students with similar demographic characteristics. But metrics unconnected with mission are an expensive distraction for donors and grantees alike.

Third, demographic data requirements for individual foundations discourage excellence in giving. Peak performance in philanthropy is the result of knowledgeable donors following their passions and interests and developing expertise and thoughtful judgment about the charitable areas where they want to achieve results. Pressure campaigns to push individual foundations to fulfill some minimum demographic standards in their giving—which usually accompany calls for data disclosure—encourage the opposite. Activists who want more and better philanthropy directed toward underserved populations would be well advised not to push all foundations in this direction, but to encourage the emergence of more donors who specialize in delivering results for these communities. 

Finally, demographic data requirements betray a misunderstanding of how to motivate donors, especially new donors, who will account for the principal growth of charitable giving in future decades. Appealing to donors’ guilt, by implying that they aren’t doing enough to help underserved minorities, will have limited results in increasing philanthropy for such causes. A more effective approach, on the model of KIPP and other high-performing charter school networks, is to capture the imagination of donors by showing them philanthropic strategies that are genuinely opening opportunity for African Americans and Hispanics.

Donors and foundations may find it very valuable to collect demographic information. But they should feel no moral obligation to do so if it does not help them achieve their charitable objectives.  

Adam Meyerson is president of The Philanthropy Roundtable.

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