Accounting for foundations By Shea Howell

Thinking for ourselves

Accounting for foundations

By Shea Howell

January 24, 2012

Foundations are playing an increasingly influential role in public life. They are using their enormous power to determine what they think are public problems and how these problems should be solved. While they often demand clear objectives and quantifiable results from the non-profit organizations they support, most foundations offer no such evaluation of their own functioning to the public. They operate without public oversight, evaluation or assessment. Most do not publish the possible conflicting interests of their board members.

In Detroit we are witnessing both the influence of foundations and their lack of accountability. For example, there has been no assessment of the destructive run of Robert Bobb, the Emergency Financial Manager of the Detroit Public Schools. While appointed by the governor, local foundations supplied about one third of Bobb’s $425,000 salary. What did those who helped pay for him think of his performance? How do they explain that under his authority the deficit he was supposed to reduce actually grew from $219 million to an estimated $327 million? Did they approve of his management style? His decisions?

And what about the failure of the Detroit Works Project? What has the foundation community learned from this effort? Why did they reappoint Toni Griffin to head the project that she bungled so badly? Why are Kresge and Ford continuing to support a process that they indicated they knew was not working?

Education and the shape of the city are fundamental public concerns. Yet foundation forces are spending millions of dollars influencing decisions that effect people’s lives, with no public accountability.

Since the 1980s the role of private foundations has been shifting from the support of agreed upon public goods to the initiation of public policies. Much of this shift, aided by increasingly generous tax policies, has been lead nationally by the Philanthropy Roundtable. The guiding principles of the Roundtable were developed by William Simon, former Secretary of the Treasury under Presidents Nixon and Ford. Simon noted that many of the activities foundations supported in the 1960’s and 1970’s were efforts at greater democratization and equality. This, Simon said, was in opposition to real interests of foundations and the corporations that provided their resources.

In his 1978 book, A Time for Truth, Simon wrote, “Most private funds … flow ceaselessly to the very institutions which are philosophically committed to the destruction of capitalism. … [T]he great corporations of America sustain the major universities, with no regard for the content of their teachings [and sustain] the major foundations, which nurture the most destructive egalitarian trends.”

The Philanthropic Roundtable was intended to rectify the problem.

According to a recent report by David Morris, the shift in values can be seen in the embrace by the Roundtable of Charles G. Koch, who received the 2011 William E. Simon Prize for Philanthropic Leadership. Noted for funding right wing efforts, in 2008 the Charles G. Koch Charitable Foundation made clear how much control it expects for its money. It donated millions to Florida State University for the school’s economics department. The money came with the understanding that that Koch would have the authority to approve who filled the positions and what would be taught.

Morris concludes, “Just to be clear here. The public is subsidizing possibly to the tune of 50 percent charitable contributions to a public university that give control to a private person to hire professors who will teach what may be a required course that will educate the students about the evils of government.”

The foundation community in Detroit has the opportunity to reassess what is becoming an increasingly destructive relationship. They can begin by asking what it would mean for them to be as accountable to the public as they demand organizations are to foundations?