Thanks for your participation in November’s Carnival of Giving.

If you would like to learn more about what other participants have said, their submissions can be found here.

Best wishes,

Maya Norton

The New Jew: Blogging Jewish Philanthropy

As for the more customer-service/partnership oriented approach — I think we’re still a long way from that, but it is a great goal to continue pushing. I think some of the newer or more venture philanthropy models — such as Echoing Green and Draper Richards — to a terrific job of parntering with their grantees. I think there’s a lot ot learn from their models.

The tax exempt status for private foundations, whose source of funds is essentially themselves, the tax status is an incentive. They have no accountability to others. Their responsibility is to themselves, the IRS and on some (stewardship)level the right to do good how they see fit. So, I am not on the same page.

Sure! The more conversation, the merrier…

Dahna

I’m not a tax expert, but my understanding is that private foundations are, in fact, classified under section 501(c)(3). From IRS publication 4220 (”Applying for 501(c)(3) Tax Exempt Status”): “Every organization that qualifies for tax-exempt status under section 501(c)(3) of the IRC is further classified as either a public charity or a private foundation. Under section 508 of the IRC, every organization is automatically classified as a private foundation unless it meets one of the exceptions listed in section 509(a).

For some organizations, the primary distinction between a classification as a public charity or a private foundation is the organization’s source of financial support. Generally, a public charity has a broad base of support while a private foundation has very limited sources of support.”

I agree completely with your point that foundations are frequently set up to achieve both financial and charitable goals for their founders/investors/donors. Part of the point that I’m trying to make is that the tax exempt status that is granted to foundations obligates them to go further than the goals of their donors – that tax exemption brings with it a responsibility to “be organized and operated exclusively for exempt purposes” (from the IRS website), which implies a public responsibility.

What do you think?

Would you mind if I included this entry in November’s Giving Carnival? The topic is what business practices nonprofits should adopt to maximize their resources. Your entry fits in well.

Thanks,

Maya Norton

The New Jew: Blogging Jewish Philanthropy

First, private foundations are just that, private. They don’t have to disclose, nor should they. So they file 990.. it’s a requirement. Their donors are not the general public, so with all due respect.. they get to do with their funds what they like. It’s a private matter and let’s face it, most don’t set up private foundations to change the world - it’s ideally on the advice of their attorney as a good vehicle to help achieve both financial and charitable goals.

You write:…This responsibility is heightened when one considers the tremendous public trust that is invested in the success of foundations by virtue of their tax exempt status. My response, you put too much stock in this. Private foundations don’t have to have public trust. With the exception of a handful of biggies, I don’t think the public has an interest or really cares. They may read about what the big foundations do and think - Oh that’s such a good thing! Also, trust and disclosure only applies to to public charity (foundations). I am not one to have an ‘interest or trust’ in the McManus family foundation (fictitous for this reply)- it’s their $, their decisions and hope they are good people making good decisions with their philanthropy.

You write: Foundations collect vast amounts of information about how pressing social issues are being tackled. OK- Maybe the big guys do, but let’s face it, most private foundations don’t do this.

What I Do Agree With: Sharing information could not only help funders to learn from other funders (from their successes and their failures), but could also help nonprofits learn from other nonprofits.” I don’t think financial info is the most important, rather the issues are.

I think foundation success is not measured by the dollars given but buy the issues addressed and even solved.

So, in my opinion private foundations don’t have be like public companies much like private companies don’t have to. I don’t think it should be a mandate and again, if their a private not publc fdn - they aren’t violating stakeholder responsibility.

However, I agree with every point you made if you were referring to public charity (foundations).

I do think their should be an invitation for all private and public charity foundations to share practices, knowledge, and even strategies. This I think is very, very important. Roundtables, webinars, forums, etc… at a local, regional and national level. RAG’s are an excellent resource for this - but they ‘might’ could do it better on some level.