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Legislative Status: September 26, 2007
Chairman John Lewis [D-GA] opened the hearing by commenting, “One thing is clear – our resources and the resources of the charitable community do not exactly match our needs. Sadly, those with the greatest need are not always served.” Members in attendance at the hearing included: Chairman John Lewis, Ranking Member Jim Ramstad [R-MN], Representative Richard Neal [D-MA], Representative John Linder [R-GA], Representative Xavier Becerra [D-CA], Representative Stephanie Tubbs-Jones [D-OH], and Representative Bill Pascrell. [D-NJ]. First to testify was Julian Wolpert, Professor of Public Affairs at the Woodrow Wilson School of Princeton University. According to Dr. Wolpert’s research, “charity and volunteerism in the United States is largely confined within social, ethnic, racial, religious, and localized communities with little leakage to the “stranger” except for short intervals at times of crises.” Dr. Wolpert’s testimony also indicated that charity remains overwhelmingly “circumscribed within class, ethnic and racial boundaries” and that donors give to causes that they are familiar and close to – i.e. their alma mater, their church, etc. In fact, Dr. Wolpert recently completed a case study in New York City where he examined the access, responsiveness and coverage of nonprofit services offered in the city. His research determined a “high degree of unevenness and a number of significant gaps” in who was giving and who was receiving. Next to testify was Dr. Elizabeth Boris, from the Center on Nonprofits and Philanthropy for the Urban Institute who countered the assertions of Dr. Wolpert. According to Dr. Boris, total charitable donations for 2006 were just over $295 billion. Of this, Americans gave just over 75% directly to the charitable organizations. From this, Dr. Boris pointed to “a new analysis by the Center on Philanthropy researchers…to estimate that approximately $78 billion (31 percent) of the $250 billion that individuals gave to nonprofits in 2005 explicitly addressed the needs of the disadvantaged.” Including contributions from foundations, corporations and estates, 23% of total charitable contributions are specifically intended to benefit low-income populations. However, in terms of the “gaps” in charitable giving, Dr. Boris testified that it is often very difficult to analyze the needs of communities without systematic information collected on the outcomes of the services already provided. In conclusion, Dr. Boris called for “an integrated sector information system” that would essentially be a clearinghouse for all information on nonprofits – their employment statistics, contributions, and other information designed to make the sector more transparent. The American Red Cross, the organization that collects approximately 40 percent of America’s blood supply each year, was next to testify. Kevin Brown, the Chief Operating Officer, testified about the need to improve the recruitment and retention of diverse blood supplies. In their response to Hurricane Katrina, the American Red Cross heard criticism that it lacked “cultural competence” due to the lack of diversity in their recovery team and that the Red Cross had not done enough to foster relationships with local and national organizations that serve diverse populations before the disaster struck. In response, the American Red Cross has been working diligently with Asian-Pacific, Hispanic, and other minority communities to ensure that their response, supply and other recovery and relief efforts are not similarly received. In his conclusion, Mr. Brown conceded that the American Red Cross still has work to do before it becomes the “strong, diverse and inclusive organization it should be,” but that steps were being taken to ensure that the criticisms heard in the aftermath of Katrina would no longer be applicable. To counter points made earlier by Dr. Wolpert, Susan Berresford, the President and CEO of the Ford Foundation, testified that the Ford Foundation commits 75 percent of its U.S. funding (approximately $220 million) to the reduction of poverty and injustice. Ms. Berresford continued, “since poverty disproportionately affects women, minorities, immigrants and rural communities, they are at the center of our work.” In terms of the Ford Foundation’s leadership team, Ms. Berresford stated that 46 percent of their professional U.S. grantmakers are minorities and 50 percent of this staff is female. In fact, she is the first female president in the Ford Foundation’s history and her predecessor, Franklin Thomas, was the first African American president. Ms. Berresford testified at length about the Ford Fellows Program – a program for which it has provided over $175 million for 5,000 scholars from rural and urban areas. Of this, 55 percent of the recipients are African American, 38 percent are Hispanic, and 6 percent are Native Americans. From supporting civil rights, to promoting home ownership, to advancing higher education, Ms. Berresford highlighted several Ford Foundation initiatives that are aimed or benefit underserved, diverse communities. Lesley Grady, the Vice President of Community Partnerships for the Community Foundation for Greater Atlanta testified on behalf of the Council on Foundations, about the role and power of community foundations. Ms. Grady testified at length about various initiatives that her organization has been involved in over the years that have benefited diverse populations – from the homeless to HIV/AIDS education. Ms. Grady pointed out that the Community Foundation for Greater Atlanta is not unique among its colleagues. Community foundations aim to fully represent “the dynamic and diverse communities that we [they] serve.” While Ms. Grady conceded that they are not finished with their efforts to encompass their entire community, it is a step they work towards every day in attempting to build “healthy, vibrant communities…representing the many diverse voices that make up those communities.” Lastly, Byron Laher, the Director of Public Policy at Greater Twin Cities United Way, and Marcia Fink, the Director of Basic Needs, testified about ways that they are serving a constantly-evolving, diverse community. The Greater Twin Cities United Way is the second largest in the country in terms of money raised from the community and, last year, invested in more than 450 programs through 200 agencies addressing the most pressing needs in their area. According to Ms. Fink, “the United Way identifies the most pressing needs of our communities, like hunger, school readiness, job training and the need for education and assistance with financial stability…And these issues most often impact low-income individuals and families and communities of color.” Questions Ranking Member Ramstad [R-MN] kicked off the question and answer period by noting that the Red Cross had received some criticism in the aftermath of Hurricane Katrina for failing, in some cases, to serve the needs of disabled Katrina victims. He went on to ask the Kevin Brown of the Red Cross about how the Red Cross is working to address the problems that arose after Hurricane Katrina so it can better serve those with disabilities. Mr. Brown responded by reporting that the Red Cross had worked hard to address the shortcomings that were highlighted after Katrina and had purchased 8000 accessible cots and other items for use by the disabled. Rep. Ramstad then commented that the Red Cross had indeed been very responsive and thanked them for their efforts on behalf of the disabled. Rep. Neal [D-MA] raised concerns about the impact that some provisions of the Pension Protection Act had on family foundations, indicating that a foundation headquartered in Massachusetts, had found it more difficult post-PPA, to hand out scholarships. He then asked Elizabeth Boris of the Urban Institute, “What has been your experience with family-run charities?” To which she responded, that family foundations reflect the values of the donors, and as such they are very important to local communities and are an important part of the framework of philanthropy around the country. Chairman Lewis [D-GA] opened his questions by thanking those on the panel for their “good work.” He commented on the success, particularly in the South, of fellowship programs and asked the representative of the Ford Foundation what they had learned about poverty. Susan Berresford of Ford responded by saying that in addressing an issue like poverty, it was important for charitable organizations to develop specific goals and strategies to achieve results, organize research and money and invest long-term. She also stressed the importance of sharing the lessons learned with other grant-makers. Chairman Lewis then asked the panel if anyone on it had recommendations for the members of the Subcommittee. In response, Lesley Grady of the Community Foundation for Greater Atlanta asked for support for IRA Charitable Rollover legislation, and Byron Laher of the Greater Twin Cities United Way mentioned support for the non-itemized deduction. Rep. Stephanie Tubbs Jones, Co-Chair of the Congressional Philanthropy Caucus, highlighted her concern that there exists” a divide among those who give to charities and that more needs to be done to help the poor who give understand philanthropy outside of church tithing, so that they feel a part of it.” She then encouraged the panel witnesses to think about ways to do that, further commenting that “we need to reward the giving of time as much as we reward the giving of money.” She questioned the Red Cross about many people in the region who tried to help victims of Katrina were turned away by Red Cross workers after having been told that they couldn’t help, because they had not received Red Cross training. In other words in some cases, volunteers of color were often turned away from providing assistance. As a consequence, those giving aid to victims were overwhelmingly white, while those receiving aid were overwhelmingly of color, which created tensions. She said it was important that those who look the same and/or speak the same language be allowed to assist in their own communities in a disaster. She asked the Red Cross what they had done since then to diversify? Kevin Brown responded by saying that the criticism was well-taken, and the Red Cross had taken a number of steps to address that issue, mentioning their partnership with Boat People SOS, a nationally recognized group that assists Vietnamese refugees and immigrants. Rep. Tubbs Jones then encouraged all of the panelists to get involved with the Congressional Philanthropy Caucus and suggested that there ought to be an effort to introduce school children to philanthropy. Rep. Becerra [D-CA] closed the question period by posing the question, “Are we serving the general welfare by allowing tax deductions for charitable giving?” This concept was recently raised by New York Times reporter Stephanie Strom in her September 6, 2007 article entitled Big Gifts, Tax Breaks and a Debate on Charity, in which Becerra was quoted. At the Oversight hearing, Rep. Becerra picked up on the theme of article, asking if these expenditures net the money that they cost the treasury in lost revenue. Rep. Becerra further inquired whether we are being best served by allowing the wealthy to take the tax deduction and whether it would be worthwhile to examine the tax-treatment of these gifts, suggesting that perhaps there should be more generous tax benefits for those gifts that are targeted to the general welfare. Finally, he commented on administrative expenses counting toward the 5% payout, noting that some foundations have very high overhead. He asked the panelists whether they believed this was a problem and whether this was an area in which Congress should act. Elizabeth Boris of the Urban Institute responded that administrative expenses are relatively low in the sector and she did not view this as a huge problem. She stated that she did not believe that there a huge number out there who are gaming the system.
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