NCRP Criteria for Philanthropy at Its Best

In March 2009, the National Committee for Responsive Philanthropy ("NCRP"), an independent watchdog of foundations and institutional grantmakers, released the Criteria for Philanthropy at Its Best:  Benchmarks to Assess and Enhance Grantmaker Impact.  NCRP claims that the Criteria is "the first ever set of measurable guidelines that will help foundations and other institutional grantmakers operate ethically and maximize the impact of their dollars."  The criteria focus on values, effectiveness, ethics, and commitment, along with the concept that foundation dollars should be viewed as "partially public" dollars (because of the charitable deduction taken by donors and tax-exemption of the foundation).

The first and most controversial criterion is values:

A grantmaker practicing Philanthropy at Its Best serves the public good by contributing to a strong, participatory democracy that engages all communities.

a) Provides at least 50 percent of its grant dollars to benefit lower-income communities, communities of color and other marginalized groups, broadly defined

b) Provides at least 25 percent of its grant dollars for advocacy, organizing and civic engagement to promote equity, opportunity and justice in our society.

Here is part of NCRP's argument for inclusion of the first criterion:

Philanthropic support for people and communities that historically have been marginalized is extremely low.  Although serving disadvantaged communities is not the only purpose of philanthropy, it should be a much higher priority than it is.  In the aggregate, only 33 percent of grant dollars can be classified as benefiting marginalized communities, even though broadly defined.  This is cause for concern in spite of the fact that philanthropy and the charitable sector are not a substitute for public programs; the government has an obligation to assist the country's underserved populations.

By intentionally elevating vulnerable populations in their grantmaking, foundations benefit society and strengthen our democracy.  Prioritizing marginalized communities brings about positive benefits for the public good.  "Targeted universalism" is one of the most effective strategies for doing this.

Income and wealth inequality impact the entire U.S. economy negatively.  Grantmakers that pursue social inclusion for the economically disadvantaged help not only the poor, but broader society as well.  Race persists as a significant barrier to social inclusion and to achieving the American Dream.  Grantmakers that prioritize racial and ethnic minorities see benefits accrue to people of all races.

Critics of the controversial criterion often point to examples of widely-valued charities that would not be included as recipients of grants meeting the criterion.  For example, Heather Higgins, Vice Chairman of the Philanthropy Roundtable, identifies the Susan B. Komen Foundation, which focuses its mission on breast cancer, as one that did not qualify.  Chris Graham of the Alliance for Charitable Reform similarly cites St. Jude Children's Research Hospital, National Public Radio, and Make-A-Wish Foundation.  Steve Gunderson, President of Council on Foundations, states that because the Council supports the diversity of philanthropy, "we cannot endorse mandates, or imposed measures that seek to promote a one-size-fits-all approach."  About the Criteria, Gunderson states: "we reject the use of a single template to promote effective philanthropy."  Paul Brest, President of The William and Flora Hewlett Foundation, makes perhaps the most comprehensive argument against the Criteriaon in an entry on Huffington Post available here.

Aaron Dorfman, Executive Director of NCRP, explains that his organization wants to trigger a debate about how foundations should operate.  Brest counters that NCRP seeks to control the debate.  Dorfman claims that his organization is not seeking greater regulation of foundations.  However, the Criteria makes the following statements:

  • Policymakers … will find the benchmarks and the mapping of current practices informative when considering issues related to philanthropy.  [According to Brest, an earlier prepublication version contained a more direct statement: "Policymakers may find the criteria valuable when considering regulations or legislation that affect institutional grantmakers."]
  • If foundations don't do a better job of regulating themselves with integrity and rigor, and if more grantmakers don't demonstrate their relevance to nonprofits and marginalized communities by meeting the benchmarks set forth in this document, the likelihood of more government regulation of the sector will increase.

My take:  NCRP probably understood that it would shake things up with the Criteria and chose to use some provocative statements in order to stimulate this critical discussion.  I'll leave it to others to debate whether foundations meeting the benchmarks would truly represent the "Best in Philanthropy."  However, I will note that many lawyers are already familiar with the general premise of the issue and have accepted, with respect to fulfilling their professional responsibilities, a preference toward service to benefit persons of limited means. 

The American Bar Association Model Rule 6.1 provides that a lawyer should aspire to render at least (50) hours of pro bono publico legal services per year. The Model Rule is not law. It was adopted in recognition that it was a critical step in furtherance of a more just legal system. In fulfilling this responsibility, the lawyer should provide a substantial majority of the (50) hours of legal services without fee or expectation of fee to:

(1) persons of limited means or
(2) charitable, religious, civic, community, governmental and educational organizations in matters which are designed primarily to address the needs of persons of limited means.

The ABA explains the emphasis on helping persons of limited means as follows:

[The applicable provisions] recognize the critical need for legal services that exists among persons of limited means by providing that a substantial majority of the legal services rendered annually to the disadvantaged be furnished without fee or expectation of fee.

Does a similar rationale exist to support the NCRP criterion?  Is there a critical need for philanthropic support of low-income and marginalized communities?  Is such guideline a critical step in furtherance of a more just system with respect to charitable deductions and tax-exemption?  Isn't it really the threat of regulation, and not just a simple NCRP "Good Housekeeping Seal of Approval," that is causing the controversy?  Would our positions change if even less foundation funds (e.g., 10 percent) were going to these communities?  These are difficult but important questions to consider and discuss openly (maybe in Atlanta at the Council's Annual Conference).

I'll end with the note that while the the ABA Model Rule is frequently acknowledged, it is not widely followed, and I don't anticipate any regulation in the near future.