Carnegie Reporter, Vol. 4, No. 2 | Philanthropy Now: Diversity and Creativity for Changing Times, page 2

The Foundation Community Reacts
The wealth of the Gates Foundation has created something of an inferiority complex among some long-standing pillars of the foundation community. They seem to be worried that Gates will become the foundation world’s sole superpower, setting the spending agenda in areas of focus for many foundations—specifically health and education. How can grantmakers with fewer resources possibly make their own mark?

But numerous experts say such concerns are overblown. “It makes people think, ‘what can I do with the relatively smaller amount of money that I have,’ but there are so many problems in the world that need to be addressed,” says Adam Abramson, of the Aspen Institute, “that philanthropy can almost always have a positive effect.”

Likewise, Steve Gunderson, the president and chief executive of the Council on Foundations, says other foundations “ought to ignore Gates. It will make a significant impact on philanthropy, but it should not dictate the focus or structure of other foundations. We must celebrate the diversity of philanthropy.”

Several experts have pointed out that last year’s grants by the Gates Foundation—$1.75 billion—amount to just over 5 percent of all grantmaking by American foundations. After 2009, the number could grow to nearly 10 percent—unprecedented, yes; monopoly, no. In terms of all U.S. charitable giving, the Gates share is less than 1 percent of total U.S. charitable giving, which the most recent figures put at approximately $260 billion.

Martin Morse Wooster, a senior fellow at the Capital Research Center and author of Great Philanthropic Mistakes is bemused by the idea that some foundations might change course because the Gates Foundation or other donors with big wallets have taken on a particular cause. “It’s not a contest,” he says. “It’s about what you are doing to make your community better. Small foundations can do a relatively great amount of good with small budgets.”

At a discussion about philanthropy post-Buffett held in June 2006 by the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal (which published Great Philanthropic Mistakes in May 2006), Adam Meyerson, president of The Philanthropy Roundtable, also dismissed concerns that the munificence of the Gates Foundation might have a chilling effect on other foundations. He pointed out that they are already intimately familiar with another funding Goliath. “Every foundation lives in the shadow of the federal government,” Meyerson said.

The National Institutes of Health has a budget of close to $30 billion a year, for example. “That doesn’t mean you can’t be an effective foundation in biomedical research,” Meyerson said. “Many foundations are. But they have to determine, ‘what is our comparative advantage in the face of this enormous spending from the government?’ And one reason, by the way, that the Gates Foundation chose malaria and has been quite effective in raising awareness about [the disease] was that it was an area where there wasn’t much spending.”

At the same discussion, Elizabeth Boris, the founding director of the Center on Nonprofits and Philanthropy at the Urban Institute, offered another telling comparison. Citing research by the Hudson Institute, she said that foundation giving for international development issues amounts to about $3.4 billion a year versus about $20 billion by the U.S. government.

Such statistics should put paid to another worry that has been bandied about post-Buffett: that the government will shirk its spending duties in some areas because of foundations’ largesse. “Few people understand the proportion of foundation giving in relation to government spending, and you have to add in the budgets of other countries, too,” says James Allen Smith of Georgetown. “Once you tally it all up, philanthropy is small.”

That doesn’t mean governments won’t be tempted to shirk. According to Rick Cohen, former executive director of the National Committee for Responsive Philanthropy, the fine print of the Bush Administration’s fiscal 2007 budget proposals shows that “the proposed cuts in the small-schools program were basically explained away by saying that the government expenditure from the Department of Education would simply duplicate what the Gates Foundation and Carnegie Corporation are already doing.”

But such examples are few. And popular pressure, exerted on Congress or through the media, can reverse proposed budget cuts. Steve Gunderson of the Council on Foundations, a former Republican Congressman from Wisconsin, believes that foundations must weigh in when necessary. “I think I can make a contribution here,” he says. “I had an ‘R’ behind my name all those years I served in Congress. When I am communicating with our sector, I am a strong advocate for advocacy, for education about public needs. That’s not politics; we have a duty to articulate public needs. We will be engaged in articulating the need for government spending.”

The Gates Foundation, which causes the biggest worries about obviating government spending, is being very careful to mitigate those risks, notes Adam Abramson of the Aspen Institute. “They’re trying to figure out how to leverage their grants, going to great lengths to ensure that governments don’t leave a field because of their money.” He adds, “They want to spend money to unleash government money.” In some areas, like combating AIDS and malaria, that has indeed happened.

Next page: Big gifts, from Gates or anyone, have in fact been known to have an exponentially positive effect on the private and foundation sectors, too, encouraging additional donations for a cause.

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