The ‘Diversity’ Threat to California Charity

Heather R. Higgins, Wall Street Journal, May 30, 2008

A bill purporting to encourage diversity among nonprofits has passed the California Assembly and faces a key vote in the state senate in early June. While little attention has been paid to this bill, it poses an enormous threat to private philanthropy in this country.

The Foundation Diversity and Transparency Act requires California foundations with $250 million in assets to report the composition by ethnicity and gender orientation of their boards and staffs, the boards and staffs of the charities they support, and the degree to which they are run by or support certain minorities.

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Champions of the bill claim that its only goal is to “request diversity data.” Then why force the donors to collect this information from grantees, instead of asking each registered charitable organization simply to report the information directly to the government? The bill’s critics fear the real goal is to pressure charities into meeting “diversity” goals out of fear of displeasing their funders—who themselves fear that ultimately their ability to set their own goals, or even their tax-exempt status, will be at risk if diversity goals aren’t met.

The bill creates the opportunity for grandstanding, public relations shakedowns, and litigation. Already, foundations that have questioned this legislation have been publicly attacked. The executive director of Greenlining recently stated that “most of our money comes from lawsuits.”

The “diversity” bill, if enacted into law, would be just the beginning. Already contemplated is legislation to cover all foundations, and all grant recipients, not just in California, but nationally; and to broaden reporting requirements to include the aged or the disabled. Ultimately, this all leads in one direction: to politically determine how private charities manage and deploy their resources.

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Ms. Higgins is on the board of the Philanthropy Roundtable.

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