An Assembly bill claiming to bring diversity and transparency into charitable giving in California is actually an unprecedented intrusion by government to muscle its way into charitable organizations.  Here’s a fuller perspective on the bill which David Lehrer and I wrote for the Jewish Journal:

The next few weeks will be the moment of truth for Assembly Bill 624, the so-called, “Foundation Diversity and Transparency Act” as it comes before the State Senate Business, Professions & Economic Development Committee.

The bill is a nearly unprecedented intrusion by government into the world of charitable giving. While purporting to promote “transparency”, in fact it is the first step in setting government mandated priorities for where charitable dollars should go.

Through the not very subtle means of mandating the publication of the race, ethnicity, and gender of large foundations’ staff and board members, AB 624 requires that they inquire about and report on the race, ethnicity and sexual orientation of the board and staff of the organizations to which they make grants and of every business contact they have. The bill also mandates that foundations report the percentage of their grants that go to organizations that “specifically serve” designated minorities.

This intrusive legislation (which in the version that passed the Assembly, additionally required that the foundations survey their boards and staffs to determine everyone’s sexual orientation) is bad policy and will ultimately drive our largest foundations to set up shop outside of California.

The bill claims to simply be “sunshine” legislation—aimed at letting the public know more about large, tax-exempt foundations and their beneficiaries. In truth, sunlight is not what animates the authors of this bill; they have tried to hide in the shadows the true intent of the legislation.

The Greenlining Institute, the bill’s drafters, has rarely betrayed what the motivation behind AB 624 is. In a televised discussion of the bill last year, Greenlining Institute’s Associate Director, Orson Aguilar, made an admission that Greenlining has been loath to own up to since,
We think that foundations have a lot of power in society today. So what we want is to make sure that foundation dollars are reaching our communities so that we can be active decision-makers, discussion-makers, that we can be voters, that we can influence the democracy that we live in. So that’s basically what we’re asking for…. equal dollar amounts (emphasis added).

It was a rare moment of honesty in the debate over AB 624— a moment when the real purpose was revealed— to ultimately direct where the charitable dollars of private foundations are given.
That unprecedented over-reaching is compounded by other serious deficiencies in the legislation that are dangerous in their implications.

For example, the universe of the underserved is not defined by race, ethnicity, disability or sexual orientation. The poor and disadvantaged come in all sizes, shapes, colors and sexual orientation. Focusing on selected groups (as the bill does) is, in fact, special pleading and identity politics.

The Institute’s contempt for those causes they don’t favor has also been a hidden reality. Its executive director, John Gamboa, has derisively dismissed as “pet causes” foundation gifts to “elite universities and the opera.” If it’s not on Greenlining’s agenda, it’s not very important.

The Nonprofit & Unincorporated Organizations Committee of the State Bar of California has weighed in twice on this legislation. In its most recent opinion it concluded that it is unconstitutional, burdensome on foundations, poorly drafted, and invasive of privacy. There is no equivocation in its analysis; the bill has “fatal flaws.”

Equally troubling is the statistical “data” proffered by the Greenlining Institute to justify the need for their bill, information they testified to before the state legislature as if it were gospel. The most damning of their assertions is their claim that just three percent (or more recently the claim is 3.6%) of foundation giving went to minority-led organizations in California and only 10% went to benefit low income communities. An amazing assertion if one is at all familiar with large foundations in California and their patterns of giving.

Although few eyebrows were raised as they repeated their claims over the past year of lobbying, Greenlining’s data—the rationale on which their legislation is predicated—is as “fatally flawed” as the bill. An independent study of their research by George Mason University’s Statistical Assessment Service concluded that the Greenlining’s research “contains several analytical problems, involving sampling strategies, data collection, operational definitions, and data analysis…As it is, the foundation community seem ‘set up to fail’ by the comparisons used in the report.” After that critique, there isn’t much left for Greenlining, or its supporters, to hang their hat on.

AB 624, despite its manifest flaws and its being based on erroneous and skewed research, sailed through the State Assembly in a virtual party line vote earlier this year—every Democrat voted for it, every Republican, save one, opposed it. With the attention the bill has received in recent months, the result in the next few weeks might be different.

Students at UC Berkeley, hardly a bastion of conservative or libertarian thought, editorialized on AB 624 in the campus newspaper, The Daily Californian, and got it right, “AB 624, however, is less an effective treatment for pervasive inequality than a horrendous intrusion by the state into the affairs of private institutions. “

Hopefully, our legislators will think twice before reflexively voting for a measure that will do far more harm than good.