[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




                     TO EXAMINE WHETHER CHARITABLE
                     ORGANIZATIONS SERVE THE NEEDS
                         OF DIVERSE COMMUNITIES

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 25, 2007

                               __________

                           Serial No. 110-60

                               __________

         Printed for the use of the Committee on Ways and Means














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                      COMMITTEE ON WAYS AND MEANS

                 CHARLES B. RANGEL, New York, Chairman

FORTNEY PETE STARK, California       JIM MCCRERY, Louisiana
SANDER M. LEVIN, Michigan            WALLY HERGER, California
JIM MCDERMOTT, Washington            DAVE CAMP, Michigan
JOHN LEWIS, Georgia                  JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts       SAM JOHNSON, Texas
MICHAEL R. MCNULTY, New York         PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee            JERRY WELLER, Illinois
XAVIER BECERRA, California           KENNY HULSHOF, Missouri
LLOYD DOGGETT, Texas                 RON LEWIS, Kentucky
EARL POMEROY, North Dakota           KEVIN BRADY, Texas
MIKE THOMPSON, California            THOMAS M. REYNOLDS, New York
JOHN B. LARSON, Connecticut          PAUL RYAN, Wisconsin
RAHM EMANUEL, Illinois               ERIC CANTOR, Virginia
EARL BLUMENAUER, Oregon              JOHN LINDER, Georgia
RON KIND, Wisconsin                  DEVIN NUNES, California
BILL PASCRELL, JR., New Jersey       PAT TIBERI, Ohio
SHELLEY BERKLEY, Nevada              JON PORTER, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama

             Janice Mays, Chief Counsel and Staff Director

                  Brett Loper, Minority Staff Director

                                 ______

                       SUBCOMMITTEE ON OVERSIGHT

                     JOHN LEWIS, Georgia, Chairman

JOHN S. TANNER, Tennessee            JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts       ERIC CANTOR, Virginia
XAVIER BECERRA, California           JOHN LINDER, Georgia
RON KIND, Wisconsin                  DEVIN NUNES, California
BILL PASCRELL, JR., New Jersey       PAT TIBERI, Ohio
JOSEPH CROWLEY, New York

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
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                            C O N T E N T S

                                                                   Page

                               WITNESSES

Julian Wolpert, Ph.D., Bryant Professor of Public Affairs, 
  Emeritus, Woodrow Wilson School, Princeton University, 
  Princeton, New Jersey..........................................     5
Elizabeth T. Boris, Ph.D., Director, Center on Nonprofits and 
  Philanthropy, The Urban Institute..............................    11
Kevin M. Brown, Chief Operating Officer, American Red Cross......    20
Susan V. Berresford, President and CEO, The Ford Foundation, New 
  York, New York.................................................    25
Lesley Grady, Vice President of Community Partnerships, The 
  Community Foundation for Greater Atlanta, Atlanta, Georgia.....    31
Byron Laher, Director, government and Labor Relations and 
  Community Affairs, Greater Twin Cities United Way, Minneapolis, 
  Minnesota, and accompanied by Marcia Fink, Director, Basic 
  Needs, Greater Twin Cities United Way, Minneapolis, Minnesota..    40

                       SUBMISSIONS FOR THE RECORD

African American Nonprofit Network, statement....................    60
American Arts Alliance, statement................................    62
Americans for the Arts, statement................................    63
Association of Art Museum Directors, statement...................    67
Association on American Indian Affairs, statement................    71
First Nations Development Institute, Longmont, CO, statement.....    73
Greenlining Institute, statement.................................    77
National Council of Nonprofit Associations, statement............    78

 
                     TO EXAMINE WHETHER CHARITABLE
                     ORGANIZATIONS SERVE THE NEEDS
                         OF DIVERSE COMMUNITIES

                              ----------                              


                     WEDNESDAY, SEPTEMBER 25, 2007

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                 Subcommittee on Oversight,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2:03 p.m., in 
room 1100, Longworth House Office Building, Honorable John 
Lewis (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                       SUBCOMMITTEE ON OVERSIGHT

                                                CONTACT: (202) 225-5522
FOR IMMEDIATE RELEASE
September 17, 2007
OV-6

                  Lewis Announces A Hearing to Examine

                 Whether Charitable Organizations Serve

                    the Needs of Diverse Communities

    House Ways and Means Oversight Subcommittee Chairman John Lewis (D-
GA) announced today that the Subcommittee will hold a hearing to review 
whether tax-exempt charitable organizations are serving the needs of 
diverse communities. The hearing will take place on Tuesday, September 
25, 2007, in the main Committee hearing room, 1100 Longworth House 
Office Building, beginning at 2:00 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Subcommittee and 
for inclusion in the record of the hearing.
      

BACKGROUND:

      
    There are more than one million tax-exempt organizations described 
in Internal Revenue Code section 501(c)(3). These organizations are 
required to be organized and operated exclusively for religious, 
charitable, scientific, educational, and certain other specified exempt 
purposes. They include, among others, public charities and private 
foundations. Currently, the assets of section 501(c)(3) organizations 
exceed $2.5 trillion.
      
    On July 24, 2007, the Subcommittee on Oversight held an overview 
hearing on the state of the charitable sector (growth and size). At the 
hearing, witnesses testified that the Federal Government is 
increasingly partnering with nonprofit organizations to address the 
specific needs of individuals and communities. Nonprofit organizations 
often bring an in-depth understanding of a particular geographic area 
or special population and have access to underserved populations.
      
    The U.S. population (nearly 300 million) is becoming increasingly 
diverse. The U.S. Census Bureau estimates that approximately: 36.5 
million Americans live in poverty; 100.7 million Americans are 
identified as minorities; 37 million Americans are age 65 and older; 
106.9 million Americans live in urban communities; 116.8 million 
Americans live in rural communities; 41.2 million Americans have some 
level of disability; and 37.5 million Americans are foreign born. It 
further estimates that nearly 10% of the nation's 3,100 counties have a 
population that is more than 50 percent minority.
      

FOCUS:

      
    This hearing will focus on whether charitable organizations are 
serving diverse populations and communities. The hearing will discuss: 
the extent to which philanthropic dollars are being directed toward 
diverse communities; the actions tax-exempt organizations are taking to 
deal with issues and challenges that have arisen in identifying the 
needs of diverse communities; and the partnerships between governments 
and charitable organizations that are needed to reach and serve diverse 
populations. The Subcommittee will hear testimony on why developing a 
plan to serve diverse communities is important and beneficial.
      
    In announcing the hearing, Chairman Lewis stated, ``Charitable 
organizations play a key role in our country's ability to respond to 
the needs of its communities, which have become increasingly diverse. 
We must do more to serve all Americans no matter where they live and 
match charitable resources with the needs of diverse communities.''
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
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of business Tuesday, October 9, 2007. Finally, please note that due to 
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or if you encounter technical problems, please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
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    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman LEWIS. Good afternoon. The Subcommittee on 
Oversight will now come to order.
    I want to thank each and every one of you for being here 
this afternoon.
    The hearing today will deal with the whole question of 
charitable organizations--whether charitable organizations 
serve the needs of diverse communities. Today the Subcommittee 
on Oversight is holding a hearing to explore whether charitable 
organizations are serving the needs of diverse communities.
    We have called this distinguished panel to help us examine 
whether there are better ways to identify, reach and serve all 
Americans.
    Our country is growing. It is becoming more diverse, and we 
are a better nation for that diversity. These are people who 
share our values and share our hopes and our dreams. It could 
just as easily be you and I in need, one illness, one natural 
disaster, one accident, and we too could find ourselves in 
need.
    We must make sure that we meet the needs of our diverse 
residents, our diverse population. This is not an easy task and 
we cannot do it alone. The Federal Government cannot be in 
every community and the Federal Government cannot identify 
every community's unique needs. This is the strength of 
nonprofit and charitable organizations.
    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.
    We must ask the question, how well do we reach our diverse 
populations. The next question we must ask is how can we do it 
and do it better.
    It is our challenge and our duty, our obligation, our 
mission and our mandate to serve all people in need. This is a 
social issue. This is a moral issue. This is American 
challenge.
    So, today we call you here to ask for your help, your 
suggestions, your recommendations. We want you to speak openly, 
candidly and be frank with all of us. So, don't put your cards 
under the table, put them on top of the table, face up and tell 
us what we need to do and what we all should be doing.
    Now I am pleased to recognize the distinguished Ranking 
Member, my dear friend from Minnesota, Mr. Ramstad, for his 
opening statement.
    Mr. RAMSTAD. I thank my good friend Chairman Lewis for 
yielding and for holding this important hearing on the role of 
charitable organizations serving diverse communities, a very 
important topic.
    As we all know, for many years the government, public 
charities, foundations, have been partners in helping those who 
are less fortunate. We often talk about expanding the social 
safety net for people in need, but we also must be sure there 
are no gaps in the existing safety net, that is diverse 
communities being served.
    Just last month our home state of Minnesota became a place 
of great need, as you all know from the press accounts. First 
there was the eight-lane bridge collapse over the Mississippi 
River. Then there were deadly floods in southeastern Minnesota.
    Charitable organizations such as United Way, Red Cross and 
numerous others rushed to help victims of the bridge collapse, 
to help families in rural Minnesota cope with the floods. They 
donated time, money, goods, even their own blood.
    Ordinary Minnesotans joined the charitable organizations 
who provided the leadership in these efforts. But charitable 
organizations are not only good in disasters, they also respond 
in huge numbers to the daily needs of people of every 
background.
    These are needs that too many of us take for granted, food, 
clothing, housing, healthcare, decent job; the basic needs of 
human beings. I'm pleased that Byron Laher and Marcia Fink from 
Minnesota are here today to tell us about how Greater Twin 
Cities United Way works with local charities to meet the needs 
of diverse communities. They do an especially excellent job of 
promoting the needs of diverse communities and serving those 
needs exceptionally well.
    I've worked with United Way for a number of years, and I 
certainly appreciate the good work that Byron and Marcia and 
everyone at United Way, Twin Cities United Way, does.
    Byron, Mr. Chairman, is director of public policy and a 
jack of all trades, as he calls himself, at Greater Twin Cities 
United Way. He has also directed a narcotics rehabilitation 
program for Catholic Charities in Minnesota. So, he brings a 
diverse background of serving people and is well recognized in 
our state as one of the true public servant leaders.
    Marcia Fink is director of basic needs at Greater Twin 
Cities United Way, and we thank Marcia for being here today. 
Marcia also has a long and distinguished career, Mr. Chairman, 
including 15 years with the region's largest chamber of 
commerce.
    Thank you for joining us, Byron and Marcia. Thank you, Mr. 
Chairman, for calling this hearing. I look forward to the 
testimony of this distinguished panel.
    Chairman LEWIS. Thank you very much, Mr. Ramstad. Thank you 
very much for your comments and for being here, being such a 
wonderful partner in this whole effort.
    Mr. Neal, would you like to make a statement, Mr. Richard 
Neal from the great state of Massachusetts, Springfield?
    Mr. NEAL. No.
    Chairman LEWIS. Thank you for being here, Richard.
    Now we will hear from our witnesses. I ask each of you to 
limit your testimony to 5 minutes. Without objection, your 
entire statement will be included in the record. I will have 
all of the witnesses give their statements and the Members will 
ask questions of the panel.
    It is now my pleasure and delight to introduce our first 
witness, Dr. Julian Wolpert of Princeton University. Thank you 
very much, sir, for being here.

              STATEMENT OF JULIAN WOLPERT, Ph.D., 
            PROFESSOR EMERITUS, PRINCETON UNIVERSITY

    Mr. WOLPERT. Thank you for asking me to participate. I want 
to congratulate the Subcommittee chair, the Members and staff 
for their decision to focus on the important issue of 
charitable responsiveness to diverse communities.
    The topic of American generosity expressed both through 
charitable donations and through willingness to support public 
sector safety net and social programs has been very prominent 
in my recent research. The time allotment today will allow me 
to present only a very brief synopsis of findings.
    My research has shown that 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.
    The needs of diverse urban and rural, majority and minority 
communities are largely invisible to donors unless highly 
publicized in the aftermath of major tragedies like Katrina.
    To the degree that our diverse communities are flush with 
resources, for example, Princeton alumni in the financial 
sector who need be little concerned with the responsiveness of 
nonprofit organizations to their needs. However if diversity is 
defined as synonymous with concentrated poverty and social 
needs. For example, among recent Hispanic and Asian immigrants, 
Native Americans, inner city black poverty zones, the rural 
south, charitable organizations are woefully short of resources 
commensurate with needs.
    Little charity or volunteerism passes from wealthy suburbs 
to inner cities or rural areas or regions like Appalachia. 
Local charity in those needy communities, no matter how 
generous, makes only a small dent.
    My estimates show that only somewhere between 10 to 30 
percent of charitable contributions are targeted to the 
stranger. That is, outside one's own social group and locale.
    We live and work in communities highly segregated by 
income, race and ethnicity and have little contact with the 
other. Charity remains circumscribe within class, ethnic and 
racial boundaries.
    The poor and members of diverse communities and their needs 
are not prominent to donors. Contributors' contributions are 
overwhelmingly local, church, arts organizations, alumni 
organizations, et cetera. No clearinghouse or invisible hand 
operates at national or local levels to ensure that donations 
are adequate and well targeted to where they are most needed.
    That is, the process is fragmented and atomized. Targeting 
decisions are made largely without rigorous analysis of social 
needs and priorities, and little attention is devoted to 
monitoring and evaluation of the services that are supported.
    Furthermore, contribution levels are based more upon 
donor's ability to give than on levels of need.
    Now charity has been highly effective in enhancing quality 
of life and the variety of educational, civic, cultural and 
health services available to the American population as a 
whole. However, the targeting is not charitable in the sense of 
distributional equity. That is, consistency of allocations with 
the distribution of fundamental social needs among our diverse 
communities.
    Our systems of charitable institutions and tax 
deductibility for contributions are highly cost ineffective as 
mechanisms for redistribution of household income or social 
welfare.
    The losses in Federal and state revenue from charitable 
deductions far exceed donor transfers to the needy. 
Redistribution has been demonstrated to be far better through 
government appropriations that through tax remission or 
deduction measures.
    Now the historical evolution of the charitable sector in 
the U.S. shows growing recognition that government bears the 
major responsibility. On the other hand, charity and 
philanthropy have reserved the role of first response to 
crises, development in testing of innovative service programs 
and advocacy for enhanced quality of life and greater 
inclusiveness in the American Dream. Now this is not a bad 
division of responsibility if done well.
    I want to briefly describe a recent case study from 
research in New York city. It was a study of excess 
responsiveness and coverage of nonprofit services in New York 
city. It showed a high degree of unevenness and a number of 
significant gaps.
    First of all, the middle and upper income communities have 
a very dense network of civic groups and services that go along 
with it. There is a strong preference given by nonprofit 
providers to downtown locations for the convenience of staff 
and board bembers, much to the detriment of people in the 
neighborhoods who really need the services.
    There has been a slow response of extending coverage of 
nonprofit services to neighborhoods that are experiencing rapid 
demographic and social change. There are significant service 
gaps in communities with large numbers of recent Hispanic and 
Afro-Caribbean immigrants.
    Service gaps in poverty neighborhoods are attributable to a 
shortage largely of government contracted programs because in 
those communities there is virtually no charitable support of 
the services that are provided. Those nonprofits are reliant 
for 80 to 90 percent of their revenues upon grants from 
Federal, state and local government.
    Next, much greater financial failure, that is bankruptcy 
among nonprofits in poverty and immigrant neighborhoods due to 
failure in finding diversified funding resources. Now we can 
expect only modest changes at the margin or the level and 
targeting of charitable donations.
    I've learned something valuable through prayer, that if you 
expect decent results you want to give God a decent break and 
you want to pray for something that is consistent with natural 
law or human nature; don't pray for things that are unlikely to 
occur. For this reason I believe strongly that any changes in 
our charitable system are likely to occur only at the margin 
with modest incremental forces.
    The nonprofit sector is strong. It does a good job in many 
of the things that it does, even if it isn't charitable, and it 
has strong friends in Congress.
    I'm not expecting to find major changes to occur, but I'm 
going to talk only about incremental changes. Progress in some 
metro areas has been achieved by making the needs of the 
communities more visible through regular needs assessments and 
inventories of service gaps. Make them more visible.
    Next, taking advantage of natural and manmade catastrophes 
that uncover longstanding service needs----
    Chairman LEWIS. Doctor, if you could, summarize. I've 
tended to let you go over your 5 minutes because your 
intervene--you had the divine to intervene there for a moment, 
and I didn't want to interfere with the divine.
    Mr. WOLPERT. He's no longer with me.
    [Laughter.]
    Chairman LEWIS. Okay. Okay. So, your 5 minutes is up. If 
you can, just close it out.
    Mr. WOLPERT. Okay. The rest of my statement largely makes 
recommendations for redefining needs not necessarily through 
diversity but through categories, for example, serving those 
who have health problems associated with being poor so the need 
is targeted or the campaign is targeted toward groups who have 
high incidence of stroke and diabetes rather than necessarily 
with the ethnic communities.
    Anyway, so the rest of my remarks are mainly suggests of 
what can be done at the increment, at the margin in order to 
improve the distribution of charitable resources. Thank you.
    [The prepared statement of Mr.Wolpert follows:]
        Statement of Julian Wolpert, Ph.D., Bryant Professor of
            Public Affairs, Emeritus, Woodrow Wilson School,
              Princeton University, Princeton, New Jersey
    I want to congratulate the Subcommittee chair, members and staff 
for their decision to focus on the important issue of charitable 
responsiveness to diverse communities. The topic of American generosity 
expressed both through charitable donations and through willingness to 
support public sector safety net and social programs has been very 
prominent in my recent research. The time allotment today will allow me 
to present only a brief synopsis of findings. A list of references to 
my other writings on the topic has been added to the end of this 
statement.
What charity does well and not so well
    My research has shown that charity (and voluntarism) 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. The needs of diverse 
urban and rural, majority and minority communities are largely 
invisible to donors, unless highly publicized in the aftermath of major 
tragedies, like Katrina. To the degree that our diverse communities are 
flush with resources (e.g. Princeton alumni in the financial sector), 
we need be little concerned with the responsiveness of nonprofit 
organizations to their needs. However, if diversity is defined as 
synonymous with concentrated poverty and social needs (e.g. among 
recent Hispanic and Asian immigrants, Native Americans, inner city 
Black poverty zones, the rural south), then charitable organizations 
are woeful short of resources commensurate with needs. Little charity 
or voluntarism passes from wealthy suburbs to inner cities or rural 
areas or Appalachia. Local charity in those needy communities, no 
matter how generous, makes only a small dent. My estimates show that 
only somewhere between 10 to 30% of charitable contributions are 
targeted to the ``stranger,'' (i.e. outside ones own social group and 
locale.)
The nonprofit sector is fragmented and atomized, much like local 
        government
    The targeting of donations is thus not very different from the 
functions of local government. We live and work in communities highly 
segregated by income, race, and ethnicity and have little contact with 
the ``other'' or the ``stranger.'' Charity remains circumscribed within 
class, ethnic and racial boundaries. The poor and members of diverse 
communities and their needs are not prominent to donors. Contributions 
are overwhelmingly local (church, arts organizations, alumni 
organizations, etc.) No clearing house or invisible hand operates at 
national or local levels to ensure that donations are adequate and well 
targeted to where they are most needed. Targeting decisions are largely 
made without rigorous analysis of social needs and priorities and 
little attention is devoted to monitoring and evaluation of the 
services that are supported. Furthermore, contribution levels are based 
more on donors' ability to give than on levels of need.
    Charity has been highly effective in enhancing quality of life and 
the variety of educational, civic, cultural, and health services 
available to the American population as a whole. However, the targeting 
is not charitable in the sense of distributional equity, i.e. 
consistency of allocations with the distribution of fundamental social 
needs among our diverse communities. Our systems of charitable 
institutions and tax deductibility for contributions are highly cost 
ineffective as mechanisms for redistribution of household income or 
social welfare. The losses in federal and state revenues from 
charitable deductions far exceed donor transfers to the needy. 
Redistribution has been demonstrated to be far better achieved through 
government appropriations than through tax remission or deduction 
measures.
    The historical evolution of the charitable sector in the United 
States shows growing recognition that government bears the major 
responsibility for safety nets and addressing issues of equity and 
distribution. On the other hand, charity and philanthropy have reserved 
the role of: first response to crises; development and testing of 
innovative service programs; and advocacy for enhanced quality of life 
and greater inclusiveness in the American dream.
Case study in New York City
    My recently completed assessment of access, responsiveness, and 
coverage of nonprofit services in New York City showed a high degree of 
unevenness and a number of significant gaps in service provision:

      the much denser infrastructure and support networks for 
nonprofit organizations in long-established middle and upper income 
neighborhoods
      the preference by nonprofits to locate their service 
facilities in downtown commercial zones rather than in residential 
areas where they would be more accessible to users
      slow response in extending coverage of nonprofit services 
to neighborhoods experiencing rapid demographic and social change
      significant service gaps in communities with large 
numbers of recent Hispanic and Afro-Caribbean immigrants
      service gaps in poverty neighborhoods attributable to a 
shortage of donations and grants as well as government contracted 
programs
      much greater financial failure (i.e. bankruptcy) among 
nonprofits in poverty and immigrant neighborhoods due to failure in 
finding diversified funding resources
      numerous faith-based service providers lack the staff and 
facilities to provide the variety of services they claim to deliver to 
diverse communities.

Incremental improvements in charitable services to diverse communities
    We can expect only modest change at the margin in the level and 
targeting of charitable donations. At the same time, we would not want 
to maim the golden goose that has accomplished so much on behalf of our 
cultural, educational, and religious life by inhibiting donor 
discretion.
    Findings from my earlier research show that charitable institutions 
in partnership with government at all levels, and business leaders can 
help to make their targeting more responsive to the needs of diverse 
communities. Progress in some metro areas has been achieved by:

      making the needs of these communities more visible 
through regular needs assessments and inventories of service gaps
      taking advantage of natural and man-made catastrophes 
that uncover long-standing service needs to implement new charitable 
priorities that can endure beyond the crisis period
      encouraging greater voluntarism and partnerships across 
class and ethnic communities and across cities, suburbs, and exurban 
areas
      overt advocacy by nonprofit leaders for a greater 
government role when and where service needs clearly outpace the 
capacity of charitable institutions
      helping public, nonprofit officials, and business leaders 
to stress among other messages in charitable campaigns that:
      The American notion of fairness implies helping to 
``level the playing field'' especially for younger people
      The adage that ``we take care of our own'' is not only 
insufficient but generally a license to discriminate in favor of the 
less needy
      Households should plan their charitable decisions more 
systematically to ensure that gifts do not simply pay for services they 
themselves use.
      Strong family values are prominent among our needy recent 
immigrants and could be better sustained through enhanced services that 
assist upward mobility
      Services to our diverse communities are a form of 
insurance that help to reduce the future incidence of social problems
      Community pockets with severe service gaps are 
reflections of civic neglect and are stigmatizing to their cities and 
regions
      Diverse communities consist of people like ourselves who 
share the same values and whose needs are likely to be very temporary
      Donor targeting of contributions tends to be highly self-
serving while donors' forums and leaders of federated campaigns are 
generally better able to target donations where they are most needed.

References to studies of donor targeting by Julian Wolpert

Patterns of Generosity in America: Who's Holding the Safety Net?, Twentieth 
Century Fund, New York, NY, 1994.

What Charity Can and Cannot Do, New York: Twentieth Century Fund Press, 
1995

Fragmentation in America's Nonprofit Sector in Paul Schervish and Virginia 
Hodgkinson, eds. Care and Community in Modern Society. San Francisco: 
Jossey-Bass, 1995.

1Rationalizing Selfishness, The American Prospect, Fall, 1995.

Giving and Region: Generous and Stingy Communities, in Charles H. Hamilton 
and Warren F. Ilchman, eds. Cultures of Giving: How Region and Religion 
Influence Philanthropy. San Francisco: Jossey-Bass, 1996.

The Demographics of Giving Patterns in Dwight Burlingame, ed. Critical 
Issues in Fundraising. San Francisco: Jossey-Bass, 1996.

Nonprofit Adjustment to Neighborhood Change, Proceedings, 25th Anniversary 
Conference, Association for Research on Nonprofit Organizations and 
Voluntary Action, New York,1996

The Role of Small Religious Nonprofits in Changing Urban Neighborhoods, 
Nonprofit and Voluntary Sector Quarterly, 1999

How Federal Cutbacks Affect the Charitable Sector, in Lynn Staeheli, et al. 
eds. Transforming American Government: Implications for a Diverse Society. 
Thousand Oaks, CA: Sage, 1999.

The Role of Philanthropic Foundations: Lessons from America's Experience 
with Private Foundations. Chapter 6 in Helmut Anheier and Jeremy Kendall 
(Eds.) Third Sector Policy at the Crossroads: An International Nonprofit 
Analysis. London: Routledge 2001

Communities, Networks and the Future of Philanthropy. Chapter in C.T. 
Clotfelter and

T. Ehrlich (Eds.) Philanthropy and the Nonprofit Sector. Bloomington: 
University of Indiana Press and American Assembly, 1999.

Nonprofit Property Tax Exemption: Background, Challenges, and Implications, 
2000 Lincoln Institute of Land Policy

The Location of Nonprofit Facilities in Urban Areas. 2001. Lincoln 
Institute of Land Policy Working Paper WP01JW1

New York City's Nonprofit Sector , Toronto: Univ. of Toronto Press. 2003 
(and supplementary Technical Manual on methodology. (with John E. Seley)

Nonprofit Services in New York City's Neighborhoods. Univ. of Toronto 
Press. 2003 (with John E. Seley)

The Distributional Impacts of Nonprofits and Philanthropy. in Patrice Flynn 
and Virginia Hodgkinson (Eds.). Measuring the Impact of the Private 
Nonprofit Sector on Society. Plenum Publ. 2002.

The Role of Philanthropic Foundations: Lessons from America's Experience 
with Private Foundations. Chapter in Helmut Anheier and Jeremy Kendall, 
Eds.) Third Sector Policy at the Crossroads: An International Nonprofit 
Analysis. London: Routledge 2003

The Impact of 9/11 on New York City's Nonprofits: Temporary Setback or New 
Trajectory?'' Community Studies Society Discussion Paper, 2002;

Employment Growth in the Nonprofit Sector: Good or Bad News? Community 
Studies Society Discussion Paper, 2003;

Nonprofit Response to Demographic Change: The Role of Government 
Support.Community Studies Society Discussion Paper, 2002;

The Financial Squeeze for New York City's Nonprofit Human Service 
Providers. Univ. of Toronto Press. 2004 (with John E. Seley)

Redistributional Effects of America's Private Foundations Chapter 8 in: 
Prewitt, Kenneth; Toepler, Stefan; and Heydemann, Steven (Eds.) 
Philanthropic Foundations and Legitimacy: U.S. and European Perspectives. 
SSRC and Russell Sage. 2004.

Secular and Faith-Based Human Services: Complementarities or Competition? 
Community Studies Society Discussion Paper, 2004

Nonprofit Services in New York City's neighborhoods: An Analysis of Access, 
Responsiveness, and Coverage. The New York City Nonprofits Project, 2004

Financially Vulnerable Nonprofit Service Providers in Underserved 
Neighborhoods.

The New York City Nonprofits Project, 2006

                                 

    Chairman LEWIS. Thank you very much for your testimony. 
Your entire statement will be placed in the record.
    Our next witness is from the Urban Institute. I am pleased 
to welcome Dr. Elizabeth Boris, the director of the Center on 
Nonprofits. Welcome.

            STATEMENT OF ELIZABETH T. BORIS, Ph.D.,

               DIRECTOR CENTER ON NONPROFITS AND

                 PHILANTHROPY, URBAN INSTITUTE

    Ms. BORIS. Thank you very much.
    Chairman LEWIS, Ranking Member Ramstad and Members of the 
Committee, thank you for this opportunity to testify today.
    At the Urban Institute I direct the Center on Nonprofits 
and Philanthropy and also oversee the National Center for 
Charitable statistics where we collect data on the nonprofit 
sector and make it available for research.
    The topic today is an important one, a unique civic culture 
exists in the United States largely based on giving and 
volunteering to improve communities in a variety of ways, by 
solving problems, preventing harm, generating knowledge, 
promoting civic participation and much more.
    In my testimony I cover five questions. In my 5 minutes 
I'll only have time to touch on each.
    Surveys reveal that people from every economic, racial, and 
ethnic group give and volunteer. They also create 
organizations. The most widely used source, Giving USA, says 
that total donations for 2006 equal about $295 billion.
    We're talking about who gives how much and to whom. An 
estimated 10 percent of contributions went for human services 
organizations, but this is clearly not the whole story.
    Nonprofits are partners with government in providing many 
human services. Government is estimated to provide about 30 
percent of nonprofit revenues, through grants and contracts and 
a variety of human and health-related services and others, so 
government shapes where most nonprofit contributions are really 
used.
    Compared to the government sector however, the nonprofit 
sector is small. Nonprofits receive about 2 percent of personal 
income, government about 25 percent. The nonprofit sector is 
not a system--this echoes Julian's comments--Rather, it is a 
fragmented mosaic of mostly small organizations.
    Sixty-one percent have less than $250,000 in revenue per 
year. Fees for services are increasingly important source of 
support. Contributions are a small but vital part of nonprofit 
revenues, about 12 percent.
    Who benefits from these contributions? All nonprofits and 
donations to them must serve public purposes, broadly defined. 
Breakdowns by population groups are difficult to document. The 
information is not required on tax forms or public disclosure 
documents and many types of activities are really for public 
benefit.
    A new analysis by the Center on Philanthropy at Indiana 
University estimates that about 31 percent of individuals gave 
to nonprofits that explicitly address the needs of the 
disadvantaged. If contributions from foundations and 
corporations and estates are included that total is about 23 
percent. These estimates are the best we have at the moment, 
and they are cobbled together from a variety of sources. You 
can't go to one place and find these data.
    In terms of charitable beneficiaries, preliminary results 
of a study in my institution show that about 90 percent of 
nonprofits serve at least some low-income clients and that for 
a quarter of non-profits their low-income clients range between 
75 and 100 percent of those they serve.
    So, about 40 percent of nonprofits focus on economically 
disadvantaged with half or more of their clients, but fewer 
nonprofits serve that proportion of ethnic and racial 
populations. Seventy percent of nonprofits, according to this 
survey, serve half or more white clients.
    Foundation beneficiaries are from a sample that the 
Foundation Center collects. It's the largest 1,100 or so 
foundations, accounting for about a half of foundation grants. 
From there we learn that about 15 percent of foundation grant 
dollars serve human services; education, about 24 percent; arts 
and culture, 13 percent; health, 21 percent.
    Well, what does this mean? About half of the foundation 
grants are for the general public. They're for the general 
good. We have no way of determining who they benefit. One might 
say that the indirect beneficiaries of those foundation grants 
might be more important in some senses, if they're for research 
or prevention.
    So, there's very little public data available on the 
outcomes of nonprofit programs or of foundation grants, yet 
this information is what we are really required to assess if we 
want to understand the underlying question of who benefits from 
charitable contributions.
    How do charities and foundations identify community needs? 
There are lots of ways; surveys, mostly; focus groups. There 
are all kinds of things that I'm sure our folks from Atlanta 
will talk about. The National Neighborhood Indicators project 
is one way of neighborhoods collecting data and making it 
available.
    The weakness of needs assessment is that it's not done 
uniformly and that finding the resources to conduct needs 
assessment is very difficult.
    Are there gaps between needs and services? There are 
undoubtedly gaps, especially for the poor. Charities that 
provide basic human services are largely funded by the 
government, and government itself only spends two to three 
percent of its budget on the under-served.
    The makeup and needs of the poor are not uniform across the 
country. Neither are nonprofits. Contracts with charities often 
don't provide overhead so that in order to make ends meet they 
have to go out and raise additional revenues. There are all 
kinds of things that we could do to try to fix that problem.
    How do we improve the quality and scope of data on 
nonprofit beneficiaries? First, we can mandate electronic 
filing of Forms 990 and, second, revise that form. They're very 
high on my agenda. We use those data all the time and we also 
have software on our website to help nonprofits fill them out.
    But even with these enhancements the sector requires an 
investment not only from those of us in the nonprofit sector, 
but from government in systematic data collection and an 
integrated sector information system.
    As this testimony demonstrates, we can piece together 
plausible stories from surveys and data from all kinds of 
sources, but it requires a Herculean effort and lots of time 
and money, and the results that we find have to be heavily 
qualified.
    If knowledge about nonprofits is important to public policy 
in this country we must have the resources for creating, 
maintaining and making accessible data on the nonprofit sector. 
Thank you very much.
    [The prepared statement of Ms. Boris follows:]
           Statement of Elizabeth T. Boris, Ph.D., Director, 
       Center on Nonprofits and Philanthropy, The Urban Institute
Chairman Lewis, Ranking Member Ramstad, and Members of the Committee:

    Thank you for this opportunity to testify today on the topic, 
``Whether Charitable Organizations Serve the Needs of Diverse 
Communities.''
    I am Elizabeth Boris, director of the Center on Nonprofits and 
Philanthropy at the Urban Institute, where I also oversee the work of 
the National Center for Charitable Statistics (NCCS). The Urban 
Institute conducts independent, nonpartisan analyses of a wide range of 
national issues. The Center that I direct focuses on nonprofit 
organizations and philanthropy. At our National Center for Charitable 
Statistics, we create and share with researchers and the public over 
150 databases on nonprofit organizations derived mainly from the public 
reports that nonprofit organizations annually file with the IRS on 
Forms 990 and 990-PF. Researchers use NCCS data to assess financial 
trends and conduct in-depth surveys of nonprofit and foundation 
governance, administrative and fundraising costs, and much more.
    The topic today is an important one. A unique civic culture exists 
in the United States. It evolved through the efforts of our diverse 
populations reaching back before the creation of this country and it 
continues to evolve with every new generation and immigrant group. In 
our culture, we expect individuals to contribute to their communities 
over and above their taxes and we honor people who give and volunteer 
to solve problems and improve conditions in their communities, in the 
larger society, and throughout the world. U.S. laws recognize the value 
of these contributions and exempt from taxes the 1.4 million nonprofit 
organizations that serve public purposes, and provide tax incentives to 
encourage giving to a subset of almost 900,000 charitable organizations 
that serve the public through educational, religious, scientific, 
literary, poverty relief, and other activities for public benefit (Wing 
et al. forthcoming).
    To capture the diversity of nonprofit organizations in the United 
States, the National Taxonomy of Exempt Entities has over 630 
categories that group organizations under eight major headings--arts, 
culture, and humanities; education; environment and animals; health; 
human services; international; public and societal benefit; and 
religion-related organizations.
    In my remarks today, I will draw on our research and experience 
with data on the nonprofit sector and that of others. I will try to 
answer five critical questions:

      Who gives, how much, and to whom?
      Who benefits from charitable contributions?
      How do charities and foundations identify the needs of 
their communities?
      Are there gaps between needs and services?
      How can we improve the quality and scope of data on 
charitable beneficiaries?

Who Gives, How Much, and to Whom?
    First, let's turn to the sector's scale. Nonprofits receive about 2 
percent of personal income, compared with government's 25 percent 
(Steuerle and Hodgkinson 2006). The nonprofit sector is not a system. 
Rather, it's a fragmented mosaic of mostly small organizations--61 
percent reported less than $250,000 in revenues in 2004. Most 
nonprofits, especially the larger ones, have a mix of revenue sources, 
but contributions provide only about 12 percent of the $1.4 trillion in 
revenues of charities.
    Some types of organizations rely more heavily on contributions, for 
example, international organizations (68 percent), environmental 
organizations (51 percent), and religious organizations (57 percent). 
Others depend more on fees for goods and services (including Medicare 
and Medicaid). For example, the top three sectors in terms of fee 
income are health (85 percent), human services (49 percent), and 
education (47 percent) (Boris and Steuerle 2006). Government is 
estimated to provide about $317 billion of nonprofit revenues through 
grants and contracts for a variety of human and health-related 
services, as well as education, research, and much more (Abramson et 
al. 2006). Overall, giving is a small, but important part of nonprofit 
revenues.
    The origins of nonprofits are telling. Most are created by social 
entrepreneurs to meet societal needs, protect cherished values, promote 
desired conditions, or prevent undesirable outcomes or activities. Most 
are local, though some work at state, regional, national, and 
international levels. Nonprofits are employers, employing about 9 
percent of the U.S. workforce and providing volunteer opportunities 
that enrich the lives of millions of Americans.
    There is no one definitive source of data for the amount of 
contributions and their beneficiaries. Over the past 25 years, we have 
improved the estimation techniques and survey data used in annual 
compilations, now researched by Center on Philanthropy at Indiana 
University and published in Giving USA (Giving USA Foundation). This is 
still a mix of more and less reliable sources. We have good data on 
amounts of contributions made by individuals who itemize donations on 
their income taxes, but we must rely on surveys to estimate 
contributions of those who do not itemize on their tax returns.
    Surveys also provide information on the recipients of donations and 
are thus subject to the limitations of response rates and timeliness 
issues in addition to the problems that arise when different data 
sources are combined.
    While Census data are available on giving and volunteering, we must 
use less definitive data to estimate who benefits from charitable 
donations. We can look at beneficiaries from three perspectives, (1) 
recipients of individual donations by conducting surveys; (2) 
recipients of foundation grants by doing surveys and analyzing grants; 
and (3) beneficiaries of nonprofit services, by making estimates based 
on surveys and program descriptions.
    The basic facts about charitable giving, estimated in the 2007 
Giving USA are the following:

      Total charitable donations for 2006 equal $295.02 
billion. Americans gave an estimated $222.89 billion in 2006 directly 
and to foundations, and $22.91 billion at death through their estates.
      Private and community foundations gave $36.5 billion 
dollars for charitable purposes in 2006, and corporate foundations and 
giving programs gave $12.72 billion.

    Surveys reveal that people of every economic, racial, and ethnic 
group give and volunteer to nonprofit organizations. Sixty-eight 
percent of households in the 2004 survey made donations. The median 
gift was $775 (Center on Philanthropy at Indiana University 2007). In 
addition, there is a growing diversity of givers from middle- and 
higher-income groups who are creating foundations and nonprofits, 
joining in giving circles, giving online, and engaging with charitable 
organizations of all types (New Ventures in Philanthropy 2007).
Who Benefits from Charitable Contributions?
    Who benefits from individual and institutional contributions, and 
from the nonprofit services they support, is not well documented--
because that information is complex to report and is not required on 
tax forms or on public disclosure documents. The Forms 990 that 
nonprofits annually file with the IRS do not require organizations to 
report the demographics of the people they serve. The forms also 
combine individual contributions with those from foundations and 
corporations, making it impossible to differentiate among those 
sources. Requiring a break-out of individual, foundation, and 
government contributions on the Form (as NCCS has recommended in its 
comments on the revised Form 990), would allow us to measure how much 
different types and sizes of organizations receive from each type of 
contributor. With that information, we will be able to determine where 
those contributions are going, right down to the neighborhood level.
    Churches and other religious congregations receive the largest 
proportion of charitable donations and since they are not required to 
report to the IRS, researchers estimate the amounts from surveys. 
Congregations received almost a third of contributions, $96.82 billion 
in 2007, according to data compiled for Giving USA 2007 (figure 1). An 
estimated 59 percent of contributions to congregations are from the 42 
percent of households with incomes less than $100,000.
    In contrast, an estimated $29.56 billion (10 percent) of 
contributions in 2006 went to human services organizations. Many larger 
human service organizations serve multiple constituencies with a range 
of offerings. It is therefore difficult to tell whether a donation to a 
particular organization supports people in crisis, a capital campaign, 
or low-income child care provision. Similarly, it's hard to define 
``poor'' populations and to disentangle how much of a given 
organization's programs serve a community support poor people, aged 
people, youth, women, ethic minorities, disabled people, and other 
marginalized populations. The IRS does not require organizations to 
report on their clients' demographics. There are not uniformly used 
standards for reporting recipients.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Figure 1. 2006 Contributions: $295.02 Billion by Type of Recipient 
Organizations

    Source: Giving USA 2007

    Notes: All figures are rounded. Total may not be 100 percent.

     * Foundation Center and Giving USA estimate

    ** Contributions to organizations that are not tracked (for 
example, government entities or scholarship donations to mutual benefit 
associations), deductions carried over, and unallocated giving are 
estimated at $26.08 billion, or 6.6 percent of the total.

Individual Contributions
    Individuals must itemize their annual contributions on their income 
tax forms if they seek a charitable deduction. When this information 
becomes available, it is the definitive source for the amounts 
itemizers give, although research by David Joulfaian (2001) indicates 
that, on average, high net worth households contribute about twice as 
much as they can deduct in any given year, suggesting that the amounts 
recorded for any one year may be undercounted. Recipient information is 
not available, however, and we do not have a comparable source for 
measuring donations from the majority of Americans who do not itemize 
contributions on their tax returns. We rely on surveys to assess how 
much and to whom different population groups give. These surveys are 
getting better but are still likely to undercount at the bottom and top 
of the income distribution. Still, survey data allow us to estimate 
broad categories of recipient organizations. Tax deductibility of gifts 
hinges on the contributions being made to organizations that have 
recognized ``charitable'' status. Direct gifts to individuals and 
informal giving are not tax deductible, and thus are not counted.
    A new analysis by the Center on Philanthropy researchers uses two 
surveys and data from other sources to estimate that approximately $78 
billion (31 percent) of the $250 billion dollars that individuals gave 
to nonprofits in 2005 explicitly addressed the needs of the 
disadvantaged. If contributions from foundations, corporations, and 
estates are included, 23 percent of total contributions are 
specifically intended to benefit low-income people (Center on 
Philanthropy at Indiana University 2007). These estimates use the best 
data we have at present and represent an important advance. But, these 
complex combinations of less-than-adequate data must be used 
cautiously.
Charities' Beneficiaries
    Organizations are required to describe on their IRS Forms 990 the 
accomplishments of their four largest programs, but they are not 
required to describe the people they serve. For some organizations, 
like colleges and universities, such reporting is likely to be quite 
easy because most track their students by multiple factors. For other 
types of organizations, it might be difficult to categorize the 
recipients of services. A soup kitchen may, by definition, serve the 
poor, but if it does not collect information from those it serves, it 
is not likely to know the ethnic, immigrant, disabled, gender, aged, or 
ex-offender status of that population. Collecting such information 
would require staff and or volunteers to gather the information, 
develop databases, input data, and generate reports and statistics. 
These steps might be difficult for small organizations, but not for 
larger charities with developed administrative infrastructures.
    An Urban Institute study, Nonprofit Governance in the United 
States: Findings from the First National Representative Study by 
Francie Ostrower (2007), provides a rigorous and detailed analysis of 
nonprofit governance practices in the United States based on a 
stratified random survey of over 5,100 charities required to file the 
IRS Form 990. The survey asks questions about diversity of board 
members and of the people the organizations served. While early study 
reports do not focus on diversity issues, further analysis will do so. 
Preliminary results suggest that over 90 percent of nonprofits serve at 
least some low-income (below the poverty level) clients and that for a 
quarter of nonprofits, their low-income clients range between 75 and 
100 percent of those they serve.
    With regard to diversity, 70 percent of nonprofits have clients 
that are half or more white; 15 percent of nonprofits do not have any 
black (non-Hispanic) clients, and 3 percent serve 75 percent or more; 
35 percent do not serve any Asians, and 0.9 percent serve 75 percent or 
more; 21 percent do not serve any Hispanic/Latino people and almost 2 
percent serve 75 percent or more. For white (non-Hispanic) clients, 3 
percent serve no whites, and 40 percent serve between 75 and 100 
percent white clients. These preliminary findings indicate that while 
40 percent of nonprofits focus on economically disadvantaged (half or 
more of their clients), few nonprofits serve that proportion of ethnic 
and racial populations.


                           Table 1. Beneficiaries of Charitable Organizations (percent)
----------------------------------------------------------------------------------------------------------------
                                                           Black (non-                               White (non-
       Percentage of  clients served         Low-income     Hispanic)     Hispanic        Asian       Hispanic)
----------------------------------------------------------------------------------------------------------------
0                                                8.7          14.9          21.2          35.1           3.1
----------------------------------------------------------------------------------------------------------------
1-9                                             19.1          41.6          45.3          25             5.2
----------------------------------------------------------------------------------------------------------------
10-24                                           19.0          20.7          16.6           9             7.4
----------------------------------------------------------------------------------------------------------------
25-49                                           12.0          13.7           9.7           2            14.6
----------------------------------------------------------------------------------------------------------------
50-74                                           15.4           5.8           3.3           0.8          29.8
----------------------------------------------------------------------------------------------------------------
75-100                                          25.7           3.4           1.9           0.9          39.8
----------------------------------------------------------------------------------------------------------------
Source: National Survey of Nonprofit Governance (Ostrower, 2007)

    To put the findings in context, about 13 percent of Americans live 
below the poverty level, but the proportion of various ethnic groups 
who live in poverty varies greatly. Almost 9 million of American blacks 
(25 percent) live in poverty, compared with almost 18 million (9 
percent) of whites, over 9 million (21.5 percent) of Hispanics, and 
Asian 1.4 million (10.7 percent) (2006 American Community Survey). 
These demographics and the differences by state and regions have an 
impact on those served by nonprofits that have not been sufficiently 
analyzed.
    Underserved populations are not spread uniformly across the 
country. Neither are nonprofits. While nationally there are 
approximately 10.9 nonprofits per 10,000 people, the density varies by 
state and region. The states with highest density of nonprofits are 
Vermont with 26.9 organizations per 10,000 people, Alaska with 20, and 
Montana with 19.2--compared with low-density states, Nevada with 5.9, 
and Mississippi with 6.7. Among the most populous states, Texas had 8.3 
nonprofits per 10,000 people; California, 10.4; and New York, 12.5. 
Rural states in the upper Midwest have a denser nonprofit 
infrastructure than Southern states (National Center for Charitable 
Statistics forthcoming). These findings underline the potential 
mismatch between nonprofit resources and populations, particularly in 
the South. Research has not addressed the reasons for the mismatch or 
strategies for addressing the gaps.
Foundations' Beneficiaries
    The 71,095 private, corporate, and community foundations held 
assets of $550 billion in 2005, a gain of 7.8 percent from 2004. They 
made grants of more than $36 billion dollars, a 14.3 percent increase. 
Human services received the largest proportion of foundation grants, 
but in dollars (15 percent); education (24 percent); arts and culture 
(13 percent); and health (21 percent) (Foundation Center 2007).
    Foundation grants are all reported to the IRS on Forms 990-PF, (and 
Form 990 for community foundations) but the beneficiaries of the grants 
are not required. The Foundation Center does survey a sample 1,154 of 
the largest foundations and classifies their grants of $10,000 or more. 
The statistics cover about half of the money given by foundations, but 
are only indicative of grantmaking trends among the largest 
foundations, and are likely to underestimate grants to smaller, 
community-based organizations. Among the limitations of these data are 
the overlapping categories and the different ways that similar grants 
might be classified. If a foundation, for example, makes a grant for 
scholarships for single women heads of households, depending on the 
locale and strategy of the foundation, that grant could be categorized 
as one that benefits the poor, a particular ethnic group, women, youth, 
ex-offenders, or may be part of an economic development strategy for a 
particular community.
    In 2005, nearly 54 percent of the reported grants (70,000) did not 
have a specific beneficiary. Those were classified as benefiting the 
general public. Among those with an identified beneficiary group, the 
greatest number, 30,044 with a value of $2.97 billion, benefited 
children and youth. The second largest group with 25,647 grants worth 
$2.58 billion was for economically disadvantaged populations. Grants 
for ethnic or racial minorities numbered 13,455 with a value of $1.35 
billion (Foundation Center 2007). These figures suggest that about 11 
percent of grants benefit underserved populations. Without an analysis 
of the grants that fall below the $10,000 threshold and those that 
benefit the general public, it is difficult to determine the utility of 
these figures. They probably underestimate grants to smaller 
organizations likely to be serving diverse constituencies. More 
generally, however, most grants of large foundations likely do not 
directly serve particular constituencies.
    In a special report on Social Justice Grantmaking (2005), the 
Foundation Center assessed grants made to vulnerable population groups 
specifically to spur structural change and increase opportunities. The 
report documents that 749 of the 1,005 donors (whose grants were 
tracked by the Foundation Center) provided $1.76 billion for social 
justice issues, up from $1.15 billion given by 686 donors in 1998. 
These grants were given to 52,375 recipients, compared with 40,934 
recipients in 1998. The proportion of all grant dollars for the group, 
however, was lower: 11 percent in 2002, compared with 11.8 percent in 
1998. The report indicates that there may be a trend toward increasing 
numbers of foundations giving to social justice issues.
    These data illustrate the variety of grants and grant recipients. 
They also illustrate the limitations of the data for a detailed 
analysis of giving that benefits low-income and minority populations. 
Foundations do target underserved populations, both directly and 
indirectly. It is not possible yet to measure adequately and at a 
reasonable cost the scope of either the direct or the indirect 
beneficiaries of the foundation field. And the indirect benefits may be 
among the most powerful. Foundation-funded research, for example, may 
reveal the dimensions of problems ex-prisoners face and may lead to 
programs designed to head off re-incarceration and to federal dollars 
to support such efforts. The research grants may go to an entity like 
the Urban Institute or to a university--and thus, in a cursory 
analysis, would not be categorized as benefiting underserved 
populations even though they do.
    Finally, there is very little public data available on the outcomes 
of grants, yet this information is required to assess the underlying 
question of who benefits from foundation grants.
    Evaluations of specific programs, for example of the National 
Community Development Initiative, can reveal how foundation funding 
leveraged resources and affected communities (Walker et al. 2002).
How Do Charities and Foundations Identify Community Needs?
    Charities and foundations identify community needs in many 
different ways. Local governments, United Way agencies, and community 
and private foundations may all support efforts to determine 
communities' needs. Examples include a collaboration of major 
nonprofits and government that produced the 2007 Community Needs 
Assessment for Howard County, Indiana (Bonnet and Hoke 2007), and How 
Is the Region Doing: Human Service Use and Service Availability in 
Allegheny County, PA, a study commissioned by the Forbes Fund of 
Pittsburgh (Guitierrez-Mayka and Bernd 2006). The Knight Foundation 
drew on Census, NCCS, and other data sources to develop very detailed 
economic and demographic portraits of the communities that it serves. 
The National Neighborhood Indicators Partnership furthers the 
development and use of neighborhood-information systems to guide 
policymaking and community building (http://www2.urban.org/nnip/).
    Smaller organizations do not often systematically assess community 
needs. Human service charities are usually created to meet unmet needs 
and are often hard pressed even to make payroll. To raise operating 
funds, they must convince public and private funders of the needs they 
are meeting, and they must provide services that people are willing to 
pay for. In a sense, the nonprofit marketplace--especially foundations 
and government--requires a case to be made. Those who rely on 
individuals who give small amounts probably rely more on stories about 
needs.
    The foundation field has many task forces and affinity groups to 
help donors explore the needs of ethnic and racial minorities, women, 
disabled people, gays and lesbians, neighborhoods, civic participation, 
health, education, community development, and more. Right now, one task 
force is looking at how to measure the diversity of foundation 
grantees, and another one is examining rural grantmaking. There are 
also efforts to share information and best practices. The Annie E. 
Casey Foundation, for example, developed a ``Race Matters'' toolkit 
designed to help address policies and practices that contribute to 
inequitable outcomes for children, families, and communities, with fact 
sheets on key areas (health, education, income security, etc.), a 
racial equity impact analysis tool, community building strategies, and 
an organizational self-assessment (http://www.aecf.org).
    The weakness of needs assessment in the nonprofit world is that it 
is not systematic and regular in all communities. It is often 
piecemeal--a study of the needs of youth in one neighborhood and of 
housing shortages in another. Obtaining resources to conduct 
comprehensive needs assessments over time is often difficult. Another 
weakness is that there is rarely systematic information collected on 
the outcomes of the services already provided.
Are There Gaps between Needs and Services? 
    There are undoubtedly gaps between needs and services, especially 
for the poor. Charities are largely funded by government when they 
provide basic human services. The makeup and needs of populations at 
risk are not uniform throughout the country, and government resources 
and priorities differ. Contracts with charities to provide welfare-type 
services often do not reimburse the full cost of services or provide 
overhead as they do for business contracts, with the result that 
charities must spend their resources raising money from other sources, 
often forgoing infrastructure improvements that would make them more 
efficient (Miller 2005).
    Part of the difficulty is that most giving is local, and 
communities differ in their makeup and needs. It is far more likely 
that a branch of a local youth group in Marshall Heights, or Bailey's 
Crossroads, Virginia, will serve Latino youth, than a branch in 
Potomac, Maryland, or Anacostia. National nonprofits with local 
affiliates can often help to cross-subsidize efforts from one locality 
to the next, but there are issues of donor intent that may limit their 
ability to take revenues from one area to serve another. Rather, 
nonprofits must raise additional revenues to serve low-income 
populations.
    Governments sometimes provide incentives for individuals to direct 
their contributions to organizations serving low-income populations. In 
Arizona, the state government implemented a special tax credit for 
those who give to charities that certify that more than half of those 
they serve are below the poverty line. This strategy has raised 
additional resources, but mostly for large, well-known organizations 
(De Vita and Twombly 2004).
    Immigrants are creating organizations to meet their needs. Often 
these come out of religious entities. In a study we are conducting of 
immigrant serving organizations, we identified several hundred 
organizations, most created in the past 15 years, that serve Latino, 
Asian, African, and Middle Eastern immigrants in the D.C. metro area 
alone. New immigrant groups seem to be following the time-honored 
pattern of setting up organizations for a variety of purposes. Those 
include religious worship and services, human services, cultural 
activities, education, language instruction, and many more. Among the 
Latino organizations, revenue is roughly equally derived from 
government, contributions, and fees, but over half of the organizations 
do not receive government revenues. As immigrant communities move to 
the suburbs, they are causing a rethinking about the location of groups 
that serve them. There is a newly emerging dimension of civil society 
beginning to flourish in our immigrant communities. These new 
organizations may require mentoring, seed funding, and capacity 
building as they learn the ropes.
How Can We Improve the Quality and Scope of Data on Charitable 
        Beneficiaries?
    As you might imagine, the quality and timeliness of data on 
nonprofit organizations concerns us greatly. We developed the nonprofit 
classification system, the National Taxonomy of Exempt Entities that 
the IRS and many researchers now use. We also collaborated with the IRS 
to scan the Forms 990 and partnered with GuideStar to make those images 
available to the public on both our websites. We recently analyzed the 
proposed changes to the Forms 990 and submitted our recommendations for 
improvement. We believe that electronic filing of Forms 990 will 
complete the revolution in nonprofit transparency that began with 
sharing images of Forms 990 with the public, because the quality and 
timeliness of the information will be enhanced. To that end, we 
developed and make available on our web site software that lets 
nonprofits complete their Forms 990 and transmit them to the IRS. 
Requiring nonprofits to complete Forms 990 in electronic format will 
facilitate more complete and timely reporting by nonprofits, and better 
data on the nonprofit sector.
    Even with these enhancements, however, there is no doubt that the 
sector requires an integrated sector information system that links 
information on nonprofits, foundations, contributions, employment, 
Census, general social survey data, and others. There has been very 
little government investment in data that document trends in the 
nonprofit sector. As this testimony demonstrates, we can piece together 
plausible stories, but to do so requires Herculean efforts and 
resources that are rarely available. And the results of these efforts 
must be heavily qualified. If knowledge about nonprofits is important 
to public policy in this country, resources must be directed toward 
creating the infrastructure required to develop the information.
References

Abramson, Alan, Lester Salamon, and C. Eugene Steuerle. 2006. ``Federal 
Spending and Tax Policies: Their Implications for the Nonprofit Sector.'' 
In Nonprofits and Government, 2nd edition, edited by Elizabeth Boris and C. 
Eugene Steuerle (107-40). Washington, DC: Urban Institute Press.

Bearman, Jessica E. 2007. ``More Giving Together: The Growth and Impact of 
Giving Circles and Shared Giving.'' Forum of Regional Associations of 
Grantmakers. http://www.givingforum.org/s_forum/bin.asp?CID=1883&-DID=
5316&DOC=FILE.PDF.

Bonnet, Deborah, and Robert E. Hoke. 2007. ``2007 Community Needs 
Assessment for Howard County, Indiana.'' [[city?]]: DBonnet Associates. 
http://www.unitedwayhoco.org/needs/prt_overview.pdf.

Boris, Elizabeth, and C. Eugene Steuerle. 2006. ``Scope and Dimensions of 
the Nonprofit Sector.'' In The Nonprofit Sector: A Research Handbook, 
edited by Walter W. Powell and Richard Steinberg (66-88). New Haven: Yale 
University Press.

DeVita, Carol J., and Eric C. Twombly. 2004. ``Charitable Tax Credits: Boon 
or Bust for Nonprofits?'' Policy Brief no. 16. Washington, DC: The Urban 
Institute.

Giving USA Foundationtm. 2007. Giving USA 2007. Glenview, IL: 
Giving USA Foundation.

Guitierrez-Mayka, Marcela, and Elisa Bernd. 2006. ``How Is the Region 
Doing? Human Service Use and Service Availability in Allegheny County, 
PA.'' Tropman Reports. The Forbes Fund. http://www.forbesfunds.org/docs/
2006
TropmanReports.pdf.

Independent Sector and the Foundation Center. 2005. Social Justice 
Grantmaking: A Report on Foundation Trends. New York: The Foundation 
Center.

Joulfaian, David. 2002. ``Charitable Giving in Life and at Death.'' In 
Rethinking Estate and Gift Taxation, edited by Gale. W., J. R. Hines, Jr., 
and J. Slemrod. (350-74). Washington, DC: Brookings Institution Press.

Miller, Clara. 2005. ``The Looking-Glass World of Nonprofit Money: Managing 
in For-Profits' Shadow Universe.'' The Nonprofit Quarterly 12(1).

Ostrower, Francie. 2007. ``Nonprofit Governance in the United States: 
Findings on Performance and Accountability from the First National 
Representative Study.'' Washington, DC: The Urban Institute.

Steuerle, C. Eugene, and Virginia A. Hodgkinson. 2006. ``Meeting Social 
Needs: Comparing Independent Sector and Government Resources.'' In 
Nonprofits and Government, 2nd edition, edited by Elizabeth Boris and C. 
Eugene Steuerle (81-106). Washington, DC: Urban Institute Press.

The Center on Philanthropy at Indiana University. 2007. ``Patterns of 
Household Giving by Income Group, 2005.'' http://
www.philanthropy.iupui.edu/Research/Giving%20focused%20on-
%20meeting%20needs%20of%20the%20poor%20July%
202007.pdf.

The Foundation Center. 2007. Foundation Giving Trends: Update on Funding 
Priorities. New York: The Foundation Center.

U.S. Census Bureau. 2007. ``2006 American Community Survey.'' [[city?]]: 
U.S. Census Bureau. http://www.census.gov/acs/www/.

Walker, Christopher, Jeremy Gustafson, and Chris Snow. 2002. ``National 
Support for Local System Change: The Effect of The National Community 
Development Initiative on Community Development Systems.'' Washington, DC: 
The Urban Institute.

Wing, Kennard T, Thomas H. Pollak, Amy Blackwood, and Linda M. Lampkin. 
Forthcoming. Nonprofit Almanac 2007. Washington, DC: Urban Institute Press.

                                 

    Chairman LEWIS. Thank you very much for your testimony. I 
am pleased now to welcome Kevin Brown from the American Red 
Cross, the chief operating officer.
    We will not hold it against you, Mr. Brown, for stealing 
our former IRS commissioner. Wish him well.
    Mr. BROWN. I will. Thank you.
    Chairman LEWIS. Thank you. We're very pleased to have you 
here.

STATEMENT OF KEVIN M. BROWN, CHIEF OPERATING OFFICER, AMERICAN 
                           RED CROSS

    Mr. BROWN. Thank you, Mr. Chairman. I am delighted to be 
here today on behalf of the American Red Cross.
    Ordinarily, as you mentioned, Mark Everson, our president 
and CEO, would be here in my place. Unfortunately he had a 
previous commitment that does not allow him to be here today.
    For the American Red Cross our mission is defined by our 
congressional charter to help our Nation prevent, prepare for 
and respond to disasters. Diversity is important to us because 
our mission is to help all, not some. Our services are only 
beneficial if they reach those who need them. We must ensure 
that the American Red Cross is reflective of all the 
communities we serve.
    We realize that not all people turn to the Red Cross as 
their first line of defense when disaster strikes. For many, 
they turn to who they know and trust, be it their church or a 
local nonprofit or civic organization.
    This was certainly true during Hurricane Katrina. Because 
the need was so great, hundreds if not thousands of local 
churches opened their doors to help their neighbors. Other 
local nonprofit organization, those that typically would not be 
in the disaster response business, were selflessly giving all 
they could to care for people.
    Several advocacy groups observed that we did not 
consistently meet the needs of diverse communities, that we 
lacked diversity in our staffing and volunteer ranks, and that 
we had not done enough before the storm to foster the right 
relationships with local and national organizations that serve 
diverse populations. We have taken this criticism to heart.
    To this end, we have been working diligently over the past 
2 years to partner with many new nontraditional disaster 
response organizations well before a disaster hits.
    An example of this would be the Vietnamese fishing 
community in the Gulf Coast area. This community was not 
familiar with the Red Cross, and after Katrina struck they 
turned elsewhere for assistance. Unfortunately we did not know 
where they were or what their needs were and it took us days to 
reach them and provide needed resources.
    We now have an agreement in place with Boat People SOS, a 
nationally recognized group that assists Vietnamese refugees 
and immigrants.
    Just this past weekend as a tropical depression threatened 
the Gulf Coast, our local chapter in New Orleans activated 
their agreement with Boat People SOS, who was charged with 
running the Plaquemines Parish shelter in partnership with the 
Red Cross.
    Similarly, over the past 2 years the Red Cross has trained 
over 1,100 volunteers from the NAACP to provide essential 
relief services, and they have deployed with us during several 
recent storms.
    To be sure, while such partnerships have proven useful they 
are not the sole answer. For instance, the Red Cross needs to 
make further significant improvements on the staffing front and 
in our volunteer base.
    I want to touch on one other point as well. In addition to 
disaster preparedness and response the Red Cross also collects, 
processes and distributes more than 40 percent of the blood 
used in our country.
    We know that we need to approve the recruitment and 
retention of diverse blood donors for a couple of reasons. The 
first is that only 8 percent of eligible donors donate blood 
each year. Secondly, donations from diverse communities can 
help with specific needs like sickle cell anemia. Increased 
donors will help to alleviate these needs and contribute to a 
safe and available blood supply.
    I would also like to acknowledge and thank my fellow 
panelists for their long support of the American Red Cross. The 
Ford Foundation has been a tremendous partner in helping us 
improve our post-disaster service delivery mechanisms, 
providing millions of dollars in support of these efforts.
    The Community Foundation of Greater Atlanta was a strong 
supporter of our disaster response efforts during Katrina and 
is a consistent supporter of the American Red Cross of Greater 
Atlanta. The Twin Cities United Way is a strong supporter of 
disaster relief and local Red Cross community initiatives in 
the Twin Cities. We are grateful for their friendship and 
continued support.
    As you all know, there were some leadership changes at the 
Red Cross earlier this year when Mark Everson took over as our 
new president and CEO. New leadership provides new 
opportunities. I can tell you today that the Red Cross must do 
better in understanding that diversity is a strategy that can 
enhance all aspects of our mission.
    Successful diversity initiatives result in better client 
services, increased staff and volunteer talent pools, stronger 
and more meaningful partnerships and increased financial and 
blood donations.
    Together I know we can make the Red Cross the strong, 
diverse and inclusive organization it should be and that all 
Americans expect it to be. Thank you for the opportunity to 
testify today, and I'd be happy to answer any questions you may 
have.
    [The prepared statement of Mr. Brown follows:]
  Statement of Kevin M. Brown, Chief Operating Officer, American Red 
                                 Cross
    Chairman Lewis, Congressman Ramstad and Members of the Committee, I 
am pleased to be able to appear before you today as the Chief Operating 
Officer of the American Red Cross.
    I want to thank you, Mr. Chairman, for holding this hearing today. 
While I have only been at the Red Cross for just a few short weeks, the 
issue of diversity--and of ensuring that our organization integrates 
diversity into all aspects of our mission and operational strategies--
has been top of mind.
    Today, I will focus my remarks on where we have been, lessons 
learned in particular from our response to Hurricane Katrina, and where 
we are going in the future. But before I do that, I want to address why 
it is important for nonprofit organizations to be mindful of 
integrating diversity initiatives into their organizational 
strategies--into recruitment, into strategies on engaging partners, and 
into service delivery.
    The very nature of charitable organizations is to address needs--
needs that, perhaps, are not met by government or social services, or 
that are better left with a ``neighbor helping neighbor'' model. 
Charities provide an important role in our nation--in communities from 
coast to coast. For the American Red Cross, our Congressional Charter 
mandates our mission: to help our neighbors prevent, prepare for and 
respond to disaster. Each and every day, our more than 700 chapters 
respond to more than 200 house fires and other disasters, in addition 
to providing first aid, CPR/AED, and other health and safety training 
programs to more than 11 million individuals each year. Our 35 blood 
regions collect, process and distribute more than 40% of all blood 
needed and used in the nation. Our two Service to Armed Forces Centers 
annually provide 650,000 emergency communications from 193,000 families 
to loved ones serving in our nation's armed forces. And our 
international relief operations respond to an average of 30 
international disasters annually.
    Most Americans recognize the American Red Cross as our nation's 
partner in disaster preparedness and response. As the landscape of our 
great country has changed over the past 125 years, the American Red 
Cross has to better adapt to changing demographics and ensure that our 
organization--at every level and across all our lines of business--is 
reflective of the communities we serve. This includes our paid staff 
and management, volunteers and blood donors, and contracting 
opportunities.
    Our mandate is not to help some of the nation prepare and respond--
rather, our mission is to help ensure that all in our nation are cared 
for. Simply stated, our programs and services are only beneficial if 
those who need them can access them. All people should feel comfortable 
coming to the Red Cross in times of need--and we need to ensure that we 
inspire faith, trust and confidence in our organization.
    Mr. Chairman, this hearing is timely as September is National 
Preparedness Month. Just last week, the Red Cross President and CEO, 
Mark Everson, and six of our local chapter executives participated in a 
roundtable discussion with Representative Bennie Thompson, Chairman of 
the House Committee on Homeland Security, and his colleagues on the 
Committee to talk about community and individual preparedness. Our 
chapter executives highlighted progress they have made in engaging all 
their constituents in preparedness efforts--many through partnerships 
with diverse organizations, faith groups, businesses, and local civic 
organizations. We know that it is often the most vulnerable communities 
that are most significantly impacted by disaster, which reinforces my 
point--in order for us to get to communities that need us, we need to 
reflect those communities at all levels throughout our organization.
    This hearing is also timely because it is National Sickle Cell 
Awareness Month. Sickle Cell Anemia, which causes red blood cells to 
form an abnormal crescent shape, affects more than 70,000 people in the 
United States--mostly African Americans. One of the most common 
treatments for Sickle Cell Anemia is regular blood transfusions to help 
reduce the risk of stroke, damage to major organs that can lead to 
severe infections, and other complications that can arise from the 
disease. Many donors need blood transfusions every few weeks to help 
keep the effects of the disease at bay, and transfusions from blood 
donors of the same ethnic background are even more beneficial because 
they have less chance of causing complications for the recipient.
    The American Red Cross collects more than 40 percent of the 
nation's blood supply annually. Statistically, we know that we need to 
improve the recruitment and retention of diverse blood donors, for a 
couple of reasons. The first is that only 8 percent of eligible donors 
donate blood each year. Secondly, donations from diverse communities 
help with specific needs like Sickle Cell Anemia. African Americans, 
for instance, are more likely to have Type O or B blood. On any given 
day in any Red Cross blood region in the country, there are shortages 
of Type O and B blood. Increased donors will help alleviate these needs 
and contribute to a safe and available blood supply.
    For large, historical organizations, building relationships and 
changing the demographics of the organization take time, resources, and 
a solid commitment from leadership. Since Hurricane Katrina, the Red 
Cross has taken a hard look at our challenges with regard to reaching 
diverse groups and has put some policies and programs in place to help 
the organization meet these challenges. We recognize we have more work 
to do, and with new leadership comes new opportunities.
Where We Have Been
    Before Hurricane Katrina slammed into the Gulf Coast, the American 
Red Cross knew that it needed to implement changes that would better 
serve diverse communities. There seemed, however, to be some reluctance 
in acknowledging or discussing publicly these needs. While the Red 
Cross previously had attempted to implement diversity programs that 
were designed to enhance our abilities to serve all communities, there 
were starts and stops and limited progress was made.
    When Hurricane Katrina hit the Gulf Coast, however, issues became 
exacerbated and the organization was forced to publicly acknowledge and 
discuss problems of race, language, and culture in ways it had never 
done before. Indeed, the 2005 hurricane season proved to be more than 
20 times greater than anything we have ever responded to in our 125-
year history--and it turned out to be a defining moment for our 
organization.
    While I will discuss lessons learned for the Red Cross in just a 
moment, I want to offer some initial observations. Over 220,000 trained 
Red Cross disaster services workers from all 50 states, the District of 
Columbia, Puerto Rico and the Virgin Islands gave their talents and 
time to respond to Hurricane Katrina. Accordingly, our self-assessment 
is not a reflection on the people who donated their time, money and 
talents so generously. Indeed, when we turned to the American people 
and told them that our relief efforts were going to cost more than $2 
billion, they responded with extraordinary charitable support. When we 
turned to the business community and said that we needed their 
expertise, several corporations, working collaboratively, shared with 
us their talent and innovation. I know that you will join me in 
agreeing that the challenges that existed, and those issues that still 
persist, are not a reflection of the devotion and kindness of our 
volunteers and donors. We appreciate and value all who came to help 
their neighbors in need, and continue to rely on volunteers to assure 
we can provide services today and in the future.
    That said, through our response to Katrina the Red Cross learned 
that there are limits to our effectiveness in addressing the needs of 
diverse constituencies in a vast array of communities. These 
constituencies included, among others, the elderly, people with 
disabilities, African Americans, Latinos and Asian Americans. During 
the relief effort, some advocacy groups observed that the Red Cross had 
not consistently met the needs of a diverse segment of their 
communities. One group asserted that the Red Cross workforce lacked 
diversity from top to bottom, and, as a result, was not sufficiently 
sensitive to racial and cultural issues. Put another way, the sense was 
that the Red Cross lacked ``cultural competence'' in its response to 
Katrina. Other groups reported Red Cross communication failures with 
minority populations, particularly in remote areas along the Gulf 
Coast. Another recurring complaint was that the Red Cross had not done 
enough before Katrina struck to foster the necessary relationships and 
develop agreements with local and national organizations that serve 
diverse populations.
    We have taken this criticism to heart. As the nation's largest mass 
care provider, we have been successful in responding to disasters for 
more than a century. On larger relief efforts we have worked 
effectively with familiar partners like the Southern Baptist Convention 
and The Salvation Army. In very large events, like Katrina, many new 
groups step forward. In the midst of providing service during Katrina, 
we had difficulty helping these new groups become part of the community 
response. We need to improve our ability to work with these new, non-
traditional disaster response organizations, and do so well before the 
disasters take place. This was a hard but valuable lesson for the Red 
Cross to learn. The Red Cross can, and must, take a lead role in 
helping them become part of the response.
    Katrina also was a wake up call for the Red Cross that partnering 
is important in all disasters--not just major catastrophes. Since 
Katrina, the Red Cross, at the national level and throughout our more 
than 700 chapters nationwide, has worked diligently to create and 
foster strong partnerships with many new organizations that would 
typically not be in the disaster response business. Our chapters have 
been working with local community organizations--from faith groups and 
businesses to local civic organizations--to ensure that partnerships 
are in place so that organizations that selflessly step up to help 
their neighbors know in advance how to access supplies, resources, and 
expertise. For many people the Red Cross is not their first line of 
defense when disaster strikes. Instead it is their church, local civic 
group, or other community organization. Through such partnerships, Red 
Cross chapters are providing training and supplies to community and 
faith-based organizations to strengthen response efforts across the 
nation so that when a disaster strikes, these organizations will be 
better prepared to assist, and the Red Cross will be better prepared to 
identify and reach out to people who may need assistance. We have seen 
the benefit of working with these new partners in many significant 
responses over the past two years. I want to provide you with some 
recent examples:

      In preparation for this past weekend's tropical 
depression in the Gulf of Mexico, our Southeast Louisiana Chapter in 
New Orleans activated its preexisting relations with Boat People SOS, a 
nationally recognized group that assists Vietnamese refugees and 
immigrants. Boat People SOS personnel were charged with managing the 
Plaquemines Parish Shelter in partnership with the American Red Cross.
      In anticipation of the same storm, the chapter also 
activated its partnership with the Hispanic Apostolate to have Spanish-
speaking volunteers on-call to provide translation services in New 
Orleans disaster shelters.
      On a national level, the Red Cross has worked with the 
American Translators Association to ensure that some 200 translators 
are available for deployment during disasters.
      With the landfall of the quick forming Hurricane Humberto 
two weeks ago, The National Baptist Convention's youth groups worked 
with our volunteers in Port Author, Texas to do door-to-door 
distribution of informational flyers while also assisting senior 
citizens with needed items such as ice, water and clean-up kits.
      In order to more effectively address disability related 
issues, the Red Cross has partnered with the National Disability Rights 
Network and other national disability advocates. At their direction, we 
have recently purchased 8,000 accessible cots and other items, 
including commode chairs and shower stools, which have been staged in 
key warehouses across the country.
      Over the past 18 months, the Red Cross has provided 
disaster training at several NAACP convention meetings. The objective 
was to increase capacity to serve diverse and vulnerable communities as 
well as build stronger relationships with faith-based organizations, 
civic organizations and special interest partners, supporting a more 
inclusive model of community-based disaster response.

    While the work with our partners points to some progress, we 
understand that our collaboration must be sustained to truly benefit 
those we serve. Our vision for partnerships is that disaster relief 
organizations support one another for the common good through 
coordinated service. There is no market share on human suffering. 
Therefore, our work needs to be joint in nature and inclusive to all 
segments of the nation.
Where We Are Going
    Earlier this year the American Red Cross underwent some major 
changes. In May, the President signed into law the American National 
Red Cross Modernization Act that updated the Red Cross Congressional 
Charter, which had not been amended significantly since 1947. Under the 
new charter, the responsibilities of the Board of Governors and the 
President and Chief Executive Officer are clearly delineated--holding 
management accountable for its performance and making the Board a 
governance and oversight board. Additionally, the Act calls for the 
establishment of the Office of the Ombudsman, an independent office 
that will represent the interests of the public by investigating and 
addressing complaints reported by individuals. These are all important 
changes for the American Red Cross and I thank the Congress for its 
expeditious passage of this measure.
    The Red Cross also has a new management team. New leadership 
provides new opportunities, and over the course of the past few months 
the issue of diversity has been discussed a great deal. While 
continuing an across-the-board effort on diverse partnerships, there is 
a recognition that we also need to build a more robust diversity 
program that fully integrates diversity in all of the Red Cross. For 
instance, we need to make further significant improvements on the 
staffing front and in our volunteer base.
    The American Red Cross must do better in understanding that 
diversity is a strategy that can enhance all aspects of its mission. 
Successful diversity initiatives result in better client services, 
increased staff and volunteer talent pools, stronger and more 
meaningful partnerships, and increased financial and blood donations. 
When managers see the ``business case'' for diversity, they can support 
and drive diversity initiatives through their operations leading to 
meaningful results.
    The American Red Cross must be accountable for producing results. 
With a diversity strategy in place, and operational goals for 
implementing diversity strategies throughout the organization, the Red 
Cross will be ready to start measuring results and holding people 
accountable for delivering on diversity initiatives.
    Why are we doing this? Simply put, America is changing and the 
American Red Cross must do so as well.
Conclusion
    Mr. Chairman, Congressman Ramstad and Members of the Committee, 
this topic is important and timely--not only for the nation and the 
charitable sector, but also for the American Red Cross. While some 
progress has been made through partnership efforts, there is much more 
to be done. With more than 700 chapters and 35 blood regions, the Red 
Cross is part of every community in our nation.
    We are on a path to ensure that we represent all individuals in all 
our communities across the nation. This journey has started with 
partnership, but it will not end there.
    I want to close with one thought about the Red Cross and our long 
history. The American Red Cross, as part of an international movement, 
is guided by seven fundamental principals. One of those principals is 
``[i]mpartiality.'' This principal states ``[i]t makes no 
discrimination based upon nationality, race, religious beliefs, class, 
or political opinions. It endeavors to relieve the suffering of 
individuals, being guided solely by their needs, and to give priority 
to the most urgent cases of distress.'' The foundation of ensuring that 
we are representative of those we serve--and that we are a culturally 
competent and sensitive organization--is embedded in the principles of 
who we are. I think this is a very good starting point.
    We have a tremendous amount of work to do, and we are going to need 
your help. Together, we believe we can make the Red Cross the strong, 
diverse and inclusive organization it should be--and that all Americans 
expect it to be. I look forward to working with you as we continue this 
journey, and I would be happy to answer any questions you may have.

                                 

    Chairman LEWIS. Thank you very much for your testimony.
    I'm pleased now to welcome our next witness, Susan 
Berresford, the president of the Ford Foundation. Thank you for 
being here.

  STATEMENT OF SUSAN BERRESFORD, PRESIDENT AND CEO, THE FORD 
                           FOUNDATION

    Ms. BERRESFORD. Thank you very much. Chairman Lewis and 
Members of the Subcommittee, thank you for holding this hearing 
today.
    I was asked to explain how the Ford Foundation makes 
allocations, who makes those decisions, and to give you some 
examples of the programs we support. Ford's mission is to 
strengthen democratic values, reduce poverty and injustice, 
promote international cooperation and advance human 
achievement.
    We commit 75 percent of our U.S. funding to the reduction 
of poverty and injustice. In the last fiscal year this totaled 
about $220 million, and since poverty disproportionately 
affects women, minorities, immigrants and people in rural 
areas, they are the center of our work.
    Most of Ford's work could be called strategic philanthropy 
addressing root causes. This differs from charitable 
philanthropy that addresses immediate needs such as hunger or 
homelessness.
    We provide risk capital for pilot programs for research and 
for people tackling systemic injustice in education, housing 
and other areas.
    How do we make decisions at Ford, and who makes them? 
Ford's trustees set program policy. and policy in other 
matters, such as investment and governance. Among our trustees 
who are U.S. citizens 40 percent are minorities, 23 percent are 
citizens of other countries, 62 percent are women.
    The next president of the foundation, Luis Ubinas, will be 
the first Hispanic president. I was the first woman president. 
My predecessor Franklin Thomas, the first African-American 
president.
    Forty-six percent of our professional grant makers are 
minorities. Together the board and program staff, with help 
from outside advisors, explore ways to help solve problems that 
fall within our mission statement, and ultimately the board 
approves our grant strategies and then allocates funds to those 
strategies and offices. Then they delegate to the president the 
authority to approve grants.
    Now let me give you some examples in four categories. First 
strategy, we believe that people really matter and so we try to 
ensure diversity in the talent pools from which the U.S. draws 
leadership.
    Since the early 1960s the foundation has given over $175 
million to the largest private philanthropic fellowship program 
that promotes diversity in the American professoriate.
    The Ford diversity fellows program has given fellowships to 
approximately 5,000 scholars from rural and urban areas. Most 
now hold positions in academe. Fifty-5 percent are African 
American; 38 percent, Hispanic; six percent Native American.
    Community colleges enroll more than 50 percent of Latinos 
and 40 percent of African Americans in higher education in our 
country. Since 1966 we've provided about $33 million for these 
institutions.
    We helped them improve the way student credits can be 
transferred upward in a system, how to keep tuition low and how 
to foster the community college's collaboration with schools 
who send students to them and employers who hire them.
    The second strategy the foundation has is to give low-
income people a chance to build assets, not just to earn 
income. Ford committed $50 million as a guarantee so Fannie Mae 
would purchase mortgage loans made to families with low income 
and low credit scores.
    This leveraged $4.3 billion from Fannie Mae and created 
50,000 new homeowners in low income families, 44 percent of 
them minority and 15 percent in rural areas. They have 
outstanding repayment rates.
    Manufactured housing, as you probably know, accounts for 
two-thirds of all rural housing starts, but manufactured homes 
in mobile home parks often fail to create a lasting asset the 
way other homes do, so Ford invests in initiatives that enable 
people to buy the land their mobile homes sit on, to improve 
the structures and to raise building standards.
    Another asset strategy we invest in for low-income families 
is children's savings accounts. These accounts are seeded at 
birth by investments from government and nonprofits. They 
buildup over time by private savings and public contributions. 
They can be used after 18 years of age to pay for college or 
school fees or invest in a downpayment for a home.
    We fund a national demonstration program in eleven sites 
around the country that is working on this idea; 1,300 
accounts, 78 percent of which are held by minority children. 
Since 2005 several bills have been introduced modeled on this 
program. We think it's a very exciting idea for national 
policy.
    Third strategy: Ford has also provided decades of funding 
for legal advocacy organizations that establish standards of 
fairness in America. The NAACP Legal Defense and Education 
Fund, the Mexican-American Legal Defense and Education Fund and 
similar defense funds for Puerto Rican groups, for Native 
American and Asian-American groups.
    Since the 1950s we've invested over $265 million with these 
groups. We also support voter registration and education.
    The last area I want to note quickly is the field of 
philanthropy itself. Ford supports grant-making associations 
that foster greater funding for minority communities, Minority 
Leadership in philanthropy, greater funding for rural 
communities and rural leadership. They are groups like the 
Hispanics in Philanthropy, Native Americans in Philanthropy, 
the Association of Black Foundation Executives.
    I think you have before you a time line that shows 70 years 
of the Ford Foundation's funding for topics of this sort. It 
displays many more examples than I was able to give and we are 
very proud to have the diverse partners that we have reaching 
into the diverse communities in America.
    Thank you.
    [The prepared statement of Ms. Berresford follows:]
         Statement of Susan V. Berresford, President and CEO, 
                The Ford Foundation, New York, New York
    Chairman Lewis and members of the Subcommittee, thank you very much 
for the opportunity to appear before you today. I am Susan Berresford, 
President and CEO of the Ford Foundation, an independent, nonprofit, 
nongovernmental organization. Ford's mission is to strengthen 
democratic values, reduce poverty and injustice, promote international 
cooperation and advance human achievement.
    We commit approximately 75 percent of our U.S. funding to the 
reduction of poverty and injustice. In the last fiscal year, this 
totaled nearly $220 million of our $300 million U.S. allocation. We 
fund people and organizations tackling systemic injustice in education, 
employment, housing, asset accumulation and other areas. Since poverty 
disproportionately affects women, minorities, immigrants and rural 
communities, they are at the center of our work.
    This year the Ford Foundation celebrates 70 years of delivering on 
a promise to improve lives and create opportunity. It has provided over 
$13 billion for grants, projects and loans. These funds derive from an 
investment portfolio that began with gifts and bequests of Ford Motor 
Company stock by Henry and Edsel Ford. The foundation operated as a 
local philanthropy in the state of Michigan until 1950, when it 
expanded to become a national and international foundation. The 
foundation no longer owns Ford Motor Company stock and has no formal 
ties to the company. Its diversified portfolio is managed to provide a 
perpetual source of support for the foundation's programs and 
operations which are headquartered in New York, with offices in Africa, 
Asia, Latin America, the Middle East and Russia.
    I would like to begin by making a distinction between charity and 
strategic philanthropy. Philanthropy encompasses charity that provides 
resources to deal with immediate needs such as sheltering the homeless, 
feeding the hungry, healing the sick and other acts of basic 
generosity. Ford, for example, has made grants in the aftermath of 
natural disasters in the Gulf Coast region and we helped nonprofits in 
New York and Washington respond to the events of September 11.
    But there is another kind of philanthropy, one that offers the 
prospect of curing, rather than simply alleviating, problems. It 
involves the strategic use of resources to search for new ideas that 
can address root causes. Both charitable and strategic philanthropy 
have been present in U.S. philanthropy for many decades, and both will 
always be needed.
    Most of Ford's work is in the category of strategic philanthropy. 
We see our role as a resource for innovative people and institutions 
worldwide, providing risk capital for pilot programs, research, 
institution building and developmental activity. Strategic philanthropy 
recognizes that bringing innovations to scale requires partners such as 
government, business and civil society which have capacity and reach 
far beyond the abilities of any single philanthropic endeavor.
    Before I outline some of the ways in which we serve diverse 
communities I would like to provide you with a sense of who makes up 
the leadership and staff of the foundation and how the Ford Foundation 
makes allocation decisions.
Diversity of Leadership
    Ford's Trustees select the president, set policy and overall 
spending targets. They ensure that the foundation's policies are 
implemented effectively. The composition of Ford's board and staff 
reflects our intent to draw on diverse talent. Among our Trustees who 
are U.S. citizens, 40 percent are minorities. Twenty three percent are 
citizens of other countries, primarily representing the regions in 
which we work. Sixty two percent of our Trustees are female. Our 
Trustees bring experience in business, nonprofit and governmental work. 
The next president of the foundation, Luis Ubinas, will be the first 
Hispanic president in Ford's history. I was the first female president 
and my predecessor, Franklin Thomas, who served for 17 years, was the 
first African American president.
    Today 46 percent of our professional U.S. grant makers are 
minorities--up from 27 percent in 1996 when I became president. Fifty 
percent of all grant making staff are female. This diversity helps to 
ensure that we bring a variety of perspectives to our operations and 
grant making.
Allocation Decisions and Strategies
    Our mission drives the programmatic and substantive nature of our 
work. The board and staff explore problems to which Ford resources can 
be applied, each bringing ideas to the table. Ultimately, the board 
approves the subject areas in which we work, the broad strategies in 
which we invest, and the allocation of funds to those topics and to our 
worldwide offices. The board delegates to the president the authority 
to approve grants from those allocations.
    Program officers, our key grant makers, explore how foundation 
grants can have the greatest impact, supporting people with innovative 
and promising ideas. Program staff and grantees regularly report to the 
board on how strategies are working and board members travel each year 
to review program work on the ground in the U.S. and overseas.
    The strategies for which we seek board approval most often aim to 
alter or build systems and organizations that can deliver lasting 
benefits to disadvantaged people. We offer patient capital and 
partnership, often sticking with people and organizations for years as 
they refine and test ideas and build to scale and significance.
    I would like to offer a few examples of Ford support for systemic 
change led by courageous men and women who share our values and aims. 
This work extends to both rural and urban America and represents 
efforts in a variety of areas, including education, economic 
opportunity, the arts, media, civil rights, and philanthropy.
Creating Access to Opportunity 
    People matter, so we try to ensure diversity in talent pools from 
which the U.S. draws leadership in various domains. Since the early 
1960's, Ford has supported the largest private fellowship program that 
fosters diversity in the American professoriate. Originally called the 
Ford Minority Fellows program, now the Ford Diversity Fellows Program, 
it has provided over $175 million for fellowships and related support 
for approximately 5,000 scholars from rural and urban areas, most of 
whom who now hold positions in academe. Fifty five percent are African 
American, 38 percent are Hispanic, and 6 percent are Native American. 
The program is run by the National Academy of Sciences, whose 
distinguished reputation lends prestige to the fellows' fine work.
    In K-12 education, Ford has devoted more than $35 million to 
Project Grad, developed in Houston schools under the civic leadership 
of Jim Kettleson, former Tenneco CEO. GRAD improves high school 
graduation rates and college-going in poor, urban communities. It has 
expanded from Houston to Los Angeles, Atlanta, Newark and other 
locations. Ford also invested heavily in research to determine how and 
where GRAD worked best. Our principal grantee was GRAD USA, led by a 
Hispanic educator.
    Community colleges serve as a gateway to higher education among 
minority communities. More than 50 percent of Latinos and 40 percent of 
African Americans in higher education are enrolled in community 
colleges. Since 1996, we have provided over $33 million for these vital 
institutions. This support has focused on making them more accessible, 
improving the way students credits are transferred, keeping tuition 
low, and helping students, particularly students of color, stay in 
school and prepare to enter the workforce. In California, we've 
recently provided nearly $1 million to study how community colleges are 
serving diverse communities and to propose ways they can improve.
    We have also provided $100 million to historically black colleges 
and universities (HBCUs). And we have supported the United Negro 
College Fund with grants totaling over $20 million since the early 
1950s.
Developing Innovations that Improve Lives
    The foundation believes that giving people a fair chance to build 
assets is critical to breaking the cycle of poverty and dependence. Our 
grantees create an infrastructure of financial and workforce 
development services that reach poor, remote and marginalized 
communities that the market has served poorly.
    In housing, Ford committed $50 million as a guarantee so Fannie Mae 
would purchase mortgage loans made to families with low income or low 
credit scores. Leveraging $4.3 billion from Fannie Mae, 50,000 new 
homeowners have been created, 44 percent of them minority families with 
15 percent located in rural communities. Now in its sixth year, this 10 
year initiative is demonstrating that it is possible to identify low-
income families who pay their bills reliably and can support mortgages 
that build family assets. The program is changing banking practice in 
communities across the US. This idea came to Ford from the Center for 
Community Self-Help in North Carolina, a leader in innovation related 
to home ownership and prevention of predatory lending.
    In rural America, manufactured housing accounts for two-thirds of 
all housing starts, yet it often fails to be the dependable asset most 
urban homes are. The foundation invests in a variety of rural 
initiatives that enable people to own the land their homes sit on and 
seek to improve the building standards for manufactured housing. One 
grantee, the New Hampshire Community Loan Fund, has received $8.4 
million in grants and $5 million in loans for this asset-building work. 
With over $9 million in grants, the Corporation for Enterprise 
Development in Washington D.C. is working to improve building standards 
and financing mechanisms for manufactured-home owners.
    One of the most innovative ideas to help low income families 
accumulate assets is the creation of Children's Saving Accounts. These 
accounts are seeded at birth by nonprofits and government and built up 
over time at key life intervals by contributions from families 
themselves and other donors. We support an ongoing national 
demonstration program in 11 urban and rural locations that includes 
1,300 accounts, 78 percent of which are held by minority children. The 
accounts can be accessed only after age 18, building--through compound 
interest and deposits--assets that can then be applied to school fees, 
home down payments or other significant investments.
    Since 2005, several legislative bills have been introduced to 
advance this idea. As we receive results of the multi-year experiment 
it is sure to be a resource for longer-term policy innovation. It has 
already prompted the creation of the Child Trust Fund program in the 
United Kingdom. This program came to the Ford Foundation from The 
Corporation for Enterprise Development, and a professor at Washington 
University in St Louis.
Strengthening Urban and Rural Communities 
    Since the 1960s Ford has been committed to community development in 
distressed urban and rural communities. We support efforts to create 
healthy, safe and strong neighborhoods where people can access 
employment, education and essential services. Early investments gave 
rise to Community Development Corporations (CDC) formed by residents, 
small business owners, congregations and other local stakeholders. 
Today there are 4,600 CDCs operating across the country. Additionally, 
nearly $60 million has been invested in the creation of the Local 
Initiatives Support Corporation, or LISC, providing services to inner 
city residents. We also commit to long-term revitalization efforts in 
regions that are in economic transition and distress such as the Gulf 
Coast, Camden,, New Jersey and Detroit, Michigan.
    Nearly $70 million has been invested in rural communities in recent 
years. With loans of $6.5 million, we support Southern Bancorp, the 
largest rural development bank in Arkansas and Mississippi to address 
the needs of the poor. In Maine, we provided $4 million in grants and 
$7.75 million in loans to help Coastal Enterprises develop the Portland 
Fish Pier, enabling fisherman and fishing co-ops to gain efficiency 
that makes them more competitive in domestic and international markets. 
We have supported the First Nations Development Institute with $11 
million over the past 10 years to invest in economic development in 
Native areas.
Supporting Civil Rights
    Ford has also been at the forefront with decades of funding for the 
legal advocacy organizations that have helped establish standards of 
fairness in our country. We have funded the NAACP Legal Defense and 
Educational Fund, Mexican American Legal Defense and Educational Fund, 
the Native American Rights Fund, the Puerto Rican Legal Defense and 
Education Fund and Asian American Legal Defense and Education Fund. Our 
support to these and other key civil rights organizations since the 
1950s exceeds $265 million.
    We support work in the area of voter registration and participation 
that also helps ensure that our diverse populations can be heard in 
public fora. Since the early 1980s over $13 million has been granted to 
support the Leadership Conference on Civil Rights Education Fund for 
these and other efforts. Ford also granted $3.2 million to the National 
Coalition on Black Civic Participation, a network of 80 membership 
organizations committed to increasing civic participation. They operate 
in 12 states, including California, Georgia, Ohio and Wisconsin. 
Support has also been extended to organizations such as Asian and 
Pacific Islander American Vote, Inc.
    In southern rural areas, grassroots work on civil rights includes 
$6.5 million to lift black rural women out of persistent poverty. The 
Southern Rural Black Women's Initiative focuses resources on leadership 
and economic development, along with training to ensure women's full 
participation in economic, civic and social life. More than 1000 women 
are participating across Georgia, Alabama and Mississippi. In eight 
southern states, black land ownership has dropped from 19 million acres 
to 1.5 million acres over the last 70 years. A foundation initiative 
totaling over $2.3 million is focused on helping African American 
families retain, manage and add value to these natural assets.
    The foundation has also launched the Four Freedoms Fund, to support 
grassroots organizations working to promote civic, social, economic 
integration and civil rights for immigrant communities. We have 
invested nearly $10 million in this donor fund which has already 
provided support to over 65 organizations in 28 states.
Giving Voice to Diverse Cultural Expression
    In a free society artistic and cultural expression contributes to 
our understanding of human experience. Over the last five years more 
than $20 million has supported minority-led arts organizations and 
projects. Ford helped found the Dance Theatre of Harlem and its 
community outreach programs, helping it to grow with nearly $7.7 
million over the years. We are the nation's largest and most enduring 
private funder of Native American communities, with more than $80 
million in support over the past 20 years. This includes a recent 
commitment of $13 million to establish a Native American Arts and 
Culture Fund. A recent grant to the National Association of Latino Arts 
will support the Fund for the Arts, a national grant program to benefit 
Latino artists and small to mid-size Latino arts organizations.
    Over $9 million was granted to support the development of the 
memorable award-winning documentary ``Eyes on the Prize,'' and recently 
we provided funds to renew copyrights to keep the series publicly 
available. In the last five years $12 million has gone to the support 
of minority filmmakers.
    Recognizing the importance of a robust, diverse media to American 
democracy, the foundation has supported media initiatives that reflect 
and give voice to America's diverse communities, and that promote 
diversity in the newsroom. We support media outlets serving diverse 
populations, granting $3.3 million in the past two years to the growth 
of ethnic media. This includes New America Media, a network of 700 
ethnic news organizations. In all we have committed $60 million over 
five years to spark innovation in public media, focused on diversifying 
sources of programming and reaching new audiences.
    The last area I would like to touch upon is philanthropy itself. 
Ford has invested in strengthening the voice of minorities within 
philanthropy, providing more than $22 million in grants to professional 
associations and networks working to increase philanthropic support for 
minority communities and to expand minority leadership throughout 
philanthropy. Leading this effort are Hispanics in Philanthropy, Native 
Americans in Philanthropy, National Center on Black Philanthropy, the 
Association of Black Foundation Executives, Asia American/Pacific 
Islanders in Philanthropy, First Nations Development Institute and many 
others.
Ford's Enduring Commitment
    I have had the privilege of working at the Ford Foundation for 38 
of its 70 years. The Ford timeline you have received displays the many 
ways that Ford has dedicated resources to reduction of poverty and 
injustice, and other aims. I am proud that we have a diversity of 
grantee partners doing this work with us--partners from distinguished 
public agencies such as the National Academy of Sciences and nonprofit 
non-governmental groups like GRAD USA, the Center for Community Self-
Help, the NAACP and MALDEF, to universities, academics, and leaders 
from American business. Only when all sectors of our society align 
resources for equality and fairness will we see lasting results.
    Ford's board and staff are proud to be a resource for the 
idealistic social movements of our time and the innovative ideas of 
diverse people.
    I want to thank Chairman Lewis and the members of the Subcommittee 
for bringing attention to the contributions of foundations and other 
nonprofits to our American ideals and to struggles for equality among 
our diverse people.

                                 

    Chairman LEWIS. Thank you very much for your testimony.
    Our next witness is from the great city of Atlanta. Please 
welcome Lesley Grady from the Community Foundation for Greater 
Atlanta. She is the vice president of community partnership. 
Welcome.

         STATEMENT OF LESLEY GRADY, VICE PRESIDENT OF 
             COMMUNITY PARTNERSHIPS, THE COMMUNITY

                 FOUNDATION FOR GREATER ATLANTA

    Ms. GRADY. Thank you very much. Mr. Chairman and 
distinguished Members of the Subcommittee, thank you for the 
opportunity to appear before this Subcommittee to discuss how 
charitable organizations serve the needs of diverse 
communities.
    As vice president of community partnerships I am 
responsible for grant making, community leadership and 
education of our donors.
    The Council on Foundations, a membership organization of 
more than 2,000 grant-making foundations and giving programs 
worldwide, recently created national standards for community 
foundations. It defines a community foundation as a public 
charity with a long-term goal of building permanent funds 
established by many individual donors for the benefit of 
residents in a particular geographic area.
    We make philanthropy happen by connecting donors, 
nonprofits, community leaders and institutional partners at the 
same table. Community foundations exist all over the world. 
They account for 1 percent of all U.S. grant-making foundations 
but almost 9 percent of giving.
    The Community Foundation for Greater Atlanta serves a 23-
county region, including the urban core of metro Atlanta, 
suburban areas just outside the perimeter, and ex-urban and 
rural counties as well. We provide funding to nonprofits 
through local funds, donor advised funds, competitive grant-
making programs and strategic initiatives targeting specific 
community issues.
    The Community Foundation for Greater Atlanta ranks in the 
top 10 of community foundations by total giving and in the to 
20 for asset size, yet while these numbers provide a 
statistical background for the power of community foundations 
the real power comes from connecting people and ideas to make 
our communities stronger.
    One of the ways we reflect diverse communities is by having 
strong diverse governance. The Community Foundation's board 
nomination process identifies persons reflective of the 
communities' demographics, using primary indicators such as 
race and gender, but also ethnicity, geography, socioeconomic 
background, profession, religious and political affiliation.
    Our staff as well reflects more than seven nationalities 
and is diverse by age, religion, sexual orientation, political 
affiliation, marital status and education.
    One of the main roles of the Community Foundation is to 
provide services to donors. We make philanthropy easy for our 
individual and family donors so they continue to support 
charitable organizations.
    But the most important thing we do is to educate and engage 
our donors. One of our donors family came to us with several 
passions. The father had grown up in foster care and was 
interested in supporting youth in need. The children were 
interested in animal welfare. The entire family wanted to 
support a faith-based organization.
    We introduced them to a unique nonprofit called Noah's Ark, 
a facility serving as a home for abused children as well as a 
rehabilitation center for wildlife and abused animals. The 
foundation brought eleven intergenerational members of this 
donor family from the suburbs of Atlanta to rural Henry County 
to visit Noah's Ark, and as a result the family recommended a 
$25,000 grant.
    The Community Foundation also supports diverse populations 
through our grant-making. We have local affiliates in five 
counties and regional outreach staff who work in the counties 
furthest from us to better engage and understand their needs.
    For the past 16 years we have implemented the neighborhood 
fund, which provides small grants to resident groups of five or 
more as well as a personal coach to assist and to improve their 
communities. Neighborhood fund grants are awarded for projects 
such as neighborhood cleanups, seniors walking clubs, voter 
registration drives and more.
    The foundation stays connected the region's changing 
population by bringing diverse groups to the table to talk 
about the issues in our region and figure out how we can pool 
resources of time, expertise and assets to create potential 
solutions.
    Since the time it was called GRID, gay-related immune 
deficiency, the Community Foundation has been involved in HIV/
AIDS by providing more than $9 million in grants as well as 
strong community leadership since 1981 through partnerships 
with major institutions such as the Ford Foundation, our local 
United Way and our donors.
    As the issue has changed and new HIV infection is now 
concentrating in people of color and people who are poor, 
homeless and incarcerated we have renewed our efforts, and 
recently established a leadership team of the AIDS fund to 
provide focused strategic attention to the issue.
    This team is co-chaired by Dr. David Satcher, former U.S. 
Surgeon General and a board member of the Community Foundation, 
and Sandy Thurman, former director of national AIDS policy 
under the Clinton Administration.
    Finally, the Community Foundation conducts research on the 
critical issues addressing our community. We sponsor global 
snapshots produced by the Atlanta Regional Commission. These 
publications profile various ethnic communities, their 
demographics, their customs, economic impact, where they live 
and the organizations that serve them. Recent snapshots include 
profiles of Cubans, Bosnians, Ethiopians, Iranians, Japanese 
and Haitians.
    Other recent research efforts include a study, Giving a 
Shared Inheritance, to understand the patterns, trends and 
motivations of African-American philanthropy in metro-Atlanta. 
We also did recent research on the intersections between health 
and homelessness.
    For all of our research we go directly to the sources, 
service providers, public officials as well as persons impacted 
by the issue. We take all of this knowledge and use it to 
inform our grant-making, leadership and education of donors.
    The Community Foundation for Greater Atlanta is not unique. 
We are one of more than 700 community foundations in this 
country that all strive to fully represent the dynamic and 
diverse communities we serve. It is a constant learning 
process, but the only way we can be successful we know is by 
truly representing the diverse voices that make up our 
community.
    Thank you very much.
    [The prepared statement of Ms. Grady follows:]
 Statement of Lesley Grady, Vice President of Community Partnerships, 
     The Community Foundation for Greater Atlanta, Atlanta, Georgia
Mr. Chairman and Distinguished Members of the Subcommittee:

    Thank you for the opportunity to appear before this subcommittee to 
discuss how charitable organizations serve the needs of diverse 
communities. My name is Lesley Grady, and I am the vice president of 
Community Partnerships for The Community Foundation for Greater 
Atlanta.
    The Council on Foundations, our membership organization of more 
than 2,000 grantmaking foundations and giving programs worldwide, 
recently created national standards for community foundations. The 
Community Foundation for Greater Atlanta has achieved these standards. 
They define a community foundation as the following:

      A tax-exempt, nonprofit, autonomous, publicly supported, 
non-sectarian philanthropic institution with a long term goal of 
building permanent, named component funds established by many separate 
donors for the broad-based charitable benefit of the residents of a 
defined geographic area, typically no larger than a state.
      The governing body retains variance power by which it may 
modify any restriction or condition on the distribution of assets, if 
circumstances warrant. Further, with respect to assets held in trust, 
the governing body must have the power to replace any participating 
trustee for breach of fiduciary duties under state law or for failure 
to produce a reasonable rate of return of net income.
      Serves a particular geographic area such as a 
municipality, county, state, metropolitan area or closely related 
aggregation of such areas that are considered for some purposes as a 
community, typically no larger than one state. An organization serving 
a single greater metropolitan area would satisfy this criterion even if 
that greater metropolitan area included part of several states. This 
criterion excludes national and multi-national organizations.
      Governing body ensures that the governing documents 
include policies for size of the board, required number of meetings 
annually, limits of members' term, and structure and responsibilities 
of standing committees.
      Has a long term goal of securing resources to address the 
changing needs of the community it serves.

    Community foundations exist all over the world with approximately 
700 here in the United States. They account for 1 percent of all U.S. 
grantmaking foundations but almost 9 percent of giving. According to 
the Foundation Center in 2006 their estimated giving rose 13.2 percent 
to a record $3.6 billion--surpassing independent and corporate 
foundations. In addition, community foundations prioritized giving for 
children and youth and the economically disadvantaged in 2005.
    The Community Foundation for Greater Atlanta serves a 23-county 
region of metro Atlanta. In that region we provide services to the 
urban core of Atlanta, the suburban areas just outside the perimeter 
and to exurban and rural counties as well. We provide funding to 
nonprofit organizations through local funds, donor advised dollars, 
competitive grantmaking programs and strategic initiatives. The 
Community Foundation for Greater Atlanta ranks in the top 10 of 
community foundations by total giving, the top 20 for asset size and 
has approximately 650 individual and family donors.
    While these numbers may provide a statistical background to the 
power of community foundations, the real power comes from being a local 
source of community aid, leadership and awareness. Each community 
foundation is different because each community it represents is 
different. Community foundations exist to respond to the specific needs 
of a geographic community, to build a permanent endowment through 
assets contributed by many donors and to act as community leaders 
addressing a variety of current and long-term needs.
Governance:
    One of the most important ways a charitable organization can 
reflect diverse communities is through a strong governance structure. 
The Community Foundation's Board is a diverse group of influential 
community leaders. We feel it is crucial to our long-term success as a 
community foundation to elect members who are representative of the 23-
county service area known as metropolitan Atlanta. The Community 
Foundation has a written nomination policy and process that aims to 
elect persons reflective of the community's demographics with respect 
to primary indicators of diversity such as race and gender, but also 
with respect to ethnicity, geography, socio-economic background, 
profession, and religious and political affiliations. As a guide to 
assessing the community's demographics, The Community Foundation uses 
the census data for the Atlanta metropolitan statistical area as 
defined by the U.S Census Bureau. The Community Foundation's staff is 
another critical area of diversity. The current makeup of our staff 
includes individuals who are African American, Caribbean, Latina, 
Nigerian, Caucasian and Asian American. In addition, the staff is 
diverse by age, religion, sexual orientation, political affiliation, 
marital status and education.
Donor Services:
    One of the main roles of The Community Foundation for Greater 
Atlanta is as a donor service provider. We want to make philanthropy 
easy for our donors so they continue to support charitable 
organizations. We do this by taking care of the due diligence and the 
administrative tasks of managing their record keeping, grantmaking, tax 
reporting and investment oversight. But the most important thing we do 
for our donors is to educate and engage them. We work with both 
individual and family donors and help them to discover their 
philanthropic passion by connecting them with causes they care about. 
We take donors and their families on site visits to learn how a 
nonprofit accomplishes their work. We create reports or issue briefs on 
how a topic such as the environment is affecting Atlanta and what 
nonprofit organizations are doing right now to make a difference. We 
help donors serve on boards and volunteer committees so they become 
fully ingrained in that organization. We connect donors with issues and 
causes they might not discover otherwise, and that is how we connect 
diverse communities.
    One of The Community Foundation's strategic initiatives focuses on 
the challenging transition for foster youth out of the foster care 
system. Each year in Georgia approximately 400 youth in foster care 
reach the age of 18 and emancipate from the foster care system without 
the basic support, family network, community connections, jobs, 
housing, health insurance and other resources needed to become self-
sufficient responsible adults. Our Metropolitan Atlanta Youth 
Opportunities Initiative focuses on making this transition easier for 
foster youth through individual development accounts, youth leadership 
boards and employment opportunities. When one of our donors expressed 
an interest in children's issues and asked The Foundation staff to 
research particular areas of need, we informed him about several 
opportunities including the challenges of dental care for foster youth. 
Many youth in the foster care system have limited to no dental coverage 
and therefore have no way to repair tooth decay. The result is having 
their teeth pulled. Missing teeth not only affect potential employment, 
but it also affects an individual's self-image. That donor was so moved 
by the stories of these youth that he designated dollars from his donor 
advised fund to cover dental expenses for foster care youth. The only 
way he learned about this issue and connected with this cause is 
through The Community Foundation sharing of our knowledge. That is how 
one donor connects to diverse communities.
    We established the Center for Family Philanthropy in 2000 to help 
engage and educate the next generation in philanthropy. The Center for 
Family Philanthropy provides family-centered grantmaking and 
educational and estate planning services to donors and their families. 
Through the Center, families work with an advisor to develop an 
individual plan featuring the family's values and interests, and also 
to develop a general and annual plan for grantmaking. We coordinate and 
manage families' grantmaking processes; provide information and 
education services, personal site visits and customized reports; and we 
provide opportunities for collaborative funding. We do this to 
encourage families to engage their children in philanthropy at an early 
age. Families can begin the process of developing life-long 
philanthropists by involving young children in family volunteer 
opportunities.
    One of our Center families came to The Community Foundation with 
several ideas that made each family member passionate. The father had 
grown up in the foster care system and was interested in supporting 
youth in need, several of the children were interested in animal issues 
and the entire family wanted to support a faith-based organization. 
What they ended up discovering through The Community Foundation was a 
unique nonprofit organization called Noah's Ark--a facility serving as 
a home for abused, orphaned and troubled children as well as a 
rehabilitation center for wildlife and other abused, injured and 
orphaned animals. The Community Foundation brought 11 intergenerational 
members of this family from the suburbs of Atlanta to rural Henry 
County to learn more about the work of Noah's Ark. Through this site 
visit the family made a recommendation to support this group with a 
$25,000 grant from their fund, and they continue to ask about ways to 
help Noah's Ark. That is how we connect multiple generations of 
philanthropists to communities in need.
Grantmaking:
    The Community Foundation also reaches out to diverse populations 
through our grantmaking from local funds, donor advised dollars, 
competitive grantmaking and strategic initiatives.
    We serve a 23-county region and in order to reach the many 
individuals who make up that region we make sure we never stay in one 
place. We conduct grantmaking orientations for nonprofit organizations 
and constantly move them around to make sure we are reaching the entire 
region. Understanding the issues that matter to the multitude of 
cities, suburban townships, unincorporated areas and rural communities 
that comprise the Atlanta region is a daunting task. But we know that 
the charitable objectives of donors and their families often transcend 
city or county lines. Believing that stimulating philanthropy anywhere 
in the region ultimately stimulates philanthropy everywhere in the 
region, The Community Foundation currently works with Local Funds in 
Clayton, Fayette, Morgan, Newton and North Fulton. The Foundation helps 
Local Funds build their capacity to identify local issues and local 
assets and supports their local grantmaking efforts with a match as 
well. In addition, our staffing structure includes a regional outreach 
staff divided up into three regions. Each of these individuals works 
out in the field to engage and understand that community's needs and 
bring that knowledge back to our donor base. In this way, the potential 
of each community is enhanced and each can work with the other to 
strengthen our region.
    One of our strategic initiatives called The Neighborhood Fund 
focuses on building local leadership throughout that 23-county area. 
Established in 1991 with a grant from the Charles Stewart Mott 
Foundation and a matching grant from one of our donor-advised funds, 
The Neighborhood Fund provides low- and moderate-income neighborhoods 
of metro Atlanta critical resources for accomplishing community-based 
projects; building the leadership skills of residents; and enhancing 
the organizational capacity of the group implementing the project. 
Through the years, the range of local projects supported by the 
Neighborhood Fund has been remarkable. Many different issues have been 
addressed, such as youth development, senior safety and health, 
employment, environmental improvement, voting, recreation and cultural 
appreciation. Viewed as a whole, these projects demonstrate an 
inspiring degree of grassroots imagination, talent and resolve. In 
addition, these projects are tackled in a wide variety of communities 
from the urban core of the city of Atlanta to the rural towns in Walton 
and Morgan Counties. One example of this local leadership in action was 
within Atlanta's Allen Road complex. Residents organized to bring 
retail and other services to their side of the street, because seniors 
were afraid to cross the busy road. With a $5,000 grant, a beauty 
parlor and a snack shop were started in 1997. In 2004, The Community 
Foundation received a check for $1,400--the micro enterprises had 
become so profitable that the residents returned the grant dollars to 
the Neighborhood Fund, so others could create positive change in their 
own neighborhoods.
    Another aspect of the Neighborhood Fund is our Neighborhood Fund 
Leadership Institute. We believe that the individuals who make up their 
communities can be and should be the ones leading others to make 
positive transformations where they live. Strong leadership is the 
foundation of a neighborhood's capacity to address needs and effect 
change. The Neighborhood Fund Leadership Institute teaches individuals 
how to build strong, resourceful communities and increases the ability 
of citizens to organize their communities. For emerging leaders in the 
counties of our service area, we provide a free structured curriculum 
developed in partnership with the University of Georgia's J.W. Fanning 
Institute of Leadership. It includes asset-based community development 
helping participants identify and utilize untapped resources in their 
community; project planning teaching participants to utilize a results-
based model to develop high-impact projects; volunteer recruitment and 
management helping participants understand the needs of community 
volunteers and acquire techniques for recruiting, managing and 
promoting teamwork; values identification leading participants to 
examine the challenges and benefits of diversity, and to develop 
strategies for working effectively with different values, ideas about 
leadership and communication methods; family economic success guiding 
participants to address the economic well-being of their neighborhoods 
through a process-driven approach to community development; community 
organizing teaching participants to link individual resident challenges 
to larger social issues and concerns, and developing strategies for 
moving the community agenda forward; and organization development 
helping participants learn the fundamentals of running an effective 
organization including fundraising, board development and group 
dynamics. Our leadership institute graduates continue to inspire and 
lead their communities. Since 2001, we have graduated nearly 120 metro 
Atlanta residents from The Neighborhood Fund Leadership Institute. We 
have graduates such as Nate Dyer (2006) who has lead young people in 
the Vince City community to take on leadership roles and have actively 
challenged the school system for changes in public education. One of 
our first graduates, Peggy Harper, is an active member of the Atlanta 
community and was the former Neighborhood Planning Unit President. She 
also sits on several boards including the Atlanta Renewal Community 
Coordinating Responsible Authority (ACoRA) Program. We have supported 
other counties and groups as they create their own model for their 
community including Clayton, DeKalb and a Latino Leadership Institute. 
The institute is now a mechanism for partnerships with groups such as 
The Center for Working Families and Weed and Seed referring and 
supporting residents from the communities they sponsor to participate 
in the program. Once individuals have completed the Leadership 
Institute program they are then encouraged to submit an application for 
a planning, project or community investment grant to apply their 
leadership capabilities in a concrete way that will benefit their 
neighborhood.
    In 1994 The Community Foundation for Greater Atlanta applied for 
and received funding from the National Lesbian and Gay Community 
Funding Partnership to implement a grantmaking program of services to 
Lesbian, Gay, Bisexual and Transgender (LGBT) youth and to assemble an 
advisory committee to guide the grantmaking process that reflected 
diversity in sexual orientation, age, race, ethnicity, gender and 
socio-economic status. That funding required a unique opportunity for 
The Community Foundation--it was contingent upon us raising matching 
funds from our donors. Through education and engagement The Community 
Foundation was able to raise that local donor match and from 1994-1999 
created and helped sustain programs and bring resources to support LGBT 
youth issues through the Lesbian and Gay Funding Initiative. We were 
given the opportunity to focus on any issues affecting the lesbian and 
gay community, and we chose to focus on children and youth because of 
our knowledge base in that area. We knew, for example, that LGBT youth 
were three times as likely to commit suicide as other youth. Through 
the Lesbian and Gay Funding Initiative for youth, The Community 
Foundation was able to marry both knowledge and funding and match that 
with local dollars. Successes from this initiative include creation of 
Georgia's first community center focused exclusively on supporting LGBT 
youth, scholarship support for LGBT youth, support for the first gay-
straight alliance in a Georgia high school and staff training in 
working with gay and lesbian youth for mainstream youth programs. We 
created the first institutional response to LGBT youth including the 
first conference in the state on this population as a result of our 
funding Youth Pride, an organization in Atlanta dedicated to service 
and support for gay, lesbian, bisexual, transgender and questioning 
youth. Youth Pride celebrated their 12th birthday this year and is 
today funded by United Way, Fulton and DeKalb County government and 
other mainstream funders. Our focus on this population launched citizen 
conversation about the population enough that brought other mainstream 
funders to the table.
    In 1998 The Community Foundation became one of six community 
foundations in the nation to receive a planning grant from the Charles 
Stewart Mott and Ford Foundation's Intergroup Relations Program. In 
response to changing demographics in the metro Atlanta region, The 
Community Foundation wanted to encourage more productive intergroup 
relations to ultimately lead to increased harmony among various 
cultural and ethnic groups. With a more unified community, broader 
regional concerns such as the environment, health and youth issues can 
be addressed with input from all of Atlanta's constituencies. This 
program not only brought non-traditional voices to the decision making 
table, it also linked different refugee and immigrant populations with 
each other and with long-time residents, enabling them to share ideas, 
find solutions to common problems, and work on specific issues. Funds 
provided grants and technical assistance to a wide range of community 
enhancing programs focusing on collaborative projects. One such project 
occurred between the Newtown Florist Club and El Puente in Gainesville, 
Georgia. Newtown Florist Club is a 50 year-old community-based 
organization working to ensure environmental justice for Newtown, a 
low-income community in Gainesville, and the surrounding Southside 
communities. The organization's constituency has been poor and working-
class African Americans, but recently they had begun reaching out to 
the city's growing Hispanic population. El Puente is a community-based 
organization that focuses on grassroots outreach and organizing in the 
Hispanic community and also advocates for the needs and interests of 
people of color. Together they received funding to build bridges 
between Latino and African-American youth and adults in order to 
promote cross-cultural understanding through a community dinner 
promoting diverse cultures and through an inter-racial forum for youth.
Community Leadership and Convening:
    The Community Foundation for Greater Atlanta has always been more 
than a grantmaker and donor services provider. One of the main ways we 
are able to serve more diverse populations is through our role as a 
community leader and convener. The Community Foundation has gained the 
confidence of local and national funders as a social entrepreneur with 
a proven track record of leadership in creating effective responses to 
emerging community issues that have had long-term impact on the greater 
Atlanta community.
    As a community leader we see it as both our responsibility and our 
unique niche to bring diverse groups to the table to talk about tough 
issues affecting our region and how we can pool resources of time, 
expertise and assets to create a potential solution. We see strategic 
initiatives as a way to respond to community challenges by taking 
advantage of opportunities representing innovative ways of addressing 
existing or emerging issues; supporting projects that could develop 
significant information for the nonprofit sector to improve 
effectiveness; and bringing together the partners, resources and 
information to respond to critical issues while our community builds a 
broader base of support for sustaining that response.

    Following are examples of our work as a community leader serving 
diverse communities:

          The Community Foundation's first grant addressing HIV and 
        AIDS was in 1981 when it was known as GRID--Gay Related Immune 
        Deficiency. At the time many other local foundations were 
        reluctant to address the disease because of its stigma. The 
        Atlanta Gay Center received a grant to work with the Fulton 
        County Health Department to educate employees about the disease 
        and how to work with the gay population. The Community 
        Foundation continued grantmaking toward HIV/AIDS throughout the 
        1980s with a major grant from the Ford Foundation. Other 
        funders began to recognize the importance of this work, and in 
        1991 we launched the Atlanta AIDS Partnership Fund in 
        partnership with our local United Way and the National AIDS 
        Fund. To date we have awarded more than $9 million to AIDS 
        service organizations. The most important aspect of this 
        grantmaking is that \1/3\ of our grantmaking committee is 
        living with HIV/AIDS and has a voice in funding the 
        organizations that provide AIDS services. Earlier this year The 
        Community Foundation also created a leadership team of the AIDS 
        Fund to increase the region's awareness and involvement in the 
        HIV/AIDS crisis by bringing focused, strategic attention and 
        leadership to the table. Dr. David Satcher, President of the 
        Center for Primary Care, Morehouse School of Medicine, former 
        U.S. Surgeon General and Board member of The Community 
        Foundation, and Sandy Thurman, President, International AIDS 
        Trust at the Rollins School of Public Health at Emory 
        University and former Director of National AIDS Policy under 
        the Clinton Administration co-chair the Leadership Team. While 
        HIV infection rates remain stable in the United States, its 
        impact is significant where HIV hits hard. As the National AIDS 
        Fund describes in its recent publication, One Epidemic, HIV is 
        fueled across the world by ``a universal set of social and 
        structural inequities,'' such as poverty, poor health care, 
        inadequate education, homophobia and racial/ethnic 
        inequalities. The face of AIDS is also changing. In the United 
        States, the disease first affected gay white men. Medical 
        advances and strong prevention efforts developed within this 
        community in the initial years succeeded in reducing infection 
        rates and developing safer sex practices that decreased new 
        infections among this group. Yet the disease did not go away. 
        It has spread to new groups where the risk has not been 
        understood, where prevention education has not been focused, 
        where medications are not affordable or available, and where 
        social factors put people at increased risk for chronic HIV/
        AIDS and other health problems. New HIV infection is 
        concentrating most in people of color and people who are poor, 
        homeless, incarcerated, have other health challenges, 
        unprotected sex and/or use drugs. Their infections are more 
        likely to progress to AIDS because these communities have 
        limited or no access to health care and often do not get the 
        level of treatment needed to reduce the virus's destruction of 
        their immune system. While African Americans make up 29% of 
        Georgia's population, they represent 77% of new AIDS cases in 
        Georgia and 63% of all existing AIDS cases in Atlanta were 
        among this group. African-American women account for 87% of all 
        women with AIDS in Atlanta. The AIDS Leadership Team will bring 
        renewed energy and focus to a disease that ranks Georgia 4th in 
        the number of new AIDS cases nationally.
          In an effort to increase awareness of Atlanta's growing 
        diverse population, The Community Foundation serves as a 
        sponsor of the Atlanta Regional Commission's ``Global Atlanta 
        Snapshots.'' The snapshots are designed to help community, 
        elected and business leaders become more familiar with the 
        culture, language and customs of the increasingly diverse 
        population living and working in the Atlanta region. The 
        snapshot publications celebrate the rich ethnic and cultural 
        diversity that our region now enjoys by profiling various 
        members of Atlanta's ethnic communities illustrating their 
        customs, economic impact, where they live and organizations 
        that serve them. Recent snapshots include profiles of Cubans, 
        Bosnians, Ethiopians, Iranians, Japanese and Haitians. The 
        Community Foundation also serves as a member of the Atlanta 
        Regional Commission's Global Atlanta Works Advisory Committee, 
        which works within each of the region's counties to promote 
        diversity.
          Community Foundation has recently launched a new initiative 
        called the Atlanta Neighborhood Indicators Project in 
        collaboration with the Atlanta Regional Commission, Georgia 
        State University, Emory University and the Annie E. Casey 
        Foundation to provide organizations and individuals with user-
        friendly, neighborhood-level demographic and statistical data. 
        The purpose of this initiative is to democratize data and make 
        it accessible for all residents so they can be empowered to use 
        information to address critical community issues. The primary 
        goals of the Atlanta Neighborhood Indicators Project are to 
        broaden access to information, to monitor quality of life by 
        following conditions and trends at the neighborhood level, and 
        to inspire public conversation and collaboration on the 
        important issues that affect our Atlanta communities.
          The Community Foundation continues to focus on convening and 
        outreach to diverse and emerging residents and donors. We were 
        an integral member in developing the Southeastern Network of 
        African Americans in Philanthropy or SNAAP!--a membership 
        organization of African-American grantmakers and associates 
        from the fundraising field who are committed to strengthening 
        African American philanthropy in the greater Atlanta community. 
        SNAAP has engaged national and local leaders to focus its 
        visions for developing collective strategies to accelerate 
        black giving and volunteering. The Community Foundation 
        recently partnered with the Ford Foundation, the Marguerite 
        Casey Foundation, the San Francisco Foundation and four other 
        community foundations to release the ``Economic Development 
        through a Racial Lens'' study. The project began in 2001 in 
        response to the riots in Cincinnati and the aftermath of the 
        shooting death of an African-American man by police. This study 
        captured the opinions of city residents about race and economic 
        development and provided recommendations and strategies on how 
        investments made by philanthropic, governmental, business and 
        community stakeholders can strategically connect the important 
        issues of race and economic development. The Community 
        Foundation has been instrumental in starting a regional Civic 
        League in Atlanta to offer a community mechanism for civic 
        engagement. Every community needs a strong business, public and 
        nonprofit sector, but more important is a vehicle for community 
        members to share their voices. With a small membership fee the 
        Civic League offers broad participation from all individuals to 
        think through those civic issues of the community and promote 
        an engaged and informed citizenry. And The Community Foundation 
        comps all of the fees for any individuals graduating from our 
        Neighborhood Fund Leadership Institute so they can 
        automatically put their leadership skills to work in this 
        forum. Recently The Community Foundation also funded a training 
        of the trainers workshop to promote the use of Study Circles. 
        Study Circles have been proven effective throughout the U.S. as 
        a successful way to bring small groups of people together to 
        discuss tough topics through honest conversation in a safe 
        environment. We funded the training session for other nonprofit 
        organizations to see if they would be willing to incubate a 
        discussion around race in Atlanta through their natural 
        networks. The Community Foundation realizes that these Study 
        Circles aren't about one organization tackling an issue. 
        Instead we're encouraging an almost viral effect of many of 
        these circles happening everywhere in different settings to 
        tackle the tough issue of race. The Community Foundation also 
        is working with a community committee to convene forums on 
        ``Emerging Issues in Ethnic Philanthropy.'' Sponsored by the 
        Association of Black Foundation Executives and Hispanics in 
        Philanthropy, the forums seek to identify more effective ways 
        to link philanthropic and nonprofit leaders of color to 
        mainstream philanthropies. Each forum engages a broad, 
        inclusive audience of African American and Latino leaders from 
        philanthropy, business, politics, health, education and the law 
        from throughout the region.
Research:
    In addition to our community leadership and our grantmaking, The 
Community Foundation for Greater Atlanta conducts regular research on 
the critical issues affecting our community and our sector. We believe 
that one of the main ways to engage a community is by building and 
sharing knowledge with that community. Through our research projects we 
are able to share new issues with donors, communicate innovative 
practices with nonprofits and educate community leaders and partners 
about strategic ways to approach complex problems.
    In June 2001 The Community Foundation for Greater Atlanta conducted 
a survey called Social Capital in metropolitan Atlanta. ``Social 
capital,'' a concept popularized by Harvard political scientist Robert 
Putnam, refers to ``community connectedness,'' encompassing social 
networks--that is, the extent to which people are involved with others 
at home, work, play and in public affairs--and feelings about 
reciprocity and trust. A growing body of research makes a strong case 
that social capital can promote many other important societal goods. 
Communities with higher levels of social capital are likely to have 
higher educational achievement, better performing governmental 
institutions, faster economic growth and less crime and violence. 
Individuals living in communities with higher levels of social capital 
appear to live happier, healthier and longer lives. The Community 
Foundation for Greater Atlanta funded a survey of 510 Atlantans 
randomly selected from five representative metropolitan Atlanta 
counties to measure Atlanta's stock of social capital. This local 
survey was conducted as a part of the national Social Capital Benchmark 
Survey conducted by the Saguaro Seminar at the John F. Kennedy School 
of Government at Harvard University.
    In 2003 The Community Foundation launched a study called Giving: A 
Shared Inheritance to create a framework for understanding and engaging 
the African-American giver and volunteer in Atlanta. The study was 
undertaken to provide a research-based foundation for understanding the 
patterns, trends and motivations of African-American philanthropy. The 
study findings were drawn from thousands of individual responses and 
several focus groups. The Community Foundation assembled a team of 
advisors representing philanthropic, academic, business and civic 
sectors. These local and national thought leaders brought deep 
knowledge and real-world experience to enrich the context for the 
study. They also carried the dialogue created by the research into the 
communities in which they lived and worked, helping to keep all 
participants in touch with Atlanta's relevant societal pulse. In 
addition, The Community Foundation held several forums for nonprofits 
to share research findings from the study to help the sector have a 
greater understanding of serving diverse donors.
    In October 2004 The Community Foundation partnered with the 
Healthcare Georgia Foundation to commission a study focused on the 
health of Atlanta's homeless population called Homelessness and Health: 
Wicked Problems, Small Wins. We interviewed people closely associated 
with work on homelessness and health in Atlanta--from homeless shelters 
and medical providers to the Mayor's Commission on Homelessness and the 
Metro Atlanta Tri-Jurisdictional Collaborative on Homelessness. We also 
interviewed foundation staff across the country, and held a dialogue 
with 15 Atlanta homeless people. We reviewed local and national 
research and planning documents, and explored writings about strategies 
to address these complex issues. The outcome was a 52-page document of 
diverse findings, through which we gained greater insight about where 
homelessness and health intersect. Being homeless aggravates health 
conditions, imposes additional barriers to health care, makes recovery 
difficult and burdens the community's already scarce health resources. 
Health conditions can also cause people to become homeless--
particularly individuals who are already vulnerable because of poverty 
and other factors. In addition to being one of the many challenges of 
homelessness, health offers a unique opportunity for practitioners and 
public and private funders to work together on homelessness. 
Specifically, funding strategies to improve physical and mental health, 
reduce barriers to care and connect the resources of mainstream and 
community-base health organizations can go far toward breaking down the 
complexity of homelessness and reducing its prevalence in the Atlanta 
region and the state.
    The Community Foundation for Greater Atlanta is not unique. We are 
one of more than 700 community foundations in this country that strives 
to fully represent the dynamic and diverse communities we serve. We are 
not finished with this effort nor do we ever expect to be. It is a 
constant learning process and we work hard at it everyday. But the only 
way we can be successful in meeting our mission of building healthy, 
vibrant communities is by truly representing the many diverse voices 
that make up those communities.

                                 

    Chairman LEWIS. Thank you very much for your testimony.
    I'd like to recognize the Ranking Member, Mr. Ramstad for 
presenting our last two witnesses.
    Mr. RAMSTAD. Thank you, Mr. Chairman. I again want to 
welcome and thank the two representatives here today from 
Minnesota, from the Greater Twin Cities United Way, Byron 
Laher, who is director of public policy and Marcia Fink, who is 
director of basic needs.
    Thank you both for being here and look forward to your 
testimony. I yield back, Mr. Chairman.

STATEMENT OF BYRON LAHER, DIRECTOR, PUBLIC POLICY, GREATER TWIN 
                       CITIES UNITED WAY

    Mr. LAHER. Mr. Chairman, Members, thank you. Good afternoon 
and I wanted to acknowledge my appreciation for the opportunity 
to address you.
    Our United Way serves nine counties in Minnesota, 
encompassing the metropolitan are of Minneapolis and St. Paul. 
A few statistics about our community, the Twin Cities 
population is 2.7 million people. Our median income is $57,000 
and 15 percent of our population is people of color.
    Our service area encompasses all of Minnesota's third, 
fourth and fifth congressional districts, plus significant 
parts of two and six. Our United Way is the second largest in 
the country.
    Last year we raised $86 million and invested in 450 
programs through 200 agencies to advance the common good. 
Marcia Fink will describe what United Way is doing to help 
people meet basic needs, food, housing, job training, 
transportation and more, and to support their efforts to 
achieve financial stability.
    [The prepared statement of Mr. Laher follows:]
        Statement of Byron Laher, Director, Government and Labor
    Relations and Community Affairs, Greater Twin Cities United Way,
   Minneapolis, Minnesota, and accompanied by Marcia Fink, Director,
  Basic Needs, Greater Twin Cities United Way, Minneapolis, Minnesota
Mr. Chairman, members of the subcommittee:

    Good afternoon, and thank you for the opportunity to address 
charitable organizations serving diverse populations and communities. 
My name is Byron Laher; I am the Director of Public Policy at Greater 
Twin Cities United Way which serves nine counties in Minnesota, 
encompassing the metropolitan area of Minneapolis and St. Paul. My 
colleague, Marcia Fink is the Director of Basic Needs at Greater Twin 
Cities United Way and will talk specifically about how we invest in 
programs and serve diverse communities.
    To begin, a few statistics about our community and background on 
Greater Twin Cities United Way: The Twin Cities population is 2,714,000 
people. Our median income is $57,520, and 15% of our population is 
people of color. The service area of Greater Twin Cities United Way 
encompasses all of Minnesota's third, fourth, and fifth Congressional 
Districts plus significant parts of two and six. Our United Way is the 
second largest in the country, in terms of money raised from the 
community. Last year we raised $86 million and in turn, invested in 450 
programs through 200 agencies, addressing the most pressing human 
service needs in our area. This programming is grouped into three 
community impact areas: Meeting Basic Needs, Nurturing Children and 
Families and Supporting Health and Independence.
    Marcia Fink will describe what United Way is doing to help people 
meet basic needs--food, housing, job training, transportation and 
more--and to support their efforts to achieve financial stability while 
overcoming obstacles associated with poverty. It will be no surprise to 
committee members that this segment of our community, those needing 
help in any of our impact areas, are often hardworking, low-income 
individuals and families. And diverse populations are over-represented 
in the low-income segment of most big cities.
    (Marcia) Mr. Chairman and members of the subcommittee, good 
afternoon; I am honored to have this opportunity. As Byron stated, I am 
the Director of Basic Needs, one of three community impact areas at 
Greater Twin Cities United Way. Our service area, the greater twin 
cities of Minneapolis and St. Paul, is becoming more diverse each year. 
We have one of the largest concentrations of Hmong and Somali in the 
United States. In Congressman Ramstad's District, nearly 10% of the 
population is foreign-born and a large portion are Somali.
    In order to serve a rapidly changing population, Greater Twin 
Cities United Way supports a 2-1-1 information and referral call 
center. This service provides referrals for people in need of food and 
shelter, job resources, healthcare, childcare and more. The service is 
multilingual, offering Hmong, Russian, Somali and Spanish translations; 
it is staffed 24 hours a day, seven days a week and is a free service. 
We have one of the largest United Way 211 call centers in the country. 
Last year, United Way's 2-1-1 staff made over 440,000 referrals--
217,000 of which were for basic needs such as food, shelter, utility 
and transportation assistance. Information being submitted for the 
record provides detailed caller demographics and more specifics.
    For instance: 87% of our callers are female and one-third are 
single moms. Almost 40% of our callers earn less than $10,000 a year 
and 64% earn less than $20,000. And on these incomes these callers 
typically support three individuals!  Most significantly, for the 
purpose of testimony before this subcommittee, 60% of those calling 2-
1-1 are people of color.
    Why do I tell you this? The Greater Twin Cities United Way provides 
the resources to help those most in need, and statistics of our 2-1-1 
callers demonstrate those in need are predominantly people of color.
    We constantly strive to identify the most pressing needs in our 
community, through sound research, focus groups and surveys of those 
needing help. We use this information to determine how best to direct 
the donations entrusted to us. We routinely evaluate the effectiveness 
of all the programs and agencies we invest in. We review their services 
and whether they are responding appropriately to changing demographics, 
languages and specific cultural dynamics based on the gap which has 
been identified through research.
    In my area of Basic Needs alone (remember, one of three impact 
areas) Greater Twin Cities United Way is investing over $15 million 
each year, including several programs in Congressman Ramstad's 
district. One of our partner agencies is Community Emergency Assistance 
Program, or ``CEAP.'' Last year, Basic Needs programs through CEAP 
provided 639,000 pounds of food, enough to make 741,000 meals for over 
4,500 (unduplicated) families or 16,000 individuals. CEAP has helped 
1,157 individuals or 283 families obtain housing. This agency's Meals 
on Wheels program has delivered 33,000 meals to senior citizens and 
adults with disabilities. CEAP's clients are 60% people of color.
    United Way supports many programs centered around financial 
stability and helping low-income families break the poverty cycle. 
Research shows that many of our communities of color experience 
generational poverty, particularly African Americans and American 
Indian populations. Approximately 35% of those served in financial 
stability programs are individuals of color; more than double the 15% 
identified as individuals of color our total population.
    One of the financial stability programs at CEAP is called ``Ways to 
Work'' and is supported by United Way. Through low-interest loans, the 
program helps low-income, credit-challenged individuals purchase a 
reliable car allowing them to get to work dependably. Last year, we 
invested in eight agencies and loaned over $1 million to 348 families; 
these individuals received financial education classes and credit 
counseling as well.
    Let me share one specific story that shows the difference that can 
be made through researched, effective programs that support 
hardworking, diverse families get ahead.
    Crystal Williams is a wife, mother, a member of the Army National 
Guard and African American.
    She was hired by her current employer as a shift manager earning $9 
per hour. But she was ambitious and soon was offered a position as 
assistant manager with a significant increase in salary. However, the 
position required that she have a car. She was approved for a low-
interest loan to purchase a reliable car. In June of last year Crystal 
purchased a '93 Oldsmobile with 76,000 miles for $3,100. Crystal got 
that promotion and is now making $27,000 a year with benefits. She not 
only makes her loan payment every month, she is making them early!
    In Crystal's words ``it has made my life easier, not only to get to 
work, but also to get my family to appointments, get groceries and 
attend my kid's activities. I don't have to depend on others to get 
places, and it has helped me to build my credit.'' Crystal's life is 
just one that was improved in a variety of ways due to a United Way 
agency.
    Stories like this are repeated thousands of times in the Twin Cites 
and throughout the country by more than 1400 independent United Ways 
and their funded partner agencies. 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. We partner with effective programs 
and agencies to meet those needs, and we continually work to increase 
the resources available to invest in that work. Last year we raised $86 
million and in turn, invested in 450 programs through 200 agencies. 
Next year we hope to do more.
    Thank you again for the opportunity to speak with you, and I would 
be happy to answer any questions you have.

                                 

 STATEMENT OF MARCIA FINK, DIRECTOR, BASIC NEEDS, GREATER TWIN 
                       CITIES UNITED WAY

    Ms. FINK. Mr. Chairman, Ranking Member, Congressman Ramstad 
and other honored Members of this Subcommittee, thank you again 
for the opportunity to be here today.
    I'm the director of basic needs, which is one of three 
impact areas at Greater Twin Cities United Way. Our service 
area, the Greater Twin Cities of Minnesota, includes St. Paul 
and Minneapolis, and it's becoming more diverse each year.
    We have one of the largest concentrations of Hmong and 
Somali in the United States. In Congressman Ramstad's district 
nearly 10 percent of the population is foreign born and of that 
10 percent many are Somali.
    In order to serve a very rapidly changing population, 
United Way supports a 211 information and referral call center. 
This service provides referrals for people in need of food, 
shelter, job resources, health care, child care and many more 
things. The service is multilingual, offering Hmong, Russian, 
Somali and Spanish translations. It is staffed 24/7, and it is 
a free service for anyone calling in needing help.
    We have one of the largest 211 call centers in the country. 
Last year our 211 staff made over 400,000 referrals. Half of 
those were for basic needs such as food, shelter, utilities, 
transportation. Information being submitted for the records 
provides detailed caller demographics and more specifics.
    For instance, 87 percent of our callers are female and one-
third are single moms. Sixty-4 percent of our callers earn less 
than $20,000, and sixty percent of those calling 211 are people 
of color.
    We constantly strive to identify the most pressing needs in 
our community through sound research, focus groups and surveys 
of those needing help. We use this information to determine how 
best to direct the donations entrusted to us. We routinely 
evaluate the effectiveness of all the programs and agencies we 
invest in. We review their services. We also review whether 
they are responding appropriately to changing demographics, 
multiple languages and specific cultural dynamics which have 
been identified through our research.
    In the area of basic needs, which is one of the three 
impact areas at United Way, we invest over $15 million each 
year, including several programs in Congressman Ramstad's 
district.
    One of our partner agencies is Community Emergency 
Assistance Program or CEAP. Basic needs programs through CEAP 
provided enough food to make meals for over 4,500 individuals 
and CEAP has also helped over 1,000 individuals obtain housing. 
CEAP's clients are 60 percent people of color.
    United Way supports many programs centered around financial 
stability and helping low-income families break the poverty 
cycle. Research shows that many of our communities of color 
experience generational poverty. In our area we had a 
disparities report that showed that African Americans and 
American Indians have generational poverty issues that exceed 
others. So we've invested more intentionally in programs that 
serve those, and we have doubled the amount of investment in 
those areas.
    One of the programs at CEAP, the organization I just 
mentioned, is called Ways to Work, and it's supported by us, 
United Way. Through low interest loans the program helps low 
income people purchase cars that allow them to get to work and 
be dependable employees.
    Let me just share one specific story that shows the 
difference that can be made through researched, effective 
programs that support hardworking diverse families to get 
ahead. Crystal Williams is an African-American woman, wife, 
mother, and she's also a member of the Army National Guard.
    She was hired by her current employer as a shift manager 
earning $9 an hour. She was ambitious. She wanted to earn more 
money and she was offered the position as an assistant manager 
with a significant increase in salary, but that position 
required her to have a car.
    She was approved for a low interest loan to purchase that 
car and in June last year she did purchase that car. She got a 
promotion and she's now making $27,000 a year with benefits. It 
has made a huge difference for herself and her children and her 
family.
    Crystal's life is just one that was improved in a variety 
of ways due to a United Way agency and a United Way funded 
program. There are thousands of stories like these across 
America in more than 1,300 independent United Ways.
    United Way has a tradition of identifying the most pressing 
needs of our communities like hunger, school readiness, job 
training and the need for education and assistance with 
financial stability. These issues we know mostly impact low 
income individuals and families and communities of color.
    We partner with good programs and agencies to meet those 
needs and we continually work to increase the resources 
available to invest in that work. Last year we raised $86 
million and in turn invested in 450 programs through 200 
agencies. We always plan to do more each year.
    Thank you again for the opportunity to speak with you and 
Byron and I will be happy to answer any questions you may have.
    Chairman LEWIS. Thank you very much for your testimony. 
Each one of you, you've been so wonderful, so helpful.
    You probably heard the bell meaning that we have votes, so 
we have a limited time, and I'm not going to ask any questions. 
I'm going to defer to the ranking Member and take Members on 
both sides. Mr. Ramstad.
    Mr. RAMSTAD. Mr. Chairman.
    Chairman LEWIS. Maybe we will follow--rather than the 5 
minute rule maybe we can follow the 3 minute rule.
    Mr. RAMSTAD. Two minute rule.
    Chairman LEWIS. Okay. That's agreeable. Two minutes.
    Mr. RAMSTAD. Mr. Chairman, very briefly, Mr. Brown, as you 
know, before you and Mark Everson took over the leadership of 
the Red Cross, I chaired a hearing in the last Congress on the 
charitable response to Hurricane Katrina which revealed some 
serious problems with accommodating people with disabilities.
    I want to ask you specifically how the Red Cross is 
incorporating groups that represent people with disabilities 
now in the disaster planning process. If you could, briefly.
    Mr. BROWN. Sure. In the interest of time I'll try to give 
you one example. We partnered with a group called the National 
Disability Rights Network.
    Frankly, we don't have the expertise in-house to know what 
the needs are for all persons with disabilities. Pursuant to 
their advice recently we purchased $8,000 cots that are more 
accessible. We also purchased commodes and other types of 
devices that should prove beneficial the next time we have that 
type of disaster.
    Mr. RAMSTAD. Well, thank you. I wanted to get that on the 
record because I've heard from a number of disabilities groups, 
groups representing people with disabilities saying that you've 
been very responsive. In fact, you even called my office for 
suggestions of groups to include in the planning process.
    As you know, Congressman Langeman and I chair the 
bipartisan Disabilities Caucus, so thank you for your efforts 
on behalf of those people.
    Mr. BROWN. We appreciate your help, sir.
    Chairman LEWIS. Thank you. Mr. Neal is now recognized.
    Mr. NEAL. Thank you, Mr. Chairman.
    We've had great testimony this afternoon but I want to 
speak about one of the difficulties that some charities have in 
offering assistance to segments of our communities.
    I'd like to direct my question to Dr. Boris.
    Recently I've been discussing many of these issues with one 
of my constituents, Lowell Putnam, who runs his family 
scholarship fund, and it's existed for decades. I believe his 
family lineage traces back as the only Catholic family to sign 
the Declaration of Independence.
    The Putnam family is really an institution in western 
Massachusetts, and I think the same could be said for a lot of 
other communities around the country. Family charities can 
certainly help to provide the connection to local concerns and 
needs.
    Ms. Boris, what has been your experience with family run 
charities?
    Ms. BORIS. There are many, as you said, that are all over 
the country; large and small. My experience is they really 
reflect the values of the donors.
    Often families, whole families get behind, for example, a 
family foundation, which this sounds like, to meet the needs 
and especially in scholarships. Many of the small foundations 
do a lot of scholarships. So, my experience has been they've 
been very important to their local communities. Some of the 
larger foundations are also family foundations, and they do 
more international or national work. So, I would say they are 
part of the framework of philanthropy throughout the country.
    Mr. NEAL. Just another thought. Mr. Putnam has expressed to 
me at a couple of intervals his concern that there is--under 
the recent changes in the law it's more difficult for them as a 
family to have some influence on how the scholarships are 
actually parceled out.
    Ms. BORIS. I think some of the new regulations have been 
put in place to avoid people benefiting their own families with 
their own philanthropy, and that may make it a little more 
difficult, but I think that there are ways to put processes in 
place so that the scholarships, just as an example, can be 
given to disinterested--outside of the family group.
    Mr. NEAL. Thank you.
    Mr. Chairman, thank you for looking into this and we want 
to address some of the concerns raised by family charities 
under the new pension act requirements, but at the same time we 
want to foster the good work of those that are involved. Thank 
you very much.
    Chairman LEWIS. Thank you, Mr. Neal.
    Mr. Becerra, you're now recognized.
    Mr. BECERRA. Mr. Chairman, thank you very much. My 
understanding is that we will be coming back to ask further 
questions, and we thank the panelists for their testimony.
    Chairman LEWIS. We plan to come back if Members of--we will 
come back.
    Mr. BECERRA. We're hoping that the panelists can stay and 
we understand if they can't but we have a very interesting 
subject, and Mr. Chairman, thank you for holding this hearing. 
To all those who have testified, thank you very much.
    I will withhold any questions. I will make a couple quick 
points and since we will have a chance to come back in 30 
minutes we can hopefully talk further.
    One, I am very interested in following up on what I think 
is an important activity that goes on with our charitable 
organizations, that is the giving that's growing but I think 
unfortunately not growing fast enough into communities of need.
    Many have compared this to the redlining that occurred in 
the financial services industry, and I think a number of us 
want to make sure that we encourage people to make charitable 
contributions and encourage entities to establish themselves as 
charitable organizations.
    Many of us also believe that when only a third of the money 
that is given for charitable purposes goes ultimately toward 
helping those who are poor or needy and we know that two-thirds 
of those poor or needy live in principally minority communities 
something is wrong and there are lots of folks taking advantage 
of the tax break and we have to do a better job since 
government hasn't been able to do it all by itself.
    But we know that there are organizations like the Ford 
Foundation, and Ms. Berresford you deserve mighty 
congratulations on the work of the foundation, trying to target 
well and do the job of helping communities that really are 
looking for that opportunity. So, I'm hoping that we'll have a 
chance to come back to ask some questions.
    I know, Mr. Brown, that Red Cross is making changes in 
trying to address a number of the needs that surfaced as a 
result of Katrina but there are many things that we have to 
talk about and I hope that you'll give us that chance to ask 
those questions.
    Thank you, Mr. Chairman. I yield back.
    Chairman LEWIS. The Committee will stand in recess for 15 
minutes. We will go and vote and we will be right back.
    Our colleague is saying it may be a little longer than 15--
near the end, so it would be between 15 and 20 minutes. We'll 
be back. So, pace yourself and be patient with us.
    [Recess.]
    Chairman LEWIS. Thank you very much for being so patient. 
We had a vote that we didn't expect, but we're back.
    Let me ask the president of the Ford Foundation, first of 
all I want to thank you for all your great work and thank each 
of you for all your great work. But I remembered the work of 
the foundation and I think at the table you may be the largest, 
right?
    Would you agree?
    Ms. BERRESFORD. The second largest foundation, I think, 
yes, Gates being larger.
    Chairman LEWIS. No, no. But you're the largest in this 
room.
    Ms. BERRESFORD. Yes.
    Chairman LEWIS. Right.
    Ms. BERRESFORD. Small person in the largest foundation.
    Chairman LEWIS. The Ford Foundation like some of the 
others, when you speak, when you make a decision do you think 
others in the foundation community tend to listen, say, well, 
the Ford Foundation made this decision; the Ford Foundation did 
one, two, three; the Ford Foundation did a, b, c?
    Do you think you have others to come along, maybe one of 
the smaller foundations that get out and do something in sort 
of a pilot program or demonstrate something that encourage 
others to come along?
    Ms. BERRESFORD. We work very often with other donors. 
Sometimes they bring very good ideas to us. The example I gave 
of creating $50,000 new homeowners among low income, low credit 
score families, that was brought to us by a North Carolina 
organization, the Center for Community Self Help that had been 
supported by North Carolina donors.
    They came to us saying, you're a national donor, can we now 
take this thing that worked in one state nationally? So, 
sometimes it works that way.
    Other times we create a partnership in which we invite 
others in. We created something called the Dream Fund, which 
was to work on the issue of affirmative action and how to get 
more equity in education and employment. We went out and put a 
challenge of $10 million on the table and invited others in and 
more people came as a result of that. So, I think it works both 
ways.
    Chairman LEWIS. I know you have a long history of being 
supported--that effort you mentioned, the fellows program. In 
another period in our history I would meet Ford fellows, 
especially in the south and people took so much pride in being 
a Ford fellow and they got out and did good work. Have other 
foundations, other charitable organizations picked up on the 
idea of recruiting a particular person or group of individuals 
with certain skills to go into a community or go to a college 
or university or to work with a community organization and do 
good work?
    Ms. BERRESFORD. Yes, I think providing fellowships is one 
of the most common and popular kinds of philanthropy for people 
who are concerned with new leadership and helping people step 
up who haven't had so many opportunities. So, you see many 
family foundations doing this kind of grant-making. We heard an 
example of one earlier, who give fellowships and then there are 
other large foundations, Commonwealth, Carnegie, many others 
who make fellowship investments as well.
    It's a very important aspect of philanthropy.
    Chairman LEWIS. I understand that the Ford Foundation has 
steady ways to effect large-scale social change, to reduce 
poverty and injustice worldwide. Have you discovered anything, 
have you learned anything that you care to share with us?
    Ms. BERRESFORD. I think the question of what impact comes 
from is very important. I think there are five or six 
components of it.
    One is to have a specific goal, not just to set out to do 
good in a vague way but to have a very specific goal of some 
way you're going to help a group of people. Second is to have a 
strategy to achieve that result that is informed by the 
beneficiaries as well as the foundation and experts. Third is 
to make sure you have enough money.
    You have got to mobilize resources of people and money, and 
you have to then create some kind of an information system and 
ways of having a dialog with the people in the program to see 
if it's working. Nothing works perfectly; you want to be able 
to change things.
    Then finally you have to invest for the long term. These 
are not easy problems to overcome. If you want to do something 
on scale it takes a while to build to scale. Ultimately you 
want to be able to share your lessons with other grant makers.
    I think you have before you something called Grant Craft 
that we have supported now for a number of years. We've tried 
to distill the lessons of good grant making through this and 
share it very widely. It's available free on the net and one of 
the new guides that's online is called Grant Making with a 
Racial Equity Lens, just to give you an example of maybe 20 or 
30 such things that we have to share with other grant makers.
    Chairman LEWIS. So, in this day and age of technology, in 
another period we didn't have this sort of ready-made tools and 
instruments where people can get the information to draft a 
proposal, to submit a proposal to a foundation, to a possible 
funding source.
    Is there something that can be done to make information 
more accessible to people without the technology? How do you 
get information out, say, into some community organization, 
some group in rural Mississippi or in rural Alabama, south 
Georgia or New Mexico or Minnesota? You need something, maybe 
we can help.
    Ms. BERRESFORD. There are now across the country a growing 
number of regional associations of grant makers that get down 
to the local level, let people know what good proposals are, 
where they can direct them. That's a very important resource.
    Then organizations like the Council on Foundations, very 
important. There are also associations of grant makers 
concerned with health, concerned with world development. They 
all help people figured out where to direct their proposals, so 
I think we can build this to a much more robust and broad 
system than it is but we have the components of that to build 
now, I think.
    Chairman LEWIS. Other members of the panel have anything 
you'd like to add? Is there something that Members of the 
Committee on Ways and Means, that we should be considering 
doing to make grant making or finding a way to rewrite the Tax 
Code to make it easier and simpler for you to give money away? 
You're into money giving, right; resource giving.
    Ms. GRADY. I would like to encourage Members of Congress to 
support H.R. 1419, the Good IRA Rollover Act. I believe that it 
is an excellent strategy to further democratize philanthropy. 
It allows folks who have IRAs--if you work, you get an IRA. It 
allows everyday people who I consider myself and many of us too 
to be able to use our IRAs to help charitable organizations and 
to support charitable goods and good in the community. So we 
really encourage that you sign up and support that.
    The other, I think, is to really begin to get to know and 
understand this world of philanthropy and the sector. I'd 
actually like to thank Representative Jones for her promotion 
of the Congressional Philanthropy Caucus because you learn from 
relationships and from understanding each other's worlds and 
from being together and learning what terms mean and the morals 
and the values that each other have, and I think that's a good 
starting point to figure out how we can better work together to 
improve the communities that we all care about.
    So those are two very distinct but important ways that I 
think we can begin this journey.
    Chairman LEWIS. Let me--my colleague is here, and I know 
she wanted to ask some questions. But at one time--I'm just 
sort of curious, one time in our recent history there was this 
sort of mindset that the foundation community, they want to be 
too visible, they want to get in the way. You want to sort of 
stay under the curve. You were afraid that somebody would come 
down on you, maybe the IRS.
    Ms. GRADY. Maybe.
    Chairman LEWIS. You don't have that fear anymore, do you? I 
mean back in the 1960s, back in--I guess the big tax reform act 
that we had in 1969--and there was this fear that if you got in 
the way, you got out of line--so some members of the foundation 
community became somewhat cautious.
    Have you thrown, for the most part, caution to the wind? Do 
you just go out and just try to do the best with the resources 
you--I'd just like to hear the response from----
    Ms. BERRESFORD. Well, I think the growth of the number of 
foundations is an example of the robustness of the field, 
really. We've doubled the number of foundations in the last 20 
years or so, and I think you find a lot more confidence now 
among the institutions in pursuing their varied visions.
    I think the most important thing is to make sure that the 
variety of views, the diversity of American philanthropy be 
protected. That's what really makes philanthropy so healthy. 
It's not just directed toward one field. It's not just directed 
toward one kind of subject. It's a very diverse field.
    I do think that hearings like this one are very important, 
and I hope you'll continue to do this and do it in other parts 
of the country because I think it helps focus the field on 
disadvantage and on people who are marginalized and where the 
money is going and whether there could be some shifting in 
emphasis.
    Hearings like this are very important in that way.
    Chairman LEWIS. Thank you very much.
    Mr. LAHER. Mr. Chairman, if I could just come back to your 
first question, I really think if you could return to the non-
itemizer deduction and allow all people who are contributing to 
charity to get a deduction it would go a long way toward 
bringing more people into the field and more--much more 
diversity into the support of charities, which in turn will 
change the way charities see themselves and how they're viewed 
by the people in their own communities.
    I know it's an expensive issue, and you've had a number of 
conversations about it here and in this body and in the full 
Committee, but I think it's an important thing that as a 
country we need to look seriously at.
    Chairman LEWIS. Thank you very much.
    The gentlelady from Ohio is now recognized, Ms. Tubbs 
Jones.
    Ms. TUBBS JONES. Thank you, Mr. Chairman. I want to thank 
you for your leadership on this Subcommittee. I requested that 
I have an opportunity to serve on oversight with you because of 
all your leadership over the years, and I just want to thank 
you for that.
    Good afternoon, ladies and gentleman. I thank Ms. Grady for 
giving recognition about the Philanthropic Caucus and we hope 
to over time have an opportunity to sit with your designee to 
really have a chance to have some discussion about what 
philanthropy means and how the Congress and your organizations 
can work toward similar ends.
    I was worried for a moment there that we were getting lost 
and going after charities and nonprofits and not really being 
focused on that which we ought to be focused on.
    For a moment--I represent the city of Cleveland. Most of 
you know that--where we have some wonderful, wonderful 
foundations like Gund and the Cleveland Foundation, some other, 
smaller foundations operating.
    I'm always concerned that as we talk about diversity and 
philanthropy that there is this divide. It's almost like the 
Internet divide, you know, where we talk about--digital divide 
is the word I want. Somehow we have to begin to help poor and 
working poor folks understand philanthropy outside of the 
tithing in a church so that they feel a part of it.
    I've been happy to be a part of Cleveland Saves in 
Cleveland where we've begun to try and help people save, and I 
think Ford gave us a bunch of money for that back in the day 
and we're really thankful for it and it's going very, very 
well. But all of us need to engage in that because otherwise it 
ends up being the rich who can give to nonprofits and 
philanthropy and those on the other end who don't, and it 
becomes a habit.
    Once you get engaged in the habit it's something that you 
do over and over again, and I would--without getting an answer 
from anybody at the moment, I would like to encourage all of 
you to think about that in those terms and think about whether 
or not part of the dollars that you would spend in choosing--
some money is spent in building community and helping people 
understand--schools. But maybe we need to put it into how do we 
build community through--and if it's not giving of money, it's 
giving of time in that we reward the giving of a time as much 
as we give rewards at giving of money.
    Time is such a precious item. I was watching some show the 
other day and they were talking about this woman who had three 
kids, and that she got up in the morning, took her kids, 
dressed them, took them to the sitter or school and then she 
went to work and then she got back on the bus and went back 
home and picked them up and all the things that we are involved 
in.
    Let me second move particularly to the Red Cross and Mr. 
Brown. I was in--I know you get this all the time but I was in 
Louisiana and the thing that struck me most and the thing that 
I heard from more of my constituents of color who were educated 
and experienced was, well, you haven't been trained in American 
Red Cross training, so we can't allow you to help out the Red 
Cross, when people were in dire need.
    I'm not trying to be combative at all, but I sure hope that 
you have had an opportunity based on that experience because 
when I went to visit I found that everybody in receipt of the 
service was of color and everybody giving the service was of 
the majority. That creates a real tension that I did not care 
for. I could leave; some of the other people were stuck there.
    So, I would be interested in knowing what have you done 
since that experience to diversify the standby folks who are 
ready to make a move when another catastrophe occurs.
    Mr. BROWN. It really taught us a couple lessons. The 
criticism is well taken.
    The first thing we can do is try to engage people in 
partnerships before storms arrive. By that I mean the example 
we had this past weekend. We have 4,000 to 5,000 Vietnamese 
fishermen who are on the southeast Louisiana coast.
    When Katrina hit, we did not have a relationship with them. 
The Red Cross simply did not have a way of speaking their 
language, understanding their--what they need, understanding 
their culture.
    We now have a partnership with Boat People SOS. That is the 
group, a national group that has a linkage to the fisherman. We 
have provided disaster training to Boat People SOS. We provide 
provisions, supplies, that sort of thing.
    They actually were going to run a shelter for us this past 
weekend. Fortunately the tropical depression didn't materialize 
in the New Orleans area. They were actually going to run the 
shelter for us to make sure that these fishermen would be cared 
for in the event of a disaster.
    It's that sort of thing that we need to do all over the 
country. There are many nontraditional groups that aren't in 
the disaster business, but we can train them and provide them 
with supplies and the type of thing you need in the event a 
storm happens. So, we can do that ahead of time. That's one of 
the things we're doing right now.
    Ms. TUBBS JONES. Real happy to hear that and that's a great 
thing going on, but there are people who speak the same 
language, live on the same corner, go in the same store and 
don't communicate, so I hope that you'll figure out how you do 
it to people who speak the same language as well.
    I know you've been here quite a while so I'm anxious to 
volunteer if I have any time left from anybody who wants to ask 
me a question or volunteer to help me or say, ``I don't like 
what you're saying,'' or whatever it is you want to say, if 
anybody is looking.
    If you're not I want to encourage all of you to make sure 
someone from your organization is involved with our caucus. I 
expect that we're going to have an opportunity to do great 
things. I am an optimist and look forward to having an 
opportunity to work with you and others.
    My colleague Robin Hayes is my cochair from South Carolina 
and so we've got a Republican, a Democrat, a male and female, a 
black and a white, and we're all diverse. So we're trying to 
hook it up, and I thank the Chairman for the opportunity to say 
hello if nobody has anything they want to say.
    Please, Ms. Grady.
    Ms. GRADY. I'd just like to share--thank you for your 
comments, and I'd like to share just some learnings that we had 
in Atlanta when we completed a two-year study and community 
conversation around African-American philanthropy.
    What we found was exactly as you expressed. There was a 
level of discomfort with many African-Americans, even who had 
wealth, on all economic spectrums with considering themselves 
as philanthropists. That term was one that they could not own.
    They were volunteering. They were giving money. They were 
giving time. But they were not comfortable with the notion of 
being a philanthropist because you've got to be rich to be a 
philanthropist. So, I think that you're absolutely right, and 
thank you for your comments. It really is a community 
conversation and transformation around what is philanthropy; 
the givers, the volunteers, the people who secure the funds, 
the recipients, everyone together. I think it's the sector.
    Another thing we learned from the study was that many 
nonprofits would have volunteers, particularly African 
Americans because that was the focus, who were volunteering 
regularly without fail, and they never asked them for money. 
You know, they never thought of them as being potential donors 
but just volunteers. So, I think as a sector we have to think 
about that.
    Then we found that individually there is a level of savvy 
that was not existing around how to manage your money in a 
healthy financial way. So many folks talked about helping 
others, helping their neighbors, helping their family, putting 
out lots of money in different ways in informal philanthropy 
but not going through agencies where they could get a tax 
writeoff and do a planned gift and so forth.
    So, there's this individual opportunity as well. But I 
really appreciate your comments because I think we got to break 
down that word and really talk about what it means, and that's 
just doing good with and for other people.
    Ms. TUBBS JONES. Did you ever have a chance to meet a 
gentleman by the name of Steven Rowan that used to be with the 
Cleveland Foundation?
    Ms. GRADY. Yes, yes.
    Ms. TUBBS JONES. He is my pastor at Bethany Baptist Church, 
and we are blessed to have a pastor who is a lawyer. He is a 
doctor of divinity, has had years of experience in foundation 
work, and so we're trying to move along, but I thought maybe 
you would have had a chance.
    The last thing--I promise this is the last thing, Mr. 
Chairman. I'm working with a group of eighth grade girls right 
now. I just decided to adopt them one day. I went to the 
school. I think that is another location, even though we focus 
in on education, in the process of education we might try and 
see whether or not that's a place where we might start talking 
about philanthropy, just like we might do financial schools or 
financial--teaching children finance. We might want to teach 
them that in the process of what they learn and make it part 
and parcel of the educational process, just another idea from a 
lowly public servant.
    Thank you, Mr. Chairman. I appreciate it.
    Oh, hold on one second. Ms. Fink, yes.
    Ms. FINK. Yes, thank you. First of all, Congresswoman Tubbs 
Jones, I would like to thank you again for cochairing the House 
Philanthropic Caucus, and I also want to thank you for being a 
sponsor of the Savings for Working Families Act.
    We have been working with individual development account 
programs in the state of Minnesota. United Way has two of them 
going and they are phenomenally successful. Low income people 
want to be able to create some assets. They want to save. We 
have not had any problem getting people to subscribe to those 
saving and we have some great stories.
    We have also--part of one of our projects was working with 
high school students at a public high school, and that's been 
phenomenally successful too. So, again, thank you for your 
support of that.
    Ms. TUBBS JONES. Ms. Berresford.
    Ms. BERRESFORD. I would just mention a very interesting 
program about youthful philanthropy, picking up on your point. 
We've funded something in New York called Common Cents that's 
now spreading around the country, and what it does is kids from 
schools all through the New York school system go out and 
collect all the pennies that people keep on their bureaus in a 
little box or a pile somewhere.
    Last year they collected $650,000 worth of pennies. Each 
school was credited with how much it then collected and then 
kids in the schools sat together and figured out, well, how are 
they going to spend that money in their own community for 
people in need, and it's a very interesting thing about the 
moral engagement of kids, about activism in your community, as 
well as some of the underutilized talents of kids and the 
underutilized resources of pennies.
    I think it's going to spread around the country in a very 
interesting way.
    Ms. TUBBS JONES. Since my colleague is still writing over 
there, I have one last question. I promise.
    I hope that in the course of the work that you're doing 
that all of your agencies are looking at your relationship with 
minority businesses to help grow your communities. We have laws 
that require government to do it. We have moral engagement that 
other people do but if truly you're going to be the 
philanthropic organizations that represent the nation it would 
be very, very important that you help increase the communities 
of color within your area because I can--I always talk about--I 
can build houses in my district, I can improve the schools in 
my district but if I don't have jobs and a business community 
or sample for my kids to see then I've not done my job.
    They need to have jobs, and they need to also see people 
like them who are running businesses in their communities. So, 
if you're doing anything, if you are--if you're not, let me 
help you.
    Chairman LEWIS. Before I recognize the gentleman from--let 
me just thank my colleague and the gentlelady from Ohio also 
for organizing and co-chairing this wonderful caucus. Thank you 
for your great interest and for being here.
    Before I recognize my colleague and Member from California, 
let me just try something on you here. I don't want to preach 
to you, but our country is changing. It's a different country. 
It's becoming so diverse. I speak a great deal about we all 
live in one house, the same house, that it doesn't matter 
whether you're black or white or Hispanic or Asian American or 
Native American, whether we're rich or poor, gay or straight, 
we all live in the same house, whether we're Protestant, 
Catholic, Jewish.
    But something is happening in America, and I think the 
foundation community, the nonprofit sector must be out there 
pushing and pulling and having to build this greater sense of 
community, this greater sense of one house, that you have to 
lead the way. You have to find a way of what I call getting in 
the way.
    As one organization--and I don't want to single out any 
particular organization. I don't want to get in trouble here. 
But there's a group--and I just want to try something out on 
you. It's based in California, whether you ever heard of this 
group.
    I was in Little Rock yesterday for the twenty-fifth 
anniversary of the Little Rock nine, and the representatives--
something called Sojourn to the Past. It was started by an 
American high school history teacher, and since 1999 this young 
man had been recruiting high school students and bringing them 
to the south in groups of 100.
    They're black, they're white, they're Asian American, 
they're Hispanic, they're Native American. They spend 10 days 
driving through the south studying, learning about what 
happened.
    These young people are going to be--I meet them now all 
over the country attending colleges and universities all over 
America. They're going to be better citizens. I know they're 
getting some resources, Mr. Becerra, from the California 
legislature and from private individuals and maybe some 
foundations out there, I don't know.
    But if we, if the foundation community and organizations in 
different parts of our country can get out there and help 
create another group of leaders to bring us together as one 
house, one people--have you ever thought about something like 
that? Or maybe you're doing something like that? Anyone want to 
react? Do you know what I'm talking about?
    Ms. BERRESFORD. Well, I think first of all your point about 
understanding history is very important, and finding first of 
all materials like the wonderful series Eyes on the Prize and 
making sure that schools have that, the school systems use that 
in their teaching of American history.
    Then I agree with you entirely, kids getting out and 
working together and having a common experience--we all live 
separately. We all occupy somewhat different worlds and we 
overcome some of the sense of distance and perhaps distrust if 
we do something together. So I think any kind of youth programs 
that bring people together working on a common effort, youth 
service, that kind of thing, very, very valuable.
    Chairman LEWIS. Thank you. Ms. Grady.
    Ms. GRADY. I'd like to recognize and cue in on the notion 
of leadership building because I thin that is probably the most 
important thing that foundations, particularly community 
foundations, which are tied to geographic regions, can do. It's 
to support leadership development.
    We have for the past eight years operated the Neighborhood 
Fund Leadership Institute. It's grassroots leaders. It's folks 
who everyday are taking our blood pressure and driving us in 
trains and don't have time to fly up to Washington and talk and 
don't get leave from their job to do that but live in a 
community and want to make a difference.
    So on Saturdays they get up and they come to this 
leadership institute and the curriculum is in part with the 
University of Georgia. They learn about community issues, 
economic development, how to communicate, diversity in their 
community and so forth and then they begin to connect their 
local issues to the larger social dynamics and economic 
dynamics of the region and then of the country and it gets 
bigger and bigger.
    You just find them opening up in a very different way and 
become much more--much clearer and more deliberate about what 
they can do alone and then what they can do with a larger 
group. They bring in their young people and they bring them 
all. We've graduated 120 now from about seven of our counties 
and it just continues to be an amazing experience and all 
around just that local leadership of everyday folks who can 
really make a difference.
    Chairman LEWIS. Thank you. Now I recognize Mr. Becerra, my 
friend.
    Mr. BECERRA. Mr. Chairman, thank you.
    To the panelists thank you for graciously waiting for us to 
return. You know, we're in the process of engaging in a 
conversation or a debate on the reauthorization of the state 
health insurance program for children, and many of us believe 
that it's shameful that at this day and age we still have 
millions of American children who don't have access to health 
care and don't have health insurance. We'll get there partway 
if this legislation that we have in the Congress gets signed by 
the President, who has threatened to veto it, but maybe we'll 
make some progress.
    I think clearly there's a lot that we all still need to do 
with regard to serving the needs of all Americans. As we think 
about that and in this Committee, for our purposes, since we 
have responsibility over the Tax Code, the more we talk about 
tax reform or hear about it there is this desire to reexamine 
some of these tax expenditures that we have out there, many of 
which cost a great deal of money, whether it's the deduction 
for health insurance that we allow employers or whether it's 
the mortgage interest deduction or of course the charitable 
deduction that's allowed for charitable contributions.
    Many are saying we have to refocus and find out if in fact 
these tax expenditures and the money that they cost the 
Treasury is worth the value in having those tax expenditures. 
So, I'm glad you're here because I think we're going to examine 
that question.
    With regard to you today and this issue before us I think 
we will want to take a look at whether or not we're serving the 
best purpose in having individuals deduct from their taxes that 
they would otherwise provide to the Federal Government moneys 
that are going to charities and foundations so that we serve 
the general welfare of our people.
    A lot of us want to find out if that last part is still 
correct, that we're serving the general welfare of our people. 
I think, Dr. Wolpert, I think you mentioned in some of your 
work and testimony that most people give to charities which 
serve them, so your local church, the local service 
organization, you tend to give to that which is within your 
circle of familiarity, which obviously makes sense.
    But it also means that chances are--if you're a fairly 
wealthy American, chances are that you give to causes that are 
within your reach and your circle, and if you're a poor 
American chances are there is very little within your reach and 
there's very little you can give to those who are within your 
reach, which would then ask the question or pose the question, 
well, then, do the wealthy, who are getting this tax break for 
money they would have to pay to the Federal Treasury for 
purposes like SCHIP, health care, education, the war in Iraq, 
are we being best served by allowing people who can make 
contributions not provide tax dollars to the Federal Government 
to serve the general welfare.
    If it's true that you give to those that are within your 
reach, and if it's true that--let me see. I have a statistic 
here that wealthy people give a smaller share of their 
contributions for the purpose of serving the needy than do 
other Americans then it seems like maybe there is something 
going on here, especially when you look at family foundations 
that are formed by, in most cases, obviously, folks that have 
the wherewithal to start these foundations.
    Do you think it's time for us to examine who gives the 
money and in more detail where it goes?
    Mr. WOLPERT. Yes.--I think as a long-range goal, that's 
very important to do. But to make some short-run progress in 
helping the affluent to be more charitable, there are a number 
of things that can be done. Because I think--I mean, you know, 
the issue is the hungry children, the children who don't have a 
chance to go to college. We want to help them before Congress 
is able to do something as complex as remove a deduction.
    The studies have shown that volunteerism helps enormously. 
That is, if you can get the wealthy to use some of their time 
in voluntary activities, whether it's in a shelter or in a Big 
Brother program, it leads almost invariably to sizable 
financial contributions. It's important for the wealthy to find 
out that the people they're helping are people like themselves, 
who have similar values, who are not, quote, ``different.''
    Mr. BECERRA. Would you--and, Dr. Boris, I'd like you to 
join in on this particular question--would it be worthwhile to 
examine our tax treatment of gifts, gifts based on where they 
are focused?
    Mr. WOLPERT. Well, we already know that they're focused and 
they're not redistributive. I mean, we already know that. We 
have good information on that.
    Mr. BECERRA. So, you could probably incent noble activity 
by providing a better return for your contribution if you 
direct--if through Tax Code say that you will treat charitable 
gifts more generously under the Tax Code if they are directed 
at the general welfare, or direct general welfare of serving 
those who are in need?
    Mr. WOLPERT. It depends on the part of the country. That 
is, if you live in a state like Massachusetts or New York where 
you have a relatively generous public sector which keeps a 
relatively high safety net, then it seems quite all right 
morally for affluent people to give their money to support the 
arts and culture and museums, okay.
    In parts of the country where there is a relatively 
parsimonious public sector at the state level or community 
level, in that way, it's kind of inexcusable that the wealthy 
do not--because their lobbying has been very helpful in keeping 
local taxes low--it's incumbent on them morally to be, quote, 
``more charitable.'' They are, to some degree.
    Mr. BECERRA. Dr. Boris, any comment?
    Ms. BORIS. A couple of thoughts. First of all, the tax 
rates have gone down, and if you're talking about tax 
incentives, there's a major disincentive in a sense for 
charitable giving. But if we think about where----
    Mr. BECERRA. You're not encouraging us to increase the tax 
rates are you?
    Ms. BORIS. Personally, I think you should. That's my 
values. Many people feel that, you know, providing for basic 
needs really should come out of government because it can be 
equitably distributed across the country.
    Mr. BECERRA. Right.
    Ms. BORIS. Not to rely on charities, which are here and 
there and everywhere. So, that's one point. Also, at the top 
end of the income scale, you know, there are individuals who 
are giving way beyond what they could ever deduct, and at the 
bottom end of the income scale, they can't deduct anything. So, 
you're talking about a small slice in the middle that you would 
encourage probably not a small slice, but, you know, a middle 
class kind of slice, that you would encourage.
    Now Arizona, the state of Arizona, has a tax credit, which 
is targeted to--only to charities which serve 50 percent or 
more of those who are low income. When we looked at, you know, 
what was the result of that, more money has flowed into those 
charities, but nobody certifies that they're 50 percent or more 
low income, and the money now is going to the larger 
organizations that are more visible instead of to maybe smaller 
organizations that may still be doing good community work. Our 
data are just really lousy on this who benefits.
    Mr. BECERRA. Do you think it's possible to collect good 
data?
    Ms. BORIS. On who benefits? We could do better. But we 
don't have access to the records of, you know, where people's 
income tax goes. We have to do surveys of both nonprofits and 
income and individuals and foundations to get better data.
    At my center, we could go--we started down this road. We're 
not quite there yet. But we know where the charities are all 
located. We also know from the 990, you know, what proportion 
are contributions. Unfortunately, we can't disentangle right 
now foundations and individuals.
    Mr. BECERRA. Right.
    Ms. BORIS. But we could get down to the zip code if we had, 
you know, the resources to do it and tell you where the money 
is going. But it's not the same as where individuals of wealth 
are giving their money or individuals of middle class are 
giving their--that's all survey, and it's very expensive.
    Mr. BECERRA. Mr. Chairman, I know my time has expired. If I 
may ask just one last question, and we can pose other questions 
in writing. I really would love to follow up with some of you 
on this. But let me ask one last question. Administrative 
expenses.
    My understanding is that in many cases, foundations include 
their administrative expenses as part of the amount that they 
consider to have gone in grant or giving. In some cases, my 
understanding is that some foundations have very high overhead. 
So, therefore, a large percentage of the grant is bottled up in 
administrative expenses which really go to no purpose to help a 
particular community in need. Any comment on whether it's an 
issue, first of all? Secondly, if there's something that we 
should be doing with regard to the issue of administrative 
expenses by foundations.
    Ms. BORIS. That's an issue that I'm studying right now, and 
the reality is that the administrative expenses are really 
quite low across the foundation world. There are some examples 
of high administrative expenses. Some of the ones that we've 
looked into, what has happened is there are direct charitable 
programs that the foundations are doing with their own staff, 
and so we found one that had I think like 80 percent 
administrative expenses, and we have to find out who this is. 
We found out that they have a staff of a hundred researchers 
who are doing all kinds of research, and they give, you know, 
small amount of grants and a lot of, you know, in-kind kind of 
work that they're doing.
    I wouldn't say that it is a huge problem in terms of, you 
know, most of the foundations in the U.S. don't even have 
staff, so there are no charitable expenses at all. What the 
telling factor is, as soon as they hire a staff person that 
enables them to do the grant work, then the charitable expenses 
take a, you know, quantum leap. But, still, in terms of other 
organizations, I don't think that we would say that there's a 
huge number out there who are gaming the system.
    Mr. BECERRA. Appreciate that. I thank you all for your 
comments. I look forward to your further participation as we 
continue to study this issue.
    Mr. Chairman, I thank you very much for holding this 
hearing, because I do believe there will be a value in trying 
to get a better sense of the value of the charitable component 
in the Tax Code and how we can make it an even better and more 
targeted approach to try to help us address the general welfare 
of our communities in this country. So, I thank you, Mr. 
Chairman. I yield back the balance of my time.
    Chairman LEWIS. I thank the gentleman from California for 
your line of questioning. I just want to sort of close this out 
if the young lady from Cleveland, from Ohio may not have 
another question?
    Ms. TUBBS JONES. Of course I have, but I'm not going to ask 
it. Thank you, Mr. Chairman.
    Chairman LEWIS. Thank you. Before we adjourn, and you all 
have been so wonderful, so patient, and maybe, Ms. Grady, maybe 
one of you or any of you may want to respond. You know, in our 
country there have been in recent years, in recent days, there 
has been so much bashing of a certain segment of our society. 
As they--say in a city like Atlanta and some other cities and 
states, there's a growing diverse population. We hear the 
debate on the floor. We hear on the floor people bashing 
people, saying they're here and we're not going to provide 
services. They're not legal.
    I saw a T-shirt the other day I believe put out by the 
American Friends Service Committee, and I've been tempted to 
put it on the floor but they'd probably throw me off the floor. 
It said ``No human being is illegal.'' No human being is 
illegal. There are people that are afraid, politicians, elected 
officials are afraid to do things--to do what I call the right 
thing, the moral thing. Is there something that foundations can 
do and say to the government, say to those in elected 
positions, this is the right thing to do? Provide services, 
meet basic human needs, when it comes to health care, when it 
comes to education. Is somebody doing that someplace in 
America? Is somebody going to do it, because it's the right 
thing to do, it's the moral thing to do, it's the fair and just 
thing to do?
    Ms. GRADY. I might respond again by speaking to the 
importance of really supporting civic voice. I mean, government 
has a voice, you know, the corporate sector has a voice. But 
where is it that everyday folks are able to get together around 
issues that are important--around their community, around 
regional issues, around child welfare, around the environment, 
to be able to have a voice, come together, learn from each 
other, and then begin to mobilize, to move an agenda forth?
    I believe that happens by providing folks with the tools 
and the skills and the knowledge and the access to each other 
and to experts to be able to do that. So I think that 
foundations can support that by investing in leadership 
programs and school-based programs, teaching philanthropy at a 
young age, and really increasing that civic voice and capacity 
of communities so that they can speak for themselves and not be 
intimidated by a perceived lack of power or influence or 
knowledge.
    Chairman LEWIS. Thank you. Yes, sir?
    Mr. LAHER. Mr. Chairman, I don't want to create the 
impression that we live in a Pollyanna or that I am one, but 
the 200 program--200 agencies that we fund in the Twin Cities 
are just filled with small organizations who are doing their 
charitable work because they believe in it. They believe it's 
the right thing to do. To use your words, it's the moral thing 
to do.
    The agency that Marcia talked about, Community Emergency 
Assistance Program, $2 million budget, 22 staff in a community 
that has 10 percent people of color and they're serving 60 
percent people of color because they've come--and many of them 
are Somali, and they've come to our country for a different 
life, and supported by about 50, 60 different churches who 
really want to help people. We see it every day. Part of the 
reason people like myself and Marcia stay in this field is 
because we see what those individuals are willing to do, for 
the whole purpose of helping somebody other than themselves.
    Chairman LEWIS. Yes, Madam President?
    Ms. BERRESFORD. I think the point about moral voice is very 
important. I think we've all said it, and you've said it 
wonderfully. We need to have people who speak in more than 
sound bytes, and I think we need to have dialogs between the 
nonprofit sector, the business community, and government about 
what really guides our country and makes it great.
    I think we need to hear from people about where they think 
their values came from, what their values mean for them and 
what it animates them then to do, because that is inspiring, it 
creates protection for other people to step out and do 
something, and we don't have enough of that. We have much too 
much of the sound byte communication. I think if we can figure 
out fora in which we sit together and talk about these things 
in more than just a moment on the news, we will begin to 
restore the kind of community that we're all Americans, we're 
one house that you're speaking of.
    Chairman LEWIS. Well, I thank you so much, and thank each 
of you for the words, your statement, your testimony. You made 
a wonderful contribution how we can better serve the interests 
of our diverse communities. We appreciate your patience. There 
being no further other business before the Committee, the 
Committee will stand adjourned.
    Thank you so much.
    [Whereupon, at 4:31 p.m., the hearing was adjourned.]
    [Submissions for the record follows:]

                                 

            Statement of African American Nonprofit Network
    Thank you for convening a hearing on this important issue and for 
the opportunity to provide comments and background information on how 
the African American Nonprofit Network (AANN) is addressing the issue 
of diversity in the nonprofit sector in the National Capital Region. 
Our own experience has been that there is a need for significantly 
greater diversity at the volunteer and senior staff level of nonprofit 
organizations and that recognition led us to develop the African 
American Nonprofit Network.
Our Mission
    The mission of the African American Nonprofit Network is to 
significantly change the landscape of African American leadership in 
the National Capital Region so that nonprofit organizations can better 
empower the constituents they serve and have a positive impact on the 
community.
Why We Were Established
    AANN was established in response to the acute shortage of African 
Americans in leadership positions within the nonprofit sector, 
especially those organizations serving the diverse communities of the 
National Capital Region.
    In order to adequately serve diverse communities, AANN believes it 
is important to have diverse nonprofit leaders who can understand and 
appreciate the unique needs of the region's children, youth and 
families. AANN seeks to become a valuable resource that serves as the 
connector of African American executives and volunteers and the 
nonprofit organizations that serve diverse communities.
    A recent national study by the Urban Institute highlighted the 
acute shortage of minorities on nonprofit board positions finding that 
``Among nonprofits whose clientele is over 50% African American, 18% 
include no African American trustees. Among nonprofits whose clientele 
is 25% to 49% African American, 36% have no African American board 
members.'' Among nonprofits whose clientele is more than 50% Hispanic, 
32% have no Hispanics board members.
What We Do:
    AANN's core group of local and national leaders with experience in 
both the nonprofit and for-profit sectors, brought together their 
considerable personal and professional networks of talented African 
American professionals to form a powerful network of African Americans 
who serve as conduits for distributing information on nonprofit board 
and staff leadership opportunities.
    AANN's efforts focus on increasing a nonprofit organization's 
access to talented African American candidates to fill senior staff 
positions such as executive director, CEO, CFO, COO, as well as board 
positions.
    Currently AANN has two established services: 1) a Positions Alerts 
program in which we assist nonprofits by distributing senior staff 
leadership position descriptions through our network and 2) a Board 
Matching program in which we assist nonprofits in identifying talented 
African American as candidates for their boards.
    Since our formation in January 2007, AANN has begun to see success 
in matching African American professionals with nonprofit 
organizations. As we continue our outreach to nonprofit organizations 
and expansion of our network of professionals we expect to see 
significant impact on the landscape of nonprofit organizations serving 
diverse communities in the National Capital Region.
    Again, thank you for convening this hearing on such a timely and 
important topic.

                               __________

African American Nonprofit Network (AANN)
Board of Directors
President
Ike Fields, Chief Operating Officer, Integrated Resource Technologies
Vice President
Maxine B. Baker, Former President & CEO, Freddie Mac Foundation
Directors
Neil Albert, Deputy Mayor, District of Columbia

Vicky Bailey, President, Anderson Stratton International, LLC

James Forman, Jr. Associate Professor, Georgetown University Law Center

Terri Lee Freeman, President, Foundation for the National Capital 
Region

Artis Hampshire-Cowan, Sr. V.P., Board of Trustees, Howard University

Kimberly Keating, President, Keating Advisors

William Keyes, President, Institute for Responsible Citizenship

Brig Owens, Partner, Bennett & Owens

Jeffrey Penn, Vice President for National Recruiting of Mentors, Big 
Brothers, Inc.

Ed Robinson, Consultant, Witt/Kieffer

Kenneth Slaughter, Partner, Venable, LLP

LeRoy Thompson, Managing Director, Top Management Assistance

N. Joseph Watson, President & CEO, StrategicHire
Executive Director
Wanda L. Pierce

                                 

                  Statement of American Arts Alliance
    On behalf of the American Arts Alliance and its member 
organizations--American Symphony Orchestra League, Association of 
Performing Arts Presenters, Dance/USA, National Alliance for Musical 
Theatre, OPERA America, and Theatre Communications Group--I am happy to 
share with the subcommittee the extraordinary charitable efforts being 
made by performing arts organizations that enhance the quality of life 
of all Americans.
    The American Arts Alliance is a national network of more than 4,100 
member organizations and individuals comprising the professional, 
nonprofit performing arts and presenting fields. For more than 30 
years, the American Arts Alliance has advocated for national policies 
that recognize, enhance, and foster the contributions the performing 
arts make to America.
    Performing arts organizations and artists provide unique, diverse, 
and essential benefits that create and sustain vibrant communities 
across the country. Nonprofit performing arts organizations provide 
learning opportunities for all citizens, inspire creativity and 
imagination, and provide common ground for citizens to come together to 
build better communities.
    The arts illuminate the human condition, history, contemporary 
issues, and our future.
    The performing arts are an essential public good, and performing 
arts organizations open the doors to full arts participation in 
America--by offering access to educational opportunities for all, 
places to gather and belong, and giving citizens an appreciation of our 
nation's culture and heritage through excellent artistic programming.
    The arts help democratize our citizens. Communities of all sizes 
across the United States look to the arts to generate economic activity 
and to improve the education our citizens. Collectively, the performing 
arts reach millions of people daily. It simply is not true that only 
the wealthy elite are attending performances in a few concert halls 
around the country. Here are a few examples of the broad, diverse reach 
of the arts:

      Over 3.5 million people, including a large number of at-
risk children are served by the more than 1,283 outreach and education 
programs of 202 non-profit theatres in the U.S.
      More than 37,000 orchestra concerts in 2004-2005 reached 
audiences of more than 28 million listeners, and approximately 1,800 
orchestras exist in all 50 states.
      2 million people attended education and community 
programs served by U.S. and Canadian companies during the 2004-05 opera 
season.
      16 million people attended over 27,000 musical theatre 
performances in 35 states and 7 countries in one year.
      3.3 million people attended dance performances before 
even counting the millions who attend small dance companies' 
performances in 2005.
      6 million audience goers attend a performing arts event 
each week according to the Association of Performing Arts Presenters.

    Millions of people attend nonprofit performing arts events cross 
all income and socio-economic groups and, through diverse artistic 
programming and community engagement activities, performing arts 
organizations increase access to the arts for all. A commissioned Urban 
Institute report revealed:

      77% of presenting organizations develop programs and 
performances for students K-12
      75% of presenting organizations offer free tickets 
through programs serving the poor, elderly and youth groups.
      54% of presenting organizations offer special services 
for persons with hearing, sight, or mobility impairments.

    The Institute for Innovation in Social Policy issued a report in 
2005, ``Arts, Culture, and the Social Health of the Nation.'' The 
findings of the report found that ``arts and culture represent a vital 
component of social well-being. They create critical social bonds, webs 
of affiliation that strengthen the nation, deepen our tolerance, and 
grace our lives in unique ways.'' The report found strong support by 
people at all income levels that place a high value on the arts.
    The Phoenix Symphony is an ideal example of the kind of efforts 
being made by orchestras across the country to serve diverse 
communities and its citizens through a network of funding efforts. The 
Phoenix Symphony's education programs are introducing more than 50,000 
students to music through education and youth-engagement programs. As 
part of these efforts, the Phoenix Symphony has for seven years 
partnered with the Salt River Pima-Maricopa Indian Community. The 
program called, One Nation, has successfully promoted cross-cultural 
awareness and increased access to music education for hundreds of 
Native American children and families.
    One Nation received National Endowment for the Arts funding and 
support from the Arthur M. Blank Family Foundation to help expand the 
program from a small pilot project to a school-year long project. Over 
time, individual donors and other members of the community have 
endorsed the project attracting additional funding, and increasing 
public participation and attendance. A teacher at the Salt River High 
School, Chris Wakely, has noted,'' One Nation has had a huge impact on 
our students, not just musically, but also socially and behaviorally.''
    Programs like One Nation happen daily in communities across our 
country providing lifelong learning opportunities. Few investments 
realize the economic, not to mention the intangible, intrinsic benefits 
that only arts make possible.
    The nation's nonprofit performing arts organizations are supported 
by a delicate balance of foundation, corporate, government and 
individual support. Over and over again, civic leaders and arts 
supporters have designated their donations to be used for ensuring the 
vitality of the nonprofit performing arts organizations that anchor 
their communities, and often specifically provide funding to ensure 
broad reach into our diverse communities as well as sponsor free 
tickets and performances.
    Wealthy patrons gifting large donations to build symphony halls, 
performing arts centers and theatres make headlines. Yet in reality for 
every multimillion-dollar gift there are thousands of smaller gifts 
made by citizens across the economic and social spectrum to support the 
arts. A recent 2006 report by PEW Charitable Trust, looking at the arts 
and culture institutions in Philadelphia found that ``the vast majority 
of contributions (96%) came from individual donors, who made 266,000 
contributions to the fundraising efforts of arts and cultural 
organizations in the region. The average contribution was $300 from 
individuals.''
    The arts belong to everyone, and are supported by a broad network 
of donors. According to a survey of 800 random households in 10 
American cities, the vast majority of citizens believe that the 
presence of live, professional performing arts in the community 
improves the quality of life, promotes understanding of other cultures, 
fosters pride in the community, and contributes to the education and 
development of children. The same study found that communities with 
performing arts organizations attract ``super-citizens''--volunteers, 
voters, philanthropists and other active, civic-minded participants. 
Those that attended live professional performing arts tended to 
volunteer and vote more often. Frequent attendees volunteer at a rate 
of 86%, as opposed to 53% of non-attendees.
    Individual citizens of all income levels and from all socio-
economic backgrounds play an important role in keeping the performing 
arts alive and ensuring their accessibility to all citizens. We must 
embrace the intentions of these donors, and encourage their charitable 
and philanthropic efforts, which contribute to our health and vitality 
as a nation.
    The performing arts are an indispensable part of our society. 
Charitable donations to the arts guarantee their future access by all 
Americans. And, the arts ensure the best for America's future; children 
increase their academic achievement through arts and music education, 
and this is especially true in our underachieving schools; performance 
centers anchor community revitalization efforts in our blighted cities; 
audiences find common ground across racial, social and economic 
boundaries. The performing arts provide inspiration and hope.
    The arts belong front and center in our charitable giving 
portfolio, with full tax benefits granted to every donor.

                                 

                  Statement of Americans for the Arts
    Mr. Chairman, Americans for the Arts would like to take this 
opportunity to respond to the question of whether or not charitable 
organizations are serving the needs of diverse communities. This is not 
only a question of an allocation of resources any organization commits 
to a particular racial, cultural, or ethnic group, but also whether 
non-profits appropriately value the diverse perspectives that compose 
their communities. Given the country's increasing changes in 
demographics, an additional inquiry was raised in the subcommittee 
hearing as to whether or not the leadership of these same non-profit 
organizations is culturally sensitive to the demands of a population 
with constantly shifting cultural needs. We believe that in the arts 
field, these questions are being addressed by both national charitable 
organizations and the local non-profit agencies in pursuit of cultural 
equity. While our service to the field has not yet attained total 
equity, we are striving to administer programmatic responses that one 
day will.
    Americans for the Arts, a 5,000 member non-profit organization 
dedicated to Americans for the Arts is the nation's leading nonprofit 
organization for advancing the arts in America. With 45 years of 
service, we are dedicated to representing and serving local communities 
and creating opportunities for every American to participate in and 
appreciate all forms of the arts. Americans for the Arts and local arts 
agencies across the country have made the goal of cultural diversity a 
foundational principal. This commitment is demonstrated by a host of 
programmatic initiatives that recognize the importance of cultural 
diversity not only in access to the arts and the inclusion of diverse 
perspectives, but also in the composition of those organizations.
    More can be done in the arts field to advance multicultural 
expression and access, as more can be done in the other charitable 
fields to provide greater expansion of resources to diverse groups. 
Whether they are defined as under-represented cultural minorities or as 
underserved segments of the population, we believe steps are being 
taken by our organization and countless other local arts agencies 
across the nation to develop methods and programs to fully realize the 
goal of providing access to the arts and arts education for all 
Americans.
Americans for the Arts Initiatives
    Over the years, Americans for the Arts through its programmatic 
initiatives, Animating Democracy, Art. Ask for More, and the Americans 
for the Arts Annual Convention, has steadfastly pursued the goals of 
cultural diversity and equity.
    In our programming, we always strive to present varied voices. 
Americans for the Arts, has always made an effort to include a diverse 
representation of the field through speakers at the annual conference, 
Arts Advocacy Day, and other events. In 1990, Maya Angelou was the 
Nancy Hanks Lecture followed by Barbara Jordan in 1993, Carlos Fuentes 
in 1996, and Billy Taylor in 1998. Annual Convention keynotes over the 
years have included Congressman John Lewis, Maynard Jackson, Ossie 
Davis, Henry Cisneros, August Wilson, Russell Simmons, Ray Suarez and 
many more. Our current Emerging Leaders Initiative identifies leaders 
of color in a more natural way. Proactive recruitment through 
scholarships and positions on leadership councils has promoted age, 
gender, geographic, and cultural diversity.
Animating Democracy: A national arts and civic engagement program
    Animating Democracy's two main grant making initiatives--the 
Animating Democracy Lab (1999-2004) and the Animating Democracy/Working 
Capital Fund Exemplar Program (2005-2007) have both focused support on 
leading small and medium sized organizations that have encoded true 
diversity into core values, mission, and practice. These include mid-
sized African-American, Latino, Native American, and Asian American 
arts groups that are building sustainable organizations that support 
their artistic and community missions and serving as role models for 
the field. Through Animating Democracy's work with these cohorts of 
grantees, Americans for the Arts has learned to structure meetings and 
learning experiences that embrace and honor multiple cultural 
traditions. We have shined a light on the creative and progressive 
practices of these leading organizations, documented a significant body 
of their work and best practices for the benefit of the field, and 
brought their leaders and stories into circles where cultural policy is 
discussed and formed.
Art. Ask for More. National Public Service Awareness Campaign

      Americans for the Arts launched a Public Service 
Awareness (PSA) Campaign focusing on the importance of arts education 
for children in 2002, including television ads featuring African 
American and Hispanic (in Spanish) artists.
      Additionally, Spanish language radio and print ads 
featuring the Spanish artist ``Francisco de Goya'' were also released 
in Spanish language in 2004.
      A second phase of the PSA campaign is currently in 
production and will also feature ethnic and racially diverse artists as 
well as Spanish language ads as part of the national campaign.
Americans for the Arts Annual Convention

      Americans for the Arts hosts Cultural Diversity peer 
group roundtables during each Annual Convention. For the past two 
years, the group has programmed joint peer group sessions with the 
Emerging Leader and Cultural Diversity peer groups.
      The theme of the 2006 Annual Convention in Milwaukee, WI, 
Living Cultural Democracy: Arts in Changing Communities, was centered 
on diversity and shifting demographics including issues of diversity: 
cultural, generational, geographic, economic, gender, etc.
Economic Development in Diverse Communities
    Arts & Economic Prosperity III: The Economic Impact of Nonprofit 
Arts and Culture Organizations and Their Audiences documents the key 
role played by the nonprofit arts and culture industry in strengthening 
our nation's economy. This study demonstrates that the nonprofit arts 
and culture industry is an economic driver in communities--a growth 
industry that supports jobs, generates government revenue, and is the 
cornerstone of tourism.
    Nationally, the nonprofit arts and culture industry generates 
$166.2 billion in economic activity every year--$63.1 billion in 
spending by organizations and an additional $103.1 billion in event-
related spending by their audiences. The study is the most 
comprehensive study of the nonprofit arts and culture industry ever 
conducted. It documents the economic impact of the nonprofit arts and 
culture industry in 156 communities and regions (116 cities and 
counties, 35 multicounty regions, and five states), and represents all 
50 states and the District of Columbia.
    This research provides another aspect of how the arts sector 
relates to diverse communities: the potential of arts organizations to 
provide economic development possibilities in aspiring communities. 
This link is most specifically found in a local study by University of 
Pennsylvania researchers, ``More than other social institutions, arts 
and cultural organizations thrive in economically and ethnically 
diverse neighborhoods. . . . Arts and cultural organizations are 
dominant in economically diverse neighborhoods. In ethnically and 
economically diverse neighborhoods as well, arts groups compose 10 
percent of all organizations, nearly twice their proportion in 
homogeneous neighborhoods (5.6 percent).'' \1\ Arts organizations, 
perhaps more than any other local charitable organization, can have a 
profound effect on the economic activity in a developing neighborhood.
Local Arts Agencies Initiatives
    Local arts agencies are Americans for the Arts' key constituency 
and advancing full and affordable access to the arts are at the heart 
of their mission. Local arts agencies meet community needs by using the 
arts to address social, educational, and economic development issues as 
well as by supporting ``art for art's sake.'' They make grants, provide 
services to artists and arts organizations, and present arts 
programming to the public. Typically, local arts agencies lead 
community cultural planning--a community-inclusive process of assessing 
local cultural needs and mapping a plan of implementation.
    Of the 4,000 local arts agencies today, three quarters are private 
non-profit organizations, of which many are designated official arts 
agencies for their communities and entrusted with granting government 
funds. The remaining quarter are government agencies. Because of their 
quasi-governmental structure, many local arts agencies are able to 
execute their mission with increased access and greater service to 
their communities.
    In a comprehensive national review published by Americans for the 
Arts profiling local arts agencies addressing cultural diversity and 
cultural equity, several trends and conditions emerged.

      Success requires moving beyond numbers and statistics. By 
integrating cultural diversity with all agency programs and addressing 
issues of attitudinal change, recognizing that cultural diversity and 
cultural equity issues need to be included in areas other than funding.
      Leadership is a fundamental element to provide assistance 
in building diversity. Arts administrators must recognize that 
individuals both within their organization and out in the community 
must work together to make a difference. When individuals representing 
both the traditional and multicultural organizations step forward and 
declare the need for cultural diversity and equity and the commitment 
to working on its achievement, there is a greater likelihood that the 
community will respond.
      Foster an attitude in which there is a mutual respect and 
consideration for all those involved. The process is not a ``bottom/
down'' or ``expert and novice'' approach. All viewpoints deserve to be 
aired, and the process is one which validates the diversity of 
experiences and establishes understanding and respect for differences.
      Continued and long term commitment on the part of the 
agency and the community to deal with the complexities and hardships of 
achieving cultural diversity is necessary. Communities that have 
sustained significant changes in the areas of cultural diversity and 
equity have done so as a result of continued efforts over a period of 
at least five or more years.
      Policy statement that defines cultural diversity for the 
community. Development of specific language which defines cultural 
diversity and equity for the entire community and agency. This provides 
clarity for those involved in the process.

    Most agencies addressing cultural diversity and equity issues are 
doing so through a formal planning process. This process may be agency 
driven or at the request of the community. In many cases, cultural 
diversity and equity are defined as part of a comprehensive cultural 
planning process. In other cases, consideration of cultural diversity 
and equity are the intended outcome of a targeted plan.
    We would like to provide the committee with successful program 
examples that demonstrate the commitment from our members and 
organization. These examples also demonstrate the response from local 
arts agencies and governments to the increasing needs of culturally 
diverse communities through local initiatives in the arts and also 
through federal arts in education grants and assistance.
Local Arts Agencies Program Outreach Examples
Alexandria Commission for the Arts, The Alexandria Cultural Plan, 
        Alexandria, Virginia
    The Alexandria Commission for the Arts, sponsored in part by a 
grant front National Endowment for the Arts, embarked upon a cultural 
planning process to identify goals and objectives for the next five 
years. Although cultural diversity and equity were not explicit goals 
of the plan, opportunities to address these issues were present.
    Goal One: Create public awareness and build public interest in the 
participation and support of Alexandria's cultural resources. Of eight 
objectives and strategies, two were particularly pertinent to 
addressing cultural diversity and increased access to underserved 
audiences.

      Expand the visibility of Alexandria's arts organizations 
of color through collaborative marketing and marketing technical 
assistance by working in partnership with Alexandria's churches and 
neighborhood associations to better publicize performances and events.
      Create neighborhood art/cultural development plans 
utilizing Commission granting programs and services to help further 
neighborhood-based cultural development, through the support of new and 
emerging organizations and through support of programming that is 
neighborhood focused. Provide technical assistance and collaborative 
opportunities for audience development/marketing for neighborhood-based 
organizations and artists, to enable them to become more visible 
throughout the city.

    Goal Two: Utilizes Alexandria cultural resources to address 
community needs. The following objectives and strategies reflect 
opportunities for greater participation by the entire community:

      Develop and expand models for partnerships between arts 
and Neighborhood Recreation Centers to address social and community 
development needs;
      Expand the Commission's role in programming, utilizing 
the recreation centers, building on the 1994 Kennedy Center/Dance 
Theater of Harlem Community Residency model of special workshops and 
classes open to residents regardless of financial ability to 
participate.
      Ensure the development, upgrading and maintenance of 
appropriate performing visual, and education arts facilities for 
Alexandria by continuing to develop plans for the proposed arts 
incubator, modeled after small business incubators, to serve small and 
emerging cultural organizations.

The Los Angeles County Arts Commission, Los Angeles County, California
    The Los Angeles County Arts Commission is a local arts agency, 
acting in an advisory capacity to the County Board of Supervisors and 
granting over $4 million in county funds annually. Its mission is to 
foster excellence, diversity, vitality, understanding and accessibility 
of the arts in Los Angeles County. It provides leadership in cultural 
services for the County, including information and resources for the 
community, artists, educators, arts organizations and municipalities.
    In response to the findings of Arts in Focus, Los Angeles County 
(the Arts Commission in partnership with the Los Angeles County Office 
of Education) embarked on a year-long, community-based planning 
process. In 2002, the County Board of Supervisors, the County Board of 
Education and the County Arts Commission unanimously adopted Arts for 
All: Los Angeles County Regional Blueprint for Arts Education, which 
presents a series of policy changes, educational initiatives, and 
establishment of a new infrastructure to ensure all 1.7 million 
students receive a high-quality K-12 arts education. This program was 
profiled in testimony by the Commission's Director of Arts Education 
before the U.S. House of Representatives Labor, Health and Education 
Appropriations Subcommittee earlier this year.
Inner-City Arts, Los Angeles, California
    Inner-City Arts, a non-profit organization in Los Angeles provides 
arts learning services to students in the L.A. unified school district. 
Their three-year Arts in the Middle (AIM) Project will expand and 
rigorously evaluate an innovative, cohesive model for delivery of arts-
based instruction to remedial grade six English learners. The Project's 
strategy will extend community resources to under-resourced urban 
middle schools in order to improve academic performance among English 
learners by integrating standards-based arts education within the core 
Language Arts curricula of grade six students. The Project's target 
population is remedial grade six students who are at extreme high risk 
of academic failure due to low levels of English Language Development. 
Assuming it is successful, the goal is to replicate it within other Los 
Angeles schools. This project directly supports the school district's 
10-year plan for arts education. This program is currently funded, in 
part, through an Arts in Education grant from the U.S. Department of 
Education.
Civic Arts Commission, Civic Arts Funding Program, Berkeley, California
    Like many smaller local arts agencies, the City of Berkeley has 
limited funds to grant for arts activities. However, the Civic Arts 
Commission has developed a policy statement that defines its commitment 
to organizations of color and underserved communities. The following 
language is included in the Funding Program Guidelines:

    The City of Berkeley is committed to:

      The growth and stabilization of Berkeley arts 
organizations and its artists.
      The support of organizations and artists that represent 
diverse cultures including ethnic and racial minorities, deaf and 
disability cultures, seniors, youth, gay, lesbian and feminists.
      The empowerment and equal representation of cultural 
perspectives that have been traditionally/historically via access to 
funding programs.
      Encouraging collaborations between organizations, 
artists, and the communities in which the applicants reside.
      Activities that contribute to the development and 
enhancement of the Berkeley community or specific neighborhood or 
particular constituencies.

    The Civic Arts Program maintains its commitment to organizations of 
color and underserved communities by awarding a majority of its funds 
to organizations dedicated to providing activities to Berkeley's 
diverse communities. Subsequently, large budget organizations (which 
Berkeley defines as organizations with budgets over $150,000) can apply 
only for Community Outreach and Arts in Education projects. All other 
small and emerging organizations can apply for support former funding 
categories in addition to, Project and Production Support, Technical 
Assistance and General Operating support. Criteria to evaluate 
applicants focuses on specific diversity outreach activities.
Conclusion
    The mission of Americans for the Arts, like its local arts agency 
stakeholders, is to provide access to the arts for all. Serving the 
needs of underserved and under-represented communities is an inherent 
central goal of that mission statement. Through national arts 
organizations diversity initiatives, cultural plans that foster 
economic development in aspiring neighborhoods, and outreach efforts by 
local arts agencies, the non-profit arts sector strives to meet the 
challenges shared throughout the philanthropic community.
    We would like to thank you for the opportunity to share our work 
and hope the Subcommittee will continue to support the efforts of the 
non-profit arts field.

    Footnote: [``Re-presenting the City: Arts, Culture, and Diversity 
in Philadelphia.'' Mark J. Stern and Susan C. Seifert., University of 
Pennsylvania, School of Social Work, April 1999]

                                 

  Statement of Association of Art Museum Directors, New York, New York
    The Association of Art Museum Directors (AAMD) is composed of the 
directors of 170 of the leading art museums in the United States, with 
additional members in Canada and Mexico. We are grateful for the 
opportunity to submit written testimony for the record on the issue of 
whether philanthropy serves diverse communities. The following 
statement addresses philanthropic grants to museums. It also addresses 
how museums serve their communities, regardless of funding source.
    Art museums are among the most used and cherished institutions in 
their communities.

      Total annual attendance at AAMD member museums in the 
United States is approximately 50 million.
      Most AAMD institutions report that between five and ten 
percent of their attendance is in the form of organized school groups.

    Additional children are served by individual visits, outreach, and 
on-line programs. Given the parlous state of art education in the 
public schools, especially in inner-city schools, art museums are the 
sole source of exposure to visual art for many at-risk children and 
youth. Any discussion of philanthropy and diversity must take these 
facts into account.
    Beyond the numbers, though, it is important to state what museums 
stand for. As a former museum director said just last month,
    Our museums reflect creativity, history, culture, ideas, 
innovation, exploration, discovery, diversity, freedom of expression 
and the ideals of democracy. Today, museums matter more than ever, as 
museums protect and preserve our culture and civilization. In these 
dark and dismal days of nationalism; religious wars; terrorism and 
torture; museums present the highest ideals and achievements of 
humankind to be admired and cherished.
    America's museums were founded in many cases by generous 
individuals who believed that art should belong to the people. Their 
attitude was in marked contrast to Europe, where collections formed by 
royal and aristocratic patrons were often unavailable to a broader 
public. The public-spirited generosity of American donors both of art 
and of funding then and since is a living tradition that has enabled 
museums to offer affordable access to unique collections. The motto of 
the Taft Museum of Art in Cincinnati expresses it with succinct 
elegance: One Family's Treasure. Art for All. In the same city, the 
Cincinnati Art Museum offers free admission due to the generosity of 
donors stretching back to 1906, when Mary Emery established a fund to 
make Saturday admission free to all; free general admission for 
children was subsequently endowed by local corporations; and finally, a 
generous gift from The Richard and Lois Rosenthal Foundation 
established free general admission for everyone at all times.
    All of AAMD's members share a commitment to serving the public 
through exhibitions that inspire, entertain, and confront the issues of 
the day. They offer educational programs and classes for people and 
families of all ages, origins, and socio-economic status. Their 
programs for teachers--showing how to connect works of art to school 
curriculum in every academic subject--are irreplaceable. All partner 
with other community institutions, including health, human service, and 
education organizations, applying the unique resources of the arts to 
serving a wide variety of purposes. Our institutions are anchors in 
their communities, often serving as the centerpiece of new or 
revitalized neighborhoods, providing jobs, attracting tourists as well 
as residents, and in a less literal sense, helping to form the 
community's identity--its sense of self.
    There is still too little diversity in the top leadership ranks--a 
reality that we are committed to changing. Our adult audience, while 
diverse, is still not diverse enough. Nevertheless, education and 
community engagement--not just outreach, but actual engagement--are at 
the heart of museums' missions. It is worth citing a landmark report 
that our sister organization, the American Association of Museums, 
issued in 1992 after two and a half years of intensive work. Titled 
``Excellence and Equity: Education and the Public Dimension of 
Museums,'' it sets forth guidance on ten basic principles for museums, 
of which the first three are:

      Mission: Assert that museums place education-in the 
broadest sense of the word-at the center of their public service role.
      Audience: Reflect the diversity of our society by 
establishing and maintaining the broadest public dimension for the 
museum.
      Learning: Understand, develop, expand, and use the 
learning opportunities that museums offer their audiences.

    These principles are now universally accepted in our field, and art 
museums are committed to using their encyclopedic collections, which 
range over five thousand years and are drawn from every known 
civilization in every part of the world, to speak eloquently to diverse 
audiences. Museum collections are a primary resource for people who 
wish to learn more about their own heritage, regardless of race, 
religion, ethnicity, or economic resources. America's non-profit system 
ensures that these collections are held in trust for the public--not 
just part of the public, but all of it, and not just for today's 
audiences, but for the future as well.
    To prepare this testimony, AAMD polled the members of its Education 
Committee. Their response was immediate and overwhelming. Here is a 
small sample of what they had to say:

    The director of the Delaware Museum of Art reports:

          The Museum currently has over 60 partnerships with community 
        groups such as Kuumba Academy, a charter school for the arts 
        that mostly serves economically needy children, the Latin 
        American Community Center, Girls Inc. and other agencies that 
        service disadvantaged people. Since my arrival in 2005, I have 
        met personally with many community leaders to ask them how the 
        Museum can meet their needs. They have responded unanimously 
        that while their people need many basic services they also need 
        the creative outlet and emotional oasis that only an art museum 
        such as the Delaware Art Museum can provide . . .

    The director of the Queens Museum says that his museum ``is in 
America's most diverse county, and a large section of our audience is 
immigrants. Therefore it makes sense that:

      We employ a community organizer to work in our 90% 
``minority'' local community;
      We conduct free digital media (and other) classes in 
Spanish;
      Our admission is by voluntary contribution;
      All events are free;
      Family workshops at the Museum cost $2 for materials;
      Our most expensive program is an art camp at $50 per 
week, and scholarships are available;
      Two fully trained art therapists on staff work with 
special needs communities;
      50% of executive staff and 60% of overall staff members 
are people of color;
      Our staff speaks eight languages; and so on.''

    At the Baltimore Museum of Art, the tour most requested by school 
groups--and BMA welcomes 20,000 students each year--is the African 
collection, because the study of Africa is a curriculum element in 
Baltimore's public schools, and the museum affords a unique means for 
children to learn about the continent's history and culture. Its 
African collection was founded in 1947 by wealthy white donors and it 
continues to be the most rapidly growing collection in the entire 
museum. The museum is planning a major reinstallation for which 
important financial support has been received from the city government. 
Surely it is significant that a city with no lack of social needs sees 
fit to invest in its art museum. We note also that just last year a 
donor endowed a free admissions policy, for all, and in perpetuity. 
Since that policy went into effect last October 1, attendance at family 
programs has grown by 88 percent.
    In Flint, Michigan, with a population of which 53% is African 
American, and with statistics that are high in unemployment, poverty 
and illiteracy, the recently redesigned and greatly expanded Flint 
Institute of Arts has risen as a symbol of renewal and a catalyst for 
change. It offers a wide range of exhibitions and educational 
programming which provide an invaluable resource to the community--
educationally, socially, economically and culturally. Located in the 
heart of the city, the FIA serves nearly 100,000 visitors each year, of 
which 30% are students (kindergarten through 12th grade), in public 
schools and alternative educational programs. Admission to FIA 
galleries is free of charge and most FIA programs (classes, films, 
etc.) are discounted. However, the FIA is not funded by Federal, State, 
County or City dollars. One third of the FIA's annual budget is 
supported through income from endowments; another third is from earned 
income. The remaining third is from the financial support of generous, 
civic-minded individuals. It is arguable that eliminating inducements 
like tax deductions will reduce the frequency and amount of gifts 
given, in which case, the underserved will continue to be just that--
underserved.
    The Frick Art & Historical Center in Pittsburgh offers free and 
reduced rate programs to schools and families in need. Thanks to 
foundation grants, over the past year it has provided scholarships to 
450 students, teachers and families. Additionally, the Frick provides 
free programs to schools and community service organizations in 
neighboring areas where the population is predominately African-
American. Over the course of ten years and through four distinct 
community programs, nearly 12,000 children and chaperones from at-risk, 
high-poverty areas have been introduced to art, history and science 
through the collections and grounds at the Frick. All of the community 
programs are multi-visit and interdisciplinary, providing the students 
with an opportunity to learn about art and history in a variety of 
hands-on experiences. Because of grants the museum is able to continue 
offering these community programs at no charge along with free busing, 
snacks and program materials that allow the children to participate in 
creative take-home projects. During the 2006-07 school year, the museum 
collaborated with the Homewood-Brushton YWCA's Departments of Teen 
Services and Children and Youth to design and implement weekly or bi-
weekly art and history programs. Goals for the teens stressed positive 
mentoring and leadership skills and incorporated the core values of the 
YWCA: Caring, Respect, Excellence, Safety and Trust.
    At the Montgomery Museum of Fine Arts, located in Montgomery, 
Alabama, exhibitions and works of art in the collection by African-
American artists are a focus. The museum has, for more than twenty 
years, welcomed and provided free tours (with free art-making in the 
studios) for 3,000 third graders from the Montgomery Public Schools. 
The museum also provides free outreach presentations to kindergarten 
classes and presents a special art-related puppet show followed by a 
tour for preschoolers. Other system-wide tours include public school 
seventh and eleventh graders at times when exhibitions have a direct 
relationship with the schools' curriculum. The makeup of the students 
on these tours is a direct reflection of the diverse Montgomery 
community.
    Expanding the museum's offerings and appeal to other segments of 
the community, based on age, gender, ability economics, education and 
schedule is one of the museum's top priorities. All public areas of the 
museum meet or exceed ADA standards. The museum has designed programs 
for Korean families and for senior citizens, appealing to groups from 
assisted-living centers as well as individuals, and it has held initial 
planning meetings on addressing the small but growing Hispanic 
audience's interests and needs. Its 4,000 square foot ARTWORKS 
interactive gallery is an ideal starting place for visitors with vision 
or hearing disabilities; the museum offers (with advance notice) ``do 
touch'' White Glove tours for the blind that closely guide and 
supervise sighted or blind visitors while they touch selected 
sculptures from the Museum's permanent collection.
    The Montclair Art Museum (MAM) in Montclair, New Jersey exists to 
collect, preserve, present and interpret American and Native American 
art and to stimulate creativity in ways that educate, inspire and 
connect people of all backgrounds so that a deeper understanding and 
appreciation of America's diverse cultural heritage enhances the 
overall quality of life in our community, region, and world. It is 
committed to being an inclusive and diverse organization that respects 
and welcomes individual differences among people in order to offer the 
most meaningful art experience to the widest possible audience. It 
strives to cultivate an environment that fosters productivity, 
creativity and individual satisfaction by celebrating such differences 
as race, gender, nationality, age, religion, sexual orientation, and 
physical abilities.
    Located in one of the most fully integrated suburban communities in 
the US, and with a Museum Board leadership that has included two 
Presidents and a Chairman who are African-American in the last six 
years, MAM attracts a racially diverse membership and audience. 
However, there are many other segments of the population that it works 
to serve; at-home mothers and caregivers of small children, families 
who home-school, seniors, and all age groups in between. School-age 
children from all counties in Northern New Jersey and the metropolitan 
area visit the museum, as well as autistic children and other children 
and adults with special needs. The museum's Yard School of Art enriches 
the surrounding communities year in and year out by offering courses 
that have often been cut from many public school curricula. It offers 
free admission on Friday mornings in an effort to attract and sustain 
senior and other audiences and those from disadvantaged communities, 
and wherever possible educational events are free, as are the very 
popular Family Days that happen quarterly. The museum recognizes that 
key to new audience development is the participation of the museum's 
minority stewards, trustees, docents and other volunteers who will play 
integral roles in working to develop sustainable relationships with the 
target audiences.
    The Barnes Foundation in Merion, Pennsylvania has spent the past 
six years working to present educational programs to the students in 
the Philadelphia School District. For five years, the Foundation has 
presented a program, Patterns in our Culture which was designed for 
first and second grade students. Looking at patterns in art, 
literature, mathematics, music and dance, the program tied into the 
overall curriculum of the school.
    Currently the Foundation is partnering with the Philadelphia Museum 
of Art and three other institutions to build a curriculum for the 
entire fourth-grade of the Philadelphia School District. Art, Literacy, 
Museums seeks to increase the targeted students' and teachers' 
knowledge of the visual arts and museum experiences, illustrate how the 
study of art can be used to advance literacy skills, and provide a new 
model for art institutions working together to create basic programming 
that will increase their impact in the community. This program is fully 
subsidized by the participating institutions through contributions.
    The Philadelphia Museum of Art serves 75-80,000 Philadelphia school 
children annually. It reports that a single grant from a foundation 
enabled 13,927 Philadelphia public school students to take part in 
lessons at the museum. At all times, children who are twelve years of 
age or younger are admitted to the museum free of charge, and students 
and seniors receive discounts every day. Classroom groups from 
Philadelphia's public schools participate for free in programs serving 
K-12 children. Another grant, from a different funder, allowed the 
museum to serve nearly 6,000 people with visual and hearing 
impairments, mental and developmental disabilities, and physical 
impairments, as well as adults living in isolation or in residential 
centers. The museum has also received grants for outreach programs for 
Chinese-American, African-American, and Latino residents.
    The Blanton Museum of Art recently opened its spacious new home at 
The University of Texas at Austin with a mandate to serve as a 
``gateway'' between university and the wider community of Austin and 
Central Texas. Its ``Art Central'' program provides high-quality, 
multi-visit museum experiences for 1,000 fourth-through-sixth graders 
in the Austin school district each year. A growing body of research 
attests to the effectiveness of multi-visit museum programs in raising 
not only visual literacy, but overall school achievement. The Blanton 
reaches out to schools that cannot afford regular museum trips by 
providing free bus transportation to its Art Central classes. These 
vital educational programs which have served over 30,000 underserved 
schoolchildren in Austin would not be possible without the generous 
support of private donors and corporations.
    The museum offers free admission every Thursday to all visitors, 
and free admission every day to children 12 and under. In its first 
year of operation in the new building, it welcomed 177,000 visitors. Of 
this number, 53,000 were free community visits--30% of all visitors. 
33% of visitors are non-Caucasian (12% Hispanic). The Blanton's ability 
to continue to offer high-quality programming for free to so many 
members of our community is entirely dependent on the generous support 
from individuals and corporations without whose donations we would have 
to reduce our service to the outside community drastically. Indeed, 
this new cultural resource itself would not exist without the 
generosity of individual donors who understood the importance of 
sharing the Blanton's cultural treasures with the entire community.
    The Museum of Contemporary Art San Diego has addressed diversity in 
many ways over the past twenty-plus years. All of the museum's 
exhibition wall labels, texts, etc., are presented in English and 
Spanish, regardless of the exhibition subject matter. Latinos are 
represented on both the staff and the board of trustees. Many 
exhibitions have addressed related themes, most recently the 2006 
exhibition, Strange New World/Extrano Nuevo Mundo: Art and Design from 
Tijuana/Arte y diseno desde Tijuana. The museum has several school 
programs, including one that serves Title I schools in the poorest 
areas of San Diego. The museum has received numerous major grants for 
its community programs and audience development activities. These 
include grants of $500,000 or more from The Pew Charitable Trusts, the 
Wallace Foundation, and The James Irvine Foundation.
    In conclusion, we suggest that discouraging gifts to the arts by 
reducing their tax deductibility would have a counter-productive 
effect. It would lessen institutions' growing ability to serve the very 
populations whom Members of Congress most wish charity to serve, and 
would deprive those populations of the chance to participate fully in 
civil society and to have access to collections and programs that speak 
to their specific needs and interests. The social safety net has many 
strands; weakening any single strand only diminishes the safety net's 
overall integrity. We must insist that supporting the needy and 
supporting the arts are not mutually exclusive enterprises, and that 
the arts provide unique and irreplaceable service to this nation. Our 
service is not perfect, but the way to improve it is to provide more 
resources, not less.
    Thank you again for the opportunity to provide testimony on this 
important issue.

                                 

          Statement of Association on American Indian Affairs
    The Association on American Indian Affairs is an 85 year old Indian 
advocacy organization with offices in Rockville, Maryland and Sisseton, 
South Dakota. We are governed by an all-Native Board of Directors who 
are members of tribes from all regions of the country. Our current work 
is focused in four main areas: youth/education, cultural preservation, 
health, and tribal sovereignty. We work both nationally and at the 
grass roots level.
    AAIA was instrumental in obtaining the original Tribal Government 
Tax Status Act of 1982. The main purpose of that Act was to ensure that 
the federal tax code treated tribal governments in a manner comparable 
to states and their subdivisions. The legislation recognized that 
tribal governments were exercising their sovereign authority in 
providing essential services to their members and that they needed the 
same financial tools as states if they were to adequately serve their 
constituents.
    That Act has enabled tribes to obtain financing for and to fund a 
variety of essential governmental services. However, inequities between 
state and tribal governments persist.
    One such inequity involves that ability of tribes to create and/or 
support 501(c)(3) non-profit charitable organizations. As you may know, 
501(c)(3) organizations provide a variety of critical services 
throughout this country in areas such as health and education--services 
that are greatly needed throughout Indian Country.
    In order to maintain its charitable status, a 501(c)(3) 
organization must receive a substantial amount of public support--in 
most cases, at least \1/3\ of its revenues must be generated from the 
public. Otherwise, it is classified as a private foundation. ``Public 
support'' is defined to include grants from ``governmental units.'' 
Because tribal governments are not referenced in the applicable section 
of IRS code (section 170(c)(1)), however, tribal governmental funds are 
currently not classified as ``public support''. Thus, tribal support 
for a non-profit organization serving its community could jeopardize 
its classification as a public charity.
    In addition, States are empowered by the Code to create 
organizations that support charitable activities. These organizations 
can be accorded 501(c)(3) status. The IRS code does not provide for 
similarly created tribal organizations to be recognized in this manner.
    Why does it matter whether tribes can create and/or support 
charitable organizations? The primary reason is that public charities 
are often better able to raise outside funds to support their missions. 
Although tribes sometimes receive direct support from private sources 
such as foundations, many foundations only support charitable 
organizations. In some instances, foundation governing documents 
specifically place that limitation upon a foundation. In addition, the 
ability for tribes to form inter-tribal organizations that would be 
eligible for tax-exempt and foundation financing is inhibited by this 
``glitch'' in the current code.
    Recently there has been an effort, spearheaded by Senator Max 
Baucus and others, to encourage foundations to direct more funding to 
rural America. If tribal communities have viable and vibrant non-profit 
organizations operating in their communities, it is much more likely 
that they will benefit from these efforts. As explained in excellent 
testimony submitted to this committee by the First Nations Development 
Institute, foundations currently provide only a miniscule percentage of 
their funding to tribal communities.
    A Joint Tax Committee revenue chart indicates that these 
legislative changes will cost only $1 million over 10 years--a de 
minimis amount. (JCX-36-04, Estimated Budget Effects of H.R. 1528, the 
``Tax Administration Good Government Act,'' as Passed by the Senate of 
May 19, 2004, Provision VII., Line 2.) These provisions were passed by 
the Senate previously in the 108th Congress as part of the ``Tax 
Administration Good Government Act'', but that Act never became law 
because the differences between the House and Senate bills (on issues 
unrelated to these tribal provisions) were never resolved.
    These proposed amendments to the tax law are non-controversial, 
truly technical and can provide important assistance to tribal 
communities with minimal cost. We urge you to support their enactment.
Proposed amendments to Section 7871 of the Internal Revenue Code:

        ``Section 7871(a) (relating to Indian tribal governments 
        treated as States for certain purposes) is amended by striking 
        `and' at the end of subparagraph (C) of paragraph (6), by 
        striking the period at the end of subparagraph (B) of paragraph 
        (7) and inserting `; and', and by adding at the end the 
        following new paragraph:

                  (8) for purposes of
                  (A) determining support of an organization 
                described in section 170(b)(1)(A)(vi), and
                  (B) determining whether an organization is 
                described in paragraph (1) or (2) of section 509(a) for 
                purposes of section 509(a)(3).'.''

                                 
  Statement of First Nations Development Institute, Longmont, Colorado
    Thank you for the opportunity to submit testimony for the record of 
this important hearing on whether charitable organizations are 
effectively serving the needs of diverse communities.
    Our statement reviews the involvement of First Nations Development 
Institute and other non-profit organizations in serving the needs of 
American Indian people and reservation communities. It then assesses 
the potential of non-profits to stimulate and develop Indian 
reservation economies, and the role of traditional and alternative 
philanthropic organizations in this effort. First Nations believes that 
tribal government funded charities are poised to play a key role in 
addressing the needs of Indian Country. Our statement concludes with a 
call to Congress, especially the Ways and Means Committee, to enact 
corrective tax legislation in order to remove barriers to the effective 
operation of charitable organizations that are formed and funded by 
Indian tribal governments. Such legislation is broadly supported and 
could be enacted at virtually no revenue cost to the federal Treasury.
First Nations Development Institute--27 years of Successful American 
        Indian Reservation-based Development
    First Nations Development Institute is a national American Indian-
led 501(c)(3) non-profit organization that was founded in 1980. Through 
a three-pronged strategy of educating grassroots practitioners, 
advocating systemic change, and capitalizing Indian communities, First 
Nations Development Institute is working to restore Native control and 
culturally-compatible stewardship of the assets they own--be they land, 
human potential, cultural heritage, or natural resources--and to 
establish new assets for ensuring the long-term vitality of Native 
communities. First Nations was founded with the belief that: ``when 
armed with appropriate resources, Native peoples hold the capacity and 
ingenuity to ensure the sustainable economic, spiritual, and cultural 
wellbeing of their communities.''
    Throughout its 27-year history, First Nations' mission has been, 
not only to eliminate poverty, but to build healthy and sustainable 
reservation economies. Although the reasons for reservation poverty are 
multiple and complex, only solutions provided by Indian people, for 
Indian people, through the control of their assets, and crafted by 
their own development strategies, within the values of their own 
cultures, will succeed. First Nations' strategic intent has always been 
to be the leader in empowering and training Indian leaders and Indian 
people in their ability to control their assets and become self-
sufficient and self-sustaining communities.
    First Nations Development Institute sponsors a comprehensive range 
of economic development programs, including programs that provide 
tribes and Native non-profits the training and tools required to 
effectively organize and develop the institutional capacity necessary 
to become active partners in giving and receiving philanthropic 
dollars. Recognizing the large cultural and funding gaps between 
mainstream foundations and Indian communities, First Nations 
Development Institute began its unique and innovative grant-making 
program in 1994. As of August, 2007, First Nations' grant-making 
program has given over $13 million dollars to over 500 tribal and 
Native non-profit programs (this includes 515 grants to 331 
organizations).
    Always working to lead the way in addressing Indian Country's most 
pressing issues, First Nations created and implemented its 
``Strengthening Native American Philanthropy'' (SNAP) program in 1995 
to actively address the need for more information about the emerging 
Native non-profit and grant-making sectors. Through SNAP, First Nations 
has been able to perform innovative research and collect much needed 
data related to American Indian controlled foundations including 
philanthropic grant-making foundations sponsored by tribal governments. 
Through the programmatic side of SNAP, First Nations has also provided 
five American Indian foundations the support and start up assistance 
required to become long-term self-sustaining organizations.
    In 1994, First Nations launched the First Nations' Eagle Staff 
Fund, a grant-making and technical assistance effort that brought 
together a collaboration of philanthropic organizations interested in 
supporting Native economic development. In 1996, after two full years 
of grant-making, First Nations assessed the applicants, as well as 
those receiving grants and were surprised with the results. The 
majority were Native non-profit organizations instead of the 
anticipated tribal governments.
Emerging Non-Profit Sector and Potential for Economic Development
    Over the past 30 years, the Native non-profit sector has grown 
significantly in size, scope and effectiveness. First Nations' own 
Native Asset Research Center (one of Indian Country's premier research 
organizations), in an effort to identify this growing phenomenon so 
that they could conduct outreach, launched a two-year study of the 
emerging Native non-profit sector. Based on 1995-96 IRS and internal 
data sources, over 1,500 Native-controlled non-profit organizations 
were identified.
    This landmark First Nations' study, The Emerging Sector: Non-
profits in Indian Country, showed that almost 83% of the organizations 
responding (a 35% response rate) were founded since 1970 as compared to 
75% in the general society, indicating younger Native organizations. 
And if the trend of Native non-profit start-up were to continue through 
the second half of the 1990s as it had in the first five years, then 
more Native non-profits will have been founded in the 1990s than in any 
previous decade. (http://www.firstnations.org/publications/
TheEmergingSectorDraftApril
2003_webversion.pdf)
    The majority, or 51% of the organizations, identified as being 
located in urban areas. However, 60% of all organizations indicate they 
serve both an urban and a rural/reservation-based constituency. This 
could indicate continuing close links between urban and rural/
reservation communities as well as the continuing migration of Native 
peoples between rural/reservation-based communities and urban centers. 
A closer look reveals that those groups that serve only a rural/
reservation-based constituency are of more recent origins than the 
general group. This is an indication of a trend of more Native non-
profits at the reservation-level. This has significant implications for 
the economy of reservations and the role and relationship with tribal 
nations.
    Reservation-based non-profits accounted for three percent of 
employment in the tribal economy. This is compared to the overall U.S. 
economy where six percent of all employment is in the non-profit 
sector. Given the average $250,000 in annual revenue, one can begin to 
estimate the economic impact this growing sector plays in the Native 
economy. These 1,500+ non-profits would represent $387.5 million in 
annual economic impact. Using a dollar multiplier, which is presumably 
higher for non-reservation based non-profits, elevates the impact of 
the Native non-profit sector. Given that 46% of these non-profits are 
rural or reservation-based, where dollar multiplier is typically not 
much higher than 1:1, the impact is $178.25 million annually for 
reservation economies. An additional $209.25 million flowing to non-
reservation/urban communities, where the dollar multiplier is typically 
higher, (e.g. a conservative estimate of 2:1), makes the economic 
impact attributed to the non-reservation non-profit sector of $418.5 
million annually.
    The overall impact of the American Indian non-profit sector in 1994 
was approximately $600 million annually. Ten years later, we believe 
that the growth in the sector (based on a conservative 5% annual growth 
rate) would place its economic impact approaching $1 billion annually.
Potential to Meet the Unmet Needs of Reservation Non-Profits
    Despite the increased and best efforts by Tribes to self-finance 
the emerging American Indian non-profit sector, the sector continues to 
struggle to receive an equitable share of public philanthropic dollars. 
According to the National Indian Gaming Association, the vast majority 
of gaming operations engage in some form of philanthropic activity, 
accounting for at least $100 million in 2004 alone. There are at least 
53 Native-controlled grant-making foundations in the nation, and the 
majority of them, or 33, are affiliated with tribes (only 17 are gaming 
tribes). These 53 Native grant-making organizations provide funding for 
a broad range of social, economic, educational, and cultural programs.
    Although there are a few well-heeled national foundations that have 
clearly been leaders in providing funding for American Indians, they 
stand nearly alone among their peers. Multiple studies show a severe 
deficit in grant-making to American Indians, a deficit that is out of 
proportion with the population and its needs.
    A 1998 Foundation Center study found that the total foundation 
funding allocated to American Indians from 1992 through 1996 varied 
between 0.5 and 0.9 percent of total giving. More recently, a 2002 
Foundation Center study confirmed this same trend for the period 1997 
through 2000, with funding allocated to American Indians ranging 
between 0.5 and 0.8 percent of total giving. According to Sarah Hicks 
and Miriam Jorgensen in ``Philanthropy in Indian Country: Who is 
Giving? Who is Receiving?'':
    The American Indian grantmaking by large U.S. foundations accounted 
for a mere 0.287 percent of independent, corporate, community and 
operating foundations' overall grantmaking resources in 1989, a 
statistic which apparently rose to 0.302 percent in 2002--Even if it 
were possible to include grants under $10,000 and grants from smaller 
foundations in the analysis, it is unlikely that grantmaking to 
American Indian issues totals any more than 0.5 percent of the U.S. 
foundation sector's overall resources. This percentage calls attention 
to the substantial gap between the amounts of funding directed toward 
Native America (less than 0.5 percent) and the population size (1.5 
percent of the total U.S. population). In the face of still other 
considerations--such as the proportion of American Indians who are 
poor, tribes' major institution-building and service provision needs, 
and the sheer volume of innovative approaches to social and civic 
concerns evolving in Native America--[the] lack of foundation 
engagement is truly startling.
    Even worse, a 1996 study by Ewen and Wollock found that in many 
cases, funding by mainstream foundations to Native issues ``does not 
even go to Native people or organizations, but rather to non-Indian 
museums or universities that study Indians.'' Foundation giving to 
American Indians in 2000, when reviewed by foundation type, showed that 
private foundations gave 0.6 percent, corporate foundations 0.3 
percent, and community foundations a mere 0.2 percent.
    American Indian foundations play an important role in directing 
philanthropic dollars toward economic and social development projects 
in Native communities. Take for example the Cherokee Preservation 
Foundation, which was established on November 14, 2000, as part of the 
Second Amendment to the Tribal-State Compact between the Eastern Band 
of Cherokee Indians and the State of North Carolina. The Cherokee 
Preservation Foundation's purpose is to improve the quality of life of 
the Eastern Band of Cherokee Indians and strengthen the western North 
Carolina region. The Cherokee Preservation Foundation is funded by 
gaming revenues generated by the Eastern Band of Cherokee Indians. It 
is an independent foundation that is not part of or associated with any 
for-profit gaming entity. The Foundation's focus is on project planning 
and capacity initiatives that will enhance the Cherokee culture, 
facilitate economic development and job opportunities, and improve the 
environment. The Foundation is helping the Eastern Band of Cherokee 
Indians and its neighbors address challenges that include the loss of 
jobs from manufacturing plant closures, potential environmental 
degradation due to increased traffic and localized growth in specific 
areas, the deteriorating growth of small and medium businesses in the 
region, and a decline in visits from tourists to Cherokee cultural 
events and institutions. Since Cherokee Preservation Foundation began 
making grants in 2002, it has awarded 375 grants totaling more than 
$30.7 million.
    American Indian charitable giving is needed to help fill in the 
deficit in non-Native philanthropic giving in Indian Country. As noted 
above, however, most American Indian non-profits are affiliated with 
Tribes and, as such, are hampered because they do not enjoy the same 
status as other government sponsored non-profits. The fix is simple, of 
negligible cost and simply makes good sense. The problem and proposed 
solution are explained below.
A Fix to the Tax Code Is Needed to Foster Effective Native Philanthropy
    Due to a glitch in the tax code, Indian tribal government support 
provided to charitable organizations is not treated the same as 
federal, state, and local government support. Further, tribal 
foundations structured as ``supporting organizations'' are not treated 
the same as foundations set up by units of federal, state, and local 
governments. This failure to treat tribal government grants as ``public 
support'' could result in a donee charity failing the public support 
test and being classified as a private foundation.
    In this statement for the record, First Nations Development 
Institute provides the background for the problem, as well as an 
explanation of two proposals: (1) treating tribal government charitable 
funding as public support and (2) treating tribal foundations as 
supporting organizations. These proposals are not only good policy, 
they are also low-cost. A Joint Tax Committee revenue chart shows that 
the proposals would cost only $1 million in foregone tax revenues over 
10 years. See Joint Committee on Taxation, May 20, 2004 ``Estimated 
Budget Effect of H.R. 1528, The ``Tax Administration Good Government 
Act,'' as Passed by the Senate on May 19, 2004'' (Fiscal Years 2004-
13). (http://www.house.gov/jct/x-35-04.pdf, the tribal philanthropy 
provision score is shown at VII.2).
Background
    When an Section 501(c)(3) organization is formed, it is not only 
necessary to qualify as a charity in order to secure and maintain tax-
exempt status, it is also critical to determine the sources of the 
charity's support in order to be classified as a public charity as 
opposed to a private foundation. Why would one care about ``public 
charity'' vs. ``private foundation'' status? For a number of reasons, 
including the ability to utilize tax-exempt financing, to receive 
grants from private foundations and certain other donors, and to 
operate in the governmental arena without being subject to burdensome 
tax rules aimed at regulating privately funded and controlled 
foundations.
    Unfortunately, there is a glitch in the Tax Code with respect to 
501(c)(3) organizations (when such organizations are formed under state 
or tribal law) if they are funded primarily by Indian tribal 
governments or controlled by such governments. While the Tax Code 
generally treats government grants and other funding as ``public 
support'' (for purposes of classification of the supported 501(c)(3) as 
a public charity, it does not treat tribal government funding the same 
as funding from the federal, state or local governments.
    This omission was never intended--it was simply that no one thought 
about the possibility of Indian tribal governments providing funding 
for charities when this section of the Code was drafted. Similarly, 
another route to public charity status--being structured as a 
``Supporting Organization'' to a federal, state, or local government--
is also technically closed to charities set up to support tribal 
governments because of the failure of Section 7871 to address the 
public charity status of tribal organizations.
    To remedy this technical glitch, First Nations Development 
Institute supports the two tax code amendments briefly described below:

    1.  Treatment of Tribal Government Support as ``Public'' Support
    2.  Treatment of Tribal Foundations as ``Supporting Organizations''

    These provisions have previously been included in a bill passed by 
the Senate. See Section 153 of the Tax Administration Good Government 
Act (H.R. 1528, 108th Congress, Senate-passed version). Passage of 
these provisions (scored in 2004 by the Joint Tax Committee as costing 
only $1 million in tax revenues over a ten year period) is critical for 
all of those tribal governments who are sponsors and funders of non-
profit charities (e.g., health care clinics, health and wellness 
centers, tribal museums and cultural centers).
    First Nations calls upon Congress, especially the Ways and Means 
Committee, to enact two conforming tax code provisions that would put 
Indian tribal governments and the charitable organizations they form 
and provide funding for on par with those charities funded and 
controlled by federal, state, and local governments.
Explanation and overview of the two provisions:
  1. Tribal Government Funding Issue
      Statute:
                  Section 170(b)(1)(A)(vi) of the Internal 
                Revenue Code contains a ``public support'' test which 
                can be met through the receipt of grants from the 
                ``governmental units'' referenced in Section 170(c)(1).
                  Section 170(c)(1) references state and 
                Federal Governments, but not tribal governments.
                  Section 7871 (a Code section added by the 
                Tribal Governmental Tax Status Act) treats Tribal 
                Governments as States for other related purposes (e.g., 
                deductibility of contributions under Section 170), but 
                not for the purpose of the public support test.
      Analysis:
                  If tribal support is not treated as public 
                support, tribal-funded foundations may experience 
                difficulty obtaining classification as a public 
                charity.
                  Although individual Tribes can avoid private 
                foundation classification by using an unincorporated 
                fund for grant-making, an incorporated charity funded 
                exclusively by one tribe or inter-tribal foundation 
                funded by two or three tribes could have difficulty 
                qualifying as a public charity.
      Legislative Solution:
                  Amend Section 7871 to provide that tribes 
                will be treated like states for purposes of determining 
                support under Section 170(b)(1)(A)(vi). See Section 
                153, H.R. 1528 (Tax Administration Good Government Act) 
                (108th Cong., as passed by Senate on May 19, 2004).
                  Note: H.R. 1528 was never enacted because a 
                House-Senate conference on the bill was not held.
  2. Supporting Organization Issue
      Statute:
                  Section 509(a)(3) accords public charity 
                status to organizations formed to support organizations 
                described in Section 509(a)(1) or (2).
                  Section 170(b)(1)(A) references Section 
                170(c)(1), which lists various governmental units (but 
                not tribal governments).
                  Section 7871 treats Tribal Governments as 
                states for charitable contribution purposes generally, 
                but not for this specific purpose.
      Analysis
                  For the same reasons set forth in Section B.1 
                above, organizations that meet the supporting 
                organization test because they are organized and 
                controlled by a tribal government of a federally 
                recognized tribe should be treated as public charity.
      Legislative Solution:
                  Amend Section 7871 to provide that tribes 
                will be treated like states for purposes of determining 
                whether an organization is described in paragraph (1) 
                or (2) of Section 509(a) for purposes of Section 
                509(a)(3). See Section 153, H.R. 1528 (108th Cong., as 
                passed by Senate on May 19, 2004).
                               __________
    In conclusion, First Nations' research shows that public charitable 
organizations are generally under-serving Native communities. This is a 
problem that must be addressed and First Nations Development Institute 
thanks the Oversight Subcommittee for its efforts to understand and 
assess the problem through this hearing.
    Of particular importance is to clarify that tribally-funded 
charitable organizations are treated the same for tax purposes other 
government-funded foundations and public charities.
    The Native non-profit sector in Indian Country is finding its feet. 
In doing so, it is providing much needed services that governments are 
not in a position to provide--domestic violence assistance, alternative 
financing, counseling, entrepreneurship training, etc. With private 
philanthropies' woeful under-investment in American Indian communities, 
Tribes have no choice but to create and fund their own charitable 
organizations. But once they take the steps necessary to create high-
impact, social-investment organizations, both tribal government donors 
and donee organizations need to be assured that these critical 
institutions will receive the same tax treatment as those found in the 
public and charitable sectors outside of Indian Country.
    Today, we ask you to continue your support of American Indian 
people in rediscovering their right, and their power, to hope, dream 
and succeed. Gunalcheesh (Thank you).
    First Nations Development Institute submits this statement 
exclusively on its own behalf, and not on behalf of any individual, 
entity, or other organization. The Association on American Indian 
Affairs and the National Congress of American Indians have worked with 
First Nations Development Institute in developing the legislative 
proposals described herein.

                                 

                   Statement of Greenlining Institute
    The Greenlining Institute is a multi-ethnic advocacy and public 
policy center that focuses on issues of philanthropy to underserved 
communities and the economic empowerment of our nation's minorities. 
Our members include the three largest African-American churches in 
California, the Hispanic Chamber of Commerce, the Black Business 
Association, the Latino Issues Forum and the Mabuhay Alliance of San 
Diego.
Absence of Diversity at Foundations
    Over one third of the nation is minority and an estimated two 
thirds of the poor, particularly the underserved poor are minorities. 
Low-levels of philanthropic giving to the poor weakens the ability of 
the hundreds of thousands of low income organizations serving the poor 
to effectively serve the poor.
    For years, advocates of civil rights and diversity have been 
concerned with the lack of diversity in the foundation sector. There 
are numerous studies and research reports that echo these concerns. In 
fact, Steve Gunderson, President of the National Council of 
Foundations, clearly admits that ``There is not a study out there that 
says that foundations are appropriately serving minority communities on 
a percentage basis.''
    Greenlining has compared current foundation practices to the 
redlining practices of banks, insurance companies, and other 
corporations.
Efforts in California to Hold Foundation's Accountable
    The Chairs of the Legislative Latino, Asian and Black Caucuses in 
California have been national leaders on efforts to hold foundations 
accountable to communities of color.
    Joe Coto, Chair of the Latino Caucus, Alberto Torrico, Chair of the 
Asian/Pacific Islander Caucus, and Mervyn Dymally, Chair of the Black 
Caucus, held a hearing on April 24, 2006 to discuss foundation 
diversity practices. Unfortunately, only a very small number of 
foundation leaders chose to participate in this important discussion. 
The hearing revealed that some corporate foundations are outperforming 
private foundations in reaching the poor and underserved.
Proposed Overview Hearing on Foundation Diversity
    We applaud you for Overview Hearings on Tax-Exempt Charitable 
Organizations. It is our hope that you will follow-up with Overview 
Hearings on Diversity in the Foundation sector. This proposed hearing 
could mirror other successful hearings on diversity. For example in 
2004 the Financial Services Committee held a successful hearing 
entitled Diversity in the Financial Services and Access to Capital for 
Minority-Owned Businesses: Challenges and Opportunities. Although this 
hearing did not necessarily lead to legislation, the hearing itself, 
along with subsequent resolutions from Congress, transformed the way 
the financial services sector responds to issues of diversity.
Other Pertinent Issues to Explore
    Two issues that have not yet been explored but are being raised 
informally and often quietly to avoid potential foundation retaliation 
are:

    1.  Whether foundations should count their administrative expenses 
as part of their grants when these expenses often equal 20 percent of 
grant dollars particularly when foundation staff and boards are not 
sufficiently diverse; and
    2.  Whether foundations are informally conspiring to restrict their 
grant giving to five percent of assets when their annual returns are 
generally in double digits. A 2 percent increase in grant giving from 5 
to 7 percent of assets would increase foundation giving by 
approximately 15 billion a year, a sum greater than the total cash 
philanthropy of all corporations in America.\1\
---------------------------------------------------------------------------
    \1\ We raised this particularly in the context of some foundations 
contending that to give more to underserved minorities might displace 
the amount they give to American icons such as the opera, symphony, and 
ballet.

    We would like to request a meeting with you in the near future to 
discuss the issues raised in our letter. We would be willing to travel 
to Washington D.C. to meet with you and your staff. We will call your 
office within a week to see if we can schedule a meeting.
    We applaud you for your significant contributions to justice and 
equality and look forward to working with you to ensure philanthropy 
effectively reaches our nation's poor and underserved.

                                 

        Statement of National Council of Nonprofit Associations
    Thank you for your attention to the critical issue of charitable 
organizations' service to diverse communities and for the opportunity 
to provide information on this topic. On behalf of the National Council 
of Nonprofit Associations (NCNA), we are pleased to submit comments in 
reference to the committee's hearing, ``Charitable Organizations and 
Diverse Communities.''
    The National Council of Nonprofit Associations (NCNA) is the 
network of 42 state and regional nonprofit associations serving over 
22,000 members. NCNA links local organizations to a national audience 
through state associations and helps small and midsize nonprofits:

      Manage and lead more effectively;
      Collaborate and exchange solutions;
      Save money through group buying opportunities;
      Engage in critical policy issues affecting the sector; 
and,
      Achieve greater impact in their communities.

    NCNA's network of state associations provides direct assistance and 
builds capacity for the nonprofit sector. They understand the 
challenges nonprofits face daily as they work to serve and respond to 
the needs of diverse communities. It is with direct experience and 
information from those on the front lines that we offer our comments to 
the question at hand.
    We appreciate the comments from our colleagues in the field that 
testified on September 25, 2007. Their issues and recommendations are 
important. However, what was missing in the testimony was the extent of 
the problems facing charities trying to reach diverse communities and 
the urgency of the problems they are confronting. An overwhelming 
majority of charities (70%) have budgets of less than $1 million. 
Because of their size, the challenges they confront are overwhelming, 
especially in terms of demand for their services.
    America's nonprofit organizations are on the front lines of the 
battles against society's most pressing problems: drug addiction, AIDS, 
homelessness, hunger, illiteracy, crime, immigration, civil, and voting 
rights. Nonprofits provide care for our most vulnerable citizens--the 
young, the sick and the aged. Government has cut back funding for these 
essential services and left the nonprofit sector holding society's 
safety net. Nonprofits are reaching out to businesses and individuals 
to fill the gap left by government disinvestment, but even with the 
best will in the world--and Americans are extraordinarily generous 
donors and indefatigable volunteers--charitable donations and 
volunteers alone cannot do the job. To keep the safety net strong we 
need a partnership of the government, business, and nonprofit sectors 
working together for the public good.
    From the perspective of the small and often unheard nonprofits we 
offer the following general observations in three areas: budget 
constraints, relationship issues and proximity problem.
Budget Constraints: Direct and Indirect Funding Opportunities are 
        Insufficient
    Fewer dollars are directed to organizations serving diverse 
communities, both from organized philanthropy and individual giving. 
Organizations serving diverse communities are likely to be located 
within the communities they are serving. They are grassroots and tend 
to be small. Because they are not part of a larger, heavily funded 
entity, they must rely upon the generosity of individuals to support 
their programs. The complexity and requirements of applying for public 
funds is often out of the reach of these small organizations. Many 
public funding programs require matching grants or require an 
organization to ``front'' the payment of services while awaiting 
reimbursement. These smaller organizations do not have the resources to 
cover the costs of delivering much needed services while awaiting 
reimbursement or payment for services rendered.
    There are numerous examples of larger, more established 
organizations seeking to partner with grassroots organizations that 
have access to diverse communities. Such partnerships between these 
large, well-funded organizations and smaller, locally-based groups 
seldom involve adequate transfer of funds to support the local group;s 
work. In many cases, these larger groups operate on a national level 
and devolve the outreach efforts to a grass-roots local nonprofit. 
While the underlying premise--that an indigenous organization familiar 
with the needy population may be better-positioned to address that 
need--is sound, the operating costs required to perform this service 
are not fully appreciated.
Relationship Issues: Government and Small Nonprofit Partnerships are 
        Embryonic
    Historically speaking, small nonprofit organizations have very 
little direct partnership experience working cooperatively with larger 
governmental structures. While familiar with the protocols of town and/
or county operations, these levels of government often function 
differently from national agencies. Additionally, federal-level 
government agencies seek assurances of quality service and sound 
guiding principles before funds may be directed to these small 
nonprofit groups.
    Small nonprofit organizations possess the ability and know-how to 
serve their communities. They are often doing the most innovative and 
exciting work. If an inability to serve does exist, it likely stems 
from limited or restrictive funding. However, the front line nature of 
these small organizations puts them face-to-face with pressing 
problems, voiced by communities in need. Unlike a silent stack of 
regulatory forms, hungry mouths cry for attention and small nonprofit 
groups try to do what they know to be right--they respond. They direct 
their money at people, not paperwork. Unfortunately, this does little 
to establish trust--in either direction--or a track record which the 
Federal Government may use as justification for expanded funding. 
Restrictions on public or philanthropic funds often do not provide the 
flexibility that allows front line nonprofits to deal with the most 
pressing issues at hand.
Proximity Problems: Federal Government is Buffered from Causes and 
        Suffering
    As noted above, the distance between the Federal Government and 
some of the underserved diverse populations shrouds the urgent needs of 
these communities. Letters and emails expressing the critical need for 
funding do not command attention in the way that the unblinking eyes of 
a hungry child motivate immediate intervention. Ringing telephones do 
not resonate with the same solemnity as the knocking of a single mother 
at the front door of the small community shelter. Despite the 
commitment and concern of government officials, lawmakers, and leaders, 
the isolated nature of these diverse and underserved communities makes 
it difficult for those in Washington, DC to truly appreciate the 
urgency of these problems.
    Another distance, also of great concern to those who strive to 
improve the ability of nonprofits to serve diverse populations, is the 
growing gap in service levels between well-served (high-profile, 
accessible) populations and these diverse (largely minority, heavily 
rural) groups. Efforts to connect nonprofit organizations with needy 
populations should, in theory, use a blind eye in evaluating who 
amongst the disadvantaged receives critical, life-preserving aid. But 
in the current situation, where our eyes are not trained to recognize 
all who require our attention, judicious oversight is sometimes 
necessary. Indeed, to ensure that such blindness does not enable 
discrimination but rather prevents prolonged inequality, money must be 
raised for the exclusive purpose of serving diverse communities. The 
responsible use of charitable funds transcends ``how'' it is used to 
include ``who'' it helps. Our awareness of the ``who'' is incomplete, 
rendering our efforts, no matter how noble, inefficient.
    In summary, we agree with the intent of the hearing that developing 
a plan to serve diverse communities is important and beneficial to the 
well-being of our entire country. We encourage the committee to 
consider the budget, relationship and proximity constraints inherent in 
serving diverse communities when making future recommendations. We 
appreciate this opportunity to share our perspective and observation 
and welcome the chance to continue to inform this very important 
dialogue.

                                  
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