Grantmakers in the News

August 1, 2003

New York Attorney General Proposes Eliminating Small Foundations

In a letter to the House Ways and Means Committee, New York State attorney general Eliot Spitzer has proposed eliminating foundations with less than $20 million in assets as a way of reducing malfeasance among "non-institutional private foundations," the Syracuse Post-Standard reports.

In the letter, Spitzer proposes moving all existing small foundation assets into donor-advised funds administered by community foundations, thereby making it easier for the IRS and state attorneys general to monitor their use. The letter was drafted after the Charities Bureau in the New York attorney general's office turned up serious irregularities at a dozen small foundations in the state.

Critics of the proposal argue it is too sweeping. "That really is a dumb approach to solving the problem," said Michael Lazar of the Lazar Charitable Trust, a funder of Jewish causes in New York. "It seems to me he's trying to solve a problem with a sledgehammer rather than a scalpel." The Trust, which had $732,544 in assets in 2001, consistently awards grants totaling $35,000 a year, while spending $600 to $1,000 in expenses.

While conceding that there are have been some "bad situations" in the field involving excessive compensation and fees, Dorothy S. Ridings, president of the Council on Foundations, a D.C.-based membership organization that represents more than two thousand grantmaking foundations and giving programs, doubts whether Spitzer's suggestion will gain traction. "I would be very surprised if it has any momentum," Ridings told the Post-Standard. "[And] I would suggest that $20 million is not really a small foundation....I would not equate size with malfeasance."

Brieaddy, Frank. "Small Private Charities Targeted." Syracuse Post-Standard 7/28/03.