In summary, Mr. Chairman, we submit to you that the diversity of private foundations is one of our most valued attributes. Despite our diversity, we share in common support for significant charitable activities, a cherished tradition of independence, and an exciting potential to provide the venture capital for innovative ideas and changes in today's world and tomorrow's. Although strictly regulated since 1969, private foundations have come to terms with these comprehensive legal restrictions and are basically supportive of the 1969 Act. However, certain aspects of this legal framework imposed unnecessary burdens on foundation philanthropy and its broad array of charitable beneficiaries. burdens should be removed. Those S. 1857, the Durenberger-Moynihan bill, addresses five of these problems. First, and by far most important, this bill would stimulate increased giving to foundations and the creation of new foundations by eliminating the current tax disincentives for lifetime gifts to private foundations. As explained above, the bill also addresses four more technical defects of current law. We strongly urge the Committee to support this legislation. STATEMENT OF THOMAS R. BUCKMAN, PRESIDENT, THE Mr. BUCKMAN. Mr. Chairman, I am Tom Buckman, president of the Foundation Center. The Foundation Center is a factfinding and analysis center for public users, and we have a 25-year reputation as the best source of information on private foundations in the United States. Each year we analyze all IRS foundation information returns, both on film and computer tape extracts. The detailed supporting evidence for our findings is in my prepared statement. Our analysis of aggregate data on private foundations shows: (1) no net growth in the numbers of active grantmaking foundations in the last 10 years; (2), a drop in the creation of new grantmaking foundations, and this is something that has been confirmed in a recent report by the GAO; (3), no growth in real aggregate assets in constant dollars over 10 years; (4) a decline in the average amount of new money added to endowment by each foundation in terms of constant dollars. I have examined Mr. Bothwell's testimony for this hearing today, and I know that he questions some of our findings. I can only say that we have the data. It is publicly available, and our analyses can be verified by any independent outside investigator. We do not see growth in this field. And as a result, active grant making foundations are giving barely more today in constant dollars than they did 10 years ago. But today, there is a greater need than ever before for private funding in our growing society. To meet the need, foundations must increase their giving power. We hope for provisions in Senate bill 1857 which will help them to do that. Mr. Chairman, I want to point out that in our analyses we exclude burned-out public charities. They are defined by law as private foundations but have no other resemblance to active grantmaking foundations. They were not intended to function as foundations, but to serve other charitable purposes. In my view, burned out public charities should not be considered in any data profile used for legislation designed to improve the functioning of the active grantmaking foundations. These are our major conclusions. Thank you, Mr. Chairman, for this opportunity to testify. Senator DURENBERGER. Thank you very much. Mrs. Freeman, it is a pleasure to have you with us. [The prepared statement follows:] Statement of Thomas R. Buckman President, The Foundation Center Testimony Prepared for U.S. Senate Committee on Finance Hon. Robert Packwood, Chairman Hearing: February 24, 1984 MR. CHAIRMAN: My name is Thomas R. Buckman. I am President of The Foundation Center, a national clearinghouse dedicated to providing the public with information on private foundations and their grantmaking programs. The Center, headquartered in New York, is a modern information analysis agency with a professional staff of information and editorial specialists. Over the last 25 years, the Center has established a reputation as the source of the most current and complete information on private grantmaking foundations. Every year we purchase from the IRS microfilmed copies of all the private foundation information returns filed (Form 990-PF), as well as a computerized extract containing private foundation data from the IRS Master File. This data on computer tapes is verified against copies of the filmed returns filed, and made available to the public through our free library network and our publications. The Center uses up-to-date computer technologies, and for ten years has been a leader in providing foundation information over computer networks to any point in the United States. Number of Active Grantmaking Private Foundations Mr. Chairman, as the Committee considers the regulation and operation of private foundations, it is important that it have as clear an understanding as possible of the total number of foundations and the rate at which new foundations are being created. Confusion surrounding this point can, I believe, be dispelled by a careful look at the available data. IRS data show that the total number of organizations filing annual private foundation returns has increased steadily in recent years and now totals about 27,000. However, it is important to recognize that this total includes not only active grantmaking and operating foundations, but also a substantial and growing number of "burned-out" public charities. These are organizations which were intended to operate as publicly-supported charities, but which have failed to attract the required public support and have, therefore, been classified under the technical tax law definition as private foundations. The important point here is that these organizations were not intended to, and never will, fulfill the philanthropic function commonly ascribed to private foundations. Our best estimate is that the IRS data include almost 4,000 such organizations. Moreover, the number is continually increasing; every two weeks the Internal Revenue Bulletin contains a new list of burned-out public charities which have been reclassified as private foundations. While these burned-out public charities are appropriately subject to the selfdealing rules and other regulatory restrictions applicable to private foundations, it is important to exclude these organizations in assessing the health of the foundation community and, particularly, in evaluating changes in the foundation "birth rate." Because The Foundation Center's data do exclude these burned-out public charities, I believe they provide the most accurate gauge of changes in the foundation birth rate.1 The Foundation Center's figures over the past several years show very slow growth in the number of active grantmaking foundations. Our figures are carefully compiled each year from a detailed examination of the private foundation extract from the Master File, which we acquire from the Internal Revenue Service. As stated earlier, Center staff verify the figures against filmed copies of the actual returns filed to ensure keyboarding accuracy. 1 Because our database is used primarily by grantseekers, we also exclude operating foundations which make no grants. While this means that our total understates the number of active private operating and nonoperating foundations-probably by about 900 -this exclusion does not affect the validity of our data on the foundation birth rate since the number of operating foundations appears to be increasing quite slowly. The resulting figures are published in the introductions to our National Data Book together with a brief profile of every active grantmaking foundation which we have found on the tape extract received from the Internal Revenue Service. Here from the latest, 7th Edition, are the numbers resulting from our analysis, including the criteria for excluding non-grantmaking foundations: The National Data Book is the most comprehensive listing of currently active The entries for this publication are derived from the Internal Revenue Service's The complete national file of private foundations contains records for 27,264 This book has been published since 1972. Here following are the figures for the successive years: (continued) |