Hal Stoelzle © News Pablo Eisenberg, founder of the National Committee for Responsive Philanthropy, says philanthropic agencies have become "elitist" and "derelict" in ideas.   Harsh words for nonprofit sector By Joanne Kelley, Rocky Mountain News October 22, 2005 At 73, Pablo Eisenberg is well-known in philanthropy and charity circles for his outspoken - some say radical - views on the nonprofit sector. He led the Center for Community Change for more than two decades and founded the National Committee for Responsive Philanthropy. He now is a senior fellow at Georgetown University's Public Policy Institute.

Eisenberg spent several days last week in Denver, meeting with both fans and skeptics.

At an afternoon tea, a group of Denver foundation heads listened politely as Eisenberg railed against what he sees as an increasingly "elitist" club of philanthropic agencies. He found a more receptive audience when he led a discussion with local activists who want to put his ideas into practice.

He also spoke at the 15th anniversary of Regis University's master of nonprofit management program.

He met with the Rocky Mountain News to share his views. Here is an edited transcript.

On the scandals that have scarred the sector's reputation and have led to a coming crackdown by Congress and the Internal Revenue Service:

Some in the industry talk about a small group of folks who were rotten apples. We all know there are huge numbers of rotten apples in the barrel and still are.

You dig; you'll find it. We've got lots.

On the industry's call for self-regulation to address problems:

The problems are so egregious, the only solution is tougher regulation and tougher enforcement.

On foundations:

The foundation world is intellectually moribund. Many foundations are hiring university presidents, but once they get to their jobs most of them neither think or write. There's no debating the issues. No one's self-critical; no one's analytical.

The nonprofit community is just as derelict in ideas. In the past, every major social and institutional change, all the major movements were the result of nonprofit activity. The conservative foundations understand that.

The mainstream foundation community does not. It puts so little money into activist activities. It needs to fund more public policy work. The nonprofit sector is losing its sense of being a watchdog. It's become a lap dog. There's not much courage there.

On the broader nonprofit sector:

We now have all these one-issue groups that don't work together to push for major policy changes. They can't get together to fight a major battle for issues such as health care or education.

We're a weaker sector even though we're five times as large as we once were.

On the ability of foundations to respond to crises:

Foundations and the charities they support run on two different engines. Recipients run on the basis of urgency. They can't wait for foundations to give them money a year from now. Foundations don't know how to spell urgency. They have the money to pay their staff. And, in some cases pay huge trustee fees, which are outrageous.

They need to find some way to respond more quickly either by giving grants more frequently or by giving staff the power to make grants as needed.

On corporatization of the sector:

There's a cult of CEOs trying to build their egos and not their institutions. There's an illusion that business management is efficient, but look at the corporate scandals.

On allowing foundations to include their operating costs in the percentage of assets they must give to charity each year:

Even though the payout rate is 5 percent, most organizations really only donate between 3 1/2 to 4 percent of assets each year. It's just not good enough. There's no reason why foundations can't give out 6 or 7 percent. In this time of need, they have to do that.

On the rise of mega-funders such as the Bill and Melinda Gates Foundation:

As the government cuts back its social programs, these huge organizations are making priorities and decisions with (tax-exempt) dollars outside the public's view. Is that healthy for a democracy? It's like asking Marie Antoinette to protect the poor. We are entrusting our fate to the most elitist institutions in the country.

On corporate philanthropy:

I almost think corporate philanthropy has disappeared. It's corporate bottom line. It's self-interest giving and cause-related marketing. Is it philanthropy anymore? Questionable.

I don't mean to sound like there was a golden age. But you once had CEOs who really cared about philanthropy. You don't have that CEO anymore. They're either parachuting or they're merging or they're going global. There's no longer the pull of the community.

On spending priorities of foundations:

The costs of funding social change are a fraction of the cost of social services. Foundations have given a huge amount of money to building housing for the poor.

If they have given a teensy percentage of that money to advocate for a policy for affordable housing, they would have a much bigger impact. You can change the allocation of resources.

It's the fear of not being neutral that has neutered them. People are gutless. They want smooth-flowing, polite conversations.

kelleyj@RockyMountainNews.com or 303-892-5068