Nonprofit Newswire | Scott McNealy on Nonprofits and Bailouts

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August 2, 2010; Source: New York Times | The co-founder of Sun Microsystems has a truthful observation to make about foundations but he draws the wrong conclusion.

Scott McNealy apparently is a straight talker, at once discussing Microsoft’s similarities to a heroin dealer, another time suggesting inserting tracking chips into kids’ shoulder blades, and frequently condemning government “overregulation” such as Sarbanes-Oxley.

He’s now pitching something called the Curriki Project to provide schools with free textbooks and teaching materials.  To his surprise, he’s discovered that fundraising is tough. “The charitable class has disappeared along with the investor class and the wealth,” Mr. McNealy said. “All the foundations out there are already overcommitted.” The truth is that he’s discovering foundations and donors are still husbanding their resources.

He’s wrong however to think that foundations are overcommitted. They are only if you believe that they have to hoard their endowments. In a recession, it is a time for foundations to engage in countercyclical grantmaking, to increase their grantmaking in big chunks, because this is when nonprofits and society need more foundation spending, rather than when times are good and foundations are flush.—Rick Cohen

  • Kelly Kleiman

    ?Amen, brother. Foundations’ insistence on business as usual during the Great Recession makes
    one wonder about the value we’re getting out of their tax-preferred treatment. No one would laud
    the generosity an individual who gave 5% of his annual income while reserving a huge pile of
    assets for a rainy day–at least, not in the middle of a rainstorm!

  • Pamela Grow

    There’s no doubt that foundations need to step up the giving – and give more general operating support. But while it’s true that many foundations are holding onto their endowments, “eight out of 10 small and midsize foundations spent more than the minimum distribution required by law” last year, according to the Chronicle of Philanthropy. My experience has always been that the small to midsize foundation is also more inclined to give grants for general operating support.