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California Foundations Reach Agreement to Avoid Disclosure Legislation

July 5, 2008

(July 7, 2008) In response to legislation that would have required disclosure about their organizational diversity and their grants to minority organizations, a group of 10 large California foundations have agreed to allocate millions of dollars to charities that serve diverse and minority communities.

The foundations–including the William and Flora Hewlett Foundation, the Ahmanson Foundation and the California Endowment–have indicated they will develop a plan by the end of 2008 that will involve “a comprehensive set of grant-making activities, which we expect to be overall in the multimillion-dollar range and over several years,” according to a joint statement by the foundations.

The legislation, Assembly Bill 624, was introduced to bring more exposure to how foundations spend their money and pressure larger foundation to grant more funds to organizations that work in minority communities.  Foundations were resisting the legislation because of concerns over government interference in how they should be spending their funds.

Assemblyman Joe Coto (D-San Jose), the chief proponent of the legislation, said that by asking foundations "to shed some light on their investments," he hoped "they would then be in a position to make greater investments,” according to an article in The Sacramento Bee. "They saw this as an opportunity to do what we were suggesting and we've worked out this agreement that I think will be positive for everyone," he said.

The bill was scheduled to be voted at a recent meeting of the Senate Committee on Business, Professions and Economic Development. The deal between Coto and the foundations was announced at the meeting, and Coto immediately moved to drop the bill.

Assembly Bill 624 would have required foundations with more than $250 million in assets to post the following specific information both in their annual reports and on the Internet:

  • The racial, gender and sexual orientation composition of the board of directors or trustees, as well as their staff
  • The number of grants awarded to organizations that serve ethnic minority communities and lesbian, gay, bisexual and transgender communities
  • The percentage of grant dollars awarded to organizations where 50 percent or more of the board members and/or staff are ethnic minorities or are lesbian, gay, bisexual or transgender
  • The percentage of business contracts awarded to businesses owned by ethnic minorities or individuals who are lesbian, gay, bisexual or transgender

Other foundations involved in the agreement include the James Irvine Foundation, the UniHealth Foundation, Ralph M. Parsons Foundation, the California Wellness Foundation, the Annenberg Foundation and the David and Lucile Packard Foundation.

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