California Assembly Bill 624 – Amended March 3, 2008

The controversial California Assembly Bill 624 was amended again on March 3, 2008, deleting the requirement that large private foundations (those with assets over $250 million) collect and report the following information:

  • Business contracts awarded to businesses owned by lesbian, gay, bisexual, or transgender people.
  • Percentage of grant dollars* awarded (i) to organizations serving different minority groups, (ii) to organizations where a majority of the board consists of minority members, and (iii) to low-income communities.

* Instead of requiring disclosure of a percentage of grant dollars, the amended bill requires disclosure of the number of grant dollars.

In addition, the bill now makes clear that it is interested in the disclosure of the number of grants and grant dollars awarded to organizations specifically serving minority and underrepresented communities.  Prior to the latest amendment, the bill referred to organizations serving such communities without adding the clarifying word "specifically."

The Nonprofit & Unincorporated Organizations Committee of the Business Law Section of The State Bar of California reaffirmed its opposition to the bill, as amended, in a statement of position dated March 27, 2008.  The Committee’s opposition is based on the following factors:

  • Unconstitutionality of intruding into the personal affairs of the board members and staff of foundations, grant recipients, beneficiaries, and businesses that interact with foundations.
  • Cost and burden to the covered foundations and to their grant recipients and their beneficiaries.
  • Doubt as to the foundations covered by the bill because of use of undefined terms and ambiguous phrases (e.g., corporations "deemed" to be "corporate" or "private operating" foundations).
  • Rights of donors in the voluntary sector to choose how their donations are to be spent (within the scope of the law), which would be compromised by the political considerations of not including the promotion of ethnic and gender participation created by the bill.

The Committee also criticized the bill for its textual defects and the practical problems of interpretation and compliance that would result with its passage.  The Committee adds that "even fixing these problems will not overcome the fatal failures of the bill mentioned above."

As a person of color who is critical of the lack of foundation support to minority communities, I understand and sympathize with the goals of the legislation (but I remain unconvinced that legislation is the best solution).  As a lawyer, I am perplexed by the poor drafting (even after multiple amendments).  And as an advocate of the nonprofit sector, I question why the Greenlining Institute, the organization whose research and advocacy prompted Assemblyman Joe Coto’s introduction of the bill, did not seek the input of the Council on Foundation identity-based affinity groups such as Asian Americans/Pacific Islanders in Philanthropy, Hispanics in Philanthropy, Native Americans in Philanthropy, and Funders for Lesbian and Gay Issues; and other organizations with a vested interest in these issues such as the National Center for Black Philanthropy and Bay Area Blacks in Philanthropy.

On March 3, Orson Aguilar, associate director of the Greenlining Institute, contacted me to set up a meeting "to provide more background the lack of foundation support to non profits that serve and are run by people of color."  I’m hoping to hear back from him. In the meantime, you can find notes on Greenlining’s nationwide briefing on March 12 here.

Read the amended AB 624 here.