Sunday, December 11, 2011

Nonprofits & Business: NYT on PRIs; WSJ on "Should Philanthropies Operate Like Businesses?"

The issue of how separate charities and businesses should be continues to be discussed.  Here are two recent examples:

The NY Times reports that the Bill & Melinda Gates Foundation and a growing number of other private foundations are making program-related investments in businesses that advance their missions.  These investments range from shares in a vaccine-delivery biotech company (Gates) to investments and loans in Armenian businesses (Gerard Cafesjian's family foundation) to microfinance (Omidyar Network).  The question the article raises is whether such investments threaten to blur the line between charities and businesses, presumably leading to charitable assets that are supposed to be resulting in public benefit (since PRIs can be counted toward the annual required payout for private foundations) instead being used primarily to provide investment returns.  Of course, the PRI rules are designed to avoid exactly this result, and the article does not cite any obvious abuses.

The Wall Street Journal provides a point-counterpoint debate on "Should Philanthropies Operate Like Businesses?", with Charles R. Bronfman of the Andrea and Charles Bronfman Philanthropies in the affirmative and Michael Edwards from Demos in the negative.  The debate was part of larger report on philanthropy, links to which are available on the debate's webpage.  The WSJ also published a number of letters responding to the debate.


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