That tax-exempt organizations, particularly funding organizations, recognize an obligation to be responsive to changing viewpoints and

19 (1) Statistics respecting the number of organizations for which

6. That tax-exempt organizations, particularly funding organizations, recognize an obligation to be responsive to changing viewpoints and

emerging needs and that they take steps such as broadening their boards and staffs to insure that they are responsive.

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Commentary

This recommendation would broaden the spectrum of institutional philanthropy: by generating diversified staffs and governing bodies with differing backgrounds; through adoption of programs that are responsive to emerging priorities; and (in the case of the largest foundations) by establishing a presence in various locations in the country.

The recommendation takes into account the need for "flexibility" in the nonprofit sector, and the dangers of its isolation from legitimate channels of social change. However, the inclusion on the governing body of a nonprofit organization (whether a private foundation or a public charity) of a "representative" of the public-at-large, of the government, or of any specific sector of society would not be required.

But to establish reliable expectations respecting greater responsiveness to existing and changing public needs, both public charities and private foundations should consider the following steps:

(1) Prior to a fixed deadline every exempt organization should

review the present makeup of its governing body in relation to its

objectives. Such a review does not imply that organizations should

be forced to modify their objectives. There is a role for specializa-

tion, there is also a role for "venturesome" philanthropy as well as

for support of traditional charitable causes. Rather the purpose of

review should be to insure that the organization's governing body

is responsively and effectively serving the organization's objectives,

whatever they may be. Accordingly, the review should ascertain

whether the governing body is receptive to, and reasonably

representative of, the varying points of view and concerns in the

fields of the organization's interests. To insure that the governing

body will be receptive to current and changing needs and views in

the organization's field, consideration should be given to broad-

ening the governing body where there is a question whether,

because of a narrowly based governing body, programs are less

than fully responsive to needs.

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For example, if a private foundation operates essentially in a greater metropolitan area and commits funds for various public charitable enterprises in the area, its governing body should inquire whether the foundation has responded (or more pertinently, can be expected to respond in the future) to the full range and diversity of requests for its funds. Are there, for example, arts, health, or other types of organizations not traditionally funded by the foundation which exist and which could have need for such funding? Are there new categories of organizations in disadvan- taged neighborhoods which need funds and which have been ignored or unknown to the membership of the governing body in the past? If the foundation has historically not responded to such needs, the governing body should consider altering the foundation's program or appointing an additional member or members who would have knowledge of, and be receptive to, requests from such sources.

(2) Particularly with respect to private and "independent"

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foundations, every effort should be made to determine that adequate staffs, in relation to the foundation's financial resources, have been engaged. Study should also be given to means by which such staff personnel may be recruited and trained in sufficient numbers, and to methods of developing professionalism in philan- thropic administration and program work.

(3) Where a private foundation or operating charity does not have adequate resources to engage full-time staff personnel, consideration should be given to the sharing of staff personnel with other compatible organizations. For example, two or more smaller private foundations could jointly engage the services of an expert in a field or fields common to each.

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Alternatively, such organiza- tions could engage the services of a single person generally familiar with the problems of the local community in which the organiza- tion functions (without, of course, preempting the entire field of activity).

(4) No grant-making foundation should be required to explain in

detail the reasons for the rejection of a grant request. However,

each prospective grantee should be given reasonable assurances that

the request, if responsibly presented within the field or fields of

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the foundation's concerns, was in fact carefully and seriously considered. Foundations should, of course, remain in a position to make final decisions as to all grant applications.

Also, when rejecting requests for grants, foundations should make every effort to state as clearly as feasible — avoiding generali- zations about the availability of funds — the reasons for denial and whether any modifications might reasonably be made that would increase the possibility of successfully securing a grant in the future.

(5) The Service could develop a reliable, current directory of all c h a r i t a b l e organizations, with their addresses, indicating the availability of the annual report. Alternatively, if publication is deemed advisable, every charitable organization could indepen- dently publish notice of the availability of its annual report

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in a journal of local circulation or, if the organization is a national one, of general circulation. Such a directory or notice could also give some indication of the interests of the organization.

Commission Recommendation

7. That a new category of "independent" foundation be established by law. Such organizations would enjoy the tax benefits of public charities in return for diminished influence on the foundation's board by the foundation's benefactor or by his or her family or business associates.

s 2

Commentary

This recommendation would narrow distinctions between publicly supported charities and those private foundations which have, or can be expected to have, substantial public charity attributes. An "independ- ent" foundation would be one that is independent in fact and not susceptible to the influence of the original donor. The majority of its governing officers would not be related to or employed by the donor, his family or business associates.

Such a foundation would be treated essentially as if it were a public

charity, thus enabling it to receive gifts of property more readily and to

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