Part of that debate should focus on small grant-making foundations–those, say, with assets under $1 million, or even $10 million. Such organizations have ballooned in number in recent years, according to the latest IRS statistics. The number of those with less than $1 million in assets increased some 60 percent between 1992 and 2002 to more than 40,000, or two-thirds of the total. Some in the nonprofit and regulatory world advocate banning the smallest foundations altogether, on the grounds that they may lack adequate accountability standards and safeguards against tax-law abuse. They argue, too, that while small foundations hold only a thin slice of total foundation assets–and thus of grant making–their growing numbers impose an onerous burden on government regulators. In 2003, authorities in New York Attorney General Eliot Spitzer’s office went so far as to recommend that Congress consider eliminating tax exemptions for foundations with less than $20 million in assets. That idea has gained no traction thus far, nor should it. Putting arbitrary limits on foundation size is tricky territory. It can quash the promising, innovative foundation as easily as the amateurish or downright shady one.

A great many of the problems surrounding grant making would be solved by better self-governance in the foundation world itself. Philanthropy is serious business, and it demands serious management.

Illustration by Matt Mahurin.

Thomas J. Billitteri is a Fairfield, Pa.-based independent writer and researcher who specializes in nonprofit issues.