Accountability and the Weinberg Foundation


Recent newspaper articles about the Harry and Jeanette Weinberg Foundation in Baltimore highlight the irresponsibility of the foundation and its trustees, the lax standards of accountability required of philanthropic institutions by both the Internal Revenue Service and the general public, and the lack of courage by non-profit organizations and foundations in the face of outrageous behavior by one of their colleague institutions.

The five trustees of the Weinberg Foundation have apparently molded the institution in the image of its founder -- secretive, arrogant, contentious and cantankerous. The foundation's telephone number is unlisted, the location of its offices unknown to all but a few people, and its operating style and decision making a mystery. The phone number and address on its IRS Form 990 are those of the Weinberg real-estate operations and not those of the foundation's offices.

The trustees have had no previous involvement with foundations and, apparently, not much with the rest of the non-profit world. They have shown little interest in what other grant makers have done and they rarely consult with their peers. They justify their approach and style by saying "that's what Harry would have wanted or done." That may be good enough for Harry but it's not good enough for the public, the taxpayers and non-profits.

The foundation does not publish grant-making guidelines or annual reports and it discourages unsolicited proposals. Darrell Friedman, president of the Jewish Community Federation of Baltimore, argues that the trustees are accessible because they have always responded to him and the federation. But that's the problem. He and his organization are among the few that have had access to the trustees. The trustees have not responded, either in writing or by phone, to hundreds of other organizations that have tried to reach the foundation. In short, the foundation and its trustees are both inaccessible and largely unaccountable.

It is one thing for a wealthy individual to be secretive and unaccountable; it is quite another matter for one of the 25 largest foundations in the country to be so abusive of the public trust. Harry Weinberg could have kept or given away his money without creating a foundation, in which case he would have had to pay taxes to the federal government. But he chose not to,

preferring to create a foundation, thereby avoiding substantial tax payments. In exchange for those tax benefits, he made a compact with the American people to meet urgent public needs in a publicly accountable way.

The irresponsibility of the foundation reaches the boundary of illegality in one provision of its bylaws that states that some of the foundation's second-generation trustees, and all of its third and subsequent generation trustees, must be Jewish. This is an outrage, especially for a philanthropic institution that claims to have as its primary purpose assistance to the poor on an economic basis. What if the bylaws had stipulated that trustees could not be Jewish, Catholic, Latino or black, or could only be white Protestant males? Civil-rights groups and the Baltimore Jewish community would most certainly have been up in arms.

The provision is discriminatory and should be eliminated. In view the tax expenditures involved in the exemptions granted to Weinberg and other foundations, the IRS has a responsibility to pursue this matter. Either the bylaws should be changed or the Weinberg Foundation should lose its tax-exempt status.

To make matters worse, the bylaws also include a clause that requires its current and future Jewish trustees to have been members in good standing of a synagogue for five years prior to election to the board. Those trustees who decide after their election to resign from membership in a synagogue are automatically dismissed from the board. The foundation therefore has the right to distinguish between "appropriate" and "inappropriate" Jews.

One further provision in the bylaws deserves mention. It states that any charitable organization that criticizes the foundation or challenges, directly or indirectly, the manner in which the Trustees exercise their discretion on any subject . . . shall forever be barred from receiving any distribution from the Corporation."

Those two provisions reflect the narrowness, arrogance and meanness of disposition that seem to infuse the very heart of the Weinberg Foundation, despite its allocation of funds to some deserving non-profits. The foundation, unfortunately, does not embody the spirit and generosity of modern philanthropy. Not even a public-relations company -- which the foundation recently hired -- can hide this stark fact.

Newspaper articles about the Weinberg Foundation have all stated that no one was willing to say anything critical on the record. Those who formerly reviled Harry Weinberg as a poor and mean landlord, unpleasant businessman and surly fellow now deliver about his wisdom, generosity and vision. Non-profit organizations in Baltimore and elsewhere that have been denied access to the foundation, or even the courtesy of good manners, are participating in a conspiracy of silence and fear in the hope that they may someday hit the Weinberg jackpot.

With the exception of the Baltimore Jewish Times, no prominent Baltimore institutions and individuals have publicly expressed any concern about or criticized the foundation. Where have been the voices of other philanthropic institutions in the area that should be worried about standards in their field? Where have the leaders in the Jewish community been? Are they willing to tolerate discriminatory practices and questionable philanthropic ethics just because the foundation has given large amounts of money to some Jewish organizations? How about other community leaders and institutions? Principle seems to have given way to the demands of greed and hypocrisy.

If the Weinberg Foundation is permitted to get away with its current bylaws and practices, it will signal to other multimillion-dollar-would-be philanthropists that they have total license to establish foundations, at taxpayers' expense, in whatever way they want, without respect for philanthropic standards and ethics.

The IRS has an obligation to be more thorough and careful in granting exemptions to new foundations and to investigate those institutions like Weinberg that appear to be in violation of even the minimal standards that exist. The general public and non-profit organizations have the right to expect greater accountability from foundations, at least the large ones included in The Foundation Directory. Since foundations haven't managed to regulate themselves, it is time that all large foundations must issue an annual or biannual public report with sufficient information to permit a clear understanding of their objectives, priorities, guidelines, grant making and investments.

The Weinberg trustees seem to be somewhat nervous about the newspaper coverage they have received so far, as indicated by their decision to hire a publicist. The pressure on the foundation should be maintained. It will be important for national organizations and associations like the Council on Foundations and Independent Sector, which are concerned about the integrity of the non-profit world, to speak out on this issue. One can only hope that the Weinberg trustees will listen to the mounting criticism, change the foundation's bylaws and practices, and join the ranks of the large accountable and responsible philanthropies.

Pablo Eisenberg is president of the Center for Community Change and co-chair of the National Committee for Responsive Philanthropy. This article is reprinted with permission from the "Chronicle of Philanthropy.

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