Foundations can't do it all. Budget crunch may prevent foundations from sponsoring new programs, says James Joseph

An assumption that corporate and private foundations can take up the slack left by budget cuts in government spending is just a plain misconception, says James A. Joseph, president of the Council on Foundations. Foundations around the country fund an array of health and social projects, such as a prenatal and postnatal health-care program for poor mothers in rural areas. Foundations also helped the city of Denver evaluate the management of its various city agencies.

Mr. Joseph points out that last year some 1,000 member foundations gave out $2.2 billion in grants to educational, health, cultural, civic, and international programs.

But that number pales in comparison to the hundreds of billions spent by federal, state, and local governments in these same areas.

``The resources are not available,'' said Joseph at the annual meeting of the Council on Foundations here. He admits that many grantmakers have had healthy asset growth as the economy has gotten stronger. In 1984, members of the council had more than $32.5 billion in assets.

But Joseph likens philanthropies today to corporations that cut back on research and development, putting their money back into basic operations.

``It loses its competitive edge,'' Joseph says of such a corporation. There is a danger, he says, that foundations will be forced to go for institutional maintenance of existing programs, instead of contributing to the stimulation and creation of new programs.

``Even though foundations' total contribution is small, it has significant impact,'' says Joseph, who has held positions in foundations, business, education, and government, including a term as undersecretary of the interior during the Carter administration.

The main theme at the annual convention was the exploration of ways to support and develop new leadership -- at the community and national levels. Foundations are also questioning how they should exercise their own leadership on issues.

``Some argue that every grantmaking project is a talent search,'' says Joseph. Philanthropic foundations look over applications, and award money to the ones that show exciting and substantial leadership.

``Others are more proactive,'' he says, referring to foundations that do not wait for grant applications, but actively search for and recruit leaders in particular areas of interest.

Foundations and corporate grantmakers are uniquely qualified to identify and encourage leaders on the margins of society, he says, as they encounter nontraditional groups seeking grant money.

As head of the Cummings Engine Foundation, in Columbus, Ind., for five years, Joseph says he helped several minority community activists who are now in leadership positions. But he would like to see foundations do an even better job of encouraging nontraditional talent.

There has also been criticism that foundations sit too quietly on the sidelines in the debate over the role of both federal and state government in society.

A foundation by its incorporated status is free to determine which public service it will focus on, says Joseph. This can range from the environment, to opera, to abused wives.

``But that's very different than getting public policy enacted on these issues,'' says Joseph. Foundations are restricted from most lobbying. They are free, however, to give data and insight into issues, and to try to get particular issues into the arena of policy debate, he notes.

It is fair to say, he says, that foundations are rather modest about their efforts, and even timid in dealing with policy makers.

He attributes this to both the desire of many givers to remain anonymous and a wariness of legislators who would impose strict tax restrictions.

Joseph sees several new trends in philanthropy during the 80s. There is more desire for collaboration and cooperation in grantmaking between larger foundations and corporate givers and local groups. Some of this is reflected in the growth of regional associations and ``affinity'' groups of philanthropies with similar concerns, such as health care.

He says corporate grantmaking is also much more decentralized, no longer simply supporting national grants, but giving to local community foundations. There is also an increasing professionalism among foundations, he adds, which are much more savvy about such issues as how best to make best use of their dollars.

He sees rocky roads for foundations in proposed tax reforms in Congress. Specifically there are changes proposed in the treatment of gifts of appreciated property, and the taxing of dividend income for foundations who own more than 5 percent of a specific corporation. Joseph says this would mean the loss of millions of dollars for the foundations.

Joseph is also concerned that the public at large may become confused about just what a foundation is.

A proliferation of foundations with distinct political agendas has sprung up, such as the Heritage Foundation, a conservative think-tank, and the Center for a New Democracy, founded by Sen. Gary Hart, (D) of Colorado, which are not strictly involved in charitable giving or research in a nonpartisan atmosphere, he says.

Through public education and perhaps a redefining of charities it will be important to clear up any blurred distinctions, Joseph says.