How much is enough? Philanthropic greed.

I just received a link from the Association of Fundraising Professionals to a Christian Science Monitor article on a proposal being floated in Massachusetts to tax college endowments that exceed $1 billion.

The pros and cons of the discussion are centered around whether the colleges are spending enough of their endowments to lower tuition … and the colleges are responding with all kinds of statistics about their contributions to the local economy.

But the question I haven’t seen posed yet to the Harvards of the world is the one I asked above: How much is enough?

A few years ago I was facilitating a strategic planning process with a community center in a small oceanside community. Overall, the townsfolk were pretty well-off financially (with the exception of the service folk and farmers whose families had lived in this community forever). The community center was fortunate to have a small endowment that helped supplement their annual operating expenses.

During the course of our conversation, one of the board members posed the question: If someone wanted to leave us a million dollars, should we take it? I was floored… in my 20 plus years of nonprofit life, I had never heard a board member actively raise such a question.

This board member wasn’t posing a question about a gift with strings. His was a question about whether or not the money could be better used to meet other needs in the town. He felt that the community center was in good shape and had adequate resources to meet the needs of the community.

Last week’s Chronicle of Philanthropy published a report by the Urban Institute that showed the distribution of revenue by charities. Those that had expenses of $10 million or more represented 82.7% of charities by budget size but represented just 3.7% of the total number of US based charities.

We frequently work with small to medium-sized nonprofits. They include community based environmental organizations, charter schools serving urban kids from low-income households, community arts or humanities organizations, afterschool programs, food pantries, diaper banks, advocacy and civil rights organizations, ESL programs — you name it. All are struggling for funding. They are lucky if they have one development director — nothing like the hundreds of development professionals and support staff engaged in fulltime fundraising at major universities.

Virtually all of them serve individuals living below or just above the poverty line. The “wealthiest” of them might have budgets slightly over $1 million, but more likely, they have budgets between $25,000-$500,000. All of them could do so much more with more funding.

So how much is enough? Nearly half of Boston’s high school students fail to graduate from high school in four years. Most of those drop outs were black and Latino boys. Harvard has $35 billion — yes billion, in its endowment and continues to accumulate more donations and more land well beyond its Cambridge campus. Yes, it’s great that they are now offering free tuition to low and middle income families so that a Harvard education isn’t out of their reach, but do they have enough wealth already? And it’s not just Harvard. The “Boldly Brown” campaign just raised over $1 billion. The public high school graduation rate in Providence? A shameful 62%.

What do you think?

glg