One Trillion Is More Than Enough

By Norman E. Kjono, November 22, 2006

From The McKinsey Quarterly, "For Nonprofits, Time Is Money,"

 "US foundations and endowed nonprofit organizations have accumulated nearly $1 trillion in investment assets-a sum that is expected to double over the next 20 years. Such wealth reassures the social-service, environmental, and arts organizations that depend on these sources for funding. But by applying the financial concept of the "time value of money" to current disbursement patterns, the authors of this article conclude that it would be in society's best interest for the managers of foundations and endowments to put this money to work sooner rather than later. Donors can help by giving gifts that are not restricted to specified uses and by asking when, as well as how, their money will be used."

From MSNBC News, November 20, 2006, "For U.S. Charities, a Crisis of Trust,"   by Sharon Hoffman:

"Americans' charitable spirit peaks during the holiday season, but this year the urge to give is battling a strong contrarian tide - a crisis of trust born from public disenchantment with a philanthropic system that many consider disorganized, under-regulated and tainted by scandal. A poll by Harris Interactive released this summer found only one in 10 Americans strongly believes charities are "honest and ethical" in their use of donated funds. And nearly one in three believes nonprofits have 'pretty seriously gotten off in the wrong direction,' it found."

 

From the Children's Partnership, "Proposition 86: An Initiative to Secure Health Insurance for California Children:"  

"On November 7 Proposition 86 was defeated in California by a 4.2% margin. Proposition 86 sought to achieve several important public health goals, including expanding health insurance to all children in California, by increasing the state's cigarette tax by $2.60 per pack. Sponsoring organizations (sic), with The Children's Partnership, included: American Cancer Society, American Heart Association, American Lung Association, Campaign for Tobacco Free Kids, California Hospital Association, California Primary Care Association, Children Now and PICO California."

 

From the Robert Wood Johnson Foundation Web site, www.rwjf.org, about The Children's Partnership:  (if the link is expired, click here)

The Robert Wood Johnson Foundation (RWJF) provided three grants to The Children's Partnership, a project of The Tides Center, to research and monitor trends in health care coverage for children. The first grant (ID# 027800) produced a "strategic audit" that described the problem of children who lack health insurance due to the decline in employment-based insurance and Medicaid cutbacks. It noted health insurance coverage trends and strategies, and proposed short- and long-term solutions involving business leaders, elected officials, child care advocates, and health policy analysts to support state and national initiatives to provide health care coverage to children. A dissemination grant (ID# 028307) permitted distribution of the report to 500 health leaders, policymakers, funders, and others concerned with children's well-being. A third grant (ID# 029635) funded continued monitoring and dissemination of information about trends in children's health coverage. Four issues of a 4,000-circulation newsletter were devoted to the issue, and the grantee provided strategic advice to other organizations working on various aspects of the issue. Newsletters were also distributed by other organizations and are available on the grantee's web site, www.childrenspartnership.org. Policymakers reported using the material from the second grant in press releases, media interviews, and annual reports. . . . Some enterprising states had created programs that went beyond Medicaid, such as those that rely on taxes on health providers, cigarettes and/or alcohol, and hospital surcharges (e.g., Minnesota, California, Massachusetts, and New York) . . . A legislative aide for the Assembly Speaker in the Maine legislature used the information to convince key legislators that a tobacco tax increase should be used for children's health coverage."

GRANT DETAILS & CONTACT INFORMATION

Project: Researching and Monitoring Trends in Health Care Coverage for Children

Grantee: The Tides Center (San Francisco,  CA)

·         Audit of Activities and Opportunities to Extend Health Insurance Coverage to Uninsured Children
Amount: $ 49,893
Dates: September 1995 to December 1995
ID#:  027800

·         Dissemination of Information on Extending Health Insurance Coverage to Uninsured Children
Amount: $ 8,000
Dates: May 1996 to December 1996
ID#:  028307

·         Monitoring Public and Private Efforts to Increase Children's Access to Health Insurance
Amount: $ 175,000
Dates: August 1996 to July 1997
ID#:  029635

Contact: Wendy Lazarus, MSPH (310) 260-1220 wlazarus@childrenspartnership.org
 

According to Yahoo Finance  the Robert Wood Johnson Foundation is among the top 5 institutional shareholders of pharmaceutical giant Johnson & Johnson (Stock symbol JNJ). When marked-to-market as of November 20, 2006 the foundation's holdings of 66,440,108 shares of JNJ common stock are worth $4.4 billion. The company's subsidiary ALZA Corp. manufacturers NicoDerm CQ nicotine patches for GlaxoSmithKline. Johnson & Johnson also purchased Pfizer Consumer Healthcare for $16.6 billion in June 2006, which included Nicorette nicotine gum.

 

As tobacco control advocates - such as RWJ foundation grant recipients the American Cancer Society, the American Lung Association, and the Campaign for Tobacco Free-Kids - artificially inflate the cost of cigarettes through tobacco tax advocacy GlaxoSmithKline often increases the cost of Nicotine Replacement Therapy (NRT) products by like amount. For example, from 2001 to 2005 Washington tobacco taxes increased by $12.00 per carton and on a per unit basis the cost of a box of Nicorette increased by $12.06. Increasing the price of one product based on the increased cost of a similar product is referred to as "Parity Pricing." Cigarette tax increases directly benefit the Robert Wood Johnson Foundation because they create the basis for artificially inflating the price of Nicorette and NicoDerm CQ. As prices for those consumer products are artificially inflated the profits to manufacturers such as Johnson & Johnson and distributor GlaxoSmithKline increase accordingly. With Proposition 86 we observe the direct and undeniable phenomenon of a private foundation with a $4.4 billion vested interest in the successful distribution of Nicorette and NicoDerm CQ applying its multi-billion-dollar clout to directly influence state taxes that create artificial profits to its own benefit. When distribution of Nicorette and NicoDerm CQ expands through passing smoking bans corporate sales increase. When Parity Pricing of NRT products occurs increased sales add artificially inflated profits to corporate bottom lines of Johnson & Johnson and GlaxoSmithKline. Added profits from NRT sales support the stock price of the Robert Wood Johnson Foundation's stock holdings in JNJ. the more profitable the stock holdings are the more grant money available to finance tax and ban advocacy. The preceding observations were included in my article about Proposition 86 that was published by the Los Angeles Daily Journal on November 2, 2006.

 

It strikes me as a cultural aberration that charities with $1 trillion in combined endowments stridently hustle folks who balance their budget by mere dollars for more. It is an absurdity that organizations such as the American Cancer Society and the American Lung Association turn donor contributions around to finance statewide initiatives that levy more taxes on all taxpayers and increase costs for all consumers. It is a legal travesty that one of the largest American nonprofits, the Robert Wood Johnson Foundation, has committed hundreds of millions - reportedly at least $446 million - to tobacco control grants that support the price of its own JNJ stock holdings, while crying poor to the public about the desperate need for more funding to address children's health care.

 

Such self-serving, pecuniary interests by nonprofits make it abundantly clear to me that Ms. Hoffman may be understating public distrust in her November 20 article when she reported "one in 10 Americans strongly believes charities are "'honest and ethical' in their use of donated funds." If nonprofits were not hoarding $1 trillion in endowments to preserve their political clout perhaps funding would be available for legitimate medical needs. The bottom line as to the Robert Wood Johnson Foundation, the American Cancer Society, and the American Lung Association is simple: start funding what you claim to be about when you solicit donations - children's health - and chill out on using your economic largess to line your own pockets.

 

In view of the above, any California politician that sponsors a bill to increase cigarette taxes during the 2007 must be held politically accountable. Sponsoring such bills is an unmistakable statement that the Assembly member chooses to enrich private special-interests at the expense of consumers, taxpayers and children. Such thinking is dangerous to legitimate public health and fiscally irresponsible. Crying poor about "the children" while sending millions per year in artificial subsidies to Johnson & Johnson

and GlaxoSmithKline is beyond disingenuous, is smacks of deliberate deceit.

 

In the meantime, when the cancer society and the lung association call to solicit more donations for "the children," the wisest course of action seems to be a simple response:

 

"Sorry, no can do. Charity begins at home. I'm busy figuring out how to feed the kids after you charitable porkers are done piling on new taxes and artificially inflating the cost of consumer goods."

 

Far more dangerous than the alleged nationwide obesity epidemic is the growth of nonprofits' self-serving pork. It's time to put the Robert Wood Johnson Foundation, the American Cancer Society, the American Lung Association and other charitable health organizations on a strict diet that features a strong dose of political accountability.

 

Eliminating political grease from the health charity diet is the first step toward truly "Saving the Children."

 

Norman E. Kjono


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