The Indiana University professor talks to Michael E. Hartmann about the challenges of interpreting survey data about trust in philanthropy and the nonprofit sector and, the historical “paradox of nonprofit trustworthiness,” and the relationship between civil society and the state writ large—as well as, writ smaller and looking ahead, that between exempt nonprofitdom and the tax system.
Leslie Lenkowsky’s knowledge and wisdom about philanthropy and public policy are borne of a career’s worth of experience in and scholarly study of it. He has been director of research at the Smith Richardson Foundation, deputy director of the United States Information Agency, president of the Institute for Educational Affairs, president of the Hudson Institute, a professor of philanthropic affairs and public policy at Indiana University, chief executive officer of the Corporation for National and Community Service, a fellow at the American Enterprise Institute, and director of graduate programs at the Center of Philanthropy at Indiana University.
Among other things, Lenkowsky has also been a director of the Philanthropy Roundtable and an adjunct faculty member at the Institute of Philanthropy and Voluntary Service at Georgetown University. Before all this, he was once a teaching and research assistant to several Harvard University professors, including Nathan Glazer and Daniel Patrick Moynihan, whom he also later served as a consultant. Lenkowsky is now a professor emeritus at the Paul H. O’Neil School of Public and Environmental Affairs at IU, where he’s a member of the Lilly Family School of Philanthropy faculty, too.
To the online Vital City journal’s high-quality, wide-ranging issue on “Nonprofits and the City” last month, Lenkowsky contributed an informative and insightful article about “The Paradox of Nonprofit Trustworthiness.” “Though the details differ, today’s concerns about the trustworthiness of nonprofits and their donors echo those expressed throughout American history,” he writes in the piece. “Paradoxically, Americans have long made philanthropy a central part of their civic life (as Alexis de Tocqueville famously noted), but at the same time, have never entirely trusted it.
Today, “[t]he organizations they are most likely to trust are those they are involved with directly,” according to Lenkowsky. “But the ones that have the greatest capacity to deal with urgent problems are apt to be more distant, managerial, complexly financed, politically engaged and, as a result, less trusted.”
Lenkowsky was kind enough to join me for a recorded conversation late last month about trust in philanthropy and the nonprofit sector. During the first part, which is here, we talk about the degree to which trust, or lack of it, in wealth and the wealthy may or may not have played a role in the creation of Big Philanthropy at the beginning of the last century, through to the 1969 Tax Reform Act that essentially still structures the nonprofit sector, to today. He also discusses the growth of nonprofits in the urban context, as well as some ramifications of that growth.
The almost 17-minute video below is the second part, in which we talk about the challenges of interpreting survey data about trust in philanthropy and the nonprofit sector and, the historical “paradox of nonprofit trustworthiness,” and the relationship between civil society and the state writ large—as well as, writ smaller and looking ahead, that between exempt nonprofitdom and the tax system.
“Polls have been around for quite a while, and they do tell us something that we didn’t know before if they’re done well,” Lenkowsky tells me, “but you also have to understand what they’re saying, and I’m referring not just to things like sampling error and so on.
“Let’s take the trust polls,” he continues. “Usually, the question is, Do you trust whatever the institution is?, and the person filling out the poll registers his opinion on a scale that might run from 1 to 9 or something. … Depending on the who’s publishing it, usually just the top and bottom parts” are highlighted, so “those who break one or two are deemed to be very distrusting, and those that are eight and nine are trusting. Well, the bulk of the people fall in between. … You’ll see trust-distrust, but it’s not really binary.”
“The paradox of nonprofit trustworthiness,” as Lenkowsky’s Vital City article calls it, is “kind of a love-hate relationship, mixed in with the reality that good philanthropy, good nonprofit activity sometimes does produce distrust, but for a reason,” he says.
I mean, we have to live with it. It’s hard for people to live with, because you’ll find prominent in public life these days, like Vice President [J. D.] Vance, criticizing foundations or large endowments at universities as kind of hedge funds, and there’s some truth to that. But it’s also the case that when you have a large endowment, you’re free to do some things that you couldn’t do if you were dependent on going with the begging bowl every day trying to solicit money.
Regarding scrutiny and criticism, “You have to understand that if you’re living in the public arena, as foundations and nonprofits inevitably are, you are open to criticism,” according to Lenkowsky, “including Congressional investigation. So one has to exercise a degree of prudence. That doesn’t mean you shouldn’t take risks, but be cautious about which ones you do. And don’t think that criticisms are in any way illegitimate. It’s part of what goes on.”
Looking back, “Tocqueville really valued the independence of charities,” Lenkowsky reminds us. “My hunch is he would be appalled at the degree to which charities, both through the tax system, as well as through grants and contracts, have become dependent on their relationship with the public sector.
“Anyone who reads Democracy in America,” he continues,
also ought to read the book that Tocqueville wrote many years afterward on the French Revolution, in which he puts his finger on one of the real causes of the failure of the French Revolution, what he calls administrative centralization—too much, in other words, had to be run through the bureaucracy and monarchy. As a result, the system was brittle and just did not have the flexibility to adjust to what was going on in the country.
Tocqueville “fully understood the connection between civic associations and political associations,” says Lenkowsky, citing Democracy in America for Tocqueville’s belief that “political associations are the perfection of civic associations, by which he doesn’t mean that they are better. What he means is that after I’ve tried and tried and tried through civic associations, you may reach a point where you need to organize politically to accomplish your goal.”
Asked what that might mean, if anything, for more-contemporary and ongoing debates about the deductibility of contributions to and the tax-advantaged status of nonprofits, Lenkowsky says that as a result of the 2017 Tax Cuts and Jobs Act,
less than 10% of taxpaying households itemize their deductions and benefit from deductibility.
Exemption remains important—exemption meaning that organizations don’t pay tax on their net income. I think there’s a lot of good questions being raised about that. For example, a big university endowment essentially invests money like any other investor does. Should it pay some version of tax on its net investment income? Well, the 2017 Tax Act answered that affirmatively. Major university endowments now do pay a small tax. Should that be broadened? What are the consequences? Those are good questions to discuss.
This article first appeared in the Giving Review on April 8, 2025.
