Philanthropy in a White-Hot Economy

''Swollen charities: Should they give more?'' (Social Issues, May 29) captures many aspects of the debate about the growth of foundations in the buoyant U.S. economy of recent years and the federal requirement that they give away at least 5% of their assets annually. But it gives a misleading impression of the Ford Foundation's position and practice on these matters.

Ford has exceeded the 5% payout requirement for many years and expects to do so again this year and next. As our spending indicates, the 5% is a floor, not a ceiling.

You correctly note that ''the bottom line is really a philosophical one.'' To us, the most fundamental philosophical issue concerns individual freedom--the freedom of a donor to create a foundation to serve the public in perpetuity or for a shorter time. The 5% floor allows for perpetuity. Studies have shown that requiring a higher payout threatens a foundation's long-term survival.

Not all will choose perpetuity. But some will, because they want their wealth and good fortune to help others generation after generation, and they believe that over time their foundation will accumulate knowledge and expertise that makes it more effective.

Susan V. Berresford
President
Ford Foundation
New York

Your article presents a complex issue facing foundation trustees and staff about whether to increase grant-making above the current 5% payout level.

We believe that responsible management of a foundation's portfolio requires a perspective that covers decades, not just a 5- or 10-year period. A new study by Cambridge & Associates Inc. for the Council of Michigan Foundations, using real data from a group of 33 Michigan foundations with diversified portfolios, revealed their real annual return from 1973 to 1998 was 5.27%. At the Charles Stewart Mott Foundation, it was only in 1997 that we recaptured (in real terms) the grant-making power our portfolio had in 1963, the year that Mr. Mott donated the bulk of his estate to our Foundation.

One fact that frequently fails to enter into the public discussion is that, even at the current 5% payout level, the number of philanthropic dollars available for charity has increased at record levels in recent times. According to the Foundation Center, independent foundation giving grew 41.6% during the past two years, the strongest two-year gain on record. Grantees of the Mott Foundation have benefited directly from the stock market's recent performance, as well as our sound investment practices. In 1999 alone, the Foundation's grant actions increased 29.1%, to about $114 million, over the previous year as a direct result of our asset growth.

There is nothing to preclude a foundation from granting more than 5%, and foundation boards are making that decision on an individual basis. But we should not forget that many philanthropists establish foundations with the desire to make their resources available for the long term and with a degree of flexibility for the unknown. Fifteen years ago, no one could have predicted the AIDS epidemic or, in the case of the Mott Foundation, the opportunity to support emerging democracies in Central and Eastern Europe after the fall of the Berlin Wall.

The philanthropic table of the 21st Century has room for many styles and values, whether it is the short-term spend-down of all resources to solve a specific problem, or increasing payout rates on a short-term basis, or utilizing payout and investment strategies to sustain a portfolio's purchasing power over the long run. Pluralism and diversity are strengths of the field, and it would be unfortunate to see this disappear.

William S. White
President and CEO
Charles Stewart Mott Foundation
Flint, Mich.

Sooner or Later, the Fundamentals Count

Since your panel of experts can't agree on whether or not the stock market is currently in a bubble, I'm forced to rely on the advice of Sam, the piano player in the classic movie Casablanca, who sang: ''The fundamental things apply, as time goes by'' (''The great bubble debate,'' Economics, May 29).

I believe the stock market behaves, sometimes for long periods of time, in ways that aren't related to underlying fundamentals. I'm thankful for that behavior because it creates opportunities for wise investors. Sooner or later, though, fundamentals do count. The only unknowns are the timing and the severity of the shift back to fundamental value.

As time goes by, the catalyst that will cause the stock market bubble to burst draws inevitably closer. Thus, owning stocks with stratospherically high price-earnings ratios or stocks with no prospects of earnings in the foreseeable future isn't investing, it's gambling. When the bubble pops, only stocks with solid fundamentals will avoid a valuation bloodbath.

Paul M. Green
Cincinnati

B-School: More and More, It's a Woman Thing, Too

What ''It's still a guy thing'' (News: Analysis & Commentary, May 22) reports does not fit with what I have observed here or with my recent experience as chairman of AACSB-The International Association of Management Education, the accrediting organization for business schools. We find that our scholarship and award winners at the College of Business & Public Administration at the University of Louisville are predominantly female and that women feel the MBA enhances their career opportunities and entrepreneurial ambitions.

Our experience over the past decade is that the percentage of female students in our MBA programs has risen. Moreover, for the past five years, the percentage has been steady at 40% to 42%. A study conducted by the Council of Graduate Schools over a similar period (1986-1996) in dicates that the enrollment of women in graduate business programs has increased an average of 1% per year to a total of 39%--in your article. The study cited focuses on a small subset of schools. With data from the AACSB, the conclusions may have been quite different.

Perhaps, in the future, reports about B-schools could use data from the association closest to higher business education. Doing so would give Business Week and its readers a more accurate picture of what is truly happening.

Robert L. Taylor
Dean
University of Louisville
Louisville

Big Labor and Trade with China

There indeed is evidence of ''blatant protectionism'' in organized labor's outspoken concern over human-rights atrocities in China (''Labor should drop its hypocrisy on China,'' Editorials, May 29). Your criticism would be more helpful, however, if it respected labor's legitimate concern with job dislocation attributable to freer trade, especially competitive imports from countries with exceptionally low labor standards.

You would be more constructive if you challenged organized labor to propose a domestic-adjustment strategy addressing job dislocation caused by freer trade with China or indeed any country. Business groups should be advocating such a strategy in concert with other members of a broadly based coalition. A broadly based coalition for freer trade, which did so much in the 1950s and 1960s to secure enactment of liberal-trade legislation, does not exist today.

The fight over the China trade bill has come to look like nothing more than a confrontation between Big Business on one side and Big Labor, environmentalists, and human-rights activists on the other. A broadly based coalition for freer trade in the total national interest would have usefully altered the political dynamics of this bill. It will be essential when other major trade legislation appears on the congressional calendar.

David J. Steinberg
Alexandria, Va.

It ill behooves Business Week to accuse America's labor unions of hypocrisy and sanctimonious blather about human rights and working conditions in China. Do you accuse those in the religious community who oppose permanent normal trade relefits to the U.S. from PNTR for China.

Markley Roberts
Washington

Just Listening to Music Is No Copyright Infringement

Downloading (for listening to and making private copies of songs) is not-''almost certainly...theft,'' as some think (''The digital revolution will not be criminalized, Entertainment, May 29). The difference with the Web is the arrival of ''push'' mode. That should not make the downstream activity illegal. Copyright law has taken care of this: Persons making content accessible to others are infringing if they do so without authority from the content owner. The uploaders are at fault. The downloaders do it legally--unless they turn around and distribute onward what they received.

Splitting hairs? It makes a huge difference as far as right to information, freedom of speech, and other civil liberties are concerned. Reading and listening have never been a copyright infringement and must not become that now. It also makes sense for the growth of the Web: Penalizing browsing would be a huge step backwards.

The challenge for lawmakers and judges is to correctly interpret the new phenomena, without fundamentally twisting the balance in the copyright law. This balance can be sustained. We must neither try to slow down change nor throw up our hands and give up on enforcement, just work smarter when addressing the new business environment.

Timo Ruikka
Vice-President
Nokia Internet Communications
Mountain View, Calif.

''The Gary Cooper of Governance'' (Management, May 29, 2000)

''The Gary Cooper of Governance'' (Management, May 29) gave incorrect information about a proposal at High Plains Corp. In July, the measure will be put to a board vote, not a shareholder vote.