Tag Archives: reform

Philanthropy and Government: Perfect Strangers or Bosom Buddies?

So, yes, the title of this post does reveal the last decade in which I regularly watched television. Thank goodness for my students, who let me in on secrets of the modern world, like those Real Housewives shows that I first thought they were joking about!

This week, while my students are keeping up with American Idol (is that even still on?) so that I don’t have to, I’m blogging about a somewhat random collection of reports and analyses about the worlds of philanthropy, advocacy, and social entrepreneurialism, I guess so that you don’t necessarily have to read them!

Today’s report is from Grantcraft, and it relates to something that’s of significant interest to me–the “best” relationship between private philanthropy and government, in the pursuit of solutions to our most vexing social problems. Getting this right is tremendously important, because of what both philanthropy and government bring to the social problem-solving enterprise: the former innovation and a capacity for risk-taking, in particular; and the latter the fiscal resources and legislative authority to institutionalize the most promising strategies discovered in the philanthropic world.

Or, at least, that’s how it could/should/WILL work!

This particular survey solicited the insights from more than 1500 grantmakers, about not just how they’re currently working with government (or why they’re not) but about how they envision this relationship, and what they see as the best strategies for engagement without co-optation  and mutual challenge without devastation of the relationship.

Some of they key findings, that I believe have implications for how we view philanthropy and government as complementary forces for good:

  • Foundations are working with governments on many levels; in at least some cases, this means building skills and relationships at more local levels first, the same way advocates can.
  • Foundations see advocacy as a critical piece of their relationship with government (in terms of providing information, informing policy debates, and trying to shape policy approaches). This is a critical insight both because it suggests that at least some foundations are committed to playing an advocacy role AND because it correctly characterizes advocacy as part of a partnership with government, rather than an inherently oppositional activity.
  • There is a distinction between collaboration and coordination: the latter seeks to build understanding on both sides about the other’s work, and to find ways to work together, while the former may increase the risk of co-optation. The respondent grantmakers emphasized their role in criticizing government, as a sort of “loyal opposition”, that, if more vigorously pursued, could, I believe, create more space for nonprofit organizations (dependent on both foundations and government for financial survival) to engage in such critique, too.
  • Perhaps the part that made me the most encouraged in the survey was the strong opinion, expressed by several respondents, that philanthropy has to be on guard against being used as “cover” for government’s abdication of its core responsibilities, as part of the social contract between a citizen and his/her state. A direct quote: “we need to be sure that we’re not being used to fund programs and activities that the government should do.”So nothing like kicking the week off with optimism, right? About the enthusiasm and acumen with which at least some grantmakers evidently approach their interface with the government, and about the potential that such a joining of forces has to provide some real momentum in our struggles for social justice.

    And you can still check out the report for yourself, unless the title has you longing for some 1980s TV

  • Towards a New Framework for Nonprofit Financing

    I’ve been reading and thinking a lot about the state of the nonprofit sector during the past couple of months. And I’m obviously not alone; the creation of the Obama Administration’s Social Innovation Fund, among other developments, has sparked some widespread soul-searching among nonprofit leaders (both providers and donors) about the future of the sector and necessary reforms.

    This report, produced out of a gathering convened by the Alliance for Children and Families, Deloitte LLP, and the Hillside Family of Agencies (large nonprofit in NY, like $180 million annual budget large) earlier this spring, echoes a lot of that thinking. There were some very good pieces included in it, and it seems that, given the relationships that many participants have with congressional and administration policymakers, the group might have some momentum to enact some of their proposed changes. Still, I was very glad that they included pictures of the participants convening (in the historic Rockefeller family estate, no less!), because it was glaringly, painfully, offensively obvious that the effort is not representative of the overall nonprofit sector, which to me should color (NO PUN INTENDED) any discussion of their conclusions.

    In the pictures, there were absolutely no people of color, and very few women. Going by the attendees’ names, I’d generously say that no more than 5 of the 21 participants were women. If we’re going to have a high-level meeting about the future of nonprofit financing and try to break out of the patterns of how things have been done during the previous decades to imagine a new day, shouldn’t it be a diverse group having that conversation? Um, yes.

    Okay, then, what did these mostly male, middle-aged white people conclude about what needs to change in nonprofit financing? 🙂

    First, what I liked the most: the group seemed to emphasize that the future of nonprofit human services MUST include significant, even increased, funding support from the federal government. They didn’t have any of this ‘work smarter, public/private, new economy’ stuff that so many of these conversations have substituted for the difficult political work of getting government to do its job and take care of the American people. Yay!

    The report has three main themes: reform the ‘dollar in, dollar out’ method of government financing; encourage integration and break down programmatic silos; and innovate new mechanisms to promote the long-term financial stability of productive organizations within the nonprofit sector. Much of the last point parallels the discussion in Uncharitable, although this group came up with a few different approaches to the same stated problem. Here, they propose a human services investment bank to support mergers and acquisitions and venture capital and to finance new programs, but they recommend that the loans would be repaid, so to speak, by outcome performance, not in cash through enhanced fundraising efforts (as Pallotta proposes). They also suggest that this bank could function to underwrite lending directly to social service clients (sort of like a Fannie Mae for social services).

    Many of the recommendations to address the first two areas, though, seemed to be inadequately developed in terms of strategies to overcome the primarily political nature of resistance to change. Yes, I can agree that the government’s current method of cost-reimbursement contracting is ill suited to long-term planning, innovation, and capacity-building. I can empathize with nonprofit executives who struggle to meet multiple, often conflicting requirements for reporting to different granting entities. I see the shortsightedness of taking whatever money we can get from the government and then cutting other programs to fill the gaps, without ever making the necessary capital investments (in technology, infrastructure, physical space, staff training) to take our organizations ‘to the next level’. I get it that pooled government funds and paying organizations for performance and reforming the rules of nonprofit accounting to allow for separation of capital budgets and cash flow would free nonprofit organizations from many of the constraints that currently compromise their long-term efficacy while encouraging innovative replication of promising interventions. I like the idea of ‘super waivers’, to open contracting and increase the transparency of the funding process (even as I fear, a bit, anything with ‘waiver’ in it, since that’s often a euphemism for something that exchanges a bit more flexibility for rather dramatic cuts in funding).

    But what I don’t really see is a strategy for how we would begin to get there. There’s little discussion about the need for better outcomes data in order to judge the performance for which nonprofits are theoretically going to be paid. There’s even less analysis of the ideology behind the devolution which has contributed mightily to the fragmentation of the sector. And, while it seems that they plan to address the issue of vested constituencies for each ‘silo’, I don’t see a plan for how you corral these interests into a movement for change.

    We didn’t get to the state in which we find ourselves by accident. And it really isn’t because we think it’s the greatest situation that we perpetuate it. Articulating the problems and pointing out what would be better does not, unfortunately, lead us neatly to a new reality. What we need, even more than technical know-how and lists of great suggestions, is the political power to bring about a transformation in the way that the nonprofit human service sector is viewed…not as charity but as a core part of our social contract and an investment in our collective future.

    And that gets me back to my first critique. I don’t see how you build a movement without bringing in more of the essential voices that comprise today’s, and, perhaps more importantly, tomorrow’s, society. I applaud many of these ideas, and I concur with the dire assessment of the status quo. And I hope that this is another pebble dropping in the pond, until it spills over and we achieve the kinds of fundamental reforms that would make the nonprofit sector a real player in human progress.

    I hate to be cynical, but I’m just not sure that the revolution starts in Rockefeller’s living room.

    Financing Human Services Report

    Forest for the Trees: Social Innovation Fund

    So have you heard about the Social Innovation Fund?

    The Fund, an initiative of President Obama’s, would have (SPOILER ALERT: BIG CATCH HERE: Congress has to appropriate the money!) $50 million to grant to promising nonprofit strategies aimed at addressing elementary or secondary education for low-income students, child and youth development, poverty reduction, health, resource conservation, energy efficiency, civic engagement, or crime reduction. Here are some other bloggers’ posts on the Fund, what it is, how it would work, and what purpose it serves.

    I’m not going to rehash those discussions, but you should check them out. Some of the major questions that I do think deserve some consideration include the conflict between ‘innvoation’ and proven legitimacy; the wisdom of funneling the money through grantmakers who will then grant to subgrantees vs. direct granting; and whether the federal government will use the outcomes of the projects funded through the Fund to direct additional appropriations. Under ‘steps in the right direction’, I’d file the requirement that grants be made for at least 3 years, that grantmakers provide technical assistance to grantees, and, most importantly, the requirement that the grants be used as ‘growth capital’ rather than restricted programmatic funds.


    As an advocate, what I think is most significant, is the fact that there is this much talk about how the nonprofit world is going to use this grant money once it starts flowing, whether this Fund will really be the transformation in the nonprofit sector that many hope, and the degree to which, so to speak, we should all be cheering for it…WITHOUT ANY DISCUSSION of the fact that Congress has not yet even appropriated the money, that that is, in fact, a necessary step for any money to exist, and, perhaps most importantly, whether or not this is the best use of the government’s $50 million in the budget (so, basically, very little apparent understanding of the finite nature of the federal budget or the process by which it is appropriated). It’s far from a done deal, and, yet, rather than working to ensure that it will be (or entering the highly ‘uncivilized’ but far more urgent debate over health care reform), we’re already tearing it apart on details.

    And, let’s talk honestly about that $50 million. Or, as you might prefer to think of it, less than 10% of the direct payment subsidies for upland cotton producers in 2007 (we spent $50 billion on total farm subsidies in 2004–billion, with a b). “Fifty million dollars is better than nothing,” most nonprofit leaders have been arguing. Sure, but, what about instead of nothing, we were really at the table, with the kind of organized power to not only increase our appropriations ($50 million is, after all, almost $31 million less than the earmarks secured by Senator Richard Shelby alone!) but also reform how government tackles social problems in ways that would be deeply and widely felt.

    Truthfully, some of the nonprofit voices have been raising these questions. What if the Obama Administration focused its reform energies not on the nonprofit sector but on government itself: changing how departments award contracts, changing rules for reporting, improving transparency, changing tax rules that restrict nonprofit accounting, and, most importantly, revitalizing the eroding social contract so that nonprofits are no longer expected to pick up so much of the slack created by government abdication of responsibility?

    I don’t mean to sound like the Grinch that stole the Social Innovation Fund. I do recognize that people are hungry for signs that better days are coming, and I concede that this can be seen as one such sign. I just worry that we’re missing the boat a bit. And if we allow ourselves to lose sight of fundamental questions of justice everytime we get the chance for a little more match money, then we’ll always find ourselves fighting for crumbs to sustain the really excellent, even ground-breaking work that many nonprofits manage to do despite the odds.

    The FY2009 budget contained more than $6 billion in earmarks for ANONYMOUS defense projects. Anonymous. As in we have no idea what they are, who requested them, how much goes to each, what they are even supposed to do. Imagine if those who care about social justice in our country directed all of our collective passion and intelligence and thoughtfulness at changing our democracy, so that we no longer debate over ‘national leveraging capital’ and ‘evidence-based, randomized trials’ while the defense industry walks away with $6 billion for their secret wish list?

    Now THAT would be innovative.