• In New York, a political deal between the Governor and a union leader unfairly redirected 95 percent of a nonprofit health insurer’s assets into a fund to support pay raises for members of the state’s largest labor union.
• In Kentucky’s 2003 gubernatorial race, the Republican Governors Association claimed in an advertisement, without any substantiating evidence, that the Democratic candidate, Attorney General Ben Chandler, had acted improperly by creating a private foundation with the assets preserved in the conversion of a large health insurance company. Although the ad’s claims were debunked, it ran frequently and may have been instrumental in Chandler’s defeat that year.

As spiraling health costs take their toll on state budgets, it is possible that the Blunt approach, seeing private foundation assets as “taxpayer assets,” may be attempted elsewhere, whether through legislation or executive fiat. Have you seen any such entanglement between politics and private foundations in your state? Heard about any problematic legislation, or other threatening state action, that could tie the hands of nonprofit or foundation leaders?

Scott Benbow is a philanthropy specialist in San Francisco. Since graduating from Columbia Law School, he has practiced law in the United States and in three other countries.

Under the compromise, a coalition of 10 leading foundations pledged to:

• make a multi-million-dollar investment in building the capacity of nonprofit organizations serving communities of color and in developing a more diverse pool of foundation and nonprofit leaders;
• report annually on these activities;
• meet periodically with key community leaders to review progress; and
  “supplement ongoing research with an independent study of the nonprofit sector in California, including the communities it serves, and the number of minority-led, community-based nonprofits and their capacity building needs,” (reportedly, a first version of this study has already been commissioned from and completed by Foundation Center).

The 10 foundation coalition members, seven of which are headquartered in Southern California, include: The Ahmanson Foundation, The California Wellness Foundation, The James Irvine Foundation, The Annenberg Foundation, UniHealth Foundation, The William and Flora Hewlett Foundation, The Ralph M. Parsons Foundation, The David and Lucile Packard Foundation, The California Endowment, and the Weingart Foundation.

All involved – the Greenlining Institute, whose series of studies led to the bill’s introduction, Senator Coto, the bill’s sponsor, and the foundation coalition – deserve praise for this result. With Governor Schwarzenegger likely to veto the bill, each of the parties could have held firm and claimed victory later for standing on principle. Rather than let the perfect be the enemy of the good, they chose to try something workable that, if implemented well, can go a long way toward broadening and deepening diverse leadership in foundations and nonprofits. 

If the ultimate goal of the bill was to increase benefits from philanthropy flowing to either communities of color or low- income communities, then there is still much work to be done. Even if the capacity building called for in the compromise flawlessly succeeds, there will continue to be a need for better data on the reach of philanthropy in communities of color. (A key weakness in the bill is that it did not require the collection of information that would establish who actually is served by grant dollars, as I argued here.) Such data would help funders assess and improve their grant making, as well as enable advocates and public officials to be better informed and targeted in their critiques. 

With a modest investment of time and resources, we can determine which census tracts are served by which organizations, and map the amount of grant dollars relative to the numbers of people living in an area or, more specifically, the particular characteristics of people actually served. This is not a technological pipedream; HealthCity.org, a partnership of nonprofits in Los Angeles sponsored by the Advancement Project, already has built tools and methods for making the flow of grant dollars visible, for several public agencies and private funders, to help them assess their grants in Los Angeles County and throughout California.* Ironically, grants promoting systems change to benefit low- income communities, an increasing trend among many of the foundations involved in the compromise, will be harder to map, but this difficulty can be solved.

A good starting data universe is the grants of the compromise sponsors, perhaps with a few more of the state’s largest funders added. It makes sense to stick with grantees from this pilot set of funders for a couple years or more to evaluate both the usefulness and costs of this approach (the number of new grantee service areas that would need to be geo coded would drop, and the higher initial costs of the system could be smoothed over the period). 

To get beyond the initial set of grants from a small group of leading foundations, we’d need to make the grants data already disclosed by foundations more accessible to advocates, and supplement that with data about the geographic and demographic reach of those grant funds. This likely would mean bringing the grants databases out from behind the firewalls of services like the Foundation Center or Foundation Search, or paying the costs of providing free public access to that data (as I argued in this space previously).

My thoughts are just informed speculation, and there may be better ways to get a handle on which communities actually are served by the grants made by, and leadership developed by, foundations like the compromise sponsors. However, it should be clear that a well-designed system couldn’t very well be mandated in advance through legislation. With this compromise under their belt, advocates for more responsive grant making, like Greenlining and others, and leaders of foundations in California (and elsewhere), have preserved the time and space to explore these possibilities.

*Full disclosure: I am a proud co-founder of HealthyCity.org, and also an employee of Advancement Project.

Peter Manzo is the director of strategic initiatives for the Advancement Project, a civil rights advocacy organization, and a senior research fellow with the Center for Civil Society in the UCLA School of Public Affairs. Previously, he was the executive director and general counsel of the Center for Nonprofit Management. 

“For every $1 invested [in SingleStop], the program gives clients $3 in benefits, $4 to $13 in legal counseling, $2 in financial counseling, and $11 in tax credits.”

So what’s the revolutionary, paradigm-shifting product?

Finding every dollar of government services to which the clients are entitled.

Yes, that’s correct: the idea that will change the way we assist the poor in this country is to make sure that we are actually delivering the assistance that this country has already committed to providing to the poor. Only under a Republican administration could this be hailed as a triumph of private-sector innovation.

It’s a fine idea--we do indeed leave substantial amounts of cash assistance on the table because people are too frightened or proud or confused to apply for it. And it may indeed be necessary to have an outside agency (rather than, say, a government employee) unearth all these goodies, because that same government employee is most likely under pressure to make her agency’s budget stretch as far as possible by disqualifying potential beneficiaries.

But let’s hear no more about how effective the private sector is at providing for the needy, when the biggest idea in private-sector charity turns out to be slopping more effectively at the public trough.

One might almost call it non-profiteering.

Kelly Kleiman, who blogs as The Nonprofiteer, is a lawyer and freelance journalist whose reportage and essays about the arts, philanthropy and women’s issues have appeared in The Wall Street Journal, Washington Post, Christian Science Monitor and other dailies; in magazines including In These Times and Chicago Philanthropy; and on websites including Aislesay.com and Artscope.net.

2.  It’s an excellent article; a thought provoking read.  Apart from a dicey section on the multivariate analysis of data to control for the effect of certain variables, the study is completely accessible to non-experts.  Don’t make the same mistake as 98 percent of the people who are currently dismissing Putnam’s results: read the article for yourself.

3.  An aside: More interesting than Putnam’s article, in my view, has been the sociology of its reception.  There’s a palpable hesitancy, in polite liberal circles, to bring up the subject.  First, it’s never his article, but rather somebody’s gloss on it that my colleagues suggest I read.  Second, no person of conscience broaches the subject of Putnam’s article unless, in the same breath, he also recommends a book or article that purports to advance a countervailing thesis.  Putnam’s work is clearly radioactive.

4.  Never fear the truth, whatever it might be.

5.  Putnam’s article might ultimately rival Christine Letts’s “Virtuous Capital” for the volume of eyebrow-raising commentary it will generate—much of it, I predict, involving a great deal of hand-wringing.

6.  Liberals are in some ways hoist on their own petard: Putnam uses variation in ethnic/racial category as a proxy for “diversity.” This is what I sometimes refer to as the Whitman’s Sampler Model of diversity, an impoverished notion that enables well-meaning liberals to declare victory when they have “one of these, one of these, and one of those” on their staff or on their board.

7.  Putnam’s results will play handily to those conservatives who believe that self-segregation works with, rather than against, “the grain of human nature.” We hear this kind of argument in apologetics for “a conservatism comfortable with materialist self-interest.” These same conservatives will likely pass over in silence those sections of the article that review the many benefits of increased immigration and diversity, among them: greater creativity; better, faster problem-solving; and more rapid economic growth, among others.  Putnam never argues that diversity is, on balance, a bad thing.

8.  Putnam’s results discredit the idea that greater diversity is correlated with increased inter-ethnic hostility.  He stresses that “[d]iversity seems to trigger not in-group/out-group division, but anomie or social isolation.” To put it another way, “In more diverse settings, Americans distrust not merely people who do not look like them, but even people who do.”

9.  Putnam points out that:

All our empirical analysis to this point has involved ‘comparative statics’—that is, we have compared people living in places with different ethnic mixes at one point in time—namely different American communities in the year 2000.  Although our evidence does suggest that it is the level of diversity that matters, not the rate of change, we have not yet considered any ‘dynamic’ evidence about the effects of immigration and diversity over long periods of time within a single place (whether a single community or the nation as a whole). Exploring the dynamics, as opposed to the comparative statics, of diversity and social capital requires entirely different methods, and my research group has only begun to explore those avenues.

What would these further studies likely reveal?

10.  Finally, and most importantly in my opinion, Putnam doesn’t argue that we can’t learn to respond to ethnic and racial diversity better than we currently do.  We’re not fated forever to wallow in our ignorance and respond irrationally to fear of the “other,” however much recent history has inclined us to this view.

Presidential campaigns always seem to revive the debate about national service. Candidates, pundits, and we mere mortals again argue about its legitimacy and whether it ought be voluntary or compulsory. What usually gets missed, however, is the message that’s sent when the only price government asks us to pay is taxes and user fees. 

Most of us, I believe, want to live in neighborhoods, in communities, in societies where people care about one another. Whatever our political ideology, we want to see ourselves as compassionate and in some way as serving to help one another. Many of us learn an ethos of service—to be good neighbors, good citizens, good people, through our families and friends, through faith-based and other local institutions; but some of us don’t. 

Our schools have a role in teaching us about service. That’s part of the function of education; its purpose is to do more than try to develop our intellect and the skills we need for economic success.  Part of the role of schooling is to build character, to teach civics, to turn out good citizens, the kinds of people we want for neighbors. That’s why I think it’s as legitimate for schools to require service as it is for them to require reading, writing and arithmetic. It’s a way for them to teach and it’s something for them to teach.

Compulsory national service can also be, I believe, an important, legitimate, and reasonable expectation for citizens made by their government and by one another. If our only obligation is to pay taxes and user fees, then as citizens, we are reduced to little more than consumers of government services, to being government’s customers.  Rather, citizens are government’s owners—and owners know that in spite of your staff, every once in a while you have to roll up your sleeves, get in there, and do some hard work.

Whatever particular form it might take, mandatory national service changes the relationship between people and their government.  Rather than being passive consumers grumbling about what we do or don’t get for our tax dollars, or about the politicians from whom we feel disconnected, we’re more likely to demand accountability from elected leaders who are making decisions that affect how months or years of our lives might be spent in service to society.  As people become more immediately and personally invested in our communities, more engaged in the broader world through our direct labor, we’re more likely to feel vested in ownership of our government and to take it seriously. So, besides learning more about helping one another, actually building stronger communities and serving society, we’d become more active citizens. And that’s a good thing.

Let the debate continue…

Photo: Led by City Year corps members, volunteers paint a map of the U.S. on a playground in Harlem. (Photo courtesy of Jim Harrison)

Nonprofits across the country are scrambling for charitable dollars because recent experience has taught them not to depend on government funds to address public problems.  Economist Arthur Brooks used The Wall Street Journal (a strange choice of vehicle, it seems to me) to advise nonprofits to rely more on private contributions than on government “subsidies,” suggesting that tax-fueled funding is undependable when it comes to paying for human services and meeting societal needs; it seems the money just isn’t always there.  Or is it? 

Surprisingly, even while handing out more than a trillion dollars in tax cuts to the wealthiest among us in recent years, the Republican-controlled Congress passed enough off-budget special appropriations to pay for about 50 years of HeadStart for each of the million or so kids enrolled in that program.  These same appropriations could cover about 16 years of medical insurance for every child living in poverty in the U.S.; or pay four-year state tuition for every undergraduate at every U.S. college and university--and still have a bit left over to send some on to grad school. 

In fact, these off-budget appropriations could fund enough new public housing to accommodate the U.S. homeless population in permanent residences, and even provide some with vacation homes.  But that’s not what President Bush asked for, and not what Congress gave him.  The appropriations didn’t fund public institutions or nonprofit organizations. 

Instead the money was used to do wrong.  It has paid for a war, started with shameful deceit and continued in a fog of failure and lies, that has cost over 3,000 American lives, wounded well over 22,000 American men and women, and resulted in the deaths of between 52,000 and 600,000 Iraqis (larger estimate by Johns Hopkins University scholars).  Congress has already appropriated over $350 billion for that war (more than $200 million a day) beyond regular military budgets, and costs are projected to total over a trillion dollars after continuing care for the wounded is factored in. 

Shouldn’t nonprofits have said something about this?  Shouldn’t they say something now?  We move from bake sales into social ventures to start bakeries, but we forsake basic financing--we have a right, an obligation, to demand that our government use funds to do good instead of wrong. 

In a sector grounded in values and in a sense of humanity, we have the responsibility of outrage.  Silence is an abdication in the face of an abomination.  The new Democratic Congress needs to hear charities’ voices! 

NOTE:  In my haste to post the original version of this now-revised blog entry, I conflated a number of points Dr. Brooks has made and ascribed them to the WSJ piece.  My apologies to him and SSIR readers.

Mark Rosenman is a public service professor at the Union Institute & University, where he has long worked in various roles. He sees his 20-plus years of initiative to strengthen the nonprofit sector as an extension of earlier professional efforts in the civil rights movement, urban anti-poverty work, international and domestic program development, and higher education.

Whenever I talk to human services nonprofits, I hear the same problem: “Our funding is being cut by the government and no one is giving us a check to fill in the gap.” One long-term ED lamented, “What will happen to our agency, which we started in the 60’s, as it matures and there’s no new blood, no new money to keep the flame alive?”

The shift to decreased government responsibility for the aged, the sick, and the young seems to be scarily permanent. Everyone seems to have bought into this idea of small government.

Everyone except foundations and donors. Foundations don’t want to fund primary health programs, for example, because, they reason, that’s government’s job. We’re talking about a huge amount of money here. Private citizens, in general, don’t perceive the slow retrenchment of government services. And if they do, they don’t feel responsible. Afterall, they’ve paid their taxes.

My question to you, dear reader, is this: Who will pay for social services in our country if neither government nor foundations will?

I have a cleaning lady who is from Mexico. She pays monthly installments on her $4,000 dental bill from last year. She commutes three hours because there isn’t affordable housing nearby. Her daughter goes to a mediocre public high school, where the students watch a lot of videos in class. How will her kids ever make it to the middle class, I wonder. What will happen if there’s an emergency in the family?

I don’t have a philosophical opinion about whether government should be big or small. I just want to know, Who is going to provide social services that we used to expect from our government?

Year by year, it seems, local, state, and federal governments are freezing or cutting social service funding. It’s like global warning: The average person doesn’t see it; it takes place over a long period of time; and the results could be irreversible. So, who in this sector is going to raise raucous about this? I don’t see the Council on Foundations, Independent Sector, or Nonprofit Congress saying much. If they have and I’ve missed it, maybe they can speak a little louder.

We should have someone who is willing to make this the one issue that they will raise a stink about until someone stands up and says, I have the answer.

Who will pay for social services in our country if neither government nor foundations will?

Please post your comments below because this question confounds and scares me.

Perla Ni, founder and former publisher of the Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a co-founder of Grassroots.com.

Now that the Demopublicans have routed the Republicrats in elections nationwide, how will low-income communities be affected?

I can answer that question with another: What is the sound of one Diebold AccuVote TS Touch-Screen System™ failing to record a vote?

Exit pollsters did, however, report significant voter frustration with corruption in politics, and Nancy Pelosi, soon-to-be Speaker of the House, promised a shakedown in Congress.  “The Democrats intend to lead the most honest, most open, and most ethical Congress in history,” she said in an apparently unguarded moment.  It’s true that Republicans might have taken the rap, but Democrats, as we know, have not been models of self-denial. In January of this year, for example, the Washington Post reported that

Senate Minority Leader Harry M. Reid (D-Nev.) [now the majority leader—eds.], like House Speaker J. Dennis Hastert (R-Ill.), signed a letter in 2002 to Interior Secretary Gail A. Norton on behalf of an Abramoff client around the time he received a large campaign contribution from Abramoff’s tribal clients. Edward P. Ayoob, a former Reid aide, was a member of Abramoff’s lobbying team …

Abramoff picked up part of the tab for two Democrats, Reps. James E. Clyburn (S.C.) and Bennie Thompson (Miss.), on a trip to the Northern Mariana Islands in the mid-1990s, officially sponsored by the nonprofit American Security Council. Clyburn, now chairman of the Democratic Caucus, was recently named to the House Democrats’ “clean team,” tasked with leading the ethics-reform push.

Business as usual for both sides of the aisle.  Remember that heartwarming show of zeal earlier this year for meaningful lobbying reform?  That effort was so toothless, so cynical, that some advocates suggested dubbing it the “Let’s Add Effrontery to Bribery Act of 2006.” So nonprofit advocates beware.  If history is any guide, you’ll likely continue to be seriously outspent by well-moneyed interests, all cries for an “ethical Congress” to the contrary.

While the reformers do their work (or not), the nonprofit and foundation communities watch closely for new regulatory initiatives from the 110th Congress.  But do the elections hold a deeper meaning for the sector?

I was struck by the fact that many voters repudiated the Iraq War not because it was an immoral invasion based on trumped up charges, but because it was poorly executed and “weakened the United States.” Perhaps we were too busy fumbling for the keys of our SUVs to mention to the exit-pollsters that we were appalled at having become one of a family of nations that commits torture.  Ballot measures in 11 states banned same-sex marriage, giving legal cover to our bigotry.  And in no election—none—did the issue of poverty play a significant role.

This is apparently what defines the “middle” in these nefarious times.

It was during the time of the great robber barons of the late 19th and early 20th centuries that the first—and some of the largest—American foundations were created.  In our own Gilded Age, the captains of industry try to outdo one another with their philanthropic gifts as corporate profits soar and wages continue to shrink as a proportion of the nation’s GDP.

Some cynics argue that now, as in ages past, philanthropy has functioned as a social safety valve, redistributing just enough wealth to keep people in low-income communities from taking to the streets in protest.

Dramatic philanthropic gestures are not confined to our shores.  Hong Kong billionaire Li Ka-shing recently that he would give a third of his $19 billion fortune to charity.  This was followed days later by news that Mexican billionaire Carlos Slim, the world’s third richest man, would match peso for peso any amount invested by Mexican or foreign foundations in Mexican social work.  Over time we can expect to hear more announcements like these from people who made their fortunes in states that cooperated in concentrating wealth into the hands of a very few.  It’s much less likely, for example, that a Swedish philanthropist will emerge to grab the headlines from the Buffetts and the Gateses.  That country has a progressive tax that functions to redistribute wealth, and a cradle-to-grave welfare system that obviates the need for many privately supported charitable organizations.*

But in the United States, the social safety net is tenuous and under constant attack by fiscal conservatives.  As a result, lower-income people feel a measure of financial insecurity that can be exploited to drive down wages and further widen the gulf between the rich and the poor.  As suggested earlier, big philanthropy, together with other leveling efforts, can provide enough relief to the underclasses to quell social unrest.  Because foundations often fill the gaps left by retreating sources of public support, they’re sanctioned by government and given fairly wide latitude in their operations.  But if they go too far—if, as Bill Schambra, director of the conservative Bradley Center for Philanthropy and Civic Renewal warned, they begin to “undermin[e] traditional sources of authority”—then society must mobilize to curtail their power.

We see this in Schambra’s warning, near the end of his op-ed, that the forces of law and good order** “may not be so complaisant about philanthropy’s license” if it “drift[s] carelessly and inadvertently into … a revolutionary undertaking.” We see it also in the constant vigilance that nonprofits need to exercise in order to preserve important advocacy rights.

The fear of some is that under the leadership of liberals like Gates, Buffett, and Soros, philanthropy will become the snake that bites its own tail.  Rather than forever satisfying themselves with dressing the wounds inflicted by the periodic convulsions of American-style capitalism, or with performing triage on those who don’t fare well under its rules, these philanthropists might simply decide to change the system.  If unchecked, they might succeed in introducing democracy to the United States by helping to pass meaningful campaign and lobbying reform.  They might shore up support for a public safety net worthy of the richest nation on earth.  They might even curtail our further slide into the barbarism of state-sponsored torture.

It’s our attenuated sense of social responsibility that makes big philanthropy’s interventions appear necessary in the first place.  But big philanthropy also has the potential—largely unrealized, I believe—to be a civilizing force can help us evolve toward our full humanity.
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* The White Courtesy Telephone Center for Advanced Studies recently adduced Ruesga’s Law, represented symbolically as φ α g / (s • w), and read as “phi is proportional to g divided by the product of s and w.” Here φ is the measure of philanthropic activity in a given state, g is the state’s GDP, s is the degree to which industries in that state are socialized, and w measures the state’s degree of “welfarization.”

** In this passage, Schambra deputizes “the American people.”

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Albert Ruesga blogs on nonprofits and foundations at White Courtesy Telephone.

In something of a parallel failure of personal responsibility in the nonprofit sector, Louise Bryson maintains the board chair of the J. Paul Getty Trust after its president resigns in disgrace and the California attorney general confirms that that was the right thing for him to have done – financial misdeeds, misjudgments and what some might see as his own sophisticated version of salacious behavior, all on Ms. Bryson’s watch.  Not only is there no substantive mea culpa heard from the board’s officers or members, they even refuse to reveal details of the misdeeds though the broad outlines are known, still keeping the wagons circled in their own variant on partisan protection.

And the Getty folks are not alone in the nonprofit sector.  The charitable community may not approach the soulless depths of politicians, but I fear we have the potential to spiral further down.  The public officials who brought the world the Iraq debacle model the worst by continuing to try to lie their way out of personal responsibility for that human, political and economic catastrophe.  Yet, with increasing public attention to the real and perceived abuses of charitable privilege by hospitals, philanthropies, disaster relief groups, religious organizations and others, unless nonprofit and foundation leaders are more willing to speak the truth about their own mistakes and those of their colleagues, we may soon find ourselves swirling around in just such a flushing vortex. 

To maintain the public trust and confidence, the nonprofit sector must be accountable for – and beyond – what laws and regulations require (as a resource, see Independent Sector).  That necessitates personal responsibility by volunteers, staff and especially the board.  When we fail to meet basic standards of vigilance and due diligence, of conduct, when we fail to behave ethically, it is appropriate to feel embarrassment, and it is appropriate also to act on that feeling, to make it manifest and real.  A failure of responsibility must have consequences or it is a sham. 

To pull a facile Hastert is to continue to fail the public whose stewardship we are to serve as nonprofit volunteers, staff or board – or as public officials.  Accountability, woefully, sometimes requires shame – and shame requires action.