Recent scandals

Over the past twenty years or so, I’ve visited hundreds of community-based nonprofits and examined their financial statements and audits (this is what people who work at foundations do). In my experience, most of these organizations are scrupulously honest. Their staffs work very long hours for very short pay. They know the communities they serve and serve them effectively using very modest means. They multiply the value of your donation by enlisting the help of volunteers who donate countless hours of their time for charitable work.

High profile scandals in the charitable sector undermine the public’s trust. But this isn’t the whole story. America’s charities—especially smaller community-based organizations—sometimes do a poor job of communicating how effective they are at feeding the hungry, housing the homeless, and healing the sick. Generally overworked and overwhelmed by the demand for their organizations’ services, nonprofit leaders underinvest in their organizations’ communications capacity. Perhaps if they invested more, they’d draw fresh criticism for spending donated funds on public relations rather than on direct charitable work—who knows?

In our region in particular, we need to acknowledge and celebrate the key role that our nonprofit sector has had in our recovery and in helping us to create something even better than before. Now’s not the time for us to retreat from our commitment to them.

Four years after the storms, these hopeful words have taken on an added significance to the people living along the Gulf Coast. The devastation that Hurricanes Katrina and Rita released upon Louisiana and the Gulf Coast is unprecedented and only uncovered the disparities that existed before these natural disasters. Years later, thousands of residents still toil to rebuild their lives and their communities. However, the people of the Gulf Coast have always been resilient. Their spirit, determination and sense of community were strengthened further after the storms with a call to renew, rebuild and recover. Local and national foundations heard this call and formed a partnership with the people of the region to invest in an unprecedented effort of renewal for the region. There is still much work to be done but there are many stories to tell-stories of hope. This week, participants at the 2009 Neighborhood Funders Group Conference will hear many of these stories from colleagues and community residents alike.

The theme of the 2009 NFG Conference, “Stepping Up: Creating a New Social Compact,” reflects the growing call for a new era of partnership between government, nonprofits and the American public. With the close of a decidedly anti-government administration and talk of creating a “New, New Deal,” many are asking what is the proper role of the public sector and how can philanthropy play a positive part?

This week, we welcome our colleagues from around the country to join us in this conversation here in this beautiful city that, despite its past hardships, has so much to offer and so much to teach us. In the weeks to come, we hope this is a conversation we can continue with our colleagues, community members, nonprofit partners and friends.

Ashleigh Gardere
J.P. Morgan Chase Foundation
Conference Co-Chair

George McCarthy
The Ford Foundation
Conference Co-Chair

As government cuts back on direct service provision and transfers responsibility … to the nonprofit sector, questions of independence are implicated. If charities are forced to pick up the slack for proportional government cuts (e.g., the amount of direct healthcare subsidy/expenditure per growing number of patients with a particular medical condition; for affordable housing development or for feeding the homeless; for providing mental health treatment slots; etc.), it does affect their independence in programming. This effectively shifts nonprofits to a role in which they have to compensate for government failure, to augment its services and to do reactive caretaking rather than to attend to proactive development and change.

What’s the line between public and private responsibility when it comes to providing healthcare, education, and other services for the poor?

I’ll wager half my tax return that today, in some foundation in this country, you’ll hear an exchange like this one:

Program Officer:  ‘The city has decided it’s going to discontinue funding transitional housing programs for the poor, so ABC, Inc. [a nonprofit organization] is requesting $100,000 to replace lost city funds.’
Foundation Executive:  ‘Transitional housing programs for low-income people are a public responsibility and should be supported by tax dollars.  If we make up the funding gap, we’ll only encourage city officials to stop funding other programs.’

There are several possible outcomes to this discussion.  The foundation might decide to fill the gap for a year, to give the nonprofit time to find replacement dollars.  Or, as so often happens, it might decide to hold the line.  It’s then left as an exercise to the program officer to determine how best to communicate the bad news to the applicant, to explain a decision that begs a thousand questions.

I’ll leave it to historians to explain, for the cities in our region, why the lines of scrimmage between public and private responsibility fell where they did.  The question then becomes, how and under what circumstances should these lines ever shift?

Here’s an example of how the game is played: Elected officials succumb to public pressure to cap or reduce taxes.  Smaller tax revenues mean less public support for safety net programs for the poor.  Some foundations yell “foul” and refuse to step into the funding breach, claiming that foundation dollars should be used not for funding basic services but for testing new ideas and supporting programs unpopular with donors, such as, for example, programs that help ex-convicts find jobs.

Foundations have a few plays of their own in this game.  Some might support nonprofit advocacy efforts to shore up or increase public funding for safety net programs.  It’s now elected officials who cry “foul” and threaten to strengthen legal strictures on advocacy programs.

It’s an old contest and the balance shifts this way or that with the blowing of political winds.

Is it the proper role of foundations to plug the gaps created by retreating public funds?  In what domains should the government become your brother’s keeper?  In public education? healthcare for the uninsured? food for the hungry?