Showing posts with label Nonprofits and Public Policy. Show all posts
Showing posts with label Nonprofits and Public Policy. Show all posts

Monday, December 21, 2009

The Origins of Today's Philanthropic Marketplace

Following is a brief digest of some of the factors involved in public policy, media, nonprofits, and economic and demographic circumstances that have contributed significantly to the present over-crowded, under-funded philanthropic marketplace in the United States.

A. “Reaganomics” and the Public Policy of Political Conservatives
1. Huge tax cuts for the wealthy were enacted during Reagan’s presidency in the mistaken belief that if the wealthy had more money there would be an economic expansion that would pay for itself in greater economic productivity and in lowering the national debt. The result was that the national debt increased dramatically, while the wealthy did not invest in appreciably more new business start-ups.

2. Cuts were financed by downsizing government agencies, with special focus on those human services agencies that provided much-needed relief to the poor, as well as those services that tended to make society better, like community and neighborhood development and rehabilitation.

3. Downsized government agencies at federal, state and local levels are giving much less money to nonprofits to distribute in their programs of service.

4. Largely human service agencies were downsized the most.

5. This has left many nonprofits, particularly human service agencies, struggling to find enough money with which to provide services to those in need.

6. The IRS was also downsized and it lost many people and processes
a. IRS now cannot afford the manpower to screen charities for effectiveness
b. Charities are proliferating at more than 40,000 per year, last 20 years

7. Conservative monetary and fiscal policies have resulted in a reduction of income for the middle class generally, while providing for steadily increasing wealth at the top of the society. The gap between the rich and poor is widening, and the middle class wage earner is bringing home less today than 20 years ago. This has the effect of dampening the ability of those middle class families to make charitable contributions.

B. Press, Media and the “Watchdogs”
1. The rise of self-appointed “charity watchdogs” on the Internet
a. some hostile to charities, trying to protect donors
b. others trying to be helpful to both charities and donors

2. Press and media like to make headlines of charities that mis-step or fail because they make news. A consequence of this is that American donors are now afraid of the charities they would like to support, for reasons that are largely imagined or exaggerated.

3. A few studies done in the late 1990s and early 2000s reported that American donors were dissatisfied with charity performance in a variety of areas.

4. Consequently there is a general theme present in much journalistic reportage that Americans are, on the whole, dissatisfied or disaffected with charities and their performance.

C. Tough Economic Times
1. The smaller recessions of the 1980s and 1993 lead to a steadily increase in
demand for public services and service provision by nonprofits.

2. The Great Recession of 2007-9 has caused great hardship in nonprofit
fundraising, largely by lowering or taking out the middle class donor’s ability to give

3. Greatly multiplied demand for nonprofit services, particularly human services, resulted from these economic hard times. Additionally, the middle class wage earner’s take-home pay has declined in terms of what it will purchase.

D. Internal Challenges within Nonprofits
1. The boards and executives of huge numbers of nonprofit organizations are not investing in capacity-building efforts or infrastructure needed to strengthen their organizations for providing more and better services to the public.

2. Partly this is because of fear of the media, press and “watchdogs” and the belief that donors are afraid of “administration” and “fundraising” and “salary” expenses in NPOs.

3. Partly it is a mistaken desire on the part of many boards and executives, similar to that of some donors, to make sure that every last cent is spent only for programs of service, and that relatively little is invested in the organization’s capability or infrastructure.

4. Many nonprofits today still are reluctant to be clear and transparent with the American government and public about their financial status and dealings. This tends to feed the hunger of media and the press; it also fuels the investigations of representatives in Congress like Sen. Grassley, who, himself, tends to make headlines that reflect negatively on the nation’s charities.

E. General Factors
1. Because there are more nonprofits, and because during the 1970s and early 1980s government serviced an increasing array of public needs in all fields, the expectations of the American consumer for public services that make the society better have increased greatly. Nearly everyone can take advantage of one or several services that help him/her make life more possible, easy or comfortable.

2. The cost of service delivery has increased dramatically over the past 20 years due to professionalism in management and the costs of labor, while the public demands both increased services and better service.

3. The demographic cohorts known as "baby boomers" and "Gen-Xers" have very different giving habits and preferences than their "Ike generation" forbears.
a. Many charities have yet to discover the giving habits and preferences of these cohorts and are still raising funds in ways that would appeal to the former generation of donors. This has hurt revenues through ineptness in fundraising.

b. The differences in giving habits and preferences by these cohorts has increased the costs of fundraising and volunteer management, at the same time it makes further demands on nonprofits to be transparent in their financial dealings, management and record-keeping.

Now you know the "rest of the story" about why fundraising in this country is getting to be so difficult. Only part of it is recession-related. The bulk of it has to do with public policy and the nature of our media.

Now we have ahead of us a difficult snarl of challenges to untangle and solve, so that our nonprofit organizations can get on with the work of making society better. It is to be hoped that Congress and President O'Bama will team up to put the government back in the business of making society better, too, so that nonprofits and government agencies can, once again, deliver the services and the social goods that we all need.

Friday, August 21, 2009

Nonprofits Influencing Public Policy?

Only two sectors make public policy in Michigan today: business and government.

For example, at the Mackinaw Conference each spring, you see the Chambers of Commerce coming together with representatives of the legislature and the governor’s office, but that’s all.

We see Business lobbying Government to make sure its interests and desires are heard. Business presses its case, and tells its stories, but no one else is invited.

For example, representatives of the Nonprofit Sector are not invited.

But look at this: the Nonprofit Sector in our state of Michigan is large and substantive. We employ nearly 10% of the workforce, some 440,000 people, and we have $179 billion in assets. We spend more than $60 billion each year to generate $108 billion in economic activity.

Or, take a look at values and experience among Nonprofits. Michigan has some complex social problems involving many, varied, powerful interests that need to be brought together to devise creative solutions.

Transportation, community development, corrections, health care, homelessness, education, economic development, just to mention a few.

Nonprofits have the skills to bring people together to solve problems adn meet needs.

Nonprofits also have the set of values that focus energy for creative solutions tp problems.

Nonprofits have a nearly 250-year history of solving problems and meeting needs.

So why aren’t Nonprofits at the Public Policy Table with business and government?

The answer, unfortunately, is very clear. In fact it’s embarrassingly simple.

While corporations and local businesses have joined together to talk through their common problems, and forge legislative agendas to help them, we in the Nonprofit community remain isolated behind the walls of our silos, afraid to collaborate, hesitant to reach out to each other, and reluctant to discuss what we need..

At the same time, we have a very serious situation that needs our attention:

The Michigan Legislature has developed a structural budget deficit of enormous proportions. For at least two decades, we’ve argued over a steadily shrinking pot of dollars.

Rather than deal with the issues that created this problem, legislators keep trying to cut their way to a solution. Every year more cuts. They cut cities, education, they cut nonprofits. They cut the very things we need most to keep our state vital.

Why has this happened? Legislators are fearful, or reluctant, to make substantive changes, or have vested interests in the way things are. So nothing is done, as the pot gets smaller.

But in the midst of this situation there is a solid place for Nonprofits and Government to work together. Government values and Nonprofit values are much closer than the values of Government and Business.

On the one hand, Business values are: the bottom line, continued accelerated growth of company size and profits, and continued growth of opportunity.

But business growth ignores education, disregards neighborhoods, discounts communities, and rejects setting aside more resources to make our society a better place for all of us to live.

On the other hand, Nonprofit and Government share values of the public good. Both sectors have a history of providing necessary services for building strong communities, increasing individual capability, providing education and training.

We share concerns for community revitalization and sustainability. We both have abilities for solving complex problems that involve many competing interests.

So it’s natural that the Nonprofit community should be a powerful and effective Partner of Government in the setting of public policy.

Another thing we must do is increase resources, so that the overall state revenue pot is large enough to do the job of governing well.

But business doesn’t want to pay more taxes. And many of our voters are simply not educated enough to consider allocating more of their resources for the common good. Even though they would benefit.

So the time is right for Nonprofits to come together:
1) to remind the legislature of the responsibility Government has to the greater good of all;
2) to advocate for increased resources so nonprofits can do what we do best
3) to encourage legislators, putting the power of the Nonprofit Sector behind their efforts to do the right thing.

One problem that faces us, as I mentioned before, is the silos out of which many of our nonprofits operate.

We need to change this: we need to start lowering those silo walls and cooperate, collaborate, and advocate for Nonprofit values, a high level of education for our citizens, and the creation of sustainable neighborhoods and communities.

We can do this by starting to meet together to form a general Nonprofit Sector legislative agenda that will provide all kinds of nonprofits the resources and conditions to do a better job of making society better as we each pursue our various missions more effectively.

This is our challenge. If we work together we can make the Nonprofit Sector an effective partner with Government in pursuit of our mutual values. And that’s good for all of us.

Saturday, February 28, 2009

Voluntary Sector and Public Policy are a "Natural"

I had a discussion yesterday with a young man who is wanting to get into the fundraising profession from having been a business entrepreneur, also a history major at UM, graduated mid-1980s. We had a very interesting discussion ranging here and there through history and through the breadth and depth of the nonprofit sector. Parts of that discussion got me thinking, and my thoughts turned to "community." So today's diatribe has to do with how we all relate to one another in a multi-cultural, pluralistic society, the global community.

I'm thinking back to the roots of our democracy, and am being aware of the fact that the basic principles held by the Founding Fathers came out of the liberalism of the Enlightenment of the eighteenth century. And, in fact, two aspects of our life in this country had their origins in this philosophy: democracy and capitalism.

It is interesting to note that Enlightenment liberalism was based on the individual, and held the individual as the center of its thought. So we have economic principles based on what an enlightened person would do; we have democratic principles based on what (presumably educated) individuals will do, or what they need to do to have "life, liberty and the pursuit of happiness." And I have also seen "pursuit of happiness" translated as "property." Life, liberty and property.

Madison, for example, in dealing with "factions" in the Federalist papers understands the effects of individuals who happen to associate voluntarily with each other to do in their neighbor and profit at the neighbor's expense -- whether as persons or states. Hamilton had a few interesting things to say about individual states as factions within the larger colonial whole. The political arena is focused on individual states, or individual persons as the acting agents. The concepts of democracy do not necessarily fit well when it comes to groups or collectivities of people. We still think of them as individuals who happen to get together, but we don't think of them as communities that have some kind of integrity on their own. And we can see how this came out of a time when "collectivity" -- in terms of empire and church -- had become so completely oppressive as to subjugate and destroy the initiative and needs and aspirations of the individual..

Now we can see also how capitalism has evolved from feudal times. The feudal manor - the castle set amidst the farming community -- a symbiotic relationship. Then mercantilism -- the people of the countryside were the markets for the city, and the resources of the country focused on and were sent to the city, along with protectionism against traders from foreign city-states. Then colonialism, where the raw materials and resources of vassal states flowed to the colonial powers, and those vassal states were forced to purchase the manufactured goods of the colonial powers. "We'll take your raw materials, you'll buy our manufactures, and you cannot produce anything manufactured." I believe I recall that in the Chicago Freedom Movement we used to call that "plantation economics." To some extent, and J.W. Smith is very strong on this, the IMF debt structure for underdeveloped countries mirrors that economic tradition.

And then we can see how the Church, first Catholic, then Catholic or Protestant, cared for the basic community needs of mankind. Particularly in Catholicism we have the "religious communities" that were trying to be examples to the rest of the society on how we should live together as human beings, expressing the "community" nature of our psychic makeup In fact, early on in the development of the Holy Roman Empire, we can see government and church each struggling to gain the advantages of state and the advantages of community for itself. The church striving to take over the state, the state trying to preserve its integrity over against the Church and community. Another by-product here is the unfortunate fact that Protestantism neglected to carry with it anything that approximated the religious communities, and so was caught up in the web of thought and activities focused solely on individualism.

We can see that there is a need for governance for the people, someone to organize the resources, focus the resources on getting the people what they need to live. The state focuses on keeping enemies at bay, providing protection, providing administration of common concerns, such as crime, crop failure and famine, maybe disease control And we see the need for community -- getting together, being social animals, voluntarily associating together to do tasks, celebrate life, create moral underpinnings, ethical behavior, socialization of the "natural animal" in all of us. The church used to take care of this -- still does for those that believe. Up through the "Ike" generation there were strong elements of "Victorianism" that held the moral center together. But no longer today in a secular, multi-cultural, pluralistic society.

So here we have these two ideas brought together: democracy and capitalism. Individuals acting on their own behalf both economically and politically. But what we're lacking now is a sense of community -- or, more exactly, a "system" to deal with our life together -- particularly within a highly diverse, pluralistic society. When the church commanded everybody to worship the same way, the community was firmly in its hands. In a pluralistic society this cannot be the case. Yet we do need some "group" or "community" principles to guide everyday interactive behavior, whether in person or on the Internet. Democracy supplies the system for our governance; capitalism provides the means for bread, but what about the means of gathering together. I'm thinking of mores, ethical behavior, politeness (if you will) or the principles that guide every individual in social as well as civic conduct. Reining in greed, avarice, fear, distrust, hatred, flight and fight.

In the last half of the 19th century and into the first several decades of the 20th century, we had three related but distinct movements that tried to fashion systems that would bring together government and community. We had communism, socialism and fascism. Each was tried in many forms and instances. Each has failed. Was it the problem of trying to combine "community" with "governance"? Or was it an error in judgment about how to fashion communities in ways that meet human needs as individuals and human social needs? With communism you have the collective, with fascism the state as the primary "community." In one you toil with everyone else -- community is defined as those who labor together. In the other, we are proud to be people of a nationality, a country, a nation, a state, and in that we find our identity as the state shapes both conduct and destiny.

Whatever the problems and reasons for failure within communism, socialism and fascism, we are left today without an adequate set of principles for how we conduct ourselves as groups, or communities. So, for example, there is much within capitalism that promotes itself to individuals. But nothing that puts a cap on the pursuit of individual greed, the bent for injustice, the desire to make war on other people(s), the propensity to "grab" what the other kids in the sandbox have for one's self.

So how are we going to deal with this? In terms of government structure, the Founding Fathers, Madison included, found a way to deal with factions: we need to preserve liberty while defining boundaries for behavior. So we have, as part of government, a system of civil laws and penalties. But this doesn't really address the issues of "community" that involve arenas other than the ways we would do actual harm to each other. It doesn't, for example, address civility, manners, ethics, morality. It provides no guidelines for these, leaving it up to the individual to sort these things out according to individual beliefs. Again, the roots of Enlightenment liberalism are evident here. So we see the limits of this philosophy.

Yet we very much need something relating to "community" as we find ourselves in an increasingly globalized situation. We have a democratic system of government, we have a capitalistic system of economics. But what governs both the governors and the businessmen? What directs systems of legislation in ways that are more just, more human, more appropriate for society in which diverse peoples live peacefully together? What is it that governs and provides limits to the entrepreneurial spirit when it hitches its wagon to the star of incessant greed?

I am thinking we are in need of something here that government cannot provide, by the very nature of the constraints placed upon it, and that business will not provide, by virtue of its limited understanding of humans as solely economic beings. And where I am looking for "that something" these days is in the experience, the traditions, the sensitivities, the many impacts on society that the voluntary sector provides us. And I'm thinking that formation of national, state, or local public policy needs to be a three-way pursuit of government, business and the voluntary sector, working more ostensibly, and in a more structured way together, not just a two-way pursuit between business interests and government. And one of the chief and compelling reasons why I think this could work is that government and voluntary sector organizations have in common a value that business does not have: namely, the value of acting on behalf of the good of society -- the compulsion to make society continually better, more whole, more just, more peaceable for all citizens. Government has it in terms of what majority rule can bring. Nonprofits have it in terms of caring for all those who must, by virtue of circumstances or choice, stand outside the ruling majority's situation and decision.

So this is why -- in the name of and for the sake of "community" values -- that I would advocate for a distinct and recognized place at the public policy table for voluntary and nonprofit organizations. We tend to have the history and background, the skills, the diversity of experience over centuries, that bring more human values, more community-oriented values to the fore, and thus we are an appropriate complement to both government and capitalism in the fashioning of public policy.