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The Role of Philanthropy in Tough Times

February 05, 2009

Bill King is a smart man and an excellent nonprofit leader. As president since 2000 of the Minnesota Council on Foundations, one of the oldest regional associations of grantmakers in the country, King has led the organization into the twenty-first century and helped to establish it as a leader among its peers.

Like funders everywhere, MCF members have been hit hard by turmoil in the markets and are scrambling, in many cases, to "ring fence" their endowments. Unfortunately, writes King in a recent post on MCF's Philanthropy Potluck blog, expectations that philanthropy (i.e., foundations) can "fill the gaps" created by government cutbacks and/or budget shortfalls are rising. 

If only.

The fact of the matter, says King, is that philanthropy -- in Minnesota, or any other state -- doesn't have the capacity to substitute as a replacement for government funding in tough economic times. Nor should it. Though he doesn't say so explicitly, I'm pretty sure King believes, as many people do, that philanthropy is not charity, and that its real job and ultimate purpose is to tackle the root causes, rather than the symptoms, of the problems it seeks to address.

That view was wonderfully expressed in a recent post written by nonprofit consultant Hildy Gottlieb. In it, she relates two stories:

The first is the Starfish Story -- the one where the boy is on a shoreline surrounded by beached starfish [and]...is throwing a starfish at a time back into the sea. When asked what difference his actions can possibly make, given all the other starfish that remain, he replies, "It will make a difference to this one."

The second is the story of the guy who is driving near a river, when he suddenly sees that the river is teeming with babies, floating along in baskets. There is a swarm of people gathered, pulling those babies out of the river. As he starts to drive away, an indignant baby-saver screams, "Hey, you selfish SOB, we need all the help we can get! Where do you think you're going?" To which the guy replies, "I'm going up the river, to stop whoever is putting the babies IN the water."...

I think Bill King sees philanthropy as the guy hustling upriver to the source of the problem. What do you think? Do foundations have a special responsibility to backstop government and/or to act more charitably, in the literal sense of the word, during tough economic times? And how should foundations and individual donors work with government and businesses to help individuals and communities weather the storm? Leave your comments below.

-- Mitch Nauffts

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Posted by Matt  |   February 06, 2009 at 04:46 PM

I think philanthropy and government need to work as partners whenever possible, but obviously philanthropy doesn't have the funding capacity of government. Funding root-cause-tacklers is important, as is helping those with immediate needs. I have no problem with foundations helping to support immediate needs of people, but they need to remain clear about what they're doing. Whether they partner with government, partner with charities, or even partner with other foundations, philanthropic institutions need to continue to find effective ways of achieving their goals.

Posted by Carol Berde  |   February 07, 2009 at 12:57 PM

Bill King’s point that philanthropy can’t fill gaps created by declining public sector revenue is, of course, correct. But I take issue with Mitch Nauffts’ root causes versus symptoms argument, which has been around for my entire 35-year career in philanthropy and the nonprofit sector. Whether philanthropy’s purpose is to “tackle root causes” or “charity” is beside the point, I think.

Rather, I urge consideration of Ralph Smith’s view that “foundation philanthropy is in the solutions business and can succeed only if and to the extent it is willing to pursue solutions wherever it finds them.” (Nonprofit Quarterly, Winter 2008). (Smith is executive vice president of the Annie E. Casey Foundation and chair of the Council on Foundations board.) Finding solutions requires employing a range of strategies and engaging the most effective partners in multiple sectors, Smith argues

A foundation’s strategies must be tailored to the problems it seeks to solve and the place it occupies in its community. A place-based foundation, with strong regional or local ties, should respond differently to today’s tough economic times than a foundation that is less attached to a particular place. Sometimes an appropriate response will be increased unrestricted operating support for nonprofits that are meeting the extraordinary safety net and social support needs we see today.

Such a response might indeed be “charitable,” as well it should be.

Carol Berde
Strategic Consulting for Nonprofits and Philanthropies
Minneapolis MN

Posted by Renee Westmoreland  |   February 08, 2009 at 06:44 PM

Hi Carol --

I couldn't agree more that the philanthropy vs. charity debate sets up a false dichotomy and appreciate your impatience with those who insist on it. The genius of philanthropy in this country (as Vartan Gregorian likes to say) is its pluralism. With almost 80,000 foundations in the U.S., it's totally appropriate that many will continue to pursue solutions to long-standing social problems while others will focus more on addressing short-term needs. In these tough economic times, however, my hope is that more foundations will set aside funds for the latter, either directly or in partnership with others. History will judge us by how we, as a society, treated the least among us, not by how well those with the most fared. Our record on that score would suggest there is room for improvement, and foundations can do much to improve the situation -- in both the short- and long-term.

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