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Of Fire Trucks, Obama, Romney and Philanthropy

October 15, 2012

(Bradford K. Smith is president of the Foundation Center. In his last post, he announced the launch of the Reporting Commitment, an effort initiated by a group of the largest U.S. foundations to develop more timely, accurate, and precise reporting on the flow of philanthropic dollars.)

Gilpinlib_sign"I live in a rural community where the Tea Party dominates, no new taxes can be passed without a super majority, and government is cutting back on everything. The other day someone asked me how I can help the fire station find money to buy a new fire truck. What do I tell him?"

I was recently asked that question by a librarian at "Network Days," an annual live/virtual gathering of the librarians, nonprofit resource center administrators, and community foundation leaders that are the human face of the Foundation Center's Cooperating Collection Network. In all fifty states and fourteen countries around the world, CCs help struggling nonprofits, those who want to create nonprofits, and people who want to work in nonprofits connect with the resources they need. Except when there are no resources to be found.

Despite being president of the Foundation Center, the world's largest source of information on organized philanthropy, my response to that librarian's question was pretty feeble. All I could really muster is a few words to the effect that, around the country, there are small, local foundations which, on occasion, are willing to contribute to the purchase of a fire truck, an ambulance, emergency medical equipment, and the like. You can find some of them through the Foundation Directory Online or by searching 990-PF tax returns. Most of them don't have Web sites.

Another librarian asked me what she could say to the five hundred people who will lose their jobs next year when a factory in town closes. On that one I was able to muster a slightly less feeble answer, in that there are more foundations willing to fund job training, enterprise creation, and advocacy than there are foundations willing to contribute to the purchase of a fire truck.

Every day, these librarians ask people, "How can I help you?" And in return, they get questions like these. Of course, they listen, they empathize, and they struggle to come up with good answers. But good answers are increasingly difficult to come by. My job is all about philanthropy, not about business or government. I know foundations are concerned about government continuing to retreat from education, health care, and social services, and that legislators and many others expect philanthropy to pick up the tab. On the face of it, that's preposterous: the resources of even the largest American foundations are a rounding error in the federal budget. And channeling foundation dollars into basic service provision would kill off the independence, creativity, and risk taking that makes philanthropy so valuable to society.

But as much as I would love to see the fire truck question put to President Obama and Governor Romney in one of the next two debates, that ain't gonna happen. No matter which candidate wins in November, he will be faced with deciding what government will not fund, as an over-leveraged economy struggles through an anemic recovery. Meanwhile, the private sector will continue to shutter factories, locate them overseas, or create new ones at home that are heavy on technology but light on workers.

So that leaves philanthropy. The good news is that philanthropy, in the U.S. and around the globe, is a growth industry. The world economy is manufacturing billionaires at a record pace, and thanks to efforts like the Giving Pledge, more of them are embracing the notion of giving back. But those of us who work in philanthropy need to do more than just wring our hands over concerns that government may start telling foundations what to do with their money.

What, you ask?

First, foundations can fund more advocacy. Great Recession notwithstanding, there is still a lot of money sloshing around the public sector, and every year some of it goes to pork and some of it flows to organizations and causes championed by special interests. As Bill Clinton was fond of saying, politics is a contact sport, and advocates interested in public support for vital community services need resources to stay in the game.

Second, foundations can support and even lead efforts to foster broad public dialogue about how best to piece together a social safety net that works and is sustainable. Until the paralyzing rhetorical divide between the ideologies of "big government" and the "magic of the market" is bridged, families and communities will continue to crash through growing gaps in the frayed social safety net.

Third, foundations can support sustained social innovation. Now, innovation alone will not solve all the large-scale societal challenges we face, but it has the potential to create breakthroughs that lead to entirely new and less expensive ways of addressing those challenges.

Fourth, foundations can be more forthcoming with data and information about the good work they do. If nothing else, this will make it much easier for a rural librarian in Idaho or Arkansas or Wyoming to help the local volunteer fire department locate resources to buy that fire truck. And it will also make it easier for foundations to see what others are doing so that there can be a lot less duplication than exists today and a bit more impact.

Fifth, foundations can support local libraries. Libraries have been the information backbone of this country for more than a hundred years, and librarians, the original data scientists, take their responsibilities seriously. America is filled with people who still believe that hard work, optimism, and cooperation can save and improve their communities. When librarians have the courage to ask them, "How can I help you?" we need to be sure they have good answers at hand.

-- Brad Smith

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Posted by Jos. De Wolk  |   October 16, 2012 at 02:06 AM

Brad, I appreciate the thought and work that goes into this blog every day. I benefit from it as a reader, and so do the non profits we work with here in Asia.

So I found myself surprised to take issue with one part of this post:

"And channeling foundation dollars into basic service provision would kill off the independence, creativity, and risk taking that makes philanthropy so valuable to society."

You might agree that a lot of the most fundamental innovations you can see in philanthropy and impact investing are *driven* by social entrepreneurs re-looking at basic service provision -- re-designing schools, medical care, water supplies, financing, electricity. Many of the most recognized non profits and social enterprises in Asia are dominated by those who have re-invented basic services -- usually because the government failed in those services, leaving a gaping hole in society.

Posted by Lucy Bernholz  |   October 16, 2012 at 02:13 AM

Hear, hear! Well done, Brad. My only disagreement is with this "My job is all about philanthropy, not about business or government." I find it harder and harder to think like this (Of course, I have a different job than you do!)

If we start with the endpoint - firetrucks, libraries - the question is who do we, the people, want to provide these for us. Us, through our taxes? Us, through our charity? Business through, what, advertising space?

Firetrucks, libraries and jobs are what keep our communities going. We provide them - taxes, giving, and private commerce are different tools we use (or not).

Posted by Phil Buchanan  |   October 16, 2012 at 09:19 AM

Great post, Brad. "Until the paralyzing rhetorical divide between the ideologies of 'big government' and the 'magic of the market' is bridged, families and communities will continue to crash through growing gaps in the frayed social safety net."

Thank you for saying this so well.


Posted by David Jacobs  |   October 16, 2012 at 09:52 AM

Too bad you weren't selected for the Town Hall debate! At any rate, anyone paying attention to the newspapers for more than five minutes knows how the candidates would answer, and knows just how 100 percent at odds the two competing answers would be.

The above list is a great roadmap for foundations in these times (all times really), but I'd add a 6th to that - listen. Foundations have the best chance to make larger impacts on local levels, and those foundations that listen to their communities and can be responsive the quickest have a real opportunity to make a great difference.

Posted by brad smith  |   October 16, 2012 at 02:07 PM

I am sorry if I gave the impression that no philanthropic dollars should ever go to service provision and I do agree that innovation may find whole new solutions to seemingly intractable social and environmental issues. What I was trying to express is that no one should look to foundations to become the social welfare system or safety net for an entire country: foundations just do not have anywhere near the resources to shoulder that burden. Foundations (and their nonprofit partners) are good at providing services to marginalized groups or those that otherwise fall outside large-scale government programs. They are also good at funding risky, pilot projects that can then be taken to scale. But when it comes to basic services, the model has traditionally assumed that successful programs could and would be scaled up by government. But what is the solution when government in the United States, and in many parts of the world, is less and less capable of supporting basic services, let alone scale up other people's pilot programs?

Asia has many interesting examples of NGOs that are operating at an enterprise level, blending sophisticated income generating businesses with mass service provision. My impression is that the business models they have developed (often base of the pyramid models) were a necessity: foundation grants may have been good to experiment and build, but insufficient to operate at large scale over the long run. Impact investing is in its infancy, as the amount of dollars, euros, etc. is still very small in relation to the capital needs of the social sector. We are living in a time when traditional roles of government, business, philanthropy and nonprofits are being re-defined (as Lucy implies) But that is a difficult answer for a community that needs a fire truck, regardless of the paradigm that produces it.

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