On 'Fake' Victories and the Need to Act

While no one would argue that Donald Trump is a student of history, he and other Republicans seem to have taken a lesson from a former "dean" of the Senate, George Aiken (R-VT), who was alleged to have said of U.S. involvement in Vietnam that we should simply "declare victory and get out." How else to explain the things Trump and Republican politicians are doing to "address" poverty in America?

Most of us have learned that the president, members of his administration, and his congressional allies are adept at creating "alternative facts" through exaggeration, misrepresentation, and plain old dissembling. After a one-day summit meeting in June with North Korean dictator Kim Jong-un generated nothing in the way of detailed policy agreements, Trump declared that the North Korean nuclear threat had been eliminated. (Real-world developments subsequently invalidated the president’s assertions.) Similarly, at an extraordinary press conference following an unprecedented private meeting with Russian president Vladimir Putin in Helsinki, the president dismissed the consensus view of American intelligence agencies that Russia was actively working to undermine our electoral and democratic processes and declared that no such threat exists. And now the president is focusing his magical-thinking act on the home front.

In July, the Trump administration declared "victory" in the War on Poverty — the unofficial name for a series of federal initiatives introduced in the 1960s by the Johnson administration to help people move out of poverty and provide assistance to those in need — and declared that poverty in the United States was no longer a problem the federal government need worry about. The administration's declaration was stunning on two counts: Republicans have a long history of opposing the War on Poverty, and poverty remains a huge problem in America.

Established measures of poverty show that in 2016 about 12.7 percent of Americans — roughly 43 million people — lived in poverty. And a recent United Nations study found that 18.5 million Americans are facing "extreme impoverishment." In fact, close to 2 percent of the population – more than 5 million of us — live on no more than $4 a day, including government assistance. Even more alarming, more than a few moderate-income Americans are included in a Federal Reserve study which found that 40 percent of us would not be able to cover an unexpected $400 expense without having to sell something or borrow the money.

Tax Cuts (and Politics) Have Put the Safety Net at Risk. What Are You Going to Do About It?

The demand for human services — everything from food for the hungry to family planning for those who may be struggling to take care of the children they already have — is growing. But if recent proposals floated by President Trump and congressional Republicans become policy, charities will be faced with dramatic increases in both the scale and scope of need, even as they struggle with cuts in funding to meet them.

It is urgent for nonprofits to join forces to persuade Congress to reject ideas that create greater need. Charities have to help re-establish the kind of bipartisan political agreement about safety-net programs that used to be the norm. And foundations must fuel such efforts.

In May, the U.S. House of Representatives failed to pass a Farm Bill with vital anti-hunger provisions after many of its most conservative members withheld their votes. By doing so, Freedom Caucus members hoped to get concessions on spending as well as a future vote on an anti-"Dreamers" immigration bill that the vast majority of their colleagues find too mean-spirited and extreme to consider.

Had the bill passed (as it most likely will in the coming weeks despite united Democratic opposition), it would have required that individuals enrolled in the Supplemental Nutrition Assistance Program (SNAP) work at least twenty hours a week. Given the life circumstances of many SNAP participants, including some of the hardest-working people in America, the nonpartisan Congressional Budget Office calculates that the bill (in its current form) would deny more than a million adults and children much-needed food assistance.

Republicans base their insistence that SNAP recipients be required to work on research by the Foundation for Government Accountability, an obscure policy group headed by a former aide to Maine's ogre-ish governor, Paul LePage. FGA's work has been criticized by both conservative and liberal scholars as having no basis in credible fact, but in our current political climate it seems that many Republican lawmakers favor junk science and "alternative facts" over demonstrable reality (as they have demonstrated with notable intentionality in their opposition to action on climate change).

Desperate to cut government spending in the face of a deficit they ballooned with a $1.5 trillion tax cut, congressional Republicans and the White House are turning on those most in need — as was made clear by Trump budget director Mick Mulvaney, who wrote in a 2017 opinion piece: "Under President Trump's leadership, we're now looking at how we can respect both those who require assistance and the taxpayers who fund that support. For the first time in a long time, we're putting taxpayers first. Taking money from someone without an intention to pay it back is not debt. It is theft. This budget makes it clear that we will reverse this larceny." That's right: the Trump administration thinks government-funded social services for the poor are a form of theft.

The president is determined to continue down the same path in 2018 and has proposed cuts totaling more than $15 billion in previously approved spending, with half of that coming from the Children's Health Insurance Program (CHIP) and $100 million coming from Hurricane Sandy relief funds. Congressional Republicans fearful of what they may face in November’s midterm elections have temporarily rebuffed Trump, but the president has said he will propose an additional $10 billion in cuts to safety-net programs in the coming weeks.

At What Cost 'Mission'?

When an exempt nonprofit organization's single-minded pursuit of funding for its mission threatens to damage the broader common good, many in the larger community will question the tax advantages that enable that organization to thrive while others suffer. And so they should.

Recently, this tension was underscored by a situation in our nation's capital, where tax-exempt American University's activities as a commercial real estate developer have led to the loss of local businesses much valued in (and beyond) adjacent neighborhoods — and raised additional concerns about the sometimes-harmful practices of "charitable" entities. While local residents around the country have been doing what they can to maintain the increasingly fragile business mix that reflects the often-historic and unique character of their neighborhoods, too many exempt organizations ignore such concerns and go about their business with a blatant disregard for the consequences of their actions on others.

We've all become familiar with the egregious practices of commercial real estate owners who double, triple, or quadruple a small business owner's rent when a lease expires, forcing the business to vacate the space and leaving it empty for years in hopes that, at some point down the road, it can be combined with adjacent properties to create an attractive parcel for luxury development or perhaps a national chain tenant, even as the surrounding neighborhood retail ecosystem withers and dies.

And when ostensibly nonprofit organizations get into the game, it adds more than insult to injury. Indeed, in the recent case involving American University, which is taking steps to force out a popular family-owned garden center from one of the commercial properties it owns, it heightens the scrutiny on all exempt organizations.

Our current tax code allows exempt nonprofit organizations and institutions to maximize the revenue they generate by mimicking the often-rapacious behavior of commercial real estate developers. While some defenders of exempt organizations’ commercial real estate ventures believe that income from such activities are subject to Unrelated Business Income Tax (UBIT), they are wrong.

Now More Than Ever, Foundations Need to Step Up for Democracy

Even before agreeing on the final details of their tax bill, Republican leaders in Congress have made it clear they hope to address the national debt — the one their bill adds a trillion dollars to over the next ten years — by cutting vital safety net programs. Indeed, the dishonest Republican plan rewards the richest one percent of American taxpayers with over 60 percent of the proposed benefits of tax "reform" while people living in poverty or who depend on Medicare, Medicaid, and other programs will lose ground. Even the elderly and the sick, as well as those whose future well-being is tied to Social Security, are likely to be sacrificed on the altar of "deficit reduction."

What can charities and philanthropy do about it? Apparently nothing, judging from the feckless efforts to protect charitable giving and the integrity of the sector during the recent tax cut battle. It's reported that nonprofit "infrastructure groups" spent over $670,000 on lobbying activities in 2017 (through September) — with little in the way of results to show for it. Additional efforts — and expenditures — by individual charities and nonprofit coalitions likewise failed to derail the regressive policy changes championed by Republicans in Congress.

It doesn't have to be that way. Charities have created little opportunity for themselves to be heard on the tax bill, and it's unlikely their collective voice could affect anything but the proposed repeal of the Johnson Amendment — an action that, if not dropped from the final bill, would turn tax-exempt organizations into partisan political action groups. One hopes, however, that charities — and foundations — will learn from this depressing experience and act to better represent the public interest in the lead up to the 2018 midterm elections — and beyond.

For charities and foundations to succeed in this endeavor, three things need to change: (1) public policy issues must be seen for what they really are; (2) charities and foundations must work to invigorate enlightened grassroots participation in the democratic process; and (3) we, especially funders, need to overcome our arrogance and self-serving timidity and recognize that, regardless of organizational mission, we will not succeed as a sector if we don't also support efforts designed to strengthen civic engagement and democracy.

The Worst Tax Reform That Money Can Buy

Charities and foundations are lucky. Often their self-interest and the public interest seem to be in conflict. But not this month, thanks to Congressional Republican efforts to "reform" the U.S. tax system.

In simple terms, the Republican plan is an effort to transfer more than $1.5 trillion from public purposes, government, and charities in order to further enrich already fantastically wealthy individuals and corporations. Under both the House and Senate plans, far less of the proposed cuts would benefit middle-class folks — many of whom would actually end up paying more in taxes. And even if Republican leaders' hopes to finance their scheme through cuts to Medicare and Medicaid fail, many of the other so-called reforms would profoundly hamstring our nation's ability to address critical social needs.

It's the same old class warfare that Republicans have promoted since the days of Ronald Reagan, and it must be opposed for the sake of both the nonprofit sector and the people and causes who rely and depend on the sector.

As detailed elsewhere, standard deduction provisions alone would cost charities more than $13 billion in donations each year. Changes in the estate tax, which the House proposes to eliminate and the Senate would reform by doubling the exempt amount, would also have a devastating impact. When the tax was suspended for a year in 2010, bequests dropped by over a third; full repeal would cost the Treasury $270 billion over a decade that might otherwise fund critical needs across America. Yet the Republican proposals allow the top one-fifth of one-percent, the very wealthiest 00.2 percent of Americans, to keep that money, even though most of it has never been and never would be taxed.

Simply put, the various tax policies being pushed in both the House and Senate would significantly cut charitable donations and otherwise harm nonprofits in order to finance giveaways to Americans who already hold a disproportionate share of the nation's wealth.

What Is at Stake, and Why Philanthropy Must Respond

In the months since the 2016 presidential election, philanthropy has begun to respond energetically to real and perceived threats to longstanding American principles of justice, equality, and fairness. Yet more is needed to counter policies and actions that undermine democratic norms, roll back essential safety-net protections, and shrink or destroy government programs essential to the health of the nation and the planet.

For the nonprofit world, the election of Donald Trump as president has raised the stakes in ways the two of us have never seen. Most nonprofits have missions that address inequality, injustice, and fairness in some way or another, whether it’s providing services to poor people and others in need, working to protect and extend civil and human rights, promoting environmental and animal protections, advancing equal opportunity, or enriching arts and culture for all.

We strongly believe these values — and the nonprofit work informed by them — are in jeopardy. And whether Donald Trump is the proximate cause of that danger or merely a catalyst for the expression of years of pent-up frustration, we cannot ignore the problem.

Whether or not you applaud Trump’s campaign promise to "drain the Washington swamp" or Sen. Bernie Sanders calls to fix a "rigged" system, it is painfully clear that many Americans have developed a deep-seated distrust of government and politicians. The populist wave of resentment unleashed by Trump’s election is a manifestation of that disillusionment and anger.

Trump understands that Americans want change, that they want to see the system shaken up in a way that forces politicians to listen to their concerns. But his actions, more often than not, are directly contrary to his words. By not divesting himself of his business interests before taking office, Trump has ensured that his many conflicts of interest (and those of his family) are fair game for watchdog groups and the press. His refusal to release his tax returns and his decision to shut down a website showing who has visited the White House make a mockery of his "draining the swamp" mantra and transparency in government. His condemnation of leaks and willingness to undermine administration officials with his words and tweets, as well as to divulge secrets to the nation's adversaries, has sown fear and confusion where clarity and energy on behalf of the American people are needed.

Nonprofits, Partisan Politics, and Tax Policy

Calls for tax reform by the White House, Congress, and others have led to proposals that would have a direct and profound impact on nonprofit organizations and philanthropy. Of those proposals, one from the House Republicans calls for eliminating the tax deduction for charitable donations, one floated by the White House would eliminate an incentive for charitable bequests, and another from a coalition of nonprofit organizations would expand the deduction to more taxpayers. The three proposals couldn't be more different.

But while charities and donors are scrambling to preserve (or expand) their tax advantages, there are other worrisome proposals floating around. Most significantly, President Trump and the Republican leadership on Capitol Hill want to change the tax code to allow charities to engage in partisan electoral activity — while, at the other extreme, some want to disallow tax deductions for support of nonprofit advocacy and policy work.

Certainly, one can understand why most tax-exempt organizations would fight to protect the tax incentives for charitable contributions that support their work, but such efforts raise questions about whether charities and donors are worried more about their own self-interest than the public good.

Nonprofits' efforts to preserve and extend the charitable deduction would be less suspect were the organizations fighting for those policies as engaged in the debates over other government tax, budget, and policy initiatives — debates that profoundly threaten many of the causes and constituencies they exist to serve. When nonprofit and foundation leaders are missing from such debates, it becomes easier to impugn their motives for trying to preserve their own tax advantages. Protecting the charitable deduction is not an adequate surrogate for broader action.

Against this backdrop, the president's pledge to "totally destroy" the so-called Johnson Amendment prohibition on charities' involvement in partisan electoral campaigns needs to be addressed (as do other administration proposals).

Changing the Political Climate

The election of Donald Trump, together with Republican control of the U.S. Senate, the House of Representatives and most statehouses, is both a reflection of and serves to underscore the dramatically altered political climate in America. Many nonprofit and philanthropic leaders are scrambling to figure out how they can best operate in this new environment. Too few of them are thinking about how they might work to change it.

A lot of people would like to see it change. We know that a significant majority of Americans are stressed by the outcome of the election and that fully two-thirds are deeply concerned about what it will mean for the nonprofit sector and the nation. That presents an opportunity for charities and foundations. Instead of trying to make do, nonprofit leaders should try to make change.

Make no mistake: efforts designed to alter the context for the administration's policy agenda will find a sizeable and receptive audience. Sixty percent of Americans are embarrassed by the past actions and rhetoric of the president and do not feel he shares their values; similar percentages feel he is neither temperamentally suited for the job nor honest and that his actions are dividing the country. Given these concerns, an outpouring of donations and willing volunteers are finding their way to charities either directly affected by the Trump agenda or working to resist it.

The question now for many nonprofits is how will they deploy the new support they are receiving. Will it be used to ramp up frontline services made necessary by cutbacks in government funding and regulations? Will they allocate it to policy advocacy and organizing aimed at directly contesting the Trump and Republican agendas? Will they also use it help fuel initiatives aimed at changing the political climate in ways that renders these other activities less necessary?

Time for Nonprofits to Step Up and Make America Good Again

Although many Americans are skeptical of Donald Trump's ability to handle his presidential duties, a majority believe he is competent to be president. Nevertheless, the charitable sector should be concerned about what his presidency could mean for nonprofit organizations — and perhaps democracy itself.

The incoming administration has claimed an electoral mandate based on false assertions of massive voter fraud. In reality, Trump lost the popular vote by more than 2 percent — over 2.9 million votes. And he owes his Electoral College victory to 75,000 votes spread across just three states: Michigan, Pennsylvania, and Wisconsin.

It's important to remember these facts as the country prepares itself for an onslaught of executive orders and regressive policy initiatives likely to come out of the White House and the Republican-controlled Congress. Needless to say, many of those initiatives will belie the core values and progressive goals of the philanthropic community.

We know that a majority of Americans support some of President-elect Trump's proposals, including lower and simpler taxes for the middle class; more spending on infrastructure, the military, and veterans' services; and term limits and new ethics rules for members of Congress (although Congress itself opposes the last two).

We also know that most Americans are opposed to Trump's proposals to lower taxes on high-income Americans, build a wall on the border with Mexico (even before Congress said it would cost taxpayers billions of dollars), and deport illegal immigrants without offering them a pathway to citizenship, as well as his preference for fossil fuels over renewable energy sources.

Furthermore, unlike the president-elect and Congress, most Americans want to see Obamacare improved, not repealed and replaced. They want to see government regulations improved, not weakened or eliminated. And while they believe small businesses pay too much tax, they believe corporations pay too little.

[Review] 'The Chocolate Trust: Deception, Indenture and Secrets at the $12 Billion Milton Hershey School'

Would you be concerned if you knew there was a charity that served only a couple of thousand children each year even though its asset base was  the same size as the Ford Foundation's? Would you wonder what that charity, three times the size of the largest U.S. community foundation, did with the money it accumulates and doesn't spend each year? Would you wonder who benefits from it? 

Bob Fernandez, a reporter for The Philadelphia Inquirer, wondered all that and more about the $12 billion Hershey School and decided to do some digging. The result is The Chocolate Trust (Camino Books, 256 pages; $24.95/paper, $9.99/ebook).

The book is important not simply for what it reveals about the trust, about those who have profited from its sometimes questionable practices over decades, and about the kids who have been neglected as a result of those practices. The Chocolate Trust also is a cautionary tale for anyone who thinks nonprofits can self-regulate or rely on local and state government authorities who too often are ethically compromised and politically constrained to keep them on the straight and narrow. 

First, a little history. In 1909, Milton Hershey, who had started a chocolate company and set out to build a town for its workers, established the nonprofit Hershey Industrial School, a residential facility to serve young, fatherless, white boys. In 1918, a few years after Hershey's wife, Kitty, died – they never had children and had no heirs – Hershey transferred his land and other assets to his "orphanage," making it a very wealthy entity indeed.

Hershey stipulated that those assets were to be managed by the Hershey Trust, part of a for-profit bank, and he retained a significant measure of control over the school's operations by reserving to the bank the right to appoint its board members. In simple terms, the bank controlled the school's assets and operations, and Hershey owned the bank – the reverse of standard operating procedure in the charity world, where donated assets typically are controlled by the charity to which they have been donated. 

Calling the Piper’s Tune

Nonprofit endorsements for sale? That might be the takeaway when more than thirty charities in the District of Columbia write to government regulators in support of a popularly opposed regulatory action sought by a local funder, with many even lending their logos to full-page newspaper ads.

Pepco, a regional electric utility that serves the District (and mid-Atlantic region) wants to sell itself ­to Exelon, a national energy company with a poor reputation among environmental groups and consumer advocates. The overwhelming majority of the charities endorsing the acquisition in letters to DC's Public Service Commission (DCPSC) have a couple of things in common: they have no environmental mission or apparent expertise on energy issues, and they have received or benefited from Pepco philanthropic funding, which Exelon promises to continue for ten years.

The offered premium of 24 percent over market valuation is enough to convince Pepco to seek approval to sell its electric distribution network to Exelon. The opportunity to become the largest utility company in the country and use Pepco’s significant ratepayer base to dilute its nuclear electric generation investments is motivation enough for Exelon. But what’s in it for local charities?

A big part of the answer was summed up nicely by Meta Williams, the regional development director in the United Negro College Fund's Washington, D.C. Area Office. In a letter to D.C Public Service commissioner Brinda Westbrook-Sedgwick, Ms. Williams noted that Pepco and Exelon are important donors to UNCF, provide a great deal of support to other charities, and are admirable corporate citizens, making their plan worthy of endorsement. Yet, she went on to say in conversation with me that she had not considered environmental, energy, or related issues in deciding to write to the Public Service Commission, that policy was not made in her office, and that she was speaking only for UNCF's fundraising arm and not for the organization itself – none of which is clear from her letter.

How the Charitable Sector Keeps Us All Afloat

As social and environmental problems grow worse and the resources to address them are stretched thinner, nonprofit organizations and foundations have to make hard strategic choices about where best to intervene. In effect, they need to think about their distinctive societal role when considering their options. While experienced staff, veteran board members, and expert consultants struggle with those decisions, there's an apocryphal tale that many at a recent Alliance of Arizona Nonprofits meeting found useful in terms of framing the problem.

But first, what is the distinctive role of the charitable sector in American society? That question has become more complicated with the emergence of for-profit conversions, social-benefit corporations, social impact bonds, and other types of hybrid organizational structures and market finance schemes that blur the lines between the not-for-profit and for-profit sectors.

Based on years of personal polling from the back seat of taxicabs, I have come to realize that the American public thinks charitable organizations are all about voluntarism, sacrifice, and donated income in service to those in need. Clearly, that's not true these days for large swaths of the charitable sector. What, for instance, makes a nonprofit daycare center different from a for-profit one just across the street?

When I ask them the question, nonprofit leaders most often say their organizations provide services to those who can't afford to buy them. But when you consider the increasing prevalence of third-party payers, subsidies to service users, and contracts and grants to service providers and the preferential tax treatment they often receive, along with the fact that fees-for-service generate the lion’s share of charities' income, this "market failure" rationale doesn't hold up very well.

The nonprofit leaders I've spoken to also say their organizations, as distinct from businesses, do much to improve civil society in the U.S., though they rarely provide specific examples of how their organizations do this. Similarly, nonprofits claim a distinction between sectors with regard to a strengthening of democracy, though few can point to related activities beyond their own governance.

A final distinction seems more significant: nonprofit leaders often point out that for-profit businesses are all about increasing the market for their products, while nonprofits typically work to reduce and eliminate societal need — although, again, most aren't able to say how their organizations actually do this. Still, it points to a compelling difference between the two sectors, especially when linked to nonprofit efforts to strengthen democracy and civil society.

Charities and the ‘Compassion Gap’

Any traces of the "compassionate conservatism" championed by George W. Bush in the early days of his administration has long since evaporated under the heat of Republican extremism. Today, more than three-quarters of American conservatives think the poor "have it easy," while fewer than 10 percent believe the "poor have hard lives" and receive inadequate assistance.

What's more, many conservatives believe the poor have easy lives because "they get government benefits without doing anything," ignoring not only the limits of public aid, but also the obstacles that must be overcome to obtain food stamps, Medicaid, day care, public housing, and other kinds of government assistance. In fact, more than 80 percent of conservatives also say that the government programs on which the poor so desperately depend do more harm than good.

Can four out of five conservatives really be so hard-hearted that they cannot imagine how profoundly difficult life is for people without enough money to feed their children, to fill an essential prescription for an ill parent, or to access a safe place to leave an infant while they try to find a part-time, no-benefits, minimum-wage job that gives them no hope of escaping what in many cases are slum- and crime-ridden neighborhoods? "Have it easy?" Really?

These findings are consistent in that more than half of conservatives believe that people are poor because of "lack of effort," while fewer than 30 percent of conservatives believe poverty results from "circumstances beyond [an individual's] control." Despite all we have learned over the years about the causes of poverty and related ills, conservatives seem bound and determined to reduce the issue to the simple fact of people making bad decisions and doing bad things.

That kind of thinking ought to be greeted with dismay by most charities, even if their missions address problems other than poverty. Blaming the victim does not make the work of nonprofits any easier, does not incline people to support well-meaning interventions, and, at the end of the day, is the opposite of charitable. Indeed, with respect to most problems of concern to nonprofits, there is no path forward if people are seen as the sole source of their own troubles.

Nonprofits and Oligarchy

(Mark Rosenman is emeritus professor at Union Institute & University and a frequent contributor to PhilanTopic. In his previous post, he wrote about the link between corruption and declining trust in our public and private institutions.)

The Supreme Court's recent campaign finance ruling is fraught with irony for lovers of democracy, underscoring as it does the fact that the United States is becoming more and more like Russia, where wealthy oligarchs dominate the political system as well as the marketplace.

Equating money with speech, and refusing to limit its influence in elections, as the Court has done in recent rulings, is a problem for society – and especially for charities and foundations that work to help the least advantaged among us. They know that government programs are critical to the well-being of millions and millions of Americans and that government plays an essential role in protecting the environment and promoting the health, safety, and security of all of us.

They also know that when the super-rich intervene in politics to promote their own interests over the public interest, it can be profoundly problematic.

Unfortunately, that's exactly what is happening. While we live in a democracy where each of us has an equal vote, most of us have become aware that the outcome of many elections, especially at the congressional, state and national levels, is determined before we get to the voting booth – in part as a result of increasingly negative campaigns funded by deep-pocketed donors. Nor are we under any illusions as to our ability to compete with wealthy corporations or their lobbyists when it comes to influencing politicians' decisions once they've been elected to office.

In the last election cycle, for example, a total of more than $6 billion in campaign contributions was raised for various candidates. More than a quarter of that money came from the top one percent of the top one percent of all Americans. In fact, the money of the super-rich was so important that not a single politician running for a Senate or House seat was elected without their campaign contributions. Although more than half the members of Congress are themselves millionaires, they depend on the wealthy to win and hold on to their seats.

The wealthy are willing to provide stunning sums to political campaigns for a simple reason: it's good business. Take the financial/insurance/real estate (FIRE) sector, which accounted for more than 20 percent of the top 31,000 (0.01%) of donors to political campaigns in 2012 and over 34 percent of the top 1,000 donors.

Needless to say, they get a very good return on that investment. The share of GDP claimed by just a portion of the FIRE sector has almost doubled since 1980 – a period, as Nobel Prize-winning economist Paul Krugman points out, in which elected officials acted to deregulate the financial industry. It should come as no surprise that the FIRE sector significantly increased its campaign contributions and lobbying activities over those decades, especially when re-regulation of the sector was being considered. Indeed, elected officials bring new meaning to the term FIRE sale: As the late philanthropist Phil Stern pointed out in his 1988 book, we have The Best Congress Money Can Buy.

Trust and Corruption

(Mark Rosenman is emeritus professor at Union Institute & University and a frequent contributor to PhilanTopic. He lives in Washington, D.C., from where he drew many of the examples of the national problems cited below.)

Self-serving and dishonest actions in both the public and private sectors are severely testing the trust and confidence of Americans. That's a problem for government, for courts and the criminal justice system, for corporations and business leaders, and, yes, for the nonprofit sector.

It's a much more significant problem, however, for the larger society. Are we destined to slide further toward the pernicious levels of corruption so prevalent in other parts of the world? Can the already strained fabric of American society hold as growing numbers of public, private, and charity officials scramble to profit, legally and otherwise, from their positions? What happens when the fundamental American belief in fairness is undermined by declining confidence in the institutions we all rely on?

Make no mistake, confidence in our institutions is declining. Since the early 1970s, those of us who have a "great deal" or "quite a lot" of confidence in our institutions, including banks, newspapers, and the medical establishment, has fallen dramatically – in some cases by more than 50 percent. Confidence in religion, the Supreme Court, schools, organized labor, and the presidency has fallen by 25 percent or more, while fewer than 25 percent of us have a "great deal" or "quite a lot" of confidence in big business.

Charitable organizations don't fare so well, either. Following a precipitous drop more than ten years ago, a recent survey found that over a third of Americans have "not too much" or no confidence in nonprofits. Meanwhile, Congress's approval rating has fallen to an all-time low of 10 percent.

Interestingly, the few institutions that have shown gains in public confidence include the military and the police and criminal justice system. But while the military is the most respected of American institutions, a series of recent incidents is beginning to take a toll. They include a scandal involving two Navy officers and a senior agent with the Naval Criminal Investigative Service, and a series of misconduct charges leveled at senior military officers for abusing their positions and accepting illegal gifts. His confidence shaken, Secretary of Defense Chuck Hagel has demanded a broader investigation.