In these challenging economic times, we are all searching for ways in which we can address the financial shortfalls for our organizations and their future financial health. We are all affected by this downturn in the economy, and we are all challenged to figure out strategies to address the anticipated changes we will face.
In philanthropy we are used to having government or others point to philanthropic resources as the source of funds to “fill the gap” in shortfalls, especially those we experience from state or federal government. Just last week it was reported that Senator Grassley from Iowa told charities that they should seek support from foundations and other donors before asking for financial aid from government. (Read more from the Chronicle of Philanthropy.)
In January we published our 2009 Outlook Report and our Giving in Minnesota Report. The Outlook has an eye to the future and estimates that giving from foundations and corporate giving programs will drop by 4% over their grantmaking from 2008. The most recent numbers show approximately $1.16 billion contributed by Minnesota grantmakers in 2006.
When we compare total contributions from foundations and corporate giving programs to the anticipated state budget shortfall of $5.2 billion (and possibly more) it is clear, by using pretty simple math, that philanthropy can not cover government budget shortfalls. Even if foundations and corporations discontinued 100% of their grantmaking and redirected those funds to cover government responsibilities, we would still be over $4 billion short. Nor is it the role of private philanthropy to fill the gaps or substitute for the role of government in our society.
So, while it is not unusual to have elected officials such as Senator Grassley create an expectation that philanthropy fill the gaps of government cutbacks or budget shortfall, it is the stark reality that the capacity to do so simply is not there. And, quite frankly, it is not the role of philanthropy in our society to fill the gaps left by government.
Join the conversation: Since philanthropy clearly can’t fill the gaps left by government budget shortfalls, how should philanthropy and government work together with nonprofits to help our communities move through these tough times?
- Bill King, MCF president
Carol, thanks for your response. I’d have to say I am in complete agreement with you. Many in the field have over the last few years tried to define “philanthropy” as looking at long term solutions to root causes. While I support work that moves in that direction, I see philanthropy on a continuum from a “charity” response when appropriate to a systems change response. All are necessar and all are important.
I totally support your notion, and that of Ralph Smith, that those in philanthropy are geared toward solutions and that a full array of strategies, tools and partnerships are what are needed.
Thanks for your comments, Carol!
Mitch Nauffts, in a post on PhilanTopic (the PND blog) commenting on Bill’s post, says, “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.”
Bill’s point that philanthropy can’t fill gaps created by declining public sector revenue is, of course, correct. But I take issue with 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
Former EVP of The McKnight Foundation
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