2012 Budget May Reflect President Obama’s Attempt to Reconcile His Nonprofit Sector History

I have been watching the national discussion and debate around President Obama’s 2012 budget. I could have predicted that the nonprofit sector would be scarcely discussed, but the language coming from the left surprised me. Starting with the Huffington Post’s “Obama’s Budget Pits Him Against His Own Life Story”, there emerged a number of articles expressing perplexity at how the President could cut certain programs after spending so much time working on behalf of low-income people. Some even inferred that the present had taken a traitor-like stand against the poor. Understanding the budget as a political document, this debate and the President’s own history with the nonprofit sector gave me a better understanding as to why the President might have made some of his decisions.

I believe this discussion must start with a look at President Obama’s history in the nonprofit sector. According to his biography, after his graduation from Columbia and a brief stint in the corporate world, the President spent the several years working in the nonprofit sector. His work with the Developing Communities Project and with Illinois Project Vote focused on helping the low-income community. Programs included (per his CV) “job training programs for the unemployed, college prep programs for low-income students, parent initiatives to reform public schools, and campaigns to clean up hazardous waste sites.” When he went to Harvard Law School, he left his last job in the nonprofit sector (not including his stint as a senior lecturer at University of Chicago), and his understanding of the sector may have shifted over the next several years. That shift is apparent as we look at his 2012 budget.

Later, when Mr. Obama returned to Chicago from law school, he worked in the legal world and then transitioned to his successful career as an elected official. During this phase, he also began his life with Michelle, who early in their relationship was a successful executive director of the Chicago-branch Public Allies, one of the nation’s pioneers in the public service and social innovation movement. Right before he obtained his first elected position, he served on a couple of influential, Chicago-based foundation boards, involving himself in grant-making decisions related to organizations working on education reform and job training for low-income workers. With these positions and through his relationship with his wife, President Obama may have begun seeing the nonprofit sector in a different light.

His first relationship with the nonprofit sector was one of direct service and advocacy for the low-income community. As a community organizer and voter rights advocate, President Obama probably had a deep understanding of the programs that his 2012 budget proposes cutting. Many of the people he served probably received energy assistance through Low Income Energy Assistance Program (LIHEAP) or obtained help from Community Action Agencies that received Community Service Block Grant (CSBG) funding.  These important groups are working in church basements and lifting soup ladles; they’re the people Northwestern professors Jody Kretzman and John McKnight refer to when they talk about “Building the Community from the Inside Out”. (I base my ongoing “Third Sector Grit” articles here in the Stanford Social Innovation Review blog on these groups.) You could call this President Obama’s first nonprofit life.

As Mr. Obama moved away from directly serving these programs, he began to view the sector more broadly. This would be Mr. Obama’s second nonprofit life. Whether thinking about these issues from a philanthropic viewpoint or experiencing his wife’s work with Public Allies, we can assume he developed an affinity with social innovation or entrepreneurship-type groups. As we look at the current Social Innovation Fund or the people that make up the White House Council for Community Solutions, this crowd is comprised mostly of people who speak of innovation, measurable impact, social entrepreneurship, and scale.

I feel my perspective comes from having similar experiences. Though I’ve never met the President, I do feel somewhat of a kinship with his nonprofit path. I spent the early part of my career working in poor communities and engaged with many of the programs that may be affected by the new budget. I was actually trained as a community organizer in the same training program that he was. As I moved through my career, I found myself working on a broader level, immersed in social innovation organizations and philanthropies in these same areas. I can say that I often do not see much mingling between these two groups. They use different acronyms and attend different conferences. Looking at this dynamic, I see President Obama’s handiwork outlined in this budget.

As we have seen in the structures of grant programs like Social Investment Forum (SIF), Promise Neighborhoods, i3, Race to the Top, and others, President Obama has been identifying efforts that work, and then scaling them to new areas. Ezra Klein of the Washington Post might have said it best: “…a lot of the money feeding old programs…will be weaned off of so-called ‘formula’ funding, where money is given out according to preset rules, and moved to various forms of competitive funding, where the money is given out based on how much high-quality evidence you can provide that your intervention works…” As we understand Obama’s nonprofit “lives”, it’s clear that not only is his second nonprofit life trumping his first in his 2012 budget, but that in fact President Obama is trying to bring together, or merge, the two.

The best example in this is in the CSBG proposal, where the Community Services Block Grant program would go from $700 million to $350 million, where the remaining funding would be open to Community Action Agencies and other nonprofits that would compete for the funding. As Rick Cohen noted in the Nonprofit Quarterly, there have been “…complaints about how impossible it is to defund poor performing community action agencies and lack of real reporting requirements in the CSBG statute”. 

The challenge in merging these two worlds is that traditional groups may not be able to compete. The language of President Obama’s second nonprofit life dominates this new area, and now traditional groups have to learn a new language while fighting for existence.  As we look at this new landscape of SIFs and i3s, very few of President Obama’s first nonprofit life groups are represented. There was limited exposure to this new world before; now, the 2012 budget is introducing these groups at a feverish pace. Here’s to a hopeful, effective marriage.

Read more stories by John Brothers.