The creation of the White House Office of Social Innovation and Civic Participation in 2009 continued a longstanding practice by Democrat and Republican administrations: using governing tools to encourage a private charitable sector. For more than 50 years, public-private partnerships forged through tax credits, block grants, demonstration programs, and loans have linked nonprofit organizations to the federal government. Rhetorically too, presidents have championed nonprofit organizations as “a thousand points of light” and as problem-solvers tackling pressing issues at home and abroad.
This year, the philanthropic giving of both US presidential candidates received unprecedented coverage—and critique—in the lead up to Election Day, occupying a prominent role in debate questions and investigative reports. And while we still know very little about what the social sector might look like under the new administration, if the Donald J. Trump Foundation’s activities are any indication, the era of partnership may be coming to an end. Evidence points to Donald Trump using the foundation as a vehicle to promote his own personal needs, and the foundation appears not to have registered properly with New York’s attorney general or followed through on promised gifts. All of this has left many people wondering whether the president-elect considers nonprofit organizations as valuable partners in governance or philanthropy as a powerful agent of change.
As funders, providers, and advocates pivot to face what is almost certain to be a dramatically different funding and political environment, some lessons from history may be instructive:
- Invest in ideas and messaging. Philanthropists of the liberal persuasion might do well to consider the successful campaign by a cadre of conservative foundations in the 1970s and 1980s to promote free enterprise and create a market-oriented means of distributing social welfare. Historian Alice O’Connor has shown how funders such as the John M. Olin and the Lynde and Harry Bradley foundations used their resources to support the dissemination of conservative ideas in journalism, policy memos, academia, and legal briefs. With coordinated investments and messaging, conservative institutions raged against the so-called “liberal establishment.” Their successes remain visible decades later in school and housing vouchers, the rollback of affirmative action and voting rights protections, and the election of a businessman to the presidency.
- Protect tax-exempt organizations doing political education. Policymakers and watchdogs might want to ensure the Trump Administration and Republican-controlled Congress do not politicize the IRS’s review of tax-exempt organizations to limit the activities of progressive foundations and nonprofit organizations. Consider the regulation of community groups and foundations involved in the black freedom movement. In the 1960s, civil rights organizations used funds from allies in foundations, including the Taconic, Field, and Ford foundations, and the newly created federal Office of Economic Opportunity to register voters, organize protests, and support anti-poverty projects. Conservative, often segregationist, members of Congress liked to claim that civil rights groups and individual leaders embezzled funds. Such cries would force a freeze on funds and lead to lengthy congressional investigations into groups like the Child Development Group of Mississippi, the grassroots pre-school provider in the rural South. The IRS joined the fray, and weaponized its power of monitoring to silence black activists and service providers. For example, the agency revoked the tax-exempt status of the Boston Black United Front in 1970 for “discriminating” and supporting only organizations that served African Americans. These incidents and others prompted a larger conversation about political education and political activity, resulting in the Tax Reform Act of 1969, which narrowed the activities foundations could support.
- Consider personal donations part of a mass movement. Donors disappointed in the election might consider a reach for their checkbook as not only a charitable gift, but also a means of participating in a progressive movement. Remember that the origins of philanthropy lie not just in the elite foundations of Carnegie and Rockefeller, but also, as historian Olivier Zunz argues, in a mass movement of charitable giving. The democratization of giving emerged in the early 20th century in public-health campaigns such as the Red Cross, and mass fundraising became a predictable and regular facet of social life by the mid-century. In this context, giving by the masses functions as an investment in a shared future, rather than a detached, altruistic gift to the less fortunate. In the aftermath of the election, donations to groups such as the American Civil Liberties Union, Southern Poverty Law Center, and Planned Parenthood have seen a surge of new donors, perhaps heralding a new era of mass philanthropy.
- Anticipate growing need and decreasing revenues. Nonprofit service providers likely anticipate a period of increasing need and decreasing resources, fueled by cuts in government funding, a changing tax code, and uncertain financial markets. How the sector fared under the Reagan administration and in the recent financial crisis serve as useful parallels. Research into nonprofit finances from the 1970s and 1980s belied the myth that the social sector was somehow independent from government, whose contributions via grants and contracts far outpaced private giving as sources of revenue for nonprofit organizations. Some estimate that federal support to nonprofits declined between the 1980 and 1985 fiscal years by 57 percent, with sectors such as community development seeing cuts of more than 67 percent. Changes to the tax code under Reagan also discouraged private giving, removing an estimated $10 billion from charitable coffers between 1981 and 1984. These cuts had real impacts on the ability of nonprofit providers to deliver goods and services such as job training, affordable housing, and health care. More recently, examinations of the fiscal health of nonprofits during the 2007-2008 recession found that problems of liquidity and staff cuts had a direct impact on family and neighborhood outcomes. Communicating with donors and legislators about the direct and long-term consequences of federal cutbacks—both in terms of revenue and need—will be imperative.
- Bridge the urban-rural divide, but monitor policy implementation. Cities might want to think about where their interests align with those of rural districts and where they differ. Poverty, clearly, is one shared area of concern. Lyndon Johnson’s War on Poverty in the 1960s began as a response to both urban and rural poverty, and the lessons from the program include reasons to revive it (federal support for under-resourced communities), as well as reasons to update it (recognition of sex-based discrimination and economic causes for poverty, rather than citing personal or social causes). Investment in infrastructure also has the potential to unite cities and rural districts, but could divide them over allocation to highways versus public transportation. Eisenhower-era investments in highways hastened the movement of goods to market but also had adverse effects on cities, as jobs, residents, and capital flowed outward to suburban districts. Protests in Boston, for example, managed to divert a planned highway expansion in 1970, but only after several blocks of housing had been razed.
If history—of the United States or otherwise—has taught us anything, it is that mass protest movements and campaigns for change have discernable impact. They do not always foster change with the expediency we hope or need, but they are successful at electing candidates, shaping agendas, promoting policies, and ensuring equal rights of all Americans.
We also know that such movements are resource-intensive and difficult to evaluate. As a result, progressive donors will need to be both more and less strategic under a Trump Administration: more strategic in thinking about a coordinated campaign of funders, providers, and advocates to ensure a continuum of services and the protection of rights guaranteed by the Constitution; less strategic in de-emphasizing outcomes and data to instead take risks and invest in capacity.
The political and funding landscape for the social sector is about to undergo a significant change at the precise moment that we will need it more than ever. Historical reminders of both the power and fragility of the sector in the face of previous challenges ought to embolden us in the 21st century to roll up our sleeves and get to work. Indeed, that is the only thing that has ever succeeded.