(Illustration by Ben Wiseman)
Twenty years ago this summer, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, commonly known as the “welfare reform law.” The law imposed a work requirement on welfare recipients, initiated a five-year lifetime limit on receiving cash assistance, and cut $60 billion in funding for such assistance. Before passage of the law, foundations of all stripes contributed to the debate over welfare reform. Afterward, many foundations—especially those that focus on alleviating poverty—took steps to reckon with the consequences of the new policy. “It is hard to overstate how big a shift this was,” says Jennifer E. Mosley, associate professor at the School of Social Service Administration at the University of Chicago. “Welfare reform was a fundamental re-envisioning of the responsibility of the state toward its most vulnerable citizens.”
Mosley and her co-author—Joseph Galaskiewicz, professor of sociology at the University of Arizona—used the issue of welfare reform as a vehicle for investigating how foundations respond to changes within a political environment. Driving their investigation was a basic question about the role of foundations: Do they act primarily as providers of charity (meaning that they fill gaps left by the failure of a government to meet its citizens’ needs)? Or do they act primarily as engines of social innovation (meaning that they explore novel solutions to social problems)?
Using data collected by the Foundation Center, the researchers studied grants of $10,000 or more made by more than 1,000 large US foundations from 1993 to 2001—a period that covers several years both before and after passage of the welfare reform law. They set forth five areas of activity related to welfare reform: child care, family services, workforce development, safety net support, and research on poverty or welfare policy. Next they coded each grant for its alignment with one or more of those areas. The researchers also broke down their findings by state and by region.
Mosley and Galaskiewicz discovered that grants to child care, family services, and safety net programs essentially stayed level after government funding for cash assistance began to plummet. Significantly, in other words, foundations did not adjust their post-welfare-reform grantmaking to help meet people’s immediate needs. Instead, most foundations followed the lead of federal and state governments by focusing on efforts to develop new ways to help current and former welfare recipients. In particular, they directed funds toward research on poverty and toward workforce development. They also gave more money to support welfare-reform activities in states where governments engaged in a high degree of welfare-related policy innovation.
In sum, after passage of welfare reform, foundations directed funds not toward charity but toward social innovation. As a result, some highly vulnerable populations likely did not benefit from philanthropic efforts during this time. Overall, Mosley and Galaskiewicz conclude, foundations tended to be highly reactive to the broader political context of this period. Another finding from their research reinforces that conclusion: Although philanthropic funding for projects related to welfare reform increased in the years immediately after passage of the legislation, such funding began to drop by the late 1990s.
Jodi Sandfort, associate professor of public affairs at the University of Minnesota, emphasizes one important implication of Mosley and Galaskiewicz’s research. “Their findings suggest that there is a public responsibility borne by staff at major foundations not merely to follow trends that seem popular but to think about the unintended consequence of a change in public policy,” she says. But Sandfort also contends that foundations are better equipped to spark innovation than they are to meet people’s basic needs through charitable work: “Private philanthropy does not have the resources to ‘make up’ funding when the state pulls back. I would argue that [philanthropic] institutions made the right decision to invest in innovation.”
In any event, Mosley says, that decision “is contrary to many people’s impression of what foundations do and what they are for.” One purpose of her and Galaskiewicz’s research, then, is to help clarify the role that philanthropy actually plays in US political life. “Recognizing what foundations do well—and what they don’t do so well—is crucial to building a stronger and more effective social sector,” she says.
Jennifer E. Mosley and Joseph Galaskiewicz, “The Relationship Between Philanthropic Foundation Funding and State-Level Policy in the Era of Welfare Reform,” Nonprofit and Voluntary Sector Quarterly, 44, 2015.
Read more stories by Corey Binns.