How the State of the Union Showcases Trouble for the Government-Mandated Governance Structure

My ears perked up when in President Obama’s State of the Union speech he mentioned cutting community action programs (CAPs), stating, “I’ve proposed cuts to things I care deeply about, like community action programs.” CAPs have long dealt with the threat of cuts, but mostly from Republican presidents, and so the specific mention by President Obama should give CAPs real cause for concern.  You know times are tough when a Democratic president who has a history of serving the poor aims to cut a long-serving poverty program.

For those unfamiliar with CAPs, they were one of the great social innovations of the 1960’s, initiated by the late Sargent Shriver as a part of the War on Poverty. Today, according to the Community Action Partnership, the Community Action network serves nearly 17 million people living in poverty in the United States, with most of its participants having incomes below 75 percent of the federal poverty threshold ($9,735 for a family of three). Over half of this work is done in rural communities, and a local CAP effort could include a “Head Start program, weatherization, job training, housing, food bank, energy assistance, financial education, or any of the other 40+ distinct programs.” 

While many programs may find themselves in real trouble due to the current state budget crisis and the national dialogue about federal level cuts, the organizations that may be hardest hit will be those efforts that have board structures required by a federal grant or law.  For example, a CAP board structure is required to have at least one-third of its representatives be from the low-income community, exactly one-third be elected public officials and the remaining representatives be from the private sector. 

While the practice of having under-represented populations serving on boards is a good one, the challenge with the above groups is that their governance structures are largely ineffective.  The main reason is that these groups were created around, exist for and are dedicated to government funding.  While most boards are supposed to be monitoring and obtaining organizational resources, government-mandated boards only worry about monitoring the resources and are not accountable to obtaining additional funding. 

Last week I presented at a conference in Washington, D.C. for federally-funded disability groups who had the same federal requirements as CAP programs, and two-weeks earlier I conducted a national webinar for federally-funded mental health collaborations where the collaborative memberships were mandated by grant guidelines.  The topics I covered at the above conferences were either the changing dynamics in the nonprofit sector due to the economy or renewed strategies on resource development for nonprofits. 

In all of these sessions, dozens of board members and executives from these groups asked question after question on getting ahead of the economic or state budget crisis or rapidly creating mechanisms to obtain new funding.  I asked a couple of these groups, “Why the sudden rush” and the common response was that they cannot be as reliant on government funding in these times and that the board needed to become more of an asset in obtaining these funds. 

Although CAP was the only nonprofit-related entity discussed in the State of the Union, the mention made me think of the thousands of organizations and collaborations that have been created out of a government funding stream and how vulnerable these groups are.  As President Obama is scheduled to release his budget on February 14th, his YouTube interview following the SOTU again specifically called out CAP efforts stating, “Frankly, we’re just going to have to trim some of these programs”.  David Bradley, head of the National Community Action Foundation, in the Wall Street Journal, stated “I knew it was going to be a bad budget. I had absolutely no idea that it was going to be singled out in the State of the Union….This was theoretically a liberal, Democratic president who said he liked the program—and threw it overboard.”  While this may or may not be true, the elephant in the CAP room is that their network is unprepared after forty years of existence.  Other networks are probably similar.

Predictably, many local CAPs are really going to struggle due to these cuts and one of the main reasons will be that these organizations are ill-prepared to deal with the changing dynamic.  One of the main reasons for this struggle is the unfortunate fact that the boards of these CAPs are not aligned with one of the most central duties of a board: obtaining the necessary resources to sustain its mission.  With little time to change their organizational DNA, the impact on 1100 CAP efforts affecting approximately 17 million people throughout the United States will be more significant. 

The hundreds, if not thousands, of nonprofits and collaborations that are similar to CAPs should definitely take notice.

Writer’s Note: I should state that I have a longtime understanding of Community Action Agencies (CAA).  My family was a beneficiary of its services; I have worked for a Community Action Program (CAP), I helped create a CAP in Northern Virginia, have spoken at a national Community Action Partnership conference and have consulted dozens of CAP efforts throughout the United States. 

Read more stories by John Brothers.