Archive for the ‘Government grants’ Category

The billionaire vs. the free riders

January 13, 2012

The Nonprofiteer’s readers might enjoy this account of a pissing match between Warren Buffett and Mitch McConnell.  The Senator from Kentucky has been urging the Sage of Omaha to make voluntary contributions to the Treasury if he felt he was undertaxed.  Buffett has now responded that he’ll match any such contributions made by Republican Senators.

This dialogue makes in a different form Milton Friedman’s point as recounted by the Nonprofiteer yesterday.  Voluntary contributions to reduce poverty (or do any of the other things we rely on the government to do) are insufficient, because everyone would be willing to pay his/her share only if s/he could be sure that everyone else would be willing to pay his/her share.  Otherwise, no dice.

Doubtless McConnell will ignore Buffett’s challenge and continue his nonsensical bluster about Buffett’s freedom to pay extra if he feels “guilty” about his low tax rate.  But the point isn’t, of course, how Buffett feels, or even what he does—it’s what everyone else does.  And if McConnell and his buddies don’t donate to the Treasury, then they are poster children for the free-rider problem—thereby proving Buffett right: philanthropy is not sufficient and taxation is necessary.

H/T the indispensable Rick Cohen at The Nonprofit Quarterly.

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At war with oneself over the charitable deduction

January 10, 2012

From an article in the New York Times whose date the Nonprofiteer neglected to notice:

“It’s admirable when people back their charitable impulses up with donations,” said Scott Klinger, tax policy director of the group Business for Shared Prosperity.  “But the tax code shouldn’t allow the wealthy the kind of loopholes that let them, essentially, force other taxpayers to underwrite donations to their pet causes.”

“The kind of loopholes . . . ”  Is there some other kind?  That is, can we have the tax code encourage individual generosity without delegating to private individuals decisions about what constitutes the public good?  The Nonprofiteer doesn’t see how.  Either you have a tax subsidy—which means by definition that other taxpayers bear a bigger burden—or you don’t. 

Without the subsidy, current donors might give less but the government would have more to give out to public causes (health, education, welfare) now privately supported.  And perhaps without the subsidy, current donors would be replaced by those less-burdened other taxpayers in a burst of their own generosity.  And maybe this would mean fewer snow-globe museums and more attention to human services in the nonprofit sector.

Or maybe it would just mean a reduction in charity and an increase in the government’s resources, which could then be used on public education and public housing.  Or missiles and drones.

This is why the Nonprofiteer remains at war with herself over the charitable deduction.  She wants a thousand flowers to bloom.  She believes any free society requires a counter-balance to whatever the current government has decided about anything.  And she believes this counter-balance requires money.  The whole point of the nonprofit sector is that it permits people to identify and respond to their own needs in their own communities, producing a closer fit between service and community than is possible with centralized programs.

But she also believes that society-wide priorities should be funded society-wide, which means limiting the number of pots of money exempted from inclusion in the public fisc.  And she doesn’t want society-wide priorities to be determined by people who have so much money they can buy entire public school systems and experiment on them.

To quote the great Yul Brenner: Is a puzzlement.

Define “generous”

January 4, 2012

Here’s a chronic story (h/t The Nonprofit Quarterly), about how the United States is the most generous nation on earth.  This annual survey measures how often people donate money to charity, how often they volunteer and how often they help strangers in need—the distinction between #1 and #3 being a little vague.

While the Nonprofiteer salutes all the donors among us, she feels constrained to point out that the United States leaves to private charity a whole range of activities provided elsewhere by the government.  Are the citizens of France really less giving, or are they just willing to give free public higher education through their taxes rather than depend on the kindness of strangers?  Are the Swedes, who provide paid parenthood leave while Americans think they’re generous to provide unpaid leave, really stingier than we are?  And do the English really turn their backs on the needy, or do they instead provide health care for everyone?

The Nonprofiteer is proud to be an American, but she prefers to be proud of the things we really do well rather than the things we do to compensate for what we do poorly, namely, supply adequate social services to all our citizens.

What should (but won’t) be the last word on the charitable tax deduction

December 20, 2011

The most powerful argument Jack Shakely makes in his LA Times op-ed piece opposing the charitable tax deduction is that it’s a poor trade-off.  The retired foundation executive points out that charities have permitted themselves to be shorn of their ability to influence policy and politics in return for a mess of pottage.  Of course the restrictions on charitable participation in the public arena aren’t as draconian as nonprofit executives (and especially Boards) think they are—but the point is that nonprofits understand themselves to be constrained, and rather than bothering with the details remain quiescent politically.

As strong a proponent as the Nonprofiteer is of the pursuit of individual gifts, in the real world virtually every social service agency needs seriously more government money if it’s going to make any dent in the social problems it faces.  The more social service agencies feel free to advocate for this particular budget bill or that particular provision in a piece of legislation—both prohibited by the current tax-code provisions—the more likely it is that those bills and provisions will pass, which would serve way more of the agencies’ clients than the most blue-sky estimates of their potential for growth in individual giving.

And for someone with foundation cred to say this!  All hail Jack Shakely.

h/t The Nonprofit Quarterly Newswire.

Why the public should fund the arts, after all

December 6, 2011

The Nonprofiteer had a fascinating conversation with Margy Waller, a special advisor to Cincinnati’s ArtsWave, which leads the nation in evidence-based approaches to advocating for arts funding.  Ms. Waller had reached out to correct the Nonprofiteer’s misunderstanding (and therefore misreporting) of ArtsWave’s efforts, noting that the argument is not that the public should fund the arts to promote economic recovery but that it should fund the arts to promote neighborhood vibrancy.  This nuance turns out to make all the difference.

Here’s the ArtsWave insight: people are ready enough to agree with the notion that the arts are good for the economy.  But if you probe deeper, and ask what top three things we should do to improve the economy, no one answers “subsidize the arts.”  So apparently the argument that the arts are an economic engine (true or false) is unpersuasive, which is what really matters.

But the ArtsWave research also uncovered the fact that if you ask people what would improve their neighborhood the most, the arts come up time and time again.  Why?  Because artists’ residences are known to herald an improvement in real-estate values; because arts audiences mean feet on the street and therefore greater public safety; because arts venues are known to spawn coffee shops and restaurants and other places of urban liveliness.

Therefore, the argument for public funding needs to be focused not on the art but on the public benefits of art-making.  This simultaneously ends the unwinnable argument about whether x or y is valid art or a useful expenditure of public funds and reminds people of what they believe anyway, that investment in arts-related infrastructure benefits everyone—not in some airy-fairy, soul-stirring, life-improving sense but in the grossest day-to-day experience of quality of life.

Thus an appeal to provide tax breaks to bring artists to a particular area would be framed not as a subsidy to these all-important art-making beings (read: overprivileged white people who ought to get jobs) but as a way to offset (maybe even reverse) the damage to property values wrought by foreclosures.  The subsidy is to the value of private property (something that can be monetized) rather than to the value of art (something that cannot).

As instrumental and cold-blooded as this approach may seem, Ms. Waller makes the powerful point that vibrancy is what people love about the arts—and that weaving the arts into the fabric of other social needs and activities enables people to appreciate the arts “not as consumers but as citizens.”

The Nonprofiteer was particularly struck by that last point.  Asked what citizens should do to respond to 9/11, then-President Bush had nothing more to offer than, “Go shopping.”  Anything that enables us to respond to public concerns in a public spirit; anything that combats the notion that government is the problem and privatization the solution; anything that reminds us that we’re a republic if we can keep it; anything that illustrates we don’t have to buy something to value it—any of these is a consummation devoutly to be wished.

As a wise person once noted, the important thing is not to have BEEN right, but to BE right.  The Nonprofiteer has been wrong in her blanket condemnation of public funding for the arts, because she thought of it exclusively in the frame established by its opponents: as subsidies to artists to create what might or might not actually be valuable.  Once the framing shifts to “vibrancy,”* and to concrete benefits to the broader society, public arts support suddenly makes sense.  No one else may care, but it will be a relief to her to stop being the only left-wing theater critic in the country opposed to public funding for the arts.

She continues to think that the NEA itself is a lost cause and that energy spent defending it would be better spent squeezing support for the arts out of HUD, Fannie Mae/Freddie Mac and local housing authorities.  But that’s a matter of strategy.  As a matter of principle, the Nonprofiteer is grateful to have discovered a valid way to defend taxpayer support to something that matters so much to her.

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*Yes, “vibrancy” can be a euphemism for “gentrification,” or at least its prodroma.  But if we plan for vibrancy (instead of simply hoping that lightening strikes in this ‘hood or that), we can also plan to prevent displacement.  And without displacement, “gentrification” is just another word for “safe streets, amenities and public services”—for everyone, rich or poor.

No good deed goes unpunished

November 22, 2011

Now here’s something that breaks the Nonprofiteer’s heart: the MacArthur Foundation is making grants to a dozen libraries and museums nationwide to establish youth computer learning centers modeled on YOUMedia, the Chicago Public Library’s innovative youth learning project.

Why does such good news evoke such profound sorrow?  Because the Nonprofiteer can remember when the notion was that the philanthropic sector would serve as a laboratory, trying out new approaches to solving social problems and then passing along the ones that worked to be funded by the government.  What we have here, however, is a model already vetted in the public sector whose future sustenance apparently will have to come from private charity.

This role-reversal is particularly galling here in Chicago, where the reward for the library’s pioneering work has been a substantial chop in the city’s library budget.

It’s hard to read a computer screen, or learn anything, when the world is upside-down.

Of water bills, credit unions and self-help

November 7, 2011

Alarms are sounding in the Nonprofiteer’s home town of Chicago today about the first budget proposed by Mayor Rahm Emanuel, which requires nonprofits to pay for water and sewer services they previously received free.  A sector-wide outcry produced one modification—a phasing-in of the charges over three years at smaller nonprofits—but generally the Mayor is keeping a campaign promise to ask nonprofits to bear their “fair share” of municipal costs.

He also seems to be following the lead of the Illinois courts which, as previously noted, are re-examining the nonprofit status of several of the state’s hospitals.  The Nonprofiteer’s colleagues at The Nonprofit Quarterly characterize Emanuel’s move as over-reaching, in that it affects nonprofits other than hospitals.  But the Nonprofiteer has no difficulty identifying non-hospital nonprofits whose water and sewer bills she doesn’t feel like subsidizing: the YMCA of Metropolitan Chicago (which, notwithstanding the social services it provides, is mostly a very successful health club that uses a lot of water); the Art Institute of Chicago (which, notwithstanding the educational programs it provides, is a wealthy institution with very low personnel costs because every art-history major wants to work there); the University of Chicago (whose housing and athletic facilities use as much water as any suburban development and whose property tax exemption is secured by the Illinois Constitution).  And let’s remember that the smallest nonprofits are renters, most of whom get water and sewer as part of their leases from for-profit landlords, and won’t be affected in the least.  So a bit less howling, okay?

Especially as we contemplate this past weekend’s flood of accounts transferred to nonprofit credit unions in reaction to the obvious greed of the largest banks, particularly Bank of America.  (Even a major philanthropist has moved his accounts to protest B of A’s failure or refusal to modify a reasonable number of mortgages).  Maybe if the credit unions get wealthy enough they’ll be able to provide the rest of the sector with the working-capital loans it can rarely get from commercial banks.  Maybe they’ll offer special water-and-sewer-bill loans.

And maybe a little taste of self-help will remind the sector that it’s supposed to be independent.  Political trends come and go but the work we do must continue, and it’s our business to organize ourselves so it can.

Collaboration without the head-shaving

November 3, 2011

Thanks to Thomas Cott of You’ve Cott Mail for pointing the Nonprofiteer to this article in Crain’s New York Business about the value of collaboration among small arts organizations as typified by the Lower Manhattan Arts League.

The league — which includes small groups like Access Theater and larger organizations such as Dance New Amsterdam and the Children’s Museum of the Arts — has monthly meetings where constituents help each other with everything from fundraising to legal advice. The groups have created a downtown cultural festival, which they produce in the fall and spring. The members even apply for some grants as one entity and lobby the city government as a pack. Individually, some members with budgets as small as $100,000 are barely on funders’ radar, but as a group the members generate around $14 million in economic activity per year and employ roughly 1,200 people full- and part-time. After years when none of the groups were able to score a grant from American Express, for example, the consortium applied together in 2009 and was awarded $100,000. They divvied up the money according to the size of each budget.

While the cheery tone of the article elides some of the serious difficulties arts organizations face in aligning their missions and needs with one another, the point is nonetheless well-taken: organizations too small to get attention on their own may be big enough when combined with others to secure foundation funding and government cooperation.

Such collaborations also serve as living ripostes to the chronic funder complaint that the supply of arts organizations exceeds the demand for them: if these disparate groups can work together without cannibalizing their audiences or funding, they must not be duplicating each other’s work. Or, as it is written: the whole [collaborative network] is greater than the sum of its parts.

On Wisconsin! Part II*

August 9, 2011

Boy, this guy is the gift that just keeps on giving:  Wisconsin Governor Scott Walker, not content to interfere with the provision of public services by destroying public-sector unions, has now decided to refuse to sign off on nonprofit grant applications to the Federal government that might “lead to ongoing programs that would need money from state taxpayers later.”   The first wave of grant applications deprived of the state’s endorsement would have supported health services, including programs to reduce binge drinking, an unhealthy activity in which Wisconsin leads the nation.

The hard Right has long argued that government services were unnecessary because nonprofits could step into the breach.  This claim was always nonsense; but at least its exponents didn’t also take on themselves the task of interfering with the charities’ overwhelmed attempts to do so.  Wisconsinites will pay the same Federal taxes whether or not the state receives Federal grants to support its nonprofit sector.  So clearly the point is not to shelter the state’s citizens from confiscatory taxes but to punish people who need help.   Governor Walker’s ideology apparently requires not just that people in need of assistance seek private charity but that private charity be deprived of the means of assisting them.

And let’s be clear about the legal antecedents of what’s going on here.  Groups of citizens of a single state are being deprived of access to something available to all other citizens of the United States—just as groups of citizens of the states of the Old Confederacy were once deprived of the vote.   Then, “states’ rights” was a buzz-phrase meaning “the opportunity to mistreat black people without interference from those durned Feds.”   Now, in Governor Walker’s view, the phrase is even more expansive, meaning “the opportunity to mistreat unhealthy and/or poor  people of every color to make the point that those durned Feds have no right to interfere.”   Anyone who’s enthusiastic about the states’ rights claims in the governors’ lawsuit against the Affordable Care Act should check out Wisconsin for a foretaste of what states’ rights really mean to the rights of states’ citizens.

The good news is, the Voting Rights Act of 1965 made clear that states’ rights are trumped by citizens’ right to vote.  Thus—and despite many recent efforts to enact barriers to that right-there’s a reasonable chance that Governor Walker will lose his legislative majority in the next few weeks, whereupon the appropriate state-federal balance can be restored.

Or, should I say, the Constitution can be restored.

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On Wisconsin! Part I appears here.

Emanuel and the foundations: What price access?

March 29, 2011

In fundraising there’s an old saw that if you want someone’s money, you ask for his advice.  Leave it to the ever-innovative Rahm Emanuel to turn this observation into an ultimatum, telling people equipped with useful advice that it won’t be heard unless it comes wrapped in money.

That, in effect, is the meaning of Mayor-elect Emanuel’s request to a group of Chicago foundations that they pay the costs of his transition, costs  traditionally covered by leftover campaign funds, of which Emanuel has plenty.   In a city whose political culture has long consisted of being punished for disagreeing with or disobeying the mayor, the foundations faced an unattractive choice: call the mayor-elect on his inappropriate pick-pocketing and look forward to 40 years in the desert, or pay the man the $2 (or $2 million, as the case may be) in order to be heard.

The Nonprofiteer doesn’t blame the foundations for ponying up, though she wishes they hadn’t: their job is to influence public policy and make change, and the mayor’s office is an important route (sometimes the only route) to doing so.  But the Emanuel administration-in-waiting should never have asked for this sort of tribute.  Whether intended or not, the request makes it appear that access to city government is restricted to those who tithe.  There’s nothing new about that—the title “City That Works” has always ended in a silent “For Pay”—but Chicagoans might be excused for having hoped for something new post-Daley.

Many in the nonprofit sector are dismayed at having to compete with city government for the foundations’ largesse, and that’s a legitimate concern, though a belated one: the Daley administration never hesitated to ask private and foundation donors to subsidize city expenses with money that would otherwise have gone to independent community groups.  (Can you say “Millennium Park”?  “Olympic bid”?)  But the Nonprofiteer is more concerned about a new mayor’s implying, and establishing a precedent for the idea, that even being heard on the 5th floor requires big bucks.

Some wag once said that New York was about culture and Washington about power, but Chicago was all about money.  Plus ca change . . .