Archive for the ‘Public private partnerships’ Category

What Price Democracy?

December 27, 2012

There’s an old joke about a man who asks a woman to sleep with him for $1 million. She agrees, whereupon he asks her to sleep with him for $1. “What kind of a girl do you think I am?” asks the woman indignantly. “We’ve settled that,” replies the man, “We’re just arguing about the price.”

This came to the Nonprofiteer’s mind in response to this story about the price of the Broad Foundation’s generosity to the schools of New Jersey. A recent Broad Foundation grant stipulates that it will be available only as long as Chris Christie remains governor.

The Nonprofiteer has often argued that private philanthropy in education (and other areas) is at best a mixed blessing, because it reflects approval of the notion that public assets should be run according to private preferences.   But she never imagined any philanthropy would go this far, offering its generosity only on condition that the public sacrifice its right to choose its own leaders. The question isn’t whether or not Chris Christie is a good governor; the question is whether the Broad Foundation—as opposed to the voters of New Jersey—should get to decide that.

Sure, you can say that no voter is likely to sacrifice his or her rights for a grant of $430,000, but then we’re just arguing about the price. And sure, in form, the voters of New Jersey still hold the power, but the Broad Foundation grant gives them to understand that the cost of exercising their power is losing a lot of money—or, put another way, that the cost of the money is their democratic rights. By comparison, “the vig” (excessive interest rates) charged by organized crime look like a bargain.

Not content with specifying the outcome of an election, the grant’s terms also exempt from disclosure anything having to do with the grant, purporting to provide it with immunity from application of the Federal Freedom of Information Act. Perhaps this was intended to minimize the impact of the grant on voters: What they don’t know can’t influence them. But when the subject of the grant is the most public of concerns—the education of the next generation—a commendable motive doesn’t excuse unacceptable means. Voters need to know on what basis decisions are being made about their schools so that they can change the decision-makers if they disagree. The grant terms are an effort to protect the foundation and its direct beneficiary, the current Republican government of New Jersey, from that straightforward democratic notion.

Defenders of charter schools and other forms of privatization of public schools argue that such restructuring attracts private philanthropy that would not otherwise be available to those schools. That’s probably true, but is that a cost or a benefit? It’s a slippery slope, from good-willed private philanthropy in support of public goals to a system in which private goals predominate—specifically the private goal of eliminating public input (or even public knowledge) from the governance of the public schools.

We could argue about whether the loss of public input would be worth it if the donation were $430 million. But under the current circumstances, just what kind of girl is New Jersey?

A cheap date, apparently.


Going where the action (and money) is

April 24, 2012

An excellent piece of news today: the National Council of Nonprofits and the Center for Lobbying in the Public Interest have merged.  Why is this such good news?  Because many nonprofits have let the fear of losing their 501(c)(3) status keep them from participating in the democratic process in appropriate and legal ways.  And now, with budgets squeezed at the state and local as well as the national level, whatever organizations fail to put themselves in lawmakers’ faces will end up without the resources they require.

Lawmakers, like most other people, pay attention to what grabs their attention, which during a legislative session is whatever gets brought up by the people literally standing around the lobby waiting to talk to them.  Human services agencies need to be in that cohort; so do arts groups and environmental groups.  (Hospitals and universities long since figured out that they can conduct advocacy and still maintain their tax-exempt status.)

Not only will this merger give the National Council of Nonprofits a louder voice in legislative decision-making; it will signal clearly to nonprofits around the nation that lobbying in the public interest is indeed part of their mission—so much so that they won’t be able to pursue their mission without such lobbying.

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.

Everybody who’s not here please raise your hand

November 21, 2011

Will anyone reading this blog who was invited to this event, or knows anyone who was, please comment and tell the rest of us what it was supposed to accomplish and what actually happened?  Many thanks from the—oh, what’s the term?  “Other 99%”?

From the Chronicle of Philanthropy via LinkedIn (emphasis mine):

White House Hosts Meeting on Nonprofit Leadership

November 14, 2011,  5:07 pm

By Lisa Chiu

The White House has invited leaders from about 200 nonprofits to Washington to take part in a daylong program that will focus on the role of nonprofits and how charities can develop effective leaders. The event, which takes place Tuesday at the national office of the American Red Cross and is closed to the public, will feature discussions led by White House officials and business and nonprofit leaders.

Speakers include Valerie Jarrett, senior adviser to President Obama; Jonathan Greenblatt, director of the White House Office of Social Innovation and Civic Participation; Joshua DuBois, executive director of the White House Office of Faith-Based and Neighborhood Partnerships; and Kenneth I. Chenault, chief executive of American Express. The White House worked with American Express as well as the Annie E. Casey Foundation, the Aspen Institute Program on Philanthropy and Social Innovation, the Center for Creative Leadership, Commongood Careers, Independent Sector, and Public Allies to organize the event.

More about the impact of tax subsidies to charity

November 18, 2011

While the Feds debate the future of the charitable deduction (among many other aspects of the tax code), some states are diving in with modifications to their own tax subsidies to charity.  Michigan, for instance, will apparently permit a tax credit for donations (available for the past forty-plus years) to expire at year’s end.

Naturally, nonprofit leaders are distressed and are giving voice to their concerns.  The Nonprofit Quarterly reports:

According to Michigan Radio, the credit allows Michigan taxpayers to essentially double their contribution when they give to community foundations, homeless shelters, food banks, and public institutions (such as Michigan universities, museums, public libraries, and public broadcasting stations).

The tax credit has been eliminated as part of the governor’s plan to pay for a business tax cut. According to the Detroit News, 250,000 made use of the credit in 2010, and it earned $100 million for Michigan charities and provided $40 million in write-offs.

You won’t find the Nonprofiteer cheering any endeavor designed to pay for a business tax cut, especially when it’s so well-documented that many businesses pay nothing like the nominal rate–or even pay nothing at all.  But it’s too simple, and not exactly correct, to argue that the tax credit earned $100 million on a $40 million investment.  First, we don’t know how many of those gifts to charities would have been made anyway.  Second, as is the case with all tax subsidies, the money taken from the public fisc doesn’t support the same public purposes it would if the taxes were paid.  If Michigan traded $40 million worth of public schools and police officers for $100 million worth of private schools and university police forces, is it really better off?  The allocation of funds matters as much as, if not more than, the raw amounts.

NPQ further quotes a representative of the Community Foundation for Southeast Michigan:

Studies have shown that people give to charity because they care about the cause, but tax policy influences how much people are able to give . . . . We anticipate that with the loss of the tax credit, people will give to charities they’ve supported in the past, but they will give less because it costs them more.

She may be correct, but that’s actually less an argument for maintaining the credit than for raising the tax rate on individuals.  The higher the tax, the greater the value of any tax subsidy, and therefore the more likely individuals are to make tax-subsidized gifts.

That’s the theory, anyway.  We’ll all be interested to see how this turns out.

And meanwhile, the Cook County Assessor has begun the process of returning Northwestern Memorial Hospital buildings to the property tax rolls, after a court ruled they were not “charities” and therefore not entitled to continued exemption under the state Constitution.  The Illinois situation is worth watching because it represents a modification to tax subsidies not by the legislature but by the courts–meaning something not subject to public pressure or comment.

The Nonprofiteer is NOT arguing against “activist judges,” or any nonsense of that kind.  The Illinois Supreme Court’s rulings in this area have been (in her view) utterly within the four corners of the Illinois Constitution.  She’s merely making the point that sector-wide outcry will have no impact on judicial changes to the tax environment–which means that one way or another we’ll all find out soon how important tax subsidies really are.

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.

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.


On Wisconsin! Part I appears here.

Eliminating the charitable deduction: It’s the end of the world as we know it, and I feel fine

May 19, 2011

As governments at all levels scramble for resources, the idea of eliminating the charitable deduction from the income tax code has begun to attract support.  Many people who work in nonprofits say this would damage the sector, because people would be less inclined to give and those who did give would give less.  Let’s assume this is true (though Americans’ passion for voluntary organizations long predates the tax code; Tocqueville, anyone?).  Is the health of “the sector” really the relevant concern?

It may be that people will give less to their churches or alma maters or prestige arts organizations if deprived of a tax benefit for doing so.  But that money will be in the public treasury, where it will go for health care and education and environmental protection (and even a pittance for the arts).  So wouldn’t the goals of nonprofit hospitals and nonprofit schools and environmental nonprofits and arts nonprofits actually be advanced if the government had more to spend on these essential services?

In other words, as with health care, the question isn’t whether people pay; it’s how.  You either pay for health care by giving money to an insurance company, or by paying taxes and letting the government insure you. (The latter model, in use in this country only for the aged, produces the greatest efficiencies and greatest satisfaction among patients, families and caregivers; but of course extending it to the rest of the population would set us on the road to serfdom.  Hayek himself endorsed public provision of health care, so what are we arguing about, again?)

Likewise, you pay either way for education and schools and environmental protection and so on; it’s just a matter of which pot you’re anteing up in: the private nonprofit or the public.

So there’s a real discussion to be had about whether the charitable deduction is a good idea for the entire sector, or whether in fact social service and social justice nonprofits–-the ones that struggle the most for philanthropic support–-would be better off without deductions but with a bigger public fisc.

(Yes, the money might go for defense, or subsidies for oil companies, or some other boondoggle.  It’s our responsibility as citizens to prevent this; tax deductions were not designed to protect us from self-government.)

This is another version of the argument the Nonprofiteer has made elsewhere about the generosity of billionaires versus the reinstatement of a significant inheritance tax.  (We Democrats should make a point of calling it “the inheritance tax,” because that’s the whole point: at the moment, people who work for their money pay income taxes on it while people who inherit their money don’t.  Or we could call it “the windfall profits tax,” which is what it is: a tax on the windfall profits of people whose only contribution to society is having picked the right parents.  And the Nonprofiteer speaks as a windfall recipient.)

When the government collects inheritance taxes it can spend the money on things we as a democratic society think important: health and education and social services and, yes, roads and weapons systems and a bunch of other things about which the Nonprofiteer’s opinions are in the minority.  If the government doesn’t collect, billionaires’ offspring can spend the money on the things they as potentates think are important, which might be eradicating malaria and endowing charter schools but which might, yes, be paying scholars to produce support for the elimination of public education or the abolition of all regulation, or even paying legislators directly for said elimination and abolition.

The tax code is designed to provide the government with resources to do its job.  Its job, among other things, is to provide essential services to citizens who cannot provide those services for themselves; and the more money it collects, the more services it can provide.  What’s important is that those services get provided, not that they get provided by the sector that happens to employ the Nonprofiteer.

So the question here is not, “Is it good for the sector?” but “Is it good for social welfare and social justice?”  The answer is not clear-–crunching the numbers would be a huge job for which the Nonprofiteer is totally unqualified-–but let’s make sure we’re asking the right question.

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 . . .

Dear Nonprofiteer, How can we reduce the effort of acknowledging event-based donations?

January 6, 2011

Dear Nonprofiteer,

I have been a long time reader, and appreciate your blog tremendously!

I have a question, and if you choose to publish it, I would prefer to remain anonymous.

My organization is the fundraising agent for a couple of state funded organizations (the state only funds salaries & utilities—and the foundation I work for was founded a long time ago to raise funds for educational programs, content, etc.).  Recently, as a means to save ourselves ample amounts of time, energy, and overhead in administration, we began contracting with another local NPO that is first and foremost a performing arts space, but also the most comprehensive ticketing agent in our town.  This has become vastly beneficial because our own staff is so limited that we just don’t have the time and support staff to administer ticketing for ALL of the events for ALL of the organizations we support.  This saves us a great amount of time prior to these events, but we still have to process funds transferred to us from the ticketing agent post-event, and then send letters for any tax deductible value to the patrons.

So, here’s the question that has arisen in our office—can we just put something on the ticket itself that states the tax deductible value of the ticket to save ourselves from having to also send letters? Or, is it just best practice to send those letters post event to the event patrons?

Signed, Overwhelmed and Understaffed

Dear Overwhelmed:

Without being sure of the details, the Nonprofiteer recalls that actually tearing tickets is considered best practice in the management of for-profit events as a protection against employee theft of proceeds: the stubs are compared to the sales numbers and everything has to balance out at the event’s conclusion.  So it seems like a mistake to put the tax receipt or other acknowledgment on the ticket itself, when you’re going to want to physically retrieve at least part of it.

Of course, it’s possible to print a detachable ticket stub and leave that in the hands of the donor, and that stub could contain the necessary language for tax purposes.  (“Ticket price: X.  Tax-deductible value: X minus value of event’s benefit to patron.  Helping [nonprofit’s] clients: Priceless.”)  And if you’re using electronic tickets, which can be scanned and then returned in full to the patron, that same language can appear anywhere on the ticket’s face.

But the Nonprofiteer is a little puzzled about your role in the process.  Given that you’ve transferred ticket-processing to another nonprofit, why not transfer the entire fiscal agency to that nonprofit?  Does being the fiscal agent confer some other benefit on your foundation?  If not, it may be that a relationship that once made sense no longer does, now that the agencies you’re shepherding have become so active in their event-based fundraising.

Even if your foundation needs to remain fiscal agent for the purposes of state contracts, it should be possible to transfer fiscal agency for events to the ticketing nonprofit.  In that case, the task of sending tax-receipt acknowledgment to the patrons would fall to it.

In either case, of course, the task of actually thanking the patrons falls to the nonprofit whose event it is.  If the Nonprofiteer understands the situation correctly, donors have no particular interest in you: by their attendance at events, they intend to benefit the nonprofits for which you’re the agent.  Therefore, they don’t want to hear acknowledgment from you—they want to hear it from the benefited agency.  That’s what’s priceless!