Nonprofits Can’t Take the Place of Government

Every year at this time, news stories appear about needy nonprofits doing God’s work and modern-day good Samaritans -- great men and women with names like Kroc, Gates and Annenberg -- giving millions to worthy causes. We celebrate our generosity. We affirm that we are good people doing good things.

But if you look beyond the rim of your rose-colored glasses, you’ll see a bigger picture this year, one that is neither joyous nor heartwarming. Nonprofits are desperate. Need is up. Giving is down. Nationwide, charitable giving decreased by 1.2% last year, the first drop in 12 years. This year’s numbers aren’t expected to be any better.

But the disaster-in-the-making we face is bigger than this. Its magnitude came into focus after I read a story this year about the mayor of Somerville, Mass., going to that city’s nonprofits, pleading with churches, charities and nursing homes to make donations to the city to pay for the police and fire departments. A week later, I read another story about city officials in Pittsburgh doing the same thing.

In Los Angeles, we’ve only just put our toe in the water. The city recently began charging nonprofits a $750 fee for park use (tables, clean-up and utility hook-up not included). This time next year, nonprofits may be asked to adopt a cop. But all the nonprofits in Christendom can’t make up what government increasingly leaves unfunded.

Our crisis in public services is not simply a result of the economic downturn. The nation’s commitment to public infrastructure and the taxes that pay for them have been shrinking for some time. Expecting charity to “make up the difference” of what government fails to provide was never more than a pipe dream. When the economy heads south, the well-to-do reach for their wallet -- and it’s not usually to open it. A recent Wealth + Values study found the wealthy feel they should give to charities more than they did three years ago, but because of the economy, they won’t.

Philanthropic institutions are searching for an appropriate response. A recent study of nonprofit funding conducted by Venture Philanthropy Partners in collaboration with McKinsey & Co. predicts tough times and recommends that more charitable dollars be directed to advocacy. Policy change, they conclude, is the only way to get beyond increasing demand for nonprofit services and a decreasing supply of money to provide them.

In fact, philanthropic spending priorities are shifting as foundations begin to place greater emphasis on changing the policies that have brought us to this brink. Traditionally, philanthropy preferred to steer clear of advocacy and fund social services instead, but that reluctance is waning. The Ford Foundation has placed new emphasis on “strategic philanthropy” focused on policy change. The Pew Charitable Trusts recently decided to change its legal status from a private foundation to a public charity in part because public charities are constrained by fewer rules regarding advocacy and lobbying.

Individual philanthropists -- many of whom are middle-class people, not the gajillionaires the media swoon over -- might also respond to this crisis by reevaluating their traditional giving patterns and putting more emphasis on change, not just charity.

Next year, incredibly, we face proposals for more federal tax cuts that will further shrink government’s ability to provide basic services. Nonprofits will stagger and fail under the weight. Where and how will this end? Your checks this year could make a difference.