This post is from David La Piana, president of La Piana Consulting, a national firm that aids funders and nonprofits in addressing the strategic issues they face. It orginally appeared on Philanthropy Front and Center-Cleveland.
In a recent post for the Stanford Social Innovation Review,I played off of the increasingly common phrase, "The New Normal", as a description of the current economic and political condition of our nation. I characterized the experience of nonprofits a little differently, as "The New Abnormal", since even before the global economic crisis the nonprofit sector, and the people who depend upon it for myriad services, have been under threats greater than any experienced in recent history. Now I want to expand on this theme, with an emphasis on what The New Abnormal means for grantmakers.
Traditionally, private philanthropy was assumed to act as our nation's risk capital, with foundations creating and supporting innovat ive and at times risky solutions to pressing social problems. Those pilot efforts showing promise were then widely adopted, often with federal and state funding making these innovations broadly available. The problem with holding to this as our mental model for innovation is that its heyday was way back in the 1960s during the War on Poverty. It's been a long time, at least 1980, since a brilliant new social innovation followed this trajectory to wide acceptance. In fact, in The New Abnormal even such proven innovations as Head Start and child nutrition programs are experiencing repeated and drastic cutbacks. Yet, despite this strange reversal of the old innovation model, foundations still see themselves as the nation's social innovators. While grantmakers continually seek and test new and innovative solutions, any promising ideas have virtually no chance of achieving widespread dissemination through federal or state support. This too is part of The New Abnormal.
In addition to fostering innovation on the sexy side of philanthropy, foundations routinely attend to the more mundane business of supporting longstanding, essential activities in our communities, ranging from local arts programs to homeless shelters. Not only is innovation threatened under The New Abnormal, but the social safety net, whose fabric is tattered in the best of times, is threatened with collapse by an acute shortage of public monies. At every level, government funding for the kinds of activities typically provided by nonprofits is under attack.
There is no way for private dollars to backfill the billions being cut from public budgets, yet is it enough for foundations to continue a business-as-usual approach in the face of this building crisis? Some have argued that foundations should double their payout rate to ease the nonprofit cash crunch. Others suggest that funders should redirect all of their resources, at whatever payout level, to supporting critical services, abandoning for a time their investment in the more innovative initiatives that give foundation boards a thrill. The question I want to ask is whether there is an opportunity in all of this for philanthropy to do more than backfill – to get out in front and lead.
There are two related steps foundations could take today – individually and collectively, to address The New Abnormal. The first is to raise their voices in protest over the dismantling of the social safety net and the broader compact between citizens and their government in which some measure of fairness is assumed to prevail. When the billionaire hedge fund manager pays a 15% tax rate while his chauffeur pays 35% it is hard to believe in the fairness of our system. When tax cuts for the top 1% of the wealthy take precedence over food stamps for the poor, reasonable people will ask what has become of our democracy. Foundations are well-positioned to make the case for greater fairness in society, beginning with a loud fight against the destruction of the social safety net. The second step foundations could take is to focus additional funding on support for advocacy and organizing, activities that mobilize people to participate in the political process at every level. Only through a national movement can the voices of regular people compete with the voices of corporations, lobbyists, and other special interests.
By taking these two steps, and better still, acting together rather than individually or in isolation, philanthropy can play a pivotal role at a crucial time in our country's history, fulfilling Andrew Carnegie's pledge of philanthropy "doing real and permanent good in the world".
David La Piana's most recent book is The Nonprofit Strategy Revolution: Real Time Strategic Planning for a Rapid Response World. He will be the closing keynote speaker at Ohio Grantmakers Forum’s annual conference on October 26 in Columbus, Ohio.