Recession-Fighting Ideas for Philanthropy

By Rick Cohen

How can a half trillion dollars of tax-exempt assets sitting in foundation coffers help the U.S. overcome the deepening national economic recession? As the Rockefeller Foundation observed in July based on a public opinion survey co-sponsored by Time Magazine, Americans are engulfed in feelings of “economic insecurity,” an “obsolete” social contract between government, business, and workers, and have little faith in future economic prospects.

How can our society not call on foundations and their wealth to play a major role at this moment of near economic freefall?

The relevance of the question stands on the following: that we’re in a full-fledged recession that is roiling the nonprofit sector, and that foundations, by their own trade association’s self-definition, have a big role to play in crafting pathways out of this financial morass.

The Council on Foundations’ May 2008 survey about foundation roles in the economic “downturn,” the polite euphemism of choice in many circles, suggested that a little more than half of all foundations anticipated no effect on their grant-making from the plunge in the stock market, though a third of “independent foundations,” two-fifths of family foundations, and more than half of community foundations anticipated lower levels of grant-making this year.

That was a point of time in May, prior to the collapse of IndyMac, the largest U.S. bank failure since the Great Depression, prior to the unfathomable nosedive in the Fannie Mae and Freddie Mac stock values, the favorite “secure” investment of many foundations, prior to the Dow Jones Industrial Average reaching lows not seen in more than two years. Anyone want to take bets on whether half or more of this nation’s 90,000 or so grant-making foundations will maintain or actually increase grant-making in the midst of this continuing downward spiral?

The issue is not simply whether foundations will bump up their countercyclical grant-making to help nonprofits weather the economic storm. The issue is how foundation grantmaking -- and investments -- will be targeted to take on a sinking economy?

The question fits the Council on Foundations’ current positioning. The Council’s CEO, former Republican Congressman Steve Gunderson, has made bold, public statements about the increasingly muscular roles of foundations in our society. In December of 2005, he told the London-based Alliance magazine, “It is not philanthropy’s role to simply do what government needs to do. But the simple reality is that the limits of government have no relation to the needs of society. Philanthropy will thus play a greater role in society.” This past May, he told an audience of philanthropic donors in Idaho that, “What you’re seeing is philanthropy stepping up to the plate to provide a solution in ways the public and private sectors have not done to date.”

The Rockefeller Foundation’s response to its own survey data was the announcement of a $70 million portfolio of grants under the rubric of “Campaign for American Workers.” It was described as funding policy research akin to the foundation’s 1930s support of efforts that they say “led to Social Security under FDR.” Major foundations across the nation are launching or expanding similar policy research work, the timing just before a presidential election probably not entirely coincidental.

However, the foundation noted that “one size doesn’t fit all” and called for a “diversity of solutions.” The big public policy announcements garner press attention and provide easy copy for mainstream newspaper op-ed writers. But to address the economic insecurity of everyday Americans, foundations might want to remember the importance of doing things that are visible, tangible, and promising in communities where the recession is undermining families, incomes, neighborhoods, and jobs.

Respondents to the Rockefeller Foundation called for “new solutions” that sounded more like reinvigorated investments in the tried and true, including:
* Increased governmental help for people struggling with economic conditions;
* Investment in public-works projects, and;
* New measures to create jobs through supporting energy conservation.

The elements of a foundation sector-wide portfolio of on-the-ground anti-recession efforts might emulate what some foundations are doing to demonstrate that these efforts really can work:

Workforce Partnerships: It is a little surprising that more than a half dozen or so national foundations haven’t signed on to the National Fund for Workforce Solutions or the less than a dozen workforce partnerships that are within the program. These partnerships link employers and employees to emerging jobs (including, notably in the health sector, where the Rockefeller survey findings also discovered public interest), job training, and advancement. All-purpose solutions they are not, but they are concrete foundation investments that advance the economic conditions of American workers that can be emulated and expanded by the next occupant of the White House come 2009.

Community Investments: The John D. and Catherine T. MacArthur Foundation’s $26 million investment in Chicago’s New Community Program, the first installment of a multi-year $150 million grant commitment, is not for the half-hearted. Core NDP components include the creation of more than a dozen “Centers for Working Families,” offering job training and financial literacy assistance. Chicago and MacArthur both are mammoth. Can’t smaller foundations in small communities do the same?

Worker Centers: Familiarity with labor history and labor economics reveals that organized workers do a heck of a lot better in terms of wages, benefits, and job security than their unorganized brothers and sisters. With a workforce population that is likely to be majority minority in a couple of decades, immigrant-focused workforce centers such as the Garment Worker Center in Los Angeles, the Tenants’ and Workers’ Support Committee in Northern Virginia, and others are combining networking for newcomers to the U.S. with organizing to fight for labor rights. The Public Welfare Foundation, the Liberty Hill Foundation, and others have supported worker centers with small grants. You don’t have to be a Rockefeller or MacArthur to put capital into labor organizing.

Enterprise Investments: Parts of the historic U.S. economic machine are not functioning well. New enterprise development investments, such as those launched by the F.B. Heron Foundation, with grants as well as program-related and mission-related investments (PRIs and MRIs), capitalize new and emerging initiatives. Such initiatives include worker-owned home health care businesses in the Bronx, N.Y., through the Paraprofessional Healthcare Institute, new commercial enterprises in Arkansas, Louisiana, and Mississippi through the Enterprise Corporation of the Delta, and investments in central Appalachia, Oakland, California, Yonkers, New York, and other communities supporting cutting edge economic ventures.

This past July, COF’s Gunderson told the New York Times in a letter, “Unlike public programs, philanthropy is innovative, flexible and risk-taking.” If philanthropy is going to help confront the nation’s burgeoning sense of economic insecurity, it will have to take on a little insecurity itself and risk some big pieces of its tax exempt capital in demonstrating, not just studying ways out of the national economic recession.
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Rick Cohen is the former executive director of the National Committee For Responsive Philanthropy in Washington, D.C. His email address is cohenreport@npqmag.org and the website for the Cohen Report e-newsletter is http://www.nonprofitquarterly.org/cohenreport/.