Philanthropy recalibrates as government pulls back.
Philanthropy is changing. Once the realm of big donors who funded marquee projects and pet causes, private donations have become central to areas traditionally seen as government’s purview, including public schools, scientific research — and even the social safety net.
It’s a shift visible across Oregon: At OHSU, National Institutes of Health grants fund smaller projects, but it took a $500 million pledge by Nike founder Phil Knight and his wife, Penny, to drive an ambitious billion-dollar battle to end cancer. With businesses crying out for more scientifically minded workers and schools struggling to make ends meet, the MJ Murdock Charitable Trust, based in Vancouver, Wash., is paying to improve Northwest teachers’ ties to contemporary researchers. And as homelessness and housing worries dominate headlines across the state, even government-funded efforts to help the poorest of the poor often depend on the work of nonprofits.
“Thirty years ago, philanthropy was the difference between being great and being good. Now it’s the difference between being cutting edge and barely keeping up,” says Keith Todd, president of the OHSU Foundation. The roots of this era of austere government, and the growing role philanthropy plays in funding social services and other public goods, can be traced to Ronald Reagan’s promise to cut taxes and restrict welfare, and his push to shrink the size of the country’s social safety net. His successor, George H.W. Bush, continued this push, advocating for a “thousand points of light” — volunteers and nonprofits — to promote nongovernment solutions to social problems.
As Republican-led efforts cut federal funding for social welfare, Oregon’s government bodies have faced a changing financial reality exacerbated by public pension costs and voter-imposed tax limitations. Measure 5, passed in 1990, restricted property-tax collections and was the first of a series of tax limits voters approved over the following decade. As baby boomers edge into retirement, meanwhile, the promises made by the state’s Public Employees Retirement System have burdened the budgets of nearly every sizable government program.
But not all is gloom and doom. Steve Moore, executive director of the Murdock Trust, sees benefits in the growing role of nonprofits and foundations in what was once viewed as the public realm. “Many people start with the assumption that what government is doing is working, and that when funds are cut, the solution is just a matter of backfilling. We come at this from a different perspective,” says Moore, whose foundation specializes in looking for solutions to problems that may stymie the public sector.
“Rather than looking for more tax dollars, we can help nonprofits develop a holistic view of the community’s needs, to look for new kinds of solutions,” he says. “Governments often start from a very big picture. Nonprofits have to always start with the mission they are attempting to fulfill, and they have to always be asking what is most effective so they can satisfy their donors and supporters.”
But Renee Irvin, a University of Oregon professor who has published research on the role of philanthropy in providing public services, warns that this growing reliance on private money to fund society’s most basic needs could put critical community services at risk. Philanthropists and smallscale donors to nonprofits generally look for programs that generate “warm, fuzzy” feelings, Irvin says. Pets or children generate these feelings. Sewer plants and police patrols do not.
“Nonprofits fulfill an important role, but there is value in the importance of government funding. If we left public safety to private funding, only the ‘good neighborhoods’ would self-fund private security forces,” she says.
Irvin’s concerns are reflected across the state, as local governments struggle under PERS obligations that seem to grow faster than property-tax revenue.
As philanthropists are increasingly called upon to fund society’s basic needs, arts advocates worry that private funds that once might have gone toward theater, the ballet or other creative efforts could dry up.
“I’m applying for $50,000 to sponsor a season of plays at a theater company,” says Claire Willett, a Portland playwright and arts consultant. “That grant application goes into a pot that has things like programs to address the Portland homelessness crisis, or tackling pollution in the Columbia Gorge. For a lot of foundations and funders, it’s harder to see the case for why the arts matter in a community with so many pressing problems.”
Because of these lamentations, there’s a growing sense in the nonprofit world that while donations may never be enough to back ll missing government dollars, so philanthropy must forge a new path in this era of public austerity.
“It’s hard sometimes to draw a direct line between a) government funding was cut and b) now a nonprofit has picked up the exact thing the government was doing before,” says Kathleen Cornett, vice president for grants and programs at the Oregon Community Foundation. “The jury is probably in: We are not going to have 100% government funding for everything everybody wants. It’s going to come from a combination of private and government dollars, and we’re developing new solutions to meet community needs.”
Even as Cornett says she likes to focus on the benefits of philanthropy, she also notes that it’s important not to overlook the shortcomings of the shift from tax funding to the private sector.
“There’s creativity and flexibility that comes from nonprofits and philanthropy,” she says. “When it’s bad is when the sum of that creativity and flexibility still does not add up to anywhere near the need. Then you’ve got this spotty arts-education system, or the situation in Josephine County, where the library is now run by volunteers. at’s not right. Something like a library should be one of the pieces of infrastructure within a community.”
Moore at the Murdock Trust says he’s focused on the good philanthropy can provide and the ways it can excel over government, not the challenges posed by cash-strapped agencies. Willett, the arts consultant, sees a need for greater Oregon arts funding but not a path to get there.
As long as tax restrictions stay in place and PERS eats away at Oregon’s government budgets, the decades-long shift that’s boosted the role of philanthropy in education, research and social services seems likely to continue.
“I think in the long run, it’s the social compact,” Cornett says. “We need to readjust — maybe we are readjusting our collective vision of what it is we support in our communities. One would hope that within communities there could be consensus around certain basic levels [of funding], whether it’s public or private, all kids should have certain things, for example. That may be idealistic. I don’t know.”