Philanthropy in Flux Part III | Whose job is it anyway?

As we’ve observed significant pullbacks in government funding from the nonprofit sector, we’re hearing comments and questions grounded in fear and also genuine curiosity. 

“Whose job is it anyway to care for the most vulnerable in our country?”

“Philanthropy will never be able to fill the gaps of large scale government assistance and interventions – especially with issues like public health, housing and climate.”

“So many of our society’s biggest challenges encompass large systems. How do we move forward without public resources at scale?”

Searching for the Net

Our country’s social and environmental challenges seem suffocatingly huge. The wealth gap is growing. Access to quality healthcare and a quality education is out of reach for many in our country. Owning a home or paying rent is increasingly unattainable for many Americans.  The percentage of food insecure Americans is increasing year over year. Climate disasters are at our doorstep.  Meanwhile, government dollars addressing these challenges are evaporating and new policies are seemingly making solutions to these issues even harder to grasp.

Government: Policy, Regulation and Public Services

Many are asking, is it the job of governments to address our country’s greatest social and environmental problems? In theory, government is tasked with ensuring the well-being of its citizens and politicians are elected based on these promises. A politician’s interpretation of “well-being” must appeal to a broad electorate; they design and vote on laws and policy to serve the masses. During times of disaster, we see FEMA, states and  local municipalities coordinate services at scale to help those affected.

For decades, funding, regulation and policy at scale were the primary levers to address civil society’s issues, from public health initiatives to environmental and climate issues to social welfare programs. The sentiment has decidedly shifted and officials in office desire for other sectors to step in to fill the government’s void.

Government has the mandate and the resources to tackle some of the largest social ills, but in practice, their ability to act swiftly and innovatively is often hindered by bureaucracy, political polarization, and funding limitations. This is where private markets, faith communities and philanthropy come in.

Private Markets: Forces for Good and Profits with Purpose

Is it the role of private markets to address civil society’s greatest challenges? Corporations have a keen advantage in their agility, talent, innovation and access to capital. Their greatest limitation is they are in the business of making a profit and ultimately beholden to their shareholders. In a traditional sense, their contribution to civil society is typically tied to building their brand. In recent years, we’ve seen more and more “business for good” models where corporations are working towards a “double bottom line” whereby they produce a financial return and make a social or environmental impact. 

Always, the limiting factors for private markets to address large scale issues are the ability to scale solutions and their philanthropic budget typically averages 1.1% of their pre-tax profit. Growth of corporate philanthropy follows the growth of the American economy. Philanthropy is not the private market’s primary driver.

Faith Communities: Moral Vision and Conscious of Society

Is it the job of the faith communities to meet the needs of civil society? Going back to ancient times, we’ve seen faith traditions step up to meet the needs of a community’s most vulnerable. Most ancient religious texts mention caring for the poor and the notion of alleviating suffering. Charity (Christianity), Tzedakah (Judaism), Zakat (Islam), Dharma (Hinduism) and Dana (Buddhism) all speak to this concept of caring for the vulnerable. Current day religious leaders and followers provide a vision of human dignity, moral responsibility, and the sacredness of life. It offers not only a framework for justice but also a powerful force for mobilization, advocacy, and healing in times of crisis.  

As our country has grown, so have our systems and challenges. At the same time, those who identify with an organized religion in our country are shrinking. Faithful messages about generosity are reaching fewer people. Other limiting factors for faith communities are limited resources and an ability to scale solutions.

Philanthropy: The Risk Capital of Society

Can philanthropy provide all of the financial resources and thought partnership to solve for these current day challenges? It is estimated that there is $1.73 trillion sitting in private foundations and donor advised funds according to the National Philanthropic Trust.

Historically, philanthropy has been the spark for innovation, a safety net where others falter and a critical voice for the marginalized. Philanthropy can:

• Take long-shot, high-risk bets on social or policy innovations;
• Fund social experiments over many years without the pressure of a political cycle;
• Seed pilot initiatives at a local level and bring proven ideas to other sectors to scale with greater reach; and
• Understand local issues and nuances to drive philanthropic dollars effectively to make change.

During the pandemic, we saw philanthropy quickly mobilize to power nonprofits to address gaps in public health, education and food insecurity. Other sectors were constrained in various ways; philanthropy and nonprofits flexibly and innovatively met the moment at scale and also with localized solutions. 

Nonprofits are the engines behind civil society. Nonprofits outpace other sectors in garnering Americans’ trust with 57% of Americans rating high trust in the nonprofit sector. Leaders are on the front lines in communities and building and adjusting solutions to meet the need. They need capacity to innovate, grow talent and strategize. Two out of three nonprofits in the US receive a government grant or contract. As funding streams are shifting, leaders are quickly adapting and looking to philanthropy, private markets and faith communities to step up. 

So, whose job is it to meet the needs of civil society?

In short, it’s everyone’s job. As we watch government step back in this capacity, it is incumbent on other sectors to come to the forefront to coordinate efforts and resources. Civil society faces an unprecedented moment with the constrained resources and a news cycle that is constantly changing around federal and state policies. Uncertainty abounds. 

At GPA, we educate our clients on the role of each sector in the context of civil society and how philanthropy can lead in this moment. We fully acknowledge that philanthropy cannot replace government funding for all solutions, but under the current circumstances, this is our country’s best hope. Certainly, there is room for partnership among sectors, but it is on the philanthropic sector to lead for the next several years. There is too much at stake to sit back.

About Grant Philanthropic Advisors:
We’re an independent firm helping clients to focus and maximize their philanthropy—in turn, strengthening the fabric of our communities. Founded in 2019, we help donors move from responsive patterns of giving by assisting clients to identify values and become more strategic in their philanthropy. Our goal is to help donors to become more effective as change-makers.

We work with foundations (large and small staff teams), donor advised fund holders, multi generational families, individuals, philanthropy supporting organizations and corporations to design philanthropic strategies.