When donations go down the tubes
THIS TIME OF YEAR, charitable donors encounter Salvation Army bell-ringers at the malls and get a surfeit of fund-raising pitches in the mail. And in response, donors are inundated with the usual bromides in the press: check out the groups, make sure your money goes where it's supposed to, and the like.
Recent developments in the nonprofit sector ought to raise a different set of questions. Two years after Hurricane Katrina, reconstruction and relief are still lagging. The Smithsonian Institution has been in a downward spiral of spending scandals. Congressional hearings have revealed how much less nonprofit hospitals and universities do for the poor than they should.
So although the plugged-in charitable donor is right to worry about what might be called "mechanical accountability" - nonprofits' fund-raising costs, efficiency ratios, administrative expenditures, and the like - donors should also pay more attention to the substance of what nonprofits actually do.
Here are some common problems:
Paralysis by analysis. How many more reports do we need about critical social problems? We've seen an increasing number of instances of groups studying problems to death, issuing reams of reports as a substitute for taking action. The sheer number of planning studies has exacerbated a slow Gulf Coast recovery after Katrina.
Most social problems are complex. But many challenges need vigorous, concerted action. Donors should look for groups whose social activism is more than self-indulgent navel-gazing. An incomplete nonprofit infrastructure. While a great many people did good work after Katrina, large institutional donors tended to funnel money to the "big name" groups, usually not headquartered in the Gulf Coast region. The result is an underfunding of the local, grass-roots infrastructure. When the big names leave, the local groups are left with a much expanded workload but, in most cases, no more money.
Let's focus on finding the groups that represent and are governed by local communities and constituencies - and will build their capacities for immediate humanitarian needs and the long haul.
Inattention to social change. Congress has shown an interest in charitable giving, nonprofit activities, and foundation grantmaking addressing the needs of the poor. But the question is: Will foregone tax money end up helping disadvantaged people or not?
Most charitable giving and tax exempt expenditures don't reach the poor. It's not just the shortcomings in nonprofit hospitals' charity care and nonprofit universities' support for lower income students. American charitable giving is too often a story of the "widow's mite" - the most generous donations to people in need come from others in need. Adding a concern for social equity to our holiday giving would be a big change.
The need to build democracy. In advance of a national election that will cost, all told, well into billions of dollars, donors might be advised to look for charities whose mission is to build - or rebuild - this nation's democratic traditions. That was the distinctive function of US charities that so deeply struck French visitor Alexis de Tocqueville in the early 1800s, and it merits a new infusion of charitable giving investment today.
Scandals such as those at the National Capital chapter of the United Way, the Nature Conservancy, and the American Red Cross have forced charitable donors to be alert to those who might use donations for nefarious purposes. That concern isn't unwarranted
But this holiday season, charitable donors should also focus on substantive accountability - on what the tax exempt sector can and should do to build social equity and democracy in our nation.
Rick Cohen is national correspondent for Nonprofit Quarterly.
