Could Obama’s Social Innovation Fund Hurt Foundation Advocacy?

As the Social Innovation Fund gears up to make grants, nonprofit leaders raised concerns this week that the fund could have the unintended consquence of discourging grant makers from speaking out about federal policies.

During an event at the Hudson Institute’s Bradley Center for Philanthropy and Civic Renwal, speakers of different political stripes discussed the foundation world’s relationship with the Obama administration and the importance that grant makers remain a strong independent voice in Washington.

But they said advocacy work could be hampered by Mr. Obama’s Social Innovation program, which will give money to existing grant-making organizations that, in turn, will support effective charities helping youth and other causes.

“The more dependent you are on government revenues, the more likely you are to bite your tongue,” said Gara LaMarche, chief executive of the Atlantic Philanthropies.

Terry Mazany, chief executive of the Chicago Community Trust, agreed. While his organization is not seeking Social Innovation Fund dollars—the matching requirement is too high—he said the idea of a grant maker receiving federal money and possibly becoming depended on that revenue is a bad idea.

“I don’t think that would be healthy in the long run,” he said.

Chester E. Finn, Jr., president of the Thomas B. Fordham Institute, said the Social Innovation Fund along with other Obama administration policies have the potential to damage the nonprofit world and its independence.

As other examples, he pointed to the president’s proposal to curb charitable tax deductions for the wealthy and the U.S. Education Department’s close relationship with big foundations, which he said could steer philanthropic money towards government goals.

“The phrase public-private partnership is starting to give me the willies,” he said.