Foundations Risk Losing Their Independence in Obama Era

The phrase “public-private” partnership has begun to give me the willies. More and more, in the Obama era it seems to signal a reduction in the independence of the nonprofit world generally and the foundation world particularly, and a concerted push to align the use of philanthropic resources and energies with those of government—especially the government that President Obama heads.

If we’re not careful, philanthropy could soon become another version of the nascent corporate state, not unlike what’s going on with the automobile and finance industries. It points toward a day when the Ford or MacArthur foundation or even the mighty Gates foundation will be no more independent of White House decision making than General Motors or AIG is today.

To be sure, not all instances of public-private partnerships are troublesome. It makes sense to hire private organizations to collect the trash, run some schools, provide foster-care services, operate hospitals, and provide other key services. Indeed, countless public functions can be better handled by people who are not government employees.

Private organizations, both for-profit and nonprofit, exist in part to handle those services and have done so for decades. They must play by government rules and are generally accountable to government for their performance. No problem here, at least not with me.

Today’s notion of public-private partnerships, however, typically means something quite different. It signals private organizations applying their own resources to the same ends as government, a kind of joint venture with pooled resources.

No, that’s not always bad. Plenty of fine universities, charter schools, and hospitals represent a mingling of government and private resources.

The Knowledge Is Power Program, often called KIPP, needs a couple thousand dollars per pupil per year more than most states supply their charter schools, so this additional money comes from private sources.

The University of Virginia gets only about 8 percent of its operating budget from appropriations by the Virginia legislature, so it aggressively seeks out money from foundations, corporations, wealthy individuals, and alumni.

Well and good. What we see here are essentially independent organizations pulling resources from multiple sources to carry out missions that are both public and private, That’s nothing to worry about.

But what gives me the shakes is when elected officials and the people they appoint to top jobs ask private organizations to dig into their own pocketbooks to advance the ends of government—and what really alarms me is when those organizations, especially private foundations, cheerfully assent to this.

Stripped to its essence, what’s going on here is government seeking to do more than it can afford to do with its own resources. Instead of imposing higher taxes or changing budget priorities, government is trying to direct other resources toward its own ends.

This has two bad effects. First, it depletes the private resources available to do other things for society, including important things that government cannot or will not do.

Every dollar that a foundation or corporation contributes to, say, the Department of Education’s public-private effort to promote science and math education, or to projects devised by the White House Office of Social Innovation and Civic Participation, is a dollar no longer available for genuinely private activity.

Second, this kind of partnership inevitably reduces the independence of nonprofit organizations, their freedom to criticize government, and their capacity to tell the truth.

Let’s acknowledge that the impetus for this sort of thing doesn’t always come from government.

Recent months have brought plenty of examples of foundations and businesses suggesting joint ventures, volunteering to deploy their resources on the government’s behalf.

Many of the nation’s biggest foundations have, with the best of intentions, acted as if their foremost mission is to instruct federal and state officials on what to do, tug the strings of public policy in directions that they favor, and spend their own money in ways that complement (or foreshadow) outlays of government funds.

What’s more, the active flow (in both directions) of human traffic between foundation and government offices suggests not only much overlap between private and public agendas but also that some of the same folks are working both sides of that street in alternate months.

In education, much of this has centered on the billions of “race to the top” dollars offered by Arne Duncan, the education secretary, and his earnest effort to deploy the money to stimulate changes in the schools.

Because the ideas he is promoting more or less align with the priorities of many nongovernment analysts and donors (myself included), it’s no surprise that philanthropic organizations have been tempted to lend a hand to make it all happen.

The Department of Education has understandably encouraged and welcomed such help, and in response, well-known philanthropies have underwritten projects, meetings, and other efforts to help advance Secretary Duncan’s efforts.

And why ever not? After all, Uncle Sam has so much more money than even these deep-pocketed philanthropies that it makes sense to influence where it goes.

Perhaps in retrospect we’ll conclude that this intimacy between foundations and government did some good and produced some healthy progeny.

But this could also be a Faustian bargain that, in the throes of short-term passion, fails to note the long-term risk.

The great advantage of nonprofit organizations and the rationale that America has used to encourage their growth is that charitable institutions are distinctly different from government. They have a unique capacity to do what government cannot or will not do. That’s a far different thing from serving as guide dog, tugboat, or aide-de-camp to government itself. And that’s the distinction we risk losing as foundations rush to help do government’s work.

What private dollars can do uniquely is stand apart from government: finance activities that are politically or constitutionally beyond government’s reach; underwrite critics and analysts of public policies; pay for research and advocacy that would be inappropriate for governments to undertake; and generally distinguish its work from that of government in a truly “independent sector.”

History contains abundant examples of the distinctive good that truly independent nonprofit organizations and grant makers have produced for society.

Just look once more at education: Would Teach for America have gotten traction if it had relied from the beginning on government dollars? Would the National Council on Teacher Quality have been able to put big-city teacher contracts online? Would the National Alliance for Public Charter Schools be the vibrant advocacy organization that it is?

No, they and dozens of other important education groups, programs, and projects would not even exist. And without independent private dollars, the New York schools chancellor Joel Klein would not have been able to jump-start a fleet of charter schools in New York City. Nor would Michelle Rhee, the leader of the District of Columbia’s schools, have had any resources in reserve when she set out to bargain seriously with the Washington Teachers’ Union over the evaluation, retention, and compensation of educators in the nation’s capital.

Such lists could go on and on. It’s not that the private money that made these things possible was antithetical to sound public policy. It’s that the private dollars enabled things to be done around, outside, and often in tension with government and politics; things that, over the long haul, make for better education and sounder public policy. Due to politics, interest groups, procurement rules, equity considerations, uniformity concerns, red tape, and inertia, government cannot pay for many worthy changes itself.

And philanthropy could pay for them only because it didn’t much care what government thought.

Foundations had truly independent ideas of what would be good for education—and, as these examples suggest, more than a few of those ideas turned out to be sound.

Some, indeed, eventually led to government doing things it might not otherwise have done, such as supporting Teach for America. Some, I believe, discouraged government from doing bad things it would otherwise have done—such as maintaining the New York and D.C. school systems in their dismal, unchanged forms.

This healthy tension works, however, only when philanthropy remains truly autonomous, even aloof. When it can thumb its nose at politicians and government officials and say, “We’re doing this because we believe it’s good for American education and we don’t have to pay attention to the many constraints that you in government must labor under.”

That means being free to be oppositional, even confrontational when necessary, with government and its leaders.

That’s exceedingly tough for philanthropists to do while also sharing a bed with government. It’s not impossible, but it’s hard, if only because elected and appointed officials at whatever level are apt to say, “We can’t work with the XYZ foundation because it’s got a history of criticizing us, paying for studies that embarrass us, and funding people to give us grief.”

Stalwart philanthropists ought not be intimidated. Yet many are. Because it’s always nicer to be thanked and taken seriously, and because it is so tempting to think that one’s relatively meager private dollars are being multiplied by the government’s zillions, there’s a strong temptation to bite one’s own tongue and hug government tighter.

Perhaps no harm will come from this romance between government and philanthropy in education and other spheres like it. But I’m suspicious. American society would be better served if government and philanthropy waved cheerily at each other but then slept in their own separate beds.

Chester E. Finn Jr. is president of the Thomas B. Fordham Foundation, a Washington think tank that focuses on education. He served as assistant secretary for research and improvement in the Department of Education from 1985 to 1988.