The Federal Budget Affects Everything. So Why Do Most Funders Ignore Fiscal Policy?

In case you haven't noticed, it's budget season again in Washington, D.C. President Obama just submitted a new $4 trillion budget to Congresswhich Republicans promptly declared dead on arrival. Another round of budgetary brinksmanship may lie just around the corner. 

But here's the question on my mind: Why do so few foundations actively aim to influence fiscal policy at the federal level? After all, the federal budget affects nearly everything that funders care about, including spending on arts, science, medical research, environmental conservation, education, global development, and on and on.

Given the relatively small resources of philanthropy, many funders understand the importance of leveraging their resources to influence federal policyto help direct how the truly big money gets allocated. Yet funders are surprisingly narrow and shortsighted in how they approach policy advocacy at the federal level. Much of the focus is on winning more support in Washington for specific causes or programs by showing how effective they are. So you have science funders backing advocacy that stresses the dividends of federal investments in science, or education funders pushing for more federal spending on early childhood education, or environmental funders touting the virtues of investments in that area, or global development funders defending foreign assistance. 

All that work is fine and good, but it ignores a dominant factor that drives budgetary policymaking in Washington, which is revenuehow much money the federal government raises through taxes and thus has available to spend on programs.

There are basic two budgetary debates in Washington: One is about the overall level of taxes and spending, the other is about what specific things the government should prioritize. If you lose the first debate, it may not matter if you win the second one. When the fiscal hawks who favor lower taxes and spending cuts prevail, all priorities tend to take a hit. Which is exactly what's been happening since 2011, when Congress first started constraining spending thanks to the influence of the Tea Party. 

None of this is exactly a secret, but what's remarkable is just how little foundation funding goes to support work on taxes and fiscal policy writ largeparticularly by those funders who have the most to lose from budgetary downsizing. The Center for Budget and Policy Priorities is relatively well supported, but has a budget a third that of the Heritage Foundation, which is dedicated to downsizing government in nearly every area except national security. Meanwhile, the Institute on Taxation and Economic Policyprobably the premier group advocating for more progressive taxation, both federally and in the statesraised just $1.5 million in 2014. Other groups, like the Center for American Progress, do work on tax and fiscal issues, but it tends to just one among many priorities.

Repeatedly since 2001, when President George W. Bush's giant tax cut was enacted, progressives have lost the battle over fiscal policy. And so much of what foundations care aboutthose on the left, but also many on the centerhas suffered as a result. Why aren't those funders paying more attention?

I should add that this point most certainly does not apply to conservative funders, who have heavily invested in fiscal policy work for decades. These funders have understood the importance of capturing the highest ground in U.S. politicswhich is the broad question about the size and role of government. They haven't been as successful as they had hoped at "starving the beast," but their strategic savvy and focus has been impressive. They have given heavily to institutions that have built the intellectual firepower needed to influence fiscal policy, which can be complicated stuff.

The ideas emerging from that policy infrastructure have been enormously influential since the 1980s, helping block any further expansion of government and fueling an era of massive budget deficits—which are now cited as an urgent reason to cut spending sharply. Over the next decade, non-defense discretionary domestic spending is slated to fall to its lowest levels since World War II. Already, nearly every major program other than mandatory entitlements has felt the knife. It's only going to get worse. 

Foundations at every level, including locally, know well that federal spending cuts result in big new demands on their resources, distracting them from longer-term efforts to make change. It's bizarre that more of them aren't focused on preventing those cuts to begin with. Haven't they learned anything from the past four decades? 

Okay, "bizarre" is too strong. What we have here is a classic collective action problem. A vast number of disorganized funders with their own specific, narrow concerns keep suffering setbacks because they aren't getting together to tackle a bigger problem that hurts them all. What we need is some leadership on fiscal and budgetary policy. Foundations love collaboration, right? Well, this would be a great place for more.