Nowadays, figures like former Fed chairman Paul Volcker — wisemen types who float above the partisan fray — seem increasingly rare. Praised by politicians as diverse as Barack Obama and Ron Paul, Volcker emerged after the 2008 financial crisis as a leading critic of deregulatory excess. Over the years, he's headed up various high-profile commissions and projects. To the extent there still is an "establishment," Paul Volcker is among its leading figures.
One of Volcker's longstanding interests has been better government. Since 2013, he has headed up the Volcker Alliance, a nonpartisan nonprofit dedicated to effective public policy and rebuilding public trust in government. The alliance operates as a think tank, producing research and ideas, as well as leading educational efforts to foster the next generation of public servants.
Now, as keen students of philanthropy know, work that seeks to strengthen government writ large is a big magnet for funder dollars. To be sure, foundations and major donors are often interested in building stronger public capacity to solve this or that problem, but they tend to tune out the larger challenge of ensuring that government functions well overall and has the public's trust.
Earlier this year, the Center for Effective Government — which began as OMB Watch 33 years ago — announced that it was shutting its doors, citing a lack of funding as the main reason.
The chasm between funder interest and the profound problems facing government is striking. In fact, it's hard to think of a bigger challenge facing the nation that fewer funders are paying attention to.
But if anyone can mobilize new donor dollars for this critical area, it's Paul Volcker, with his unique stature and connections. And sure enough, the Volcker Alliance has some heavy hitters in its corner, including several billionaire donors we write about often: Laura and John Arnold, Pete Peterson, and Ray and Barbara Dalio. The biggest of these donors seems to be the Dalios, who put up $10 million to fund that alliance.
Of course, let's not forget that Paul Volcker himself is a man of means: He contributed $5.3 million to the new nonprofit through his family foundation in 2013.
Despite its founder’s career in Washington, D.C., Volcker's group pays a lot of attention to the budgets of state and local governments. Volcker’s argument is that sound, transparent practices in government budgeting at all levels can rebuild our diminished trust in public institutions. The reason is simple: People want to know how much government can afford, and when it needs to cut back. Opaque and tricky accounting, not to mention pervasive public debt, cut into that trust.
The Alliance’s Trust and Integrity in Government Finance project is designed with that transparency in mind. Collaborating with a variety of academic partners and a financial analysis firm, Alliance staff will spend several years compiling a study of state budgeting practices in all fifty states. The focus will be on integrity and clarity in fiscal reporting. This builds on a pilot conducted in three states (California, New Jersey, and Virginia), with a preliminary report released last June.
The project harnesses the talents of public policy professors and graduate students from universities across the country, assembling a research network to collect data on state budgets, analyze it and pass it on to the alliance. In a way, the project also serves as an educational program for the students involved. Academic partners include Arizona State University, City University of New York, Cornell University, Florida International University, Georgia State University, University of California, Berkeley, University of Illinois at Chicago, University of Illinois Springfield, University of Kentucky, University of Minnesota, and University of Utah.
This fall, the Volcker Alliance also released a helpful preliminary reference guide to state budgets, financial reports and fiscal analyses. The Trust and Integrity in Government Finance project promises to be much larger in scope.
It's not surprising that the Arnold and Peterson foundations are the backers of this effort. As we’ve reported, a focus on fiscal policy lies at the heart of Peterson’s philanthropy, although his foundation has mainly focused at the federal level.
Meanwhile, among its many other interests, the Arnold Foundation has been focused on public finance in the states, mainly through its work on public pensions.