Clean Up Crew? How the Fall of Government May Shape Philanthropy's Future

The other day, we ran a story about the Science Philanthropy Alliance, which was formed after federal budget cuts—enacted through the mindless meat cleaver of sequestration—left researchers in the lurch as the National Institutes of Health and the National Science Foundation pulled back funding. 

In May, we wrote about a group of funders stepping in with $125 million to address the water crisis in Flint, Michigan. 

Two years ago, we wrote about philanthropy's role in the historic bailout of Detroit. Around the same time, we covered a big give by the Arnold Foundation to address big shortfalls in Head Start funding, created by federal budget cuts. 

On the higher ed front, we've written about a number of major gifts in which donors came forward to help universities cope with state funding cuts. 

In regard to K-12, we've covered several instances—most notably in Boston and Philadelphia—of strapped education officials begging private funders to meet urgent funding shortfalls. 

In New York and Los Angeles, we've reported on efforts by mayors to rattle the philanthropic cup for priorities that those great cities just can't afford. 

And now, today, comes a small story about how the the Hartford Foundation for Public Giving will provide $1 million to nonprofits in Connecticut to help offset budget cuts in that state. 

If we put our mind to it, we could probably find a story every week of how philanthropy is increasingly being asked to step up as the fiscal screws tighten on government, both nationally and locally. 

Of course, at some level, this is all very familiar. Foundations and major donors have repeatedly come under pressure in past decades to give when the ax falls on public spending, typically during recessions. 

What's different now is that we're heading into an era when this dynamic is likely to be permanent and ongoing. 

Consider the present moment: The U.S. is not actually in a recession; it hasn't been in years. The economy has been growing, with unemployment under 5 percent. Yet budget cuts are nevertheless pinching in various places like Connecticut, which was struggling with a $900 million deficit earlier this year.

And they'll keep pinching. The biggest driver of fiscal pain is the retirement of the baby boomers, which is just kicking in, with associated costs—especially for healthcare—increasingly squeezing all other forms of government spending. Federal outlays for entitlements for seniors are projected to double in the next decade alone. Pension costs are also soaring at the state and local level. New York is a good example: city outlays for pensions rose to around $8 billion in 2015, or 11 percent of the budget, up from 2 percent is 2000. In Illinois, rising pension costs have already led to budgetary mayhem across education and human services. 

This isn't the time to assign blame for how we got into this hole or discuss what might be done to avoid a future of ever-growing fiscal austerity. I can think of any number of villains in this story, along with posable steps to free up more cash for discretionary government spending. Realistically, though, my guess is that we'll see unending budgetary crunches in the future that inflict growing harm on vulnerable communities and the nonprofits that serve them.

On top of that slow-motion agony, we're likely to see periodic crises that demand urgent action from philanthropy—like the Detroit bankruptcy, the Flint water crisis, and Hurricane Katrina. The combination of decades of deferred infrastructure investments, teetering local governments (most recently Puerto Rico), and a rising tempo of extreme weather events, terrorist attacks and financial crises will likely generate some very expensive emergencies down the line. Ditto at the global level, where the financial demands of helping a record number of refugees fleeing failed states have lately overwhelmed international agencies. That flood may be paltry compared to how many people will likely be displaced by climate change down the line. 

This future raises tough questions for philanthropy. What's been happening in Flint is a great example, as we've discussed. Many funders, like Mott, strongly believe that water systems are a quintessential responsibility of government. But how can funders just sit back and do nothing when such basics in American life fall apart, hitting our poorest citizens the hardest? You see a nearly identical set of questions around refugees. On the one hand, helping those people should be the job of UNHCR and other agencies. On the other, enough help hasn't been forthcoming. 

The age-old dilemma for philanthropists has been striking the right balance between meeting urgent human needs and trying to solve problems at a systemic level. Lately, we've seen a great burst of systemic philanthropy, made possible in part by an influx of new resources—but also by a sector that's raised the bar for itself, with more funders scrambling after the Holy Grail of long-term change. 

But you've got to wonder: How long can this period last? In a future of declining government, recurrent crises, and growing suffering, how will funders be able to resist being pulled ever more deeply into meeting short-term needs? 

I don't have the answer to that question. I'm not sure anyone does. And who knows? Maybe the future will be more prosperous and less chaotic than I'm suggesting, and maybe our political systems will become more effective at governing than has been the case lately. Let's hope so. 

Related:What Should Philanthropy's Role Be When Public Systems Fail? Flint As Case Study