Non-profit industrial complex?

February 4, 2009 9:29 AM

"Arguably...given their limited obligation and inclination to report to external audiences about operational or performance matters, foundations are the least accountable institutions in our society."

Some are pointing to the rise of a non-profit industrial complex (echoing Eisenhower's famous warning of a military industrial complex and the phrase's later application to the prison industry). What does it mean for the left if the revolution will not be funded?
posted by lunit (27 comments total)

First we had the famous Ike definition. Then, added, Academic complex; here, prison industry complex...why not simply refer to everything in our nation as the Complex Complex?
posted by Postroad at 9:45 AM on February 4

One of the things Kurt Vonnegut has taught me is that the sole purpose of a foundation is to ensure that a wealthy family both remains wealthy and does not pay taxes on that wealth when it is inherited after a death. All other altruistic or charity applications are for further tax deductions.
posted by shmegegge at 9:54 AM on February 4 [1 favorite]

Regarding nonprofitquarterly.org: They are accountable to ongoing donors and possibly their members. Who else should they be accountable to? Arguing that they should organise their funds to be unsustainable without outside capital injection is arguing for the help given by non-profits to fail in the event of severe recession. I'm British so the issue is not as extreme for us, but where you have a non-profit taking on some of the roles that would normally be fulfilled by the state in the EU it seems essential not to have a system where those non-profits then disappear when most required.

Regarding weeklystandard.com: The arguments are a) non-profits are often liberal and b) they do not represent a full plurality of views. No, they do not, and it is insane to suggest they should. If you want more conservative non-profits, donate to conservative non-profits. But saying that liberals want higher tax rates and then complaining when they do the theoretically conservative thing of not providing social care through the state but via the market of private ideas and organisations that they can donate to...well, that is a difficult position to argue. The article also misses a major point - the conservative non-profits are churches.

Here's to non-profits, long may they show the better side of humanity.
posted by jaduncan at 9:56 AM on February 4 [3 favorites]

One of the things Kurt Vonnegut has taught me is that the sole purpose of a foundation is to ensure that a wealthy family both remains wealthy and does not pay taxes on that wealth when it is inherited after a death.

Well, they let rich people turn personal consumption into influence on society, often involving helping people. It's like a less malignant version of politics.

There are one or two major loopholes that can make charitable donations a tax benefit rather than simply an adjustment in income (I'm thinking of the effectively disparate valuation of assets with appreciated capital gains in the respective contexts of donations and sales). They should be fixed. (Non-profit powerhouses like the private universities have prevented this from happening.) But in general the system works, and most charitable donations -- including those by rich people -- are really given away. This is fairly laudable.
posted by grobstein at 10:06 AM on February 4

Come to think of it, I learned a bunch of economics lessons from Kurt Vonnegut which I no longer believe. Anyone read Player Piano?
posted by grobstein at 10:10 AM on February 4

They are accountable to ongoing donors and possibly their members.

Some foundations that have ongoing donors are accountable to them. Other foundations - with one gigantic endowment passed along for decades - no longer need to be accountable to their original donors.

The argument is that they're not actually accountable to their members, or to the people whom they serve, or to the government that allows them gigantic tax breaks. They should be accountable to at least some if not all of these groups.
posted by lunit at 10:16 AM on February 4

What does it mean for the left? One would hope that it will serve as a reminder that the struggle is supposed to be against capital.
posted by No Robots at 10:16 AM on February 4 [1 favorite]

Well put, jaduncan.
posted by cows of industry at 10:34 AM on February 4

This is total right wing ideological BS. Someones got to take on the social ills of the world. If not government (higher taxes) than who? The free market has shown time after time to be flawed in its ability to solve many problems. In fact it's built on an unsustainable house of cards - limits to growth.
posted by stbalbach at 11:17 AM on February 4

Actually, the first article is moderate, the second article is right-wing, and the last two links are left-wing.
posted by lunit at 11:29 AM on February 4

Thanks for this post. These are issues I've been thinking about and working with over many years with foundations large and small both in Canada and the United States.

In the seond link there is a reference to Richard Cornuelle, an interesting man. He is a libertarian philosopher/economist who spent most of the sixities writing speeches for Richard Nixon and Ronald Reagan and also trying to write about the eveolution of the political divide in the US from left/right to bottom up/top down. His writing and work as a philanthropist, while based in solid right-wing libertarian principles, was intended to reach out across the spectrum to those who felt that authority from the top was maybe a problem, whether that authority was big government or big philanthropy. He endured the wrath of leftists and conservatives alike, and I don't know that he ever attracted the dialogue with anarchists and social libertarians he was seeking.

But I met him once, me, as the token lefty-whatever at a libertarian think tank, five years ago, and I really enjoyed talking to him despite my bone shattering aversion to his political philosophy. He is an interesting guy and I was struck by the kinds of common ground we had in talking about how Big Philanthropy and Big Government share many of the same characteristics with respect to community organizing, and how those frustrations are shared as well.

Cheif among these, in my experience, is that both big institutions impose accountability frameworks, leadership models and results based management frameworks that literally kill the spirit of community organizing. In a recent podcast, Van Jones from the Ella Baker Center in Oakland California gives a great talk on how these kinds of requirements actually cause us to lie about our intentions and our sucesses. Big foundations and big government programs want the certainty that what they are doing is "making a difference" but they are not prepared to do any of the work. Instead they farm it out to non-profits large and small who try to shape their missions and activities to fit the intentions behind this year's funding offerings. The problem is that none of us at teh community level can truly say for sure if our efforts are making a difference. In community organizing you cannot say for certainty that my one literacy program is improving the educational capacity of my neighbourhood. You can measure a few things here and there, but if the plant closes and all the educated folks move away, my literacy rate will plummet through no fault of my own. Communities are systems and there are far too many other factors involved for me to take credit or blame for impacting a social situation.

But big foundations demand proposals with clear deliverables, so we lie to them and tell them that if they fund us we will make such-and-such a quantifiable difference in the lives of people, without having any idea whether or not we will. They generally fund out of a mechanistic model of community: tinker with these leverage points and you can adjust the mechanics of a community. To meet these demands, when we in the community report our results, we tell the cheery story of how well things went, and send a note of thanks to the foundation's directors reinforcing their belief that the world is now officially A BETTER PLACE.

The biggest problem with all of this deception and prevarication - no matter how well intentioned it is offered - is that, as Van says, it leaves us completely unable to learn from one another. In the non-profit world we always say things like "oh you should meet so and so, she does great work" without every talking about what that great work is, and more importantly without ever talking about all of the inevitable failures frustrations nad set backs that come with community organizing. We are left in the social sector unable to learn from each other because we don't get honest with each other, and we rarely create the kinds of spaces in which open conversation about how hard this shit really is can flow.

I'm actively involved in several conversations at the moment about illuminating the blind spot of this kind of funding, and taking note about the effect that it has on our communities and our efforts. In this I really resonate with some of what Cornuelle said to me in our gathering: in taking money from big institutional funders, we have to be clear about the consequences. And at the same time, I would add, big funders have to really look at what they are doing and begin not to fund solutions per se, but to fund experiments, inquiry, prototypes, research and learning. After all, truth be told, that is what they are alrady funding. Looking for the magic bullet, the leverage point and the systemic shift is smothering our efforts in empty promise and compromised activity and the non-profit sector is shot through with a mortal fear of failure.

We need to really examine this, and to create the kinds of work and funding relationships that push the edge, are not afraid to fall short and bring honesty and integrity to our work.

Thanks again for the post lunit.
posted by salishsea at 11:30 AM on February 4 [9 favorites]

@Stballbach I would just add to my post that I was surprised to find orthodox libertarians engaging in these questions, a community for whom Cornuelle is very much an Elder. He told me that the reason he developed this interest was that he felt the silence of libertarianism on the need for compassion. Ine other words, as a pragmatist, Cornuelle asked the question, if we are really to pursue an agenda of minimal government, where do we draw the line? If a 20 year veteren factory worker is laid off and then accidently hit by a bus, do we abandon him in the street? When he asked this of his colleagues in the 1950s there was a split. Some said yes, that social Darwinism should take it's course. Cornuelle opted to side with the "no's" So then he asked, as libertarians who don't beleive in government, how then do we look after that guy, and the answer was "philanthropy" In other words, Cornuelle, as a libertarian has wanted to see foundations and voluntary organizations taking over the role of the welfare state, powered by the wealth that a free market is supposed to deliver.

Now you can argue about the validity of this stuff, and I have my qualms, but in practice this is pretty much what America looks like at the moment. Government has abandonned the field, and private voluntary organizations have stepped in funded by the wealth that capitalists have acquired as a result of a business friendly economic environment.

As someone who works primarily with non-profits from a leftist and progressive side, I want government to play a big role in health and education for example, but at the community level, it's voluntary organizations and associations that are best equipped to work for their people. In this, I found lots to talk about with the libertarians.

There is a whole world of interesting thinking that could go on here, or we can just retrench in the old left vs. right polemic which is far too abstract and dated a notion to be completely helpful on the ground. Katrina was a good example. The folks who got down to do the work were religious, secular, progressive, conservative, anarchist and libertarian. Didn't matter where you came from or why you were there...rescue and community based reconstruction is what it is.

Folks on the extreme right and the extreme left and everywhere in between are doing the work. For different reasons perhaps, but when the shit hits the fan, those distinctions don't mean much.
posted by salishsea at 11:44 AM on February 4 [1 favorite]

Many non-profits treat their employees terribly and I almost invariably discourage my socially-conscious friends from working for them. The non-profits aren't going to starve without your help-- there will always be another person who believes that working at the non-profit is its own reward or someone with a trust-fund who can afford the low pay.

This is total right wing ideological BS. Someones got to take on the social ills of the world. If not government (higher taxes) than who?

That's what's so hilarious about the right-wing whining about non-profits: the right-wing doesn't want government to get involved in social activism or helping anyone. When pressed, however, they'll be quick to reveal that they don't want the private sector helping anyone, either.

The argument is that they're not actually accountable to their members

The interests of the members of a foundation/non-profit are represented by the board of trustees who manage the endowment. That's what a board of trustees is supposed to do.
posted by deanc at 12:32 PM on February 4

Not only are we in the non-profit sector (here, performing arts) over a barrel in the way foundations are run (the term "non-profit industrial complex" says it all), we also have to get template form letter rejections (two today, three typos) that thank us for all the effort expended in the preparation of LOIs and applications.

When I called the first one for some feedback (this is a learning experience, after all) for future (hah!) requests, I was told "We at the NAME Foundation are not at liberty to discuss the merits positive or otherwise of individual applications." When I responded "But how can we do better next time (their web site doesn't offer much in the way of due diligence for fund-seekers), I was told "I'm not at liberty to discuss that either." I've concluded that "I'm not at liberty to discuss that" means someone is holding a gun to their heads as they talk on the phone.

I agree, there is no accountability, no rational behavior and, as the occasional afternoon wears down, no hope...is
posted by holdenjordahl at 1:23 PM on February 4

Hey holdenjordahl...what do you bet that founders of your "black box" philanthropic institution originaly started it to overcome precisely the lack of accessibility for arts funding?

Big money, big accountability creates mission creep that happens through administrative practice rather than through considered discernment and visioning and that is killing a lot of the relationships between funders and organizations.
posted by salishsea at 1:45 PM on February 4

Salishea, do you have a link to the Van Jones podcast?

It's interesting that the issues you're raising are actually a result of foundations trying to create accountability frameworks because they're aware of the fact that there is no natural "bottom line" for them in the same way there is for governments (elections) or for-profits ($$). But it's hard (probably impossible in many cases) to do in any kind of intellectually honest way, so there is a lot of the opposite that happens.

Re the Nonprofit Quarterly article, there are foundations who make what's called "program related investments" whereby some of their investment is mission-drive. The Ford Foundation's been doing it for 40-plus years. But it's a drop in the bucket compared to their full portfolio, of course.

Joel Fleischman at Duke (not the fictional character from Northern Exposure) put together a book on this topic a couple of years ago; it considers the topic of the impact of foundations in a fairly broad sense, and there are a series of case studies from the book available here.
posted by yarrow at 1:45 PM on February 4

Many non-profits treat their employees terribly and I almost invariably discourage my socially-conscious friends from working for them. The non-profits aren't going to starve without your help-- there will always be another person who believes that working at the non-profit is its own reward or someone with a trust-fund who can afford the low pay.

Your rationale for taking the job at the evil corporation because they pay more is showing.
posted by threeturtles at 1:59 PM on February 4 [2 favorites]

I agree, there is no accountability

Why should a foundation be accountable to you? They're the ones offering to give you money. If you get the money, then bully for you. If not, well, that's the way it goes-- you're not any worse off than you were before you had money. The ones concerned about accountability in this equation are the foundation trustees and the donors who put up the money. They're the ones whom the foundation has to be accountable to in terms of where the donors' money is going. Meanwhile your group would be accountable to the foundation if they gave you the money.

Now, I'm not saying that the foundation's methods of dealing with you were appropriate or good, but I think you're missing out on which direction the accountability arrow points. The entity that receives the money is accountable to the entity that dispenses it, not the other way around.

Your rationale for taking the job at the evil corporation because they pay more is showing.

To be fair, I also don't advocate working for corporations or other entities that treat you as though you should be thankful for the opportunity to work there and exploit their workers through low pay and bad working conditions, either. The entertainment industry seems pretty notorious for this, as well. Forgive me if my liberal sensibilities about expecting decent pay and a good working environment for a job well done extends to the socially-conscious non-profit sector as much as it does to wal-mart. (yes, thank you for pointing out the "contradiction" in my beliefs about the "accountability arrow" in my above paragraph. You're very smart.)
posted by deanc at 2:15 PM on February 4 [1 favorite]

To me it's a no-brainer that health, education and well-being of citizens and others should be amongst the goals and interests of the government of an affluent country, which would mostly remove the raison d'etre of these independent foundations. But I'm Canadian...

Leaving these to charity, particularly a system of non-profits is of course going to be more chaotic and harder to oversee (not that I think philanthropy is something that requires oversight - "oh noes you're giving away too much!!").

Currently the biggest recipients of government largesse are the fucking banks. As soon as these staggering amounts are paid back in full to the government, I too will cry for the regulation of non-profits. But until then...
posted by Artful Codger at 2:20 PM on February 4

"We at the NAME Foundation are not at liberty to discuss the merits positive or otherwise of individual applications."

Sheesh -- that sounds like trying to get ANY information from Google about ANYTHING.
posted by potsmokinghippieoverlord at 2:28 PM on February 4

Sorry...the link to the Van Jones podcast got hosed in my original comment:

Here it is. Well worth the full listen.
posted by salishsea at 3:04 PM on February 4

"Now, I'm not saying that the foundation's methods of dealing with you were appropriate or good, but I think you're missing out on which direction the accountability arrow points. The entity that receives the money is accountable to the entity that dispenses it, not the other way around."

Fair enough. Were the money generated by tax revenue, then I would expect some transparency (read: accountability) in the process. This particular foundation is a private one. I'm addressing more the spirit of the relationship. I realize this is rather quixotic on my part. Instead of accountability, then, we just call it "customer service?"
posted by holdenjordahl at 3:15 PM on February 4

I'm addressing more the spirit of the relationship. I realize this is rather quixotic on my part. Instead of accountability, then, we just call it "customer service?"

Granted, I concede that they treated you crappily and clearly they're staffed/run by jerks. But if not being a jerk were a requirement to run a non-profit, then the Heritage Foundation and AEI would be run out of business. Not that I'd complain....
posted by deanc at 3:19 PM on February 4

Some of the work I have been doing is about redefining accountability holdenjordahl along the lines of what you are saying. Not quixotic at all, in fact, we've been prototyping differnet forms of accountability in some of the work I'm doing here in British Columbia. Some of the foundations I work with are looking at models of accountability based on peer learning and closer relations between funder and project. This is all relationship-based, under the premise that the closer you are, the less paper you need to have, the less "distance" in the relationship. For big foundations like Ford and Kellogg and others, this is less likely, but many smaller foundations and community foundations are looking at doing this, and the web as well as face to face social technologies are making this increasingly possible, even at great distances.

When you equate foundations to government, the good-hearted people that work in foundations blanch, and then good conversations often ensue!
posted by salishsea at 3:23 PM on February 4

An interesting piece on the accountability windmill tilt.
posted by salishsea at 3:27 PM on February 4

I work in philanthropy in Australia and I can tell you that in some cases the staff themselves don't know why a particular submission was rejected, because they're not given that information by the board; other times there is no real feedback, because the submission was good, it's just that others were better/more in line with the foundation's ideals. But I do think you should keep asking. It's a difficult thing to give negative feedback gracefully and I believe that some staff avoid it precisely for that reason. Of course, here in Australia over half of the foundations have no staff at all and you probably wouldn't have a number to call anyway :)

This is one of my favourite takes on philanthropy as an ethical dilemma. Another great tome which includes something on it is Joel Orosz' 'Effective Foundation Management' which is also a damn good read.

I believe in philanthropy, partly because it pays my wages but also because I know many wealthy people who do a hell of a lot of genuine, amazing good with their wealth, often anonymously and often without getting a tax deduction since the definition of a deductible entity is much narrower here than in the USA. I figure that the wealthy will have money anyway, and if they can do some genuine good with it, that's better than just sitting on it or spending it on extravagances.

Since we've mentioned the words "accountability" and "philanthropy", NOBODY INVOKE HE WHO SHALL NOT BE NAMED! You know what I'm talking about...
posted by andraste at 7:15 PM on February 4

Really interesting post and discussion. It's funny that all this talk of non-profits reminds me of the fictitious 'Susan Ross Foundation' from Seinfeld. It's portrayed as a dull and pointless appendage that does little for society aside from giving a scholarship to a very mediocre boy.
posted by sswiller at 8:06 PM on February 4