Private Philanthropy’s Support of Public Projects: A Quandary

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August 27, 2014; Peoria Public Radio

This report from Peoria Public Radio suggests that private foundations and nonprofits are being asked to help pay for services and programs that were previously in the government’s domain, and that this may be part of a trend that’s grown across America since the Great Recession began. NPQ would tend to agree that these types of investments got more common during the recession, but the report fails to definitively make the case that the incidence of such donations is still on the increase. Instead, it depends upon a string of anecdotes—albeit interesting anecdotes that raise good questions.

As the report acknowledges, public universities have long fundraised with their alumni, and elementary school groups have held bake sales for as long as most of us can remember. Granted, we are seeing some major investments in public institutions by billionaire philanthropists, but are these donations demonstrably and proportionately more than ever before? A 2012 study from Bridgespan analyzed 400 charitable gifts of over a million dollars and showed that 40 percent of the donations were in some way connected to government, with the biggest chunk going to public universities.

Among its anecdotes, the station cites an effort about 25 miles northwest of Springfield, Illinois, where a citizens group is trying to find a way to help pay expenses at a state wildlife area. The local economic development director says the group wants to help in a hands-on manner, as well as raise money for the park for equipment repair or replacement and expansion of staff hours. The report goes on to talk about one of the most high-profile examples of this approach in the U.S., New York’s Central Park Conservancy, which has been asked by new Mayor Bill de Blasio to share some of its revenue with city parks in low-income neighborhoods that are struggling financially.

This does not seem like a particularly new phenomenon. But there are some interesting twists to inserting private dollars into public systems. Private philanthropy is not, for instance, required to be fair about spending. Private donations are also immune to market forces and small-“d” democratic opinion to an extent. Many believe that private money can taint public systems—by promising investments if a particular approach is taken, for instance—especially when resources are scarce.

Still, despite some strong critiques, barring a ban on such donations, they will continue apace, and we will all need to keep an eye on the influence they wield over what should be democratically responsible local governments.—Larry Kaplan and Ruth McCambridge