• Wendy Siegel

    Thank you. You put into words the ideas I have been formulating in my own mind, but without the data to back them up.

  • Martha Maksym

    I remember back to the April 2012 article by Rick Cohen in NPQ on this very subject but the examples used then, among others, were the CDC and CIA. Rick wrote:

    “Unlike the CDC Foundation, In-Q-Tel’s revenues grew from $50.4 million in the year ending in March of 2009 to $56.4 million in 2010. That sum helps pay for hefty salaries—over $800,000 in salary and benefits for the CEO and over $700,000 for the EVP and “managing partner.” Annual trustee compensation at In-Q-Tel is typically between $35,000 and $37,500 for board members (except for Jami Miscik, the president of Kissinger Associates, who took only $17,500).

    In its Form 990, In-Q-Tel makes it clear that it does not disclose its financials to the public, so where does the oversight of In-Q-Tel come from? The 990 states that “IQT receives regular oversight from the CIA and other client agencies, who keep Congress informed of the company’s activities.” Of course, the activities of the CIA don’t get the public, transparent scrutiny accorded to other agencies. On the other hand, rather than funding the CIA, it seems that In-Q-Tel is, in a way, a venture capital firm for the CIA’s unique technology needs. According to the 990, “IQT’s strategic investment model gives it the agility—often lacking within traditional government contracting approaches—to find nurture (sic) entrepreneurs and companies that can provide a supply chain of innovation which enables the IC to benefit from technology advances.” IQT claims to have “cultivated a network of more than 200 venture capital firms” and leveraged $1.5 billion to support technology development for the CIA.”

    No matter what the purpose, when there is no public oversight and no transparency, where Board members are compensated, and where there is a question- perceived or real- of quid pro quo (in exchange for my large charitable gift, will I get the contract to build that next widget?), I get very uncomfortable with these types of philanthropy. I think they give philanthropy a bad name and make the whole non-profit sector suspect. I would hope we keep raising the question through these venues.

  • SophieB

    There is another large group of nonprofits who unfortunately depend on philanthropy to support government services, but it is impossible to see this directly. Government grants and contracts very rarely actually pay nonprofits for the full cost of the social/human services they purchase. This requires nonprofit service providers to raise additional funds, often from foundations. However, the request to the foundation never states why the nonprofit is really having to raise private money for the service. It is hard to imagine many foundations accepting the purpose statement in an application to say, “to subsidize the cost of the services we are providing on behalf of the government because they don’t pay the full cost.” So all of those millions, or more likely billions, of dollars that are also supporting government go unnoticed and unquantifiable. With more of the philanthropic funds going to things such as schools and parks, there is even less for social services–so they are getting hit from both directions–decreasing funding from governments and foundations. Let’s face it, it is a lot easier to make the case to a foundation that building a beautiful park that will benefit the entire community and can bear their name is a more attractive use of their money than is supporting a program to reduce the recidivism of adolescent sex offenders.

    It is frightening how much of the cost of government is being shifted to the private sector, particularly when it is increasing government requirements that keep pushing up the costs at the same time.