Can Nonprofits Really Expect Business to Save the Day?

August 2, 2012; Source: Santa Maria Times

In a Santa Maria Times editorial, Trent Benedetti takes up the matter of those necessary nonprofits suffering from reduced government funding and individual donations at the same time as demand for services is on the rise—well, he kind of takes up this matter, anyhow, after a few paragraphs of listing the many taxes that Californians are obliged to pay. Seemingly a small government type of guy, Benedetti then proposes this solution for the struggling nonprofits:

“With our history, why is it not logical to assume our private sector would provide needed support to deserving nonprofits? This would leave government free to allocate its scarce resources to the provision of fire and police protection, along with other essential services.” From there, the editorial veers off into the need to make Santa Barbara County a more business-friendly climate by rethinking its “stifling regulatory regime.”

While the “let business save the day” answer sounds easy, there are multiple problems with this proposed solution. First, as was documented in our analysis of this year’s Giving USA report, corporate giving is flowing more and more often to individuals, not organizations, and is taking the form of in-kind gifts, not cash. What does this look like? Well, pharmaceutical companies giving away a portion of their generally highly priced product is one example. In fact, cash giving looks like it has declined quite significantly.

Benedetti goes on to tie in the need for less regulation and restrictions on business, arguing that this will make business flourish and, in turn, will make business more likely to give generously to community services. This logic seems about as proven as reducing taxes for the very rich to create more jobs. Then again, that old saw seems to have rhetorical legs no matter how it stacks up against reality. – Ruth McCambridge