Live Blog: Council on Foundations Annual Meeting

Kevin Walker, the president and CEO of the Northwest Area Foundation, noted that at the first day of the Council on Foundations’ plenary session on the My Brother’s Keeper initiative, the word “rural” was not in evidence.  To the unsuspecting wandering observer, one might have thought that the challenges facing black men and boys in our society was purely an inner city issue, no rural young black men were on the list of people facing the societal inequities that have been so well documented in reports such as Where Do We Go From Here: Philanthropic Support for Black Men and Boys (http://bma.issuelab.org/resource/where_do_we_go_from_here_philanthropic_support_for_black_men_and_boys), Building a Beloved Community: Strengthening the Field of Black Male Achievement (http://bma.issuelab.org/resource/building_a_beloved_community_strengthening_the_field_of_black_male_achievement), and A Time for Action (http://boysandmenofcolor.org/mbkhttps://nonprofitquarterly.org/wp-content/uploads/2014/06/A_Time_for_Action_Executive__Summary.pdf). 

Of course it’s nonsense that the problems of black men and boys doesn’t include rural, and none of the plenary presenters would have ever made that contention, but their omission of rural from the discussion is endemic and instructive.  Rural doesn’t make it onto the radar screens of many people.  In the COF annual meeting “Re-committing to Rural” panel, it would have been hard for anyone to ignore rural had they heard the presentation of Chuck Fluharty, the founding director of the Rural Policy Research Institute, who presented compelling statistical evidence on the extent and prevalence of poverty in rural America, the huge number of rural counties that are places of “persistent poverty,” the expanding problem of “deep poverty” (below 50 percent of federal poverty level) in rural America, and the crucial relationship of rural poverty to issues of race and ethnicity, the latter an important message for the philanthropies focused on black men and boys. 

Like the funders of black men and boys relating to resources and programs from Tom Perez’s Department of Labor, foundations with a rural emphasis need to understand their relationship to the budgets and programs of the U.S. Department of Agriculture, particularly the Rural Development program.  The Deputy Under Secretary for Rural Development, Doug O’Brien, addressed the connection between philanthropy and the Obama Administration’s USDA, but the framework seemed tentative.  Fluharty had straightforwardly decried “the amazing underinvestment of philanthropic support in rural America” and underscored the deep cuts year after year that had been made in O’Brien’s rural development programs, but O’Brien was there to present a somewhat more positive message.   Noting the limitations of the USDA’s rural development program as largely a bank, financing housing, infrastructure, water systems and businesses, with limited and shrinking grant dollars, O’Brien acknowledged that the biggest limitation he faces is in capacity-building resources for rural communities. Much of what he addressed on the philanthropic side involved working with community foundations, which is positive, but there is a lot of philanthropic wealth, much of it derived from rural areas, that flows through national foundations barely touching rural America. 

O’Brien mentioned USDA programs such as “Strikeforce,” aimed at better partnering with community-based groups in persistent poverty counties, the President’s Promise Zones program, where USDA is a lead partner with HUD to pick as many as 20 areas by the end of the Obama administration, with five or six being rural, for helping the federal government interact better with communities, and the new provision in the Farm Bill, Section 6025, to enable the USDA to “prefer projects” such as financing for hospitals or water systems that are part of strategic economic development plans, with evidence of that to include support from nonprofits and foundations. 

That’s all well and good, but the bottom line is still that Rural Development’s funding in terms of grants has been repeatedly slashed over the years, and the programs that O’Brien identified such as Promise Zones, do not come with money.  It isn’t an answer to say that money cures all problems, much less that money should be thrown at all problems, but if you want to see what an administration really believes in, look at its budget.  The shrinking rural development budget and the programs that don’t have any connected dollars suggest a troubling vision for rural going forward.  In the end, not much was said about how to mobilize big philanthropic dollars to rectify the “amazing underinvestment” that Fluharty noted.  While complimenting O’Brien and the Obama Administration, perhaps more generously than might be warranted, for what they are doing to promote rural and link rural to urban, Fluharty also noted the problem in the lack of connection, the lack of a metaphor for the importance of rural in public policy.  “Our democracy is at risk,” Fluharty said, “if philanthropy does not change the narrative” that makes rural something of an afterthought, as it was in the previous day’s discussion of the My Brother’s Keeper initiative.  He really challenged foundations not on the issue of more grants, though he certainly wouldn’t oppose that, but on foundation leadership in elevating rural to a position of centrality in public policy commensurate with urban.  That’s the kind of challenge that foundations, when they think seriously about the issues they confront, suggests that there are consequences to what foundations do and where they choose to sit on the sidelines.

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Nonprofit Free Speech—The Importance of Disclosure in Campaign Finance Reform

Chris Gates, the executive director of the Philanthropy for Active Citizen Engagement (http://www.pacefunders.org/), said that the IRS had received a record 150,000 or so comments in response to its draft regulations on political activities by 501(c)(4) social welfare organizations, but Independent Sector’s Diana Aviv said the number was more like 170,000 comments.  Few of those comments were complimentary about the IRS’s proposals, notably its unfortunate inclusion of activities such as get-out-the-vote, candidates forums, and other civic engagement activities as “political.”  Aviv noted that the concern was partly that those are traditional, acceptable, valued activities of non-partisan 501(c)(3) charities.  The downside of the proposed 501(c)(4) rules could seriously—negatively—impact the willingness of public charities to promote civic engagement.  Civic engagement is a function of nonprofits that cuts across nonprofit topical siloes.  Fundamentally, that is what nonprofits do at their core, which would have been imperiled by the otherwise well-intentioned IRS guidelines. 

It was Trevor Potter, the former commissioner of the Federal Election Commission, who nailed the fundamental problem behind all of the debate, laws, and regulations regarding campaign finance and its impact on nonprofits.  He said that the battleground is really about disclosure or nondisclosure, the ability to spend money in elections without having to disclose its sources.  He and other panelists at the Council’s discussion of advocacy, campaign finance, and free speech noted that corporate donors were particularly reluctant to give for political activities if their names would be disclosed.  Potter added that the Chamber of Commerce, a 501(c)(6), said it wouldn’t be able to raise the kinds of political money it raises if disclosure were mandated. 

Aviv linked the problem of the IRS comments to last year’s controversy over the Service’s review of the Tea Party groups’ applying for 501(c)(4) designations.  Problematic in and of itself, the IRS suffered not only from the scandal, but with the subsequent loss of some staff people who actually knew sometime about nonprofits, leaving a cadre of IRS agents who don’t know the nonprofit sector very well.  There may be questions as to whether the IRS should even be the lead entity in determining what constitutes political activity and political speech for 501(c) organizations, but the recent proposed efforts generated opposition, as Aviv said, “across the ideological spectrum.”  Partisan politics has grabbed last year’s IRS scandal, turning a problem that might have been solvable into the subject matter of several Congressional committee hearings that have shed much more heat than light on the subject matter. 

The consequence of the problems of 501(c)(4)s engaging in undisclosed political spending is troubling for 501(c)(3)s, Aviv said.  The public doesn’t distinguish among categories of 501(c) organizations.  Questions about the appropriateness of 501(c)(4) activities adversely impact the public credibility of nonprofits in general.  Public charities potentially suffer if the significant trust that the public holds for them is weakened because of (c)(4) shenanigans and loopholes in the political arena.

As a core principle, Aviv said that nondisclosure is bad for society.  What that means in terms of what and how moneys going to and through 501(c)(4)s might be disclosed has a number of potential iterations, but the principle she articulated is important.  Potter cited Supreme Court Justice Antonin Scalia to suggest that “hiding speech does not resemble the land of the free” and “our democracy is doomed if people do not agree to stand up and engage in debate.”  Potter further suggested that the campaign finance controversy is largely rooted in the efforts of some interests to spend money without disclosure, but if disclosure were mandated, the regulatory pressures would come off of 501(c) organizations. 

Chris Gates and Truman Anderson of the Stuart Family Foundation made the point that progress on campaign finance reform, especially disclosure, need not be a politically partisan agenda.  Anderson indicated that Republican in Illinois had come to the conclusion that the soft money loophole had corrupted government and undermined faith in democracy.  Many Republicans had long supported disclosure until the recent debates when some began to see campaign finance restrictions as favoring incumbency and incumbents.  They thought that allowing challengers to enter the fray backed by a small number of wealthy donors would benefit democracy more than campaign finance restrictions that would tend to favor the power and influence of incumbents.  In other words, propelling many conservatives to oppose campaign finance reform, particularly regarding disclosure, might be as much pragmatic politics as constitutional principles. 

Ultimately however, the fact that money to campaigns and to independent expenditure groups tends to favor those with the money to give leads some of us to think that these debates around potential IRS rules and regulations on political speech by 501(c) organizations, as important as they are, beg the question of a more fundamental solution to the American electoral challenge, the need for a return to an ethnic of public financing of elections so that the voices of everyday Americans count just as much as those Americans with unrestricted checkbooks.  

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Secretary Perez, My Brother’s Keeper, and What Foundations Might Do

One of the nation’s newest cabinet officers is Thomas E. Perez, the Secretary of the Department of Labor.  Not well known to public audiences and probably most philanthropic gatherings either, Perez’s plenary presentation at the Council on Foundations conference was remarkable.  Although a former civil rights lawyer and now a cabinet officer, he was hardly dry and boring.  He spoke about the President Obama’s Opportunity Agenda, highlighting the Administration’s achievement of 51 consecutive months of private sector job creation and the fourth consecutive month in which the nation has created 200,000 jobs.  Like the philanthropic speakers who had preceded Perez and the panel that followed him, Perez said he was “bullish” about the economic future of the nation.

Perez’s bullishness is tempered however by what he called the “vexing problem…[of] the plight of the long-term unemployed.”  Perez described the still very high rate of long term unemployment, much higher than in previous post-recession periods, as the most “important and enduring” challenge he faces at Labor, though he also added an issue of concern to many in the nonprofit sector, the fact that people in this country who do work often work for povety-level wages.  “No one who lives in the United States who works a full-time job should have to live in poverty,” Perez said.  “That just isn’t America.”

Perez noted that the nation’s “opportunity gaps” have been significant for much too long for people of color, where “all too  often your zip code determines your outcome in America.”  For that reason, Perez and the panel that followed him emphasized the importance of President Obama’s My Brother’s Keeper initiative, which he said fits key concepts in the Opportunity Agenda—“partnership, alignment, synergies, creating on-ramps, scaling.” 

That’s where Perez’s presentation, no less enthusiastic and impassioned than on any other topic, gets a little murky.  He called for and applauded Labor’s, in fact, the entire administration’s effort of “aligning our work with philanthropy.”  In Perez’s telling, the President’s announcement of the My Brother’s Initaitive had more electricity in the air than any other event he had attended at the White House.  He said in that context that government and foundations are more aligned than ever before, but what does “aligned” really mean.  He described the “stovepipe explosion” in the administration’s programs, breaking down the narrow programmatic thinking of different agencies so that they could see cross-cutting concerns and issues, and that certainly would attract philanthropic funders who would find bureaucratic stovepipes off-putting and counterproductive. 

But the nub of the issue, as foundations commit some $200 million toward My Brother’s Keeper initiatives, is what foundations should do vis-à-vis what government should do.  President Obama’s original announcement of the My Brother’s Keeper initiative was notable in part for its lack of a financial commitment from the federal government.  On the panel that followed Perez’s speech, Jim Shelton, the Deputy Secretary of the Department of Education, who shepherded the My Brother’s Keeper task force, said that the President had directed federal government to take a hard look at itself to see what it was doing to improve outcomes for black men and boys who are among the population that statistically is most left out of the nation’s economic and jobs revival.  But that isn’t the federal government suggesting, at least initially, that its response to the needs of black men and boys who are left behind in the recovery will involve new financial commitments. 

Is it up to foundations to fill in the gaps?  Perez noted, for example, that the largest funders of programs to counter prison recidivism are the Department of Labor and the Department of Justice.  Foundations aren’t going to supplant those federal agencies, no way.  Antonia Hernandez, also on the panel that followed Perez, framed the issue straightforwardly for the foundation audience: Foundations have to “demonstrate that programs work…[but] it is the government that will take it up to scale.” 

So what have foundations done?  Joining others, Hernandez said that the issue of economic disparities, particularly those affecting persons of color, isn’t new, but “what’s different now is the attention that it’s getting.”  The challenge going forward is to “embed the issue” so that it doesn’t become simply another passing concern of philanthropy, but a continuing emphasis. 

Hernandez and the Ford Foundation’s Darren Walker then offered a perspective on how that might be done.  Walker called for a “public discourse” that went beyond concerns about individual behaviors to address “the hard thing”, to “talk about the systemic oppression” of particular people.  He specifically cited the failure of the war on drugs that needs a systemic response regarding what it does to perpetuate inequities particularly affecting communities of color.  Hernandez added that the role for foundations, therefore, is “to support the organizations that are trying to create systemic change.” 

The observations of Walker and Hernandez should instill in foundations some creative thinking about the role of philanthropy in promoting the Opportunity Agenda and My Brother’s Keeper initiatives that Perez eloquently described.  The first element is to ensure that they are not seen as partisan efforts.  The focus on black men and boys shouldn’t be seen as an Obama initiative, but a federal government initiative that can and should be sustained no matter what individual or party occupies the White House.  If it devolves, like so much of U.S. society, into partisan politics, the power of the initiative and the power of foundations’ involvement becomes limited

Secondly, if the administration is truly reconsidering exactly which programs work well and which don’t for redressing the inequities of the economic recovery, especially for black men and boys, foundations have to be prepared to push the federal government, criticize it when its actions fall leagues short of its words of concern for black men and boys, and remember that partnership with the federal government doesn’t mean becoming a cheerleader or lapdog.  The inertia to leave things as they are, because of the ingrained constituencies supporting various programs, cannot be allowed to stand.  Foundations supporting entities promoting systemic change means that they are supporting watchdogs, critics, and advocates.  They aren’t taking the place of government, but kicking it in the pants to do what it should do.  It would seem that Perez, whose talk made several references to kicking people in the butt, would welcome foundations aligning their funding with the kind of systemic change and policy advocacy that doe