January 17, 2019; Washington Post
A study released by the National Bureau of Economic Research last month demonstrates that corporations may be strongly influencing public policy through their charitable giving to nonprofit organizations. While companies lobbying the federal government to inform policy that positively influences their business and bottom line is ages old, what this study demonstrates is that a company’s grantmaking may enhance those lobbied messages through nonprofits that are designed to be objective and represent the rights of their constituents.
The research had three key findings:
- A nonprofit grantee is 2–4 times more likely to comment on a proposed rule or policy shortly after it has received a donation from a business.
- The opinions of those nonprofits that weigh in are more similar to their private sector grantor’s perspective than nonprofits who don’t have a relationship with the company.
- When both a business and its nonprofit grantees have weighed in on a ruling, the final discussion with regulators is heavily reflective of the business’s perspective.
All three of these findings reinforce for us that companies have yet another deeply effective way of using their capital and strategic nonprofit relationships to produce a policy environment that supports positive business outcomes. NPQ has written extensively over the years on how the “charitable” acts of Big Soda, as an example, has engaged with unlikely nonprofit partners (like the American Heart Association and the American Diabetes Association), and that through those partnerships, those nonprofits have, at best, become part of a marketing campaign for unhealthy products and, at worst, silenced the public health advocacy that they purport to lead. Likewise, the role that patient advocacy groups play in pursuing or neglecting to pursue legislation and regulation that would curtail their pharmaceutical funders has been under scrutiny.
This latest research indicates that the worst may have become worse, with these groups positively influencing public policy and rulings that potentially contradict their mission based on their financial relationships with companies. This is one of the more insidious examples of the private-nonprofit sector power dynamic at play, and it rubs against the core purpose of the nonprofit sector. Marianne Bertrand, the lead author of the study states that nonprofits are designed to be “providers of nonpartisan, technical expertise and are commonly expected to offer more neutral input into the lawmaking and rulemaking process, with a focus on cost-benefit analysis and broader societal interests.”
This research, which examined 629 charitable foundations, 474 businesses, and the more than 225,000 nonprofits who received their donations, demonstrates that a subset of private sector philanthropy has a role, likely intentional, in not only harnessing those partnerships for the bottom line but weakening the role their partners are designed to play.—Danielle Holly