12/05/2012 |

Charities Need Government and Philanthropy to Fund What Works

12/05/2012 |

Last week the New York Times’ Room for Debate page hosted a lively exchange on the question, "Are Charities More Effective Than Government?"

The contributors wrestled with some stark questions in response to this prompt. Should we rely on government or charity to solve our social problems? Should society allocate resources through the democratic process or default to the priorities of philanthropists?

The prospect of deep federal budget cuts and caps to the charitable deduction raise these questions. But there are not either / or answers. We should build on promising ways in which government, philanthropy, and nonprofits are joining forces to invest in what works.

This must be a joint effort given the hybrid nature of the American social safety net. Most of the money comes from government. Most of the services are delivered by nonprofits that receive contracts or grants from federal, state, and local government agencies.

In effect, government outsources its social work. The Urban Institute reported that in 2009, nonprofits providing human services received government contracts and grants worth $100 billion.

Many of these charities providing food, shelter, counseling, and more to people in need also rely on contributions from foundations or individuals to round out their budgets. Like it or not, government, nonprofits, and philanthropists are in this together.

How can they join forces more effectively? Consider the federal government’s Maternal, Infant, and Early Childhood Home Visiting Program. It funds nonprofits that help mothers successfully prepare for and rear young children in challenging circumstances. This program is sending $1.5 billion to the states to invest in these nonprofit programs over five years.

The kicker is that states need to use one of nine programs selected by the federal government based on their superior outcomes in rigorous trials. A study of one of these programs, the Nurse-Family Partnership, found that a dollar invested in it saves society up to $5.70 in reduced social services costs over time.

Philanthropy has helped underwrite these programs’ infrastructure and the evaluations establishing their results. This in turn enabled the federal government to fund them at a national scale.

Consider also the federal Social Innovation Fund. It gives grants to intermediaries, e.g., foundations or United Ways, that in turn make grants to front-line nonprofits with promising outcomes working in youth development, public health, or economic opportunity.

The nonprofits receiving funds meet a high bar for selection. They also commit to deeper evaluation to assess and improve their results.

The Social Innovation Fund blends public and philanthropic resources in powerful ways to support these high performing nonprofits. Both the intermediaries and the nonprofits must raise at least one dollar for each dollar they receive. Thus far, $137.5 million in federal grants have led to private sector match commitments of $350 million.

There is much more to do. The outcomes-based approach has to infiltrate the great bulk of the federal budget and influence decision-making at the state and local levels. Philanthropy has to underwrite the management and measurement systems these programs need to demonstrate and grow their impact. The nonprofits have to commit to tracking and continuously improving their results.

That said, the "what works" movement is picking up steam. It will accelerate if we stoke the fires together.

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