October 1, 2012

Three Approaches Philanthropists Can Use to Succeed in This New Age of Government Austerity

This is the first post in our Philanthropy and Government blog series. Join the conversation by commenting below or on Twitter. You can follow Give Smart Twitter updates at @BridgespanGroup.

By: The Bridgespan Group
Many donors see advocacy as "the most direct route to supporting enduring social change for the poor, the disenfranchised and the most vulnerable among us," as Gara LaMarche, former president of the Atlantic Philanthropies, recently wrote. But in this new age of government austerity, what worked yesterday may be far less effective tomorrow. Today, advocating for increased spending in one area can mean decreasing it in another area—or attempting tax increases in a climate hostile to the very idea. This zero-sum dynamic is exacerbating an already polarized government, where common ground for bipartisan consensus between Democrats and Republicans has all but disappeared.

And yet, if you are a philanthropist trying to solve society's biggest problems—like global climate change or the achievement gap—you will undoubtedly be affected by the difficulties surrounding government and philanthropy. Just like you, government seeks to address the unmet needs of society, with government funding a myriad of nonprofit organizations, everything from homeless shelters to public universities. Even philanthropists who think philanthropy should be independent of government can't escape the ramifications of this new age of government austerity so easily. When The Bridgespan Group analyzed a random sample from the Center of Philanthropy at Indiana University's "Million Dollar List," we found that a whopping 40 percent of gifts were connected in some way with government.

So like it or not, chances are the government's fiscal challenges and continued political polarization are affecting your philanthropy. To help you work around these obstacles and in some instances reduce them, we have published, "Philanthropy in the New Age of Government Austerity," authored by Bridgespan's Daniel Stid, Alison Powell, and Susan Wolf Ditkoff (see below for bios). The study offers three promising approaches:  
  • Investing in government's capacity to govern, such as the Broad Foundation's creation of leadership programs to help transform urban public schools and Bloomberg Philanthropies' funding of new Innovation Delivery Teams to solve our cities’ greatest challenges
  • Helping high-performing nonprofits make better use of public funding, for example, by helping with the research and development costs of successful nonprofits, and other needs government won't pay for, as the Edna McConnell Clark Foundation, the Bill and Melinda Gates Foundation, and the Robert Wood Johnson Foundation are doing for the Nurse-Family Partnership
  • Mending broken political and budget processes, for example, by funding efforts to overcome political gridlock and by funding efforts to create bipartisanship around key issues so that progress can actually be made, as California Forward and the Peter G. Peterson Foundation are doing

To read a more in-depth analysis of these approaches, other advice for donors working in and around government, and greater detail about the problem itself, click here. You may also wish to read our op-ed in The Chronicle of Philanthropy, which highlights some of the issues discussed.

Our study provides just an overview of the great leadership by Eli Broad, Michael Bloomberg, Pete Peterson, the Irvine Foundation, and others. To give you a richer sense of what’s working, in the coming weeks, we'll be highlighting philanthropy work that serves as models for the three approaches above. Check back next week for a look at how the Broad Foundation is helping to close the leadership development gap in America’s public education system.

About the study's authors: Daniel Stid is a partner with The Bridgespan Group and co-leads the organization’s performance measurement practice. Alison Powell manages Bridgespan’s philanthropy practice. Susan Wolf Ditkoff is a Bridgespan partner and co-leader of Bridgespan’s philanthropy practice.

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