In Recent Public Addresses Fund’s President Articulates Challenges Facing the Sector

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In September, Sherry Magill, president of the Jessie Ball duPont Fund, delivered two addresses – one to the Delaware Grantmakers Association and the other to students of nonprofit management at the University of North Florida. In her typically straightforward manner, she articulated some of the sector’s most pressing challenges and suggested responses. Excerpts of her remarks:

On the role of nonprofits in creating, building and sustaining healthy democratic communities:

Our work — our mission — is inextricably tied to the nation’s democratic purpose. We have a public, not a private purpose, and we promote the common good. This country and this community cannot operate without us.

It’s not simply about the jobs we create, or the amount of other people’s money we attract to the local economy, or the services we provide, or our determination to serve folks less fortunate in the face of overwhelming odds, or that we are and can be a center of innovation and creativity where human beings do the extraordinary.

We are all of that and we do all of that.

At our core, we occupy the critically important space between government and business, what Brian O’Connell called “civil society” and Richard Neuhaus and Peter Berger called “mediating structures.”

We teach, we heal, we play, we create, we organize folks to take care of one another. We argue day in and day out by our very existence that human life and human interactions must be about more than a money exchange.

As this country and our elected representatives attempt to “monetize” — that is sell — everything in sight, we are the people who stand for community. We are the people who are determined to foster community. We are the people who make life livable.

Despite our dominant cultural mythologies of American individualism and western Capitalism, the central place of community in our value structure cannot be denied, as John Winthrop, the first governor of the Massachusetts Bay Colony, said in a speech he delivered in 1630:

Now the only way… to provide for our posterity is to follow the counsel of Micah: to do justly, to love mercy, to walk humbly with our God. For this end, we must be knit together in this work as one man. We must entertain each other in brotherly affection; we must be willing to abridge ourselves of our superfluities, for the supply of others’ necessities; we must uphold a familiar commerce together in all meekness, gentleness, patience, and liberality. We must delight in each other, make others’ conditions our own, rejoice together, mourn together, labor and suffer together: always having before our eyes our commission and community in the work, our community as members of the same body.

For our very security and to provide for ourselves and those that come after us, Winthrop preaches, “we must… always hav[e] before our eyes our commission and community in the work.” He did not say for our very security let’s create a police state. He said, let’s create community. The only way these early Puritans would make it through a harsh Massachusetts winter would be to work together for the common good, not against each other and not to advance self at the expense of others.

On the challenges we face as communities:

We remain in a world of hurt. With 2007 as our baseline year, we know that poverty is growing, homelessness has increased, unemployment remains high and our children struggle.
[In North Florida] SNAP participation is at 167,000 people, and a minimum wage worker must work 98 hours/week to afford a two-bedroom apartment at fair market rate. Two full time jobs.

[In Delaware] 4th and 8th graders do better in math and reading when compared to the U.S., but a greater percentage suffer from obesity, half of your school children (49. 2%) qualify for free and reduced lunch and 22% live in poverty. Not a picture of a robust future 20 years from now.

Meanwhile, private giving remains weak.

…fewer private charitable dollars, fewer public dollars, growing human need and, I would add, elected representatives who have contempt and disdain for what we do

[In Delaware] charitable giving dropped almost 18% in the wake of the economic collapse of 2008. While your economic condition is slowly improving, your most recent figures show that individual charitable giving lags the U.S. and surrounding states and remains 8% below 2007 figures.

[In Florida] total charitable giving declined 7% between 2008 and 2010, and remained flat in 2011. But, foundation and corporate giving decreased 16% between 2008 and 2010, though it remained stable in 2011 and 2012. Which means of course that we have fewer charitable dollars — significantly fewer individual, foundation, and corporate gifts — to meet growing need. Period.

On top of this private resource constraint, federal sequestration is resulting in reduced funding for basic services — federal support to those organizations that serve children, the elderly, the homeless, the hungry, the working poor is all in decline. Some programs, such as the federally funded Supplemental Nutrition Assistance Program known as SNAP and HeadStart, are threatened with extinction. I fear the Earned Income Tax Credit, the Child Tax Credit, the Low Income Housing Tax Credit, and the New Markets Tax Credit might also wind up on the chopping block.

Despite the condition of cities and neighborhoods throughout the country, the Administration and Congress are debating the possibility of capping or eliminating charitable giving incentives, some arguing that this is just another tax dodge for the wealthy and others more transparently saying we need all the money we can get.

That’s our condition: fewer private charitable dollars, fewer public dollars, growing human need and, I would add, elected representatives who have contempt and disdain for what we do. This last — if it fully materializes — threatens our future ability to raise private dollars and contract with governments.

So, what do we do?

Among many responses, two stand out in this environment: we must vigorously mount a concerted effort to protect the charitable giving incentive and we must advocate for the legitimacy of nonprofits to contract with governments at all levels.

The federal government is deeply engaged in a discussion that threatens our sector’s capacity to raise charitable dollars. I would encourage you to get involved in Washington, to join the efforts by the Council on Foundations, the Council of Nonprofits and others to save the current charitable giving tax incentive.

No matter what your political leanings — right, left, center — no matter what your view on the need for continued tax cuts, you must agree that it is permissible for governments at the federal, state and local levels to contract with nonprofit organizations just as those governments contract with for profit corporations.

Far too many elected officials do not believe in things public. They say repeatedly that serving the most vulnerable is the role of the private sector — the church, the foundation, the individual — but not the role of the public.

Governments all day long and year in and year out contract with companies and corporations whose primary purpose is to maximize profits. They build munitions, administer prisons, execute wars, provide security, pick up garbage and pave roads.

If it is legitimate for governments to contract with these companies, it is permissible and legitimate by definition for governments to contract with nonprofits to do what we do: feed hungry families and school aged children, provide child care for children of working mothers, provide meals on wheels to elderly shut-ins and after school programming for poor kids, and help folks understand what it means to be human through the arts and music.

Some of the political rhetoric today is breath-taking. Arguments that hold that it is not the role of government to contract with nonprofits abound while those same voices assume that it’s just dandy for government to contract with entities whose primary purpose is to make a private profit.

Don’t misunderstand me. I am a capitalist, I believe in the profit motive, and I am a fierce believer in the concept of private property. But I simultaneously believe that nonprofits provide necessary public goods and services and that some of my tax money should contract with them for the provision of goods and services that promote the common welfare.

I am absolutely puzzled by what I have heard from some elected officials. What is their objection to nonprofits? Do they not like the fact that we do not maximize profits? That no one can get really rich doing what we do? Do they not like the fact that we do not directly produce tax revenue — even though we pay payroll taxes, private foundations pay excise taxes, the people we employ pay taxes, and many nonprofits work to get dilapidated homes back on the tax rolls and struggling families back on their feet as tax-paying citizens. Or is it that some elected officials simply don’t like the fact that we collectively serve mostly vulnerable people?

I struggle to know what’s behind the rhetoric, but it’s becoming increasingly evident to me that far too many elected officials do not believe in things public. They say repeatedly that serving the most vulnerable is the role of the private sector — the church, the foundation, the individual — but not the role of the public.

In other words, it’s OK to give taxpayer money to a private company to provide entertainment, but not to a nonprofit group that educates the poor. That’s basically the juxtaposition. But why?

I think we must understand this ideological challenge, we must meet our critics directly, and we must stand firm in arguing that we are legitimate contractors. I’m not naive about easily turning this tide. We must be in for the long-haul.

The Bottom Line:

At the Jessie Ball duPont Fund, we have c hanged our way of thinking. We now think about the $280 million under our control as opposed to our $12 million- $15 million annual grants budget.

In 2009, after the markets crashed, we began granting 6% of our portfolio, with most of the additional dollars supporting basic human needs. And we began a thorough review of the investment portfolio and ultimately decided to devote some of that capital to mission related and program related investments.

The program related investment strategy calls for the Fund to make major investments — up to $10 million — in key communities in the form of loans to other nonprofit entities that lend money for such things as housing development in low income areas, creation of community health centers, child care centers and community centers.

[In Delaware] we recently released a request for qualifications and interest to a group of nonprofit entities with interest in Delaware.

[In North Florida], we decided to purchase a defunct public library in downtown Jacksonville, converting it into a gathering place for philanthropic and nonprofit organizations. We are financing this project with our investment capital, and, I hope, New Markets Tax Credits.

In other words, we are attempting to invest more of our investment capital in places where our grant money is mostly concentrated. Places are strapped for investment capital. Our study of Delaware’s child care industry taught us that many of these organizations need capital to improve playgrounds, and that they might — I stress might — be willing to take on debt to improve their facilities.

My overall message is this: in the face of declining revenues from every sector — governments, individuals, foundations and corporations — we must do everything we can to shore up our nonprofit sector, strengthen individual organizations, advocate for continued incentives to maintain charitable giving and for continued contracting with nonprofits as a legitimate governmental activity, and invest in strategies that strengthen families, their financial positions, the neighborhoods in which they live, and create access to quality education, quality health care and a chance at a decent job with a wage folks can live on.

Making life better for people less fortunate. That’s our job.