How Non-Profits Shape Cities
This week we had "Giving Tuesday", big money for renewable energy promised by Gates, Bezos and Zuckerberg in Paris, international mayors promised 10% of their budgets towards resilience, Facebook founder Zuckerberg pledged to give away 99% of his Facebook shares to whatever good causes, and Al-Jazeera published American author Moseley’s piece "The dark alliance of global philanthropy and capitalism". It’s a good week to look at the impact of philanthropy.
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| Annual Giving in the US: $358 billion and rising |
There is no shortage of the functions that people think the nonprofit sector should or could cover. Foundations and non-profits are variously seen as charity, job creators, as engines for economic development, counterweights to the injustices of capitalism, or as entities that step in where government fails, Can non-profits really do all that?
Nationwide 1,238,201 organizations were classified as 501(c)(3) charities, foundations or religious organizations, a really staggering number that one would expect to have a significant impact. An annual $358 billion impact. In fact, the range of the definition is so wide that in order to discuss impact a distinction needs to be made between private foundations and public charities and between giving organizations (who fund things by providing grants) and advocacy non-profits (who receive grants).
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| where the donation money goes: Religious charities have the lion share |
America with its suspicion about the role of government has always relied much more on philanthropy, charity and foundation work to assist the needy and rectify social ills than, for example, Europe, where the expectation is that government will take care of those in need. But the juxtaposition of government and charity doesn't work as intended when government, foundations and the private sector essentially respond to the same cyclical market forces. The recent "great recession", for example, has taken a toll on all sectors alike as the President of The Kresge Foundation observed in a 2008 talk at CEOs for Cities.
Detroit – where there has been an evisceration of public-sector leadership, a flight of private-sector investment and an erosion of nonprofit-sector resilience. For those cities – and we can add Cleveland, Philadelphia, St. Louis, Pittsburgh, Baltimore and others to the list – the words of one of the great philosophers of the 20th century [Woody Allen] seem more apt: “More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly....At root, we in philanthropy make grants, and I never cease to be amazed at just how powerfully money on the table concentrates people’s attention. (Rip Rapson, President Kresge Foundation. Article)All sectors especially the private sector have since recovered from the extremes of that recession, yet disparities and social ills remain unresolved or have even grown. The common economic dependency illustrates that foundations and charity are ill suited to act as a substitute for a social safety net or anti-cyclical stimulation of the economy if they rely on general prosperity to trickle down to them. Based on this insight, foundations across America are trying to move from acting simply charitably to acting strategically. For how that can be done, Rapson's speech quoted above is an excellent read.
For the Ford Foundation acting strategically means to reign in the broad spectrum of their grants in favor of a focus on inequality as they announced in June of this year. Then, this month (November) Ford Foundation President Darren Walker announced this:
At the center of the history of the Ford Foundation has been our investing in what I think of as the three I’s—groundbreaking ideas, leading individuals, and institutions and networks.
We remain committed to all three, but for starters, we’re leaning into the importance of institutions and networks. Building durable institutions and networks will be among our highest priorities because, as we’ve seen throughout our history, they represent the infrastructure on which movements for change are built.
Institutions are hubs for gathering and aggregating talent; they provide the platforms that help accelerate and sustain social change. Networks are fulcrums for creativity and dissent, beacons of stability, scaffolding for aspiring change makers, and connectors for social innovators.
Some Foundations carry their urban mission in their name such as the New Cities Foundation.
Our vision is of a world where cities drive economic, social and environmental progress.Others like the former NYC Mayor Bloomberg continue urban policy through their own foundations. Even Canadian foundations are seeing philanthropy as having a role in the future of cities, their more stable social compact notwithstanding: The Philanthropic Foundations of Canada launched a Cities for People initiative to jump-start the re-invention of cities from the bottom up. By comparison, Bloomberg entices leaders ("Mayors Challenge") to come up with innovation in a more top down approach.
Our mission is to shape a better urban future for all by fostering urban innovation and entrepreneurship. We do this by building and empowering our global network, convening events and conducting pragmatic research. We are supported by a diverse group of Members who share our belief in the potential of this century of cities and our passion for urban innovation.(New Cities Foundation).
Innovation comes from an intentional process of experimentation and exploration. Over the course of the year, we are pacing the competition to help cities not only define a serious problem and craft a bold solution, but to learn from peers and experts across the globe (Bloomberg).
New York's Michael Bloomberg who moved smoothly from entrepreneur to politician to philanthropist now pushes his agenda through grants. New Orleans Mayor Landrieu, for example, applied for a grant from Bloomberg Philanthropies, which was offering several million dollars each to cities willing to create an “innovation team” of in-house consultants that would apply data-oriented problem solving to urban challenges. The team members, a mix of public employees and private sector consultants, would be sent to troubled city agencies to make government more effective by teaching public employees how to be more collaborative, strategic and focused on measurable results. Unlike typical foundation grants, this money wasn’t targeted to a specific policy, instead it was to stimulate innovative management across the board. Bloomberg Philanthropies alone has given nearly $150 million to more than 70 municipalities in the past five years for experiments in government innovation.
Foundations are starting to see ways that they can trigger structural and cultural change in city governments. A tall soda thing or an obesity thing -- those can come and go with the whim of the mayor, but if you actually change the way government operates and it becomes the new normal, that’s a real change. That’s enduring. Ben Hecht, president and CEO of Living Cities, a nonprofit with a board made up of foundation presidents. (Governing)
With growing influence foundations have come under increased scrutiny. Moseley makes the point that some corporations perpetuate the ills that their foundations try to combat.
“There is something fundamentally antidemocratic about relinquishing control of the public education policy agenda to private foundations run by society’s wealthiest people.” Diane Ravitch
Bloomberg’s foundation activities have raised the question how much of his agenda is public interest and how much is the joy of personal power. Baltimore is familiar with his impact, Hopkins School of Public Health carries the Bloomberg name. Over the last four decades, Hopkins received over $1.1 billion dollars according to the New York Times. Michael Bloomberg is a Johns Hopkins graduate.
The question of undue influence becomes even more acute when large corporations directly fund a city-focused philanthropy. Take the Deutsche Bank, an institution once deeply entangled with Germany's darkest period and more recently with financial scandals of the Great Recession: Its Alfred Herrenhausen Gesellschaft as founded in 1992 and named after its CEO who was assassinated in 1989 by German terrorists (likely the Red Army Faction). The society named after Herrenhausen is a non-profit that organizes future-oriented talks in Germany and internationally. One series, focused entirely on cities (Urban Age), is 10 years old and will hold a big international cities conference in London this month. Although technically separate from the bank, by funding the series and to some extent controlling the agenda, the bank has a role in defining the urban agenda for the coming decades with topics such as "confronting climate change", "steering urban growth", "the politics of equity" and "designing infrastructure". The bank routinely brings out star power and world renowned speakers (Sir Norman Foster was the keynote speaker for the topic urban infrastructure).Each year the bank awards a $100,000 award to an applicant city.
After investigating 12 cities in four continents with over 200 million inhabitants, the Urban Age has established a deep understanding of how spatial, environmental and social dynamics are deeply interlinked in cities today. Our work has moved from the descriptive to the prescriptive, and we are engaged with decision-makers in global cities and institutions to help shape decisions that affect the way people live in an increasingly complex urban world. Ricky Burdett, LSE Cities, website)"Prescriptive", "shape decisions", the tone of this quote is more than a bit worrisome.
Of course the German bank's foundation is small potatoes when compared to the Gates Foundation.
On the local level it sometimes seems as if Baltimore has gained in non-profits what was lost in blue collar industries, Fortune 500 companies and industrial base. Not that non-profits usually make things (most don't) or pay taxes (none do) but no doubt, on the local level foundations shape their cities in many ways even if city planning or innovation is not their raison d'etre. Take what the local Casey Foundation says about itself:
As a private philanthropy based in Baltimore and working across the country, we make grants that help federal agencies, states, counties, cities and neighborhoods create more innovative, cost-effective responses to the issues that negatively affect children: poverty, unnecessary disconnection from family and communities with limited access to opportunity.
It makes sense that more distressed places attract the attention of non-profits based on needs but it also makes sense that foundations are where the money is, as is the case with Carnegie Melon or the Heinz Foundation in Pittsburgh. At least, they are where the money once was. Baltimore is home to a number of well-known, nationally and internationally operating foundations such as the Catholic Charities, an international relief agency and the Anne E. Casey Foundation. Others act more locally such as the Weinberg Foundation, the AbellFoundation, the Warnock Foundation, and the Deutsch Foundation to name just a few Baltimore based foundations (see a more comprehensive list here).
Baltimore Foundations are involved in important projects such as the Empower East Baltimore Development (Casey), the Baltimore Integration Partnership (BIP), the Baltimore Workforce Funders Collaborative (BWFC), the Maryland Environmental Health Network (MdEHN) or the artist and maker spaces funded by the Robert Deutsch Foundation. There is hardly a part of town that doesn't have a building named after Harry and Jeanette Weinberg Foundation. Foundations assess important government initiatives such as "Vacants to Values" (Abell), support open space and recreation (Parks and PeopleFoundation), promote clean water and healthy watersheds (Blue Water Baltimore) or promote arts and culture (Baltimore Community Foundation, Greater Baltimore Cultural Alliance) to name just a few.
Compared to government, foundations have several advantages: they are not tied to election cycles and they don't have to respond to anyone but their board and, unless they are funded from a trust, their donors. The entire set of checks and balances does not apply to them. With non-profit usually part of their description, foundations are not under suspicion for being out there to enrich a few powerful persons. It is assumed that they serve the common good and for the most part they do. Criticism about their influence and their link to for profit corporations is a new phenomenon.
Abell, whose Bob Embry has skillfully managed the trust money of the founder of Baltimore SUN papers for 27 years, has been able to wield considerable power over generations of elected officials by assigning resources to policy analysis, thorough investigations of local public policy in ways that others simply can't afford. Embry's influence has likely been nothing but good, his integrity is beyond doubt, but it is easy to imagine it to be otherwise.
On the local level, non-profits seek influence for their cause and money by chasing the foundations for their grants. Activists who pursue good causes on a honorary basis sometimes with staff sometimes without would be not normally be as suspect to undue influence as the foundations were it not for their dependency on foundation money. Only few grants come “unrestricted”, i.e. without conditions how the money has to be used. Few grants fund operations cost of non-profits, most prefer funding programs and thus have direct influence over what the non-profits do.
The land trust NeighborSpace, for example, has taken on some of the work that the department of recreation and parks would have done before its budget and staff were decimated in spite of open space having become a premium commodity in light of the ongoing infill development pressures.
The growth management group 1000 Friends of Maryland (similar groups exist in many States) has now existed through three Democratic Governors and two Republican ones, providing a level of consistent oversight and input into what the state legislature and the administration do to protect Maryland from the environmental and economic depletion of sprawl.
The Design Center is trying to establish design as a common denominator between various professional disciplines as well as between segments of the population through "Design Conversations".
This journey from global foundations to local non-profits cannot conclusively answer how foundations shape cities, nor can it determine in whose hand the public interest would be best protected for the simple reason that the field of non-profits is so vast that it defies simple classification. On the other hand, the state of government, its strengths and weaknesses, vary from city to city, from state to state and from country to country. We can see, though that especially in the US, government loses strength and non-profits gain influence, means and power. We can further see that control and accountability of foundations is very limited and that the presumption of goodness may not always be appropriate. Where the world has become a village traditional national boundaries are not only easily crossed by a set of global corporations but almost equally by globally acting foundations, non-profits and action groups such as Greenpeace.
The climate conference in Paris brings these various aspects into full focus: It is not only a gigantic international affair of government diplomacy, it is an equally powerful gathering of non-profits, NGO's in the lingo of the conference. Private capital has taken notice, hence the line up of all the announcements from big corporations and their aligned foundations this week.
Klaus Philipsen, FAIA
edited by Ben Groff J.D.
Links and sources:
City's nonprofit sector springs into action after rioting
How Associations Power America
Best US cities for non-profit start-ups
A Tale of 11 Cities: New Data-Driven Assessment of the Nonprofit Arts Sector
edited by Ben Groff J.D.
Links and sources:
City's nonprofit sector springs into action after rioting
How Associations Power America
Best US cities for non-profit start-ups
A Tale of 11 Cities: New Data-Driven Assessment of the Nonprofit Arts Sector
Cities for People, An idea challenge by Canadian Foundations
Toyota Mobility Foundation
New Cities Foundation
Toyota Mobility Foundation
New Cities Foundation
Q:
What is the difference between a private foundation and a public charity? (source)
A:
Private foundations
Foundation Center defines a private foundation as a nongovernmental, nonprofit organization having a principal fund managed by its own trustees or directors. Private foundations maintain or aid charitable, educational, religious, or other activities serving the public good, primarily through the making of grants to other nonprofit organizations.
Every U.S. and foreign charity that qualifies under Section 501(c)(3) of the Internal Revenue Service Code as tax-exempt is a "private foundation" unless it demonstrates to the IRS that it has met the public support test. Broadly speaking, organizations that are not private foundations are public charities as described in the Internal Revenue Service Code.
Public charities
Public charities generally derive their funding or support primarily from the general public, receiving grants from individuals, government, and private foundations. Although some public charities engage in grantmaking activities, most conduct direct service or other tax-exempt activities. A private foundation, on the other hand, usually derives its principal fund from a single source, such as an individual, family, or corporation, and more often than not is a grantmaker. A private foundation does not solicit funds from the public.
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