Opinion: Columnists

Manhattan Moment: White House politicizes philanthropy

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In 2009, the Obama administration established a new initiative, the Social Innovation Fund, or SIF, saying that it would "scale up" existing programs for the poor in three areas -- "economic opportunity, healthy futures, and youth development."

The fund's novelty was the way it would "scale up" these programs. The White House would choose an assortment of "intermediary grant making organizations," such as foundations, which would in turn identify worthy grant recipients. Those recipients would get money from both the government and the intermediaries, and they would also pledge to raise enough money from private donors to match the total they had received.

So far, the private donors aren't cooperating. Only 34 percent of the grant recipients listed on the fund's website report having raised their matching funds -- even as the nation's private donors increased their overall charitable giving in 2011 to $298 billion.

The donors' reluctance to participate in the SIF, which is part of the Corporation for National and Community Service, or CNCS, isn't so surprising. For one thing, the fund's mission statement implies that it funds a small number of promising new nonprofits that are based on inventive concepts. But in reality, dozens of organizations in 33 states and 100 cities have received grants, including many long-established social-services organizations and even government agencies, such as public housing authorities and public television. It's hard for potential donors who read the exciting mission statement to pony up money for what looks like a grab bag of standard social-services grants that public officials and organizations would like to take credit for.

Donors may also recognize the hollowness of the SIF's claim that it will use social science to test promising approaches to helping the poor. Such an effort would rightly command the attention of philanthropic foundations, which could watch with interest as the SIF tested, for example, whether a particular way of preparing disadvantaged children for school was producing good results. Though some of this type of evaluation is occurring, the SIF is simply funding too many programs overall to claim this as its basic approach.

Or perhaps donors are reluctant to participate because they realize that the SIF represents the politicization of private charity. Consider the donors that have provided matching funds. They include banks, health care firms and Freddie Mac, the government-backed housing enterprise -- all deeply entwined with government regulators and with plenty of motivation to stay in the White House's good graces.

The fund also appears to be strengthening the liberal arm of American philanthropy with public money. Among the outfits providing matching funds are the Ford Foundation, the Annie E. Casey Foundation and George Soros' Open Society Institute. It's possible that the government is influencing them to fund causes that they otherwise might not fund; it's more likely that the spending is in keeping with their traditional grant-making priorities.

The SIF is a step, however modest, toward a system in which government decides which programs deserve charitable support. One can imagine how such a system might operate: The government could bestow the charitable tax deduction only on donors to government-approved causes, or award tax-exempt status only to government-approved nonprofits. At risk would be not only the discretion of charitable donors, but also the happy accidents that have often resulted when an individual philanthropist takes a gamble on a visionary new organization.

The SIF represents the potential Solyndraization of philanthropy -- a system in which private giving becomes so deeply embedded with and dependent on government discretion that the line between the two blurs. House Budget Committee Chairman Paul Ryan, R-Wis., has proposed to eliminate the CNCS entirely, which would spell an end to the SIF. Speaking out against a government agency dedicated to helping the poor can be bad politics, but Ryan is right.

Howard Husock, a contributing editor of City Journal, is the Manhattan Institute's vice president for policy research and director of its Social Entrepreneurship Initiative. This piece has been adapted from one that ran in the winter issue of City Journal.

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