Philanthropies and nonprofits are often described as the “independent sector.” The current government shutdown has shown how there are in fact two parts to the independent sector: the truly independent nonprofits funded by citizens and foundations who offer voluntary support from their own resources, and the nonprofits who rely on government funding—meaning taxpayer largesse.
Nonprofits that rely on government funding are being shuttered or cutting back during the government shutdown, including charities that provide fuel assistance and meals and lunches to needy children. And it’s not just beneficiaries of charities that are being hurt: nonprofit staff may be sent home without pay—and without the assurance given to furloughed federal employees that they will ultimately be paid for these days.
In some cases, philanthropists are stepping in to provide stopgap funding: Texan philanthropists Laura and John Arnold, for example, gave $10 million to keep open seven Head Start centers that would have closed. But this is the exception; most nonprofits that rely on government funding will just do without for now, even if that means shuttering.
Meanwhile, other nonprofits that rely on private donors continued unabated with their missions. (An outrageous exception: the National Park Service tried to close access to Mount Vernon because NPS staff mistakenly thought it was a federal park instead of what it is: a nonprofit that owns and operates George Washington’s estate.)
Because government is now so central to the mission of providing meals to children at risk of going hungry, either directly (through programs such as SNAP) or indirectly through nonprofits funded by government, that mission is vulnerable to the government shutdown. This critical mission—once carried out by churches and private charities—was taken over by government in order to secure it from the vagaries and uncertainties of private charity, and yet we see today government-funded nonprofits may be more vulnerable than privately funded charities. And it’s not just the mission of providing meals to at-risk children—these concerns hold for many other charitable and philanthropic missions in America once carried out by private citizens and associations, now carried out by government or government-funded agencies.
And, do these nonprofits do better when they rely on government funding? Jane Addams’s wonderful Chicago settlement house, which tended to the needs of immigrants and the working classes, thrived when she led it with the support of private funders. But when it closed last year in bankruptcy after 123 years of operation, it was largely dependent on funding from various government programs.
Relying on government cannot but risk distorting a nonprofit’s mission. As Nonprofit Quarterly’s Michael Wyland argued, after noting that about one-third of U.S. nonprofit revenues come from government sources:
As any nonprofit leader (or for-profit business owner, for that matter) knows, diversity in revenue sources builds capacity and autonomy. When an organization becomes dependent on a single funding source, its leadership finds itself constrained by that funder’s vision, mission, and methodologies rather than being free to chart their own course. Big money is seductive in its appeal, especially when the money appears to be mission-aligned and benevolent. It’s often only later, with the regulations about contracting practices and board composition or the “guidance” from a donor for the nonprofit to “modify” its activities, that the organization realizes the control they’ve lost and the price they’ve paid for the big money.
There’s no easy way to reclaim for private philanthropy all the important charitable and philanthropic missions now carried out directly or indirectly by government. And, government certainly has a role to play in providing a safety need and social services. But the current government shutdown shows us something of what has been lost when government has taken over these important missions once assumed by citizens.