From the July 27, 2009 Wall Street Journal
July 27, 2009
by William A. Schambra
It is often noted that, after billions of dollars in government spending over the past several decades, we have seen precious little progress in solving American’s major social problems, from family breakdown to dysfunctional schools. But what about America’s nonprofit sector—organizations that concentrate their efforts on exactly such problems, with money from charities, trusts and personal philanthropies? They too spend enormous sums. Is their record any better?
Not really, says Steven H. Goldberg in “Billions of Drops in Millions of Buckets.” We should not, he cautions, blame the American character for this failure: There is plenty of compassion and generosity to go around. Nor is bad thinking at fault: There are plenty of bright ideas and innovative programs. No, it is the whole structure of giving that condemns even the best efforts: We collect and spend our charitable dollars in a haphazard and fragmented way, he argues, diluting whatever problem-solving force they may have.
Mr. Goldberg’s principal case study is the effort to rescue public-school education from its often dismal state, not least in inner-city schools. He cites Teach for America, Jumpstart, Citizen Schools, and New Leaders for New Schools, all of which aim to improve the way education is designed, staffed, managed and supported. The approaches vary—from recruiting elite college grads to teach in inner-city schools to signing up volunteers for pre-school and after-school mentoring. In recent years, Mr. Goldberg notes, “venture philanthropists,” many of them high-tech entrepreneurs, have noticed these efforts and helped to lift them beyond the experimental stage by providing long-term funding, along with the kind of administrative assistance that large programs require.
All well and good. But, Mr. Goldberg says, more is needed—much more. The first couple of stages of organizational development will get us only so far, he observes, resulting in scattered approaches, some better than others but none achieving a critical mass. What is missing, Mr. Goldberg claims, is “third stage” funding: a major commitment that vaults a particular program or approach into nationwide, system-altering status.
It is only then, Mr. Goldberg says, that we will see “transformative social impact”—the kind of change that makes headway against long odds and seemingly intractable problems. (The scale he has in mind is suggested by the phrase “100 million dollar problems.”) To make focused, big-ticket philanthropy more likely, he proposes an Impact Index, a “virtual nonprofit stock market” that would rank nonprofits according to their effectiveness. The index would operate as an information market, pooling the wisdom of those who know best—experts, funders, other nonprofit leaders. Armed with such knowledge, Mr. Goldberg concludes, wealthy individuals and foundations would back the best nonprofits with the most dollars—and change society.
It is true, as Mr. Goldberg suggests, that our foundations make their petitioners work far too hard to receive grants that are far too small and that are often limited to only a few years. But he surely exaggerates when he insists, sweepingly, that “the lack of social progress in recent decades is attributable in large measure to the way we fund nonprofit organizations.” The lack of progress has more to do with the fact that we really have no idea how to bring about “transformative social impact,” no matter how generous the funding may be. And we would probably quarrel about which kind of transformative “impact” was best for society.
Not all good ideas can be big ideas, either. Teach for America has been amazingly successful at mobilizing Ivy League graduates to teach, at least for a few years, in America’s toughest schools. But it is not at all certain that, even with a big boost in funding, the program could recruit enough teachers to transform the teaching profession. As Irving Kristol suggested to the Council on Foundations years ago: “It is possible to do good. . . . Doing good isn’t even hard. It’s just doing a lot of good that is very hard.”
Doing a lot of good in American education is made even more difficult because it is dominated by powerful lobbies—most notably, teachers unions—with vested interests in the status quo. As hostile as the teachers unions are to an idea like Teach for America when it is in the experimental phase, just imagine how they would bristle at “third stage” growth.
The same is true of every field of social policy today. Promising ideas are confined to narrow beachheads not because of fragmented funding but because too many interests have too much at stake in the way things have always been done, however ineffectively. Wealthy donors may chatter about funding only the latest, cutting-edge solutions, but as soon as it becomes clear that a particular grant may cause a nasty picket line in front of a corporate office or foundation headquarters, the ardor for reform diminishes.
Mr. Goldberg’s push for concentrated “third stage” giving is directed especially at “mid-cap” nonprofits, located somewhere between “large-cap” behemoths like the Red Cross and United Way and the “small caps,” a category he defines with appealing graciousness as the “hundreds of thousands of voluntary groups and associations that emerge spontaneously from the goodness of people’s hearts and make small but important differences in millions of lives.” Clearly Mr. Goldberg is not hostile to “small caps,” but it would seem that the more donors follow his advice—concentrating their funding on a handful of national projects—the less money will go to small “groups and associations.” But it is the small groups—with their intimate understanding of local conditions and needs—that may, in aggregate, do the most good.
Senior Fellow William A. Schambra is the director of Hudson Institute's Bradley Center for Philanthropy and Civic Renewal.
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