Wednesday, October 26, 2005

Nonprofit Organizations & Public Policy

The work of the American River Parkway Preservation Society is educational, with a long-range purpose of helping to change public policy regarding the American River Parkway to help preserve, protect, and strengthen it for our community and the generations to come.

To illuminate the role of nonprofit organizations in changing public policy, here is a discussion with executives of two nonprofit foundations that fund public policy work, from the January/February 2005 issue of Philanthropy, published by the Philanthropy Roundtable.

Foundations and Public Policy
Two prominent players square off on the value of funding public policy work

At the Philanthropy Roundtable’s recent annual meeting in Palm Beach, James Piereson (executive director of the John M. Olin Foundation) and Rebecca Rimel (president of the Pew Charitable Trusts) addressed the relationship between philanthropy and public policy, then fielded questions on such topics as K-12 education, campaign finance reform, universal preschool, and taxes. Chester E. Finn Jr. (president of the Thomas B. Fordham Foundation) moderated the session.

James Piereson: Private foundations are limited by law in the ways they can and cannot seek to influence public policy. Involvement in election campaigns, for example, is prohibited. Lobbying—contacting representatives to support or oppose legislation—is likewise prohibited in nearly all cases. If foundations spend funds in these ways, they may lose their tax exemption.

Grantees—public charities—are permitted to lobby legislatures, so long as such efforts represent only a small part of their activities. While foundations may support charities that lobby, they are not permitted to earmark funds for lobbying. In short, if foundations are to affect public policy, they must do so indirectly, through grantee programs which in various ways may influence legislators, experts, or public opinion on broad principles that go beyond particular bills under consideration.

For much of their history—from the early 1900s into the 1960s—foundations typically influenced public policy through demonstration projects or through blue ribbon panels that recommended this or that policy. In the early 1960s, for example, the Ford Foundation’s Model Cities program was picked up by the Johnson administration as part of its “Great Society” agenda, and prominent foundations funded private commissions that helped birth public television and the National Endowments for the Arts and Humanities.

Foundations had little input on the New Deal programs of the 1930s. Waldemar Nielsen’s history of foundations, Golden Donors, hardly mentions foundations in this connection, except to note the antipathy to FDR of various business leaders like J. Howard Pew and Alfred Sloan. Typically, foundations were wary of political involvement because they feared that controversy and public notice carried great personal and institutional risks. By the 1960s, such concerns had faded; today they seem to have disappeared.

A significant shift in policy-related philanthropy occurred when McGeorge Bundy, a refugee from the Kennedy-Johnson administrations, became president of the Ford Foundation in 1966. He developed the pioneering strategy of “advocacy philanthropy,” in which foundations invested funds in a maze of advocacy and litigation groups to promote feminism, affirmative action, disarmament, and other liberal causes. The groups didn’t lobby for legislation, but advocated ideas that led to legislation, then sought to influence the regulatory bodies that carried out the legislation and the courts that interpreted it. Such influence was often reinforced by timely research studies, conducted by a think tank or a university program funded by the same philanthropies. Bundy’s strategy of bypassing the electoral process became the model for foundations seeking to affect public policy.

This innovation had important consequences. First, it led to a 1968 effort, funded by the Ford Foundation, to decentralize New York City public schools by creating community school boards. This change brought on an explosion of ethnic tensions and set back race relations and public education in the city for a generation or more—it was a spectacular failure.

Second, the liberal groups created under Bundy’s leadership came to control the Democratic Party, displacing the old voting blocs (Southerners, Catholics, urbanites, union members) of FDR’s coalition. By the end of the 1970s, the Democrats had surrendered their place as the nation’s majority party; now, after a generation, they remain trapped in the advocacy group box Ford built.

Third, in the late 1970s, various conservative foundations, my own prominent among them, adopted the “advocacy philanthropy” model. The impressive array of conservative groups one sees today—from the Manhattan Institute to the Heritage Foundation to the Federalist Society to the campus newspaper movement—resulted from this strategy.

Unlike Bundy, the Olin Foundation has focused more on building institutions, nurturing talent, and promoting broad ideas than on promoting specific policies. We thought this focus better fit our competence, and we believed policies would follow once the institutions, talent, and ideas were in place.

Our achievements and failures? I think our work has encouraged a popular acceptance of free markets and religion’s role in society, and a consequent skepticism of socialism and the welfare state. This appreciation of the institutions of liberty is what we are most proud of.

For the rest of the discussion: