The “Silly Season” is a mildly derogative phrase used by donors to describe that time of year when seemingly every non-profit organization hosts a celebratory dinner (or lunch…or multi-day conference, etc.). Yes, of course, that’s an exaggeration, but you get the point.
For donor-advised fund providers there is a second Silly Season—it comes at the end of the calendar year when grant requests skyrocket (due mostly to donor procrastination in combination with end-of-the-year fundraising letters stuffed in mailboxes and inboxes).
Recently, however, a new Silly Season has surfaced. It’s the Silly Season of politics, specifically the outcry that arises when uninformed citizens (and often elected officials) see the sky falling because of a change in policy. In this case, it’s the fallout of the ongoing work of the Department of Government Efficiency, or DOGE.
I’m not interested in debating whether or not the unique DOGE experiment will be a success. That’s for another place and time. My concern is narrower: It’s the collateral damage I see happening to the philanthropic community—specifically to conservative groups like DonorsTrust—that is a byproduct of ongoing DOGE efforts.
The NGO Controversy
In the last month, donor-advised funds broadly have been thrown under the microscope as DOGE, in combination with several presidential executive orders, has recommended program and personnel cuts across a wide range of federal agencies and departments, specifically the U.S. Agency for International Development (USAID). At issue: the relationship between non-governmental organizations (NGOs) and the federal government.
The Right and the Left have equally contributed to this conversation in less than helpful ways.
On one side we have Inside Philanthropy, a trade publication, which headlined a hand-wringing article with “A Federal Freeze Would Devastate Nonprofits: Will Funders Step Up?” It cites an Urban Institute report that identifies the challenges “facing funders seeking to counter the coming era of nonprofit budget shortfalls.” It was shocking, albeit unsurprising, to read that over one-third of nationwide nonprofits drew between a quarter and three quarters of their funding from government sources (federal, state, and/or local). And much of this is direct grantmaking, not contracting.
On the other side we have Data Republican, an online database seeking to track and catalogue federal spending and identify where such funds are allocated and, in doing so, to unleash an online mob of citizen activists. In recent blogospheres and social media posts, Data Republican has fanned the fire of theories about who benefits from USAID funding. (Hint: It’s not necessarily international “aid” programs or people.) Included in all of this were blanket statements about donor-advised funds generally and DonorsTrust specifically, and the financial entanglements these organizations supposedly have had with USAID (and other government agencies). Thus, many of Data Republican’s online supporters questioned the legitimacy of any grant made by DonorsTrust to a public policy 501(c)(3), especially made to a group that did not seem to toe the line of their particular perspective on conservatism.
All of this is not just silly. It’s plain stupid.
The Role of NGOs
For the record. DonorsTrust’s entire purpose is to protect the charitable intent of conservative and libertarian donors—to ensure that their dollars go to organizations reflecting their values, including the strongly held belief that government should be limited. We honor such intent by refusing to make grants to any nonprofit which relies heavily on government dollars from any source—even if we sympathize with that organization’s mission or purpose. Nor do we make any grants to government agencies or programs (something that can’t be said about many other donor-advised fund providers). And, as part of that promise, DonorsTrust does not seek (nor accept) any contributions from any government sources. Full stop.
I confess my sympathy meter swung low as I read Inside Philanthropy, and my annoyance meter swung high as I read tweet after tweet about Data Republican’s “findings.” But there are a few things to unpack from these collective statements of handwringing self-righteousness.
All of this fails to understand that the role of the NGO in civil society is to address problems that the government has neither the resources nor mandate to address. We are a country built upon the concept of the individual citizen in relation to the government—where the citizen is empowered to pursue opportunity, wealth, creativity, yes happiness, in whatever means the citizen desires (barring basic violations such as abusing property rights, theft, and using physical violence, among others). In the process of such endeavors the citizen uses the power of voluntary action—including the use of one’s own time, talents and treasure—to participate actively in our collective civil society. It’s what gives us our unique culture, frustrating polarization, and unbelievable wealth and compassion for those in need.
Government is the Problem
Non-governmental organizations are exactly that—“non-governmental.” Relying on government for more than a fraction of one’s revenues makes one a mere extension of that government—and the NGO’s ability to act independently, according to its donor and staff wishes, is severely compromised. And it’s also an insidious means by which government extends its footprints into our lives. If shutting off the spigot of government money shuts an NGO down, then it was never truly an NGO in the first place.
Oversight of all of this should not be focused on the NGO community—even though there are problems to address. While I do not condone it, the system is one of (poor) incentives led by individuals who have no qualms (many of whom are well intentioned) about feasting at the government funding trough. The focus should be on directing more oversight of government itself. As my friends at the Philanthropy Roundtable have said “Debating the mechanics of tools like DAFs distracts from the real problem and creates the illusion of accountability.” I’m with Senator Rand Paul on this one—the only way you get less waste is to give the government less money to spend.
Conservatives have jumped on the bandwagon of NGO reform. Some of it, for example, to break the cycle of dependency between NGOs and government largesse, is good. Conservatives, however, should know what they are actually talking about when it comes to discussing donor-advised funds and private foundations. Otherwise, going down the path of redefining what a “legitimate” NGO is, seeking increased taxes on NGO assets, or forcing private foundations and donor-advised fund providers to pay out more each year, is based on envy—the desire by politicians and voters to get something they want using other people’s money. There is a nasty strain of it currently running through conservative circles which use the language of class warfare to lead us down an inevitable path to wealth redistribution. More importantly, they risk damaging the very small subset of this ecosystem comprised of a few conservative family foundations or donor-advised fund providers.
Inside Philanthropy may ironically have it correct, though they may not have intended it. Yes, funders should step up. That’s what they should have been doing these last many decades. If they step up, then they are doing precisely what U.S. civic culture expects of them. Put your money where your mouth is. You already give money to the government involuntarily—it’s called taxes. Start acting voluntarily with your giving, and don’t throw it away on more government agencies cloaked in charitable clothing. If you give to conservative organizations, be vigilant that they are financially independent from government, or don’t support them. If you give to liberal organizations and are panicking about the reduction of federal or state dollars, then I question both your intent and your sincerity. Because if you don’t step up, then the creative destruction of the marketplace extracts its painful dues by shutting NGOs down—conservative and liberal alike.
That is NGO reform that I can get behind.
