Over the course of the next few weeks, I’m going to write a multi-part series about my ongoing professional experience in running a non-profit, capturing my observations and analysis of the rot and corruption in this sector that affects you and your communities.
The title for this miniseries is a paraphrase of the famous James Carville quip during the 1992 Presidential Campaign: “It’s the economy, stupid”.
Over the next few weeks, I’ll dive into how the codependent partnership between the government and the non-profits in your community are actually making things worse. In a final post, I’ll provide some thoughts on how to address it where you can in your communities, and what I’m doing in my role to undermine and ultimately destroy this destructive relationship.
In today’s intro, I’ll outline the expansion and pitfalls with increased government funding and give you a few pointers on how you can find out what’s happening in your community.
Crackpipes…Really??
Who saw this recently and thought it was from the Babylon Bee?
Nope, it’s an actual story.
This program perfectly demonstrates how the government serves two addicts.
Government funding dictates the type of work non-profits do, and the non-profits are addicted to the funding they receive. In this case, non-profits addicted to government funding will jockey to receive funding to provide drug kits to clients addicted to drugs.
We live in an idiocracy.
Where Non-Profits Get Their Funding
Most of you go about your lives without thinking too much about the charities and non-profits in your community, even the ones you support. You may buy a ticket to a breakfast for the Boys & Girls Club, or go to a gala for the YWCA, or maybe you write an annual check to a small, local non-profit that works on a cause you care about.
But have you ever really stopped to wonder how they operate? Where do they get their money and how much do they get?
Pretty much every non-profit and charity in your community relies on one or more of the following revenue sources:
- Private donations (both from individuals and from or through companies)
- United Ways or Community Foundations (who typically provide grants)
- Government grants/funds (from the Federal or state government, and either as grants or as payments for services provided on behalf of the government)
As someone who came from the corporate world (15+ years) and with a business background (degrees in Business Administration and Economics), I dug into this and analyzed the data in my community, both in the present and past.
Once upon a time (pre-1970), that mix would look like this:
- Private donations – 20%
- United Way/Community Foundation – 70%
- Government – 10%
I chose 1970 specifically because after the Great Society legislation of the 1960’s, you begin to see a dramatic increase in funding from the government to address social problems. In my prior post (Waging "Wars" is More Lucrative than Winning Them), I deep dive into the size of those expenditures – more than 22 trillion dollars…that’s trillion with a capital “T” – and the spectacular failures associated with this obscene spending – roughly 20 million more people are now in poverty than 1970 when the War on Poverty escalated.
And that’s just a singular issue.
What it looks like now:
- Private donations – 10%
- United Way/Community Foundation – 10%
- Government – 80%
Two caveats.
One, communities used to have a much smaller number of non-profits and charities dealing with issues (which affected fewer people once upon a time) in their community. This provided some efficiency for a local United Way drive or Community Foundation to act as the principal funder for this small cluster of organizations. The number of non-profits dramatically expanded over the last 50 years, making United Way/Community Foundation support incapable of keeping pace with the increasing number of organizations. That accounts for the significant drop in how much of a non-profits’ funding comes from those sources.
Second, this is not a one-size fits all or meant to be a hard and fast mix of the various sources of funding for an organization.
It is in line with organizations in my community that I’ve researched. You can research the 990’s (IRS returns that non-profits are required to file) of non-profits in your community to determine how much of their funding comes from what sources.. They typically list these on their website as their public information.
Increased Funding Creates More Junkies and a Loss of Control
From this, you can see how non-profits’ dependence on government funding exploded over that timeframe. Government funding comes typically in the form of Federal grants, which dictate what happens in communities far away in Flyover Country through the strings attached to the money. Even those that either pass through the state government or come directly from the state, it still demonstrates a deterioration of local control in Flyover Country (and other) communities and a dependence on outside funding and influence.
While I can’t definitively prove it, nor would you be interested in an academic exercise of the sorts, my time in this industry tells me that the massive expansion of government funding caused the massive expansion in the number of non-profits in communities across the country.
We have somewhere around 1,100 registered non-profits in our county, for example. That translates to one non-profit for every 150 residents.
Seems excessive, particularly as problems, like homelessness have grown and gotten worse since the early 2000’s.
All of these non-profits seek to please their funders, and when the primary one resides in D.C., they focus more on their desires than what Flyover Country residents want. What does a career staffer in Health and Human Services really know about Flyover Country and its real needs?
Little to nothing.
While United Ways and Community Foundations have obvious deficiencies in their operations and business models, those organizations are typically located in the communities they serve, include representatives of the community on their boards and committees, and understand the needs and problems specific or unique to that town, city, or county.
Many pundits comment on how the pandemic created a transfer of wealth from small businesses that served their communities to behemoths like Amazon and Wal-Mart that serve their shareholders. Over the last 50 years, a similar pattern emerges that created a transfer of control from community representatives to detached bureaucrats located far away.
The Addiction Grows Like a Cancer
In our community, a dramatic decline in United Way revenue, a state budget crisis, and a pandemic all in a five year span resulted in precisely ZERO non-profits closing their doors.
Zero.
Sure seems like the behavior of an addict, right? Their whole existence revolves around getting their next hit, and they do anything to survive until it arrives. In this case, it comes in the form of a government grant rather than a hit off a crackpipe, but the result is the same. It gives them a high that keeps them going long enough until they get their next hit.
It’s not just limited to charities, either.
Tonight, the school district our daughters attend expects a raucous board meeting as parents plan to protest the continued enforcement of masks. Most of the surrounding districts have moved to “mask optional” policies where parents and students determine what’s best.
I have a theory on their entrenched position on this issue.
I’ve never met this governor (I’ve met previous ones), but I’ve heard this governor is the vindictive sort. I suspect my local school district wants to remain in the good graces of the governor.
Why?
They’re dependent on government funding.
Going into the pandemic, their financial picture was a mess with expected shortfalls of around $10,000,000. That number was closing in on $30,000,000 (because of debt obligations coming due, in addition to poor fiscal management) until COVID legislation bailed them out.
Our governor both directly and through subordinates has at times threatened funding over lack of compliance related to mandates and executive orders.
At one point, a Christian school that planned to make masks optional at the beginning of this school year was threatened with a loss of accreditation by state educational authorities. The school quietly reversed the decision.
Our corrupt state will bring to bear any pressure to ensure compliance.
Your school district may not be in as dire straits as ours, but you should consider researching how much money they received and how they’re spending it.
Pay particular attention to something known as “ESSER” funds. This stands for Elementary and Secondary School Emergency Relief Fund (ESSER Fund). It was established with the CARES Act and is a part of what’s known as the “Education Stabilization Fund”.
It doesn’t stop at your schools either. Your town, your county, your park district, all of them likely rely to some extent (and sometimes a GREAT extent) on government funding. As they become more dependent on this revenue, they also begin to cater to the entity providing the funding rather than the citizens they’re meant to represent. Taxpayers can’t speak in a single voice, but a multi-million dollar grant from the U.S. Department of Transportation, will make your local mayor and city council stand on their heads to please these bureaucrats.
I’ve seen this in my community, and I outlined in a recent post (The Flyover Country State of Mind) a local fixation on supporting a public transportation system (buses) that’s inefficient but largely continues to run due to?
You guessed it…Federal government funding.
Counting on a Steady Stream of Future Fixes
As these entities consistently receive government funding, they become dependent on it. Non-profits include it in organizational and program budgets. Schools and cities build their budget projections around this support. And what started out as a “free hit” from the federal drug dealer morphs into a full blown addiction. They can’t create budgets or manage their finances and services without it. If it doesn’t come, they become desperate and that desperation doesn’t improve the results or help the clients or residents they’re meant to serve. It typically means cuts in supports and services that affect poor people and fed-up residents.
This is such a dramatic contrast with my experience in the business world or what many Flyover Country residents would recognize as the “real world”. In the real world, you have to please the customer so they keep buying your product or subscribing to your service. Then, you can only spend the money you have on hand, expect to receive or can reasonably expect to pay back (if you have a business line of credit to provide liquidity, for example).
Not so in the fantasy world of those dependent on government funding.
Living within their means and finding ways to be more efficient, provide top notch products and services, and save money for your customers (the clients, taxpayers, and residents) becomes secondary to pleasing their “drug” dealer.
They’ve become addicted to government funding, and they’re completely hooked.
That’s it for the intro. Here’s what’s on deck for the “It’s the Funding, Stupid” miniseries in the coming weeks:
The Maintenance Men (and Women)
The Government/Non-Profit Industrial Complex
Shrinking the Pool
Stay tuned, Flyover Country!