By Connie and Steve Ballmer
When asked why we believe philanthropy must work closely with government, the reason we give is simple. When it comes to helping American kids and families on a national scale, government is where the money is.
Consider this: the U.S. government spends more than $1.3 trillion per year to help disadvantaged people in areas like health, housing, and nutrition, not even counting the education budget. All U.S. philanthropy for human services and public society benefits adds up to only six percent of that total.
We are fortunate to have a system of hardworking people at all levels of government who allocate those $1.3 trillion dollars. But these public servants can’t solve everything. To seriously tackle the toughest challenges, we need collaboration across multiple sectors like business, philanthropy, and academia, as well as across party lines. We all have a role in making sure our precious tax dollars are used effectively.
Government provides most of the money, but philanthropy can provide the stimulus for innovation and change. Here are a few examples of challenges and ways private dollars can contribute:
Adaptability. Once government funding is appropriated for a specific issue, it is slow to evolve, even when new approaches to problem solving have emerged. For example, the Family First Prevention Services Act last year finally caught up with what advocates have long demanded – that federal funding launched in 1961 to create the foster care system should incentivize strengthening families (prevention) rather than providing states with funding only after children are removed from their homes.
However, new federal funding streams come with many new requirements. Philanthropy can help nonprofits and state-level departments understand the changes and organize themselves to qualify for the funds.
Scope. While governments pay nonprofits to provide services for individuals and families, most government contracts pay less than what it really costs. This funding gap leaves nonprofits strapped, unable to cover their fixed costs, innovate, or grow.
When faced with a critical shortage of foster homes, for example, several child welfare licensing agencies in Washington state realized they needed to improve their business practices, develop new ways to recruit potential foster families, and advocate for state resources with one voice. Along with another philanthropy, we helped build capacity by creating the Foster Care Funding Collaborative to strengthen their collective ability to address the shortage.
Experimentation. While government provides the biggest safety net for people experiencing poverty, few of these resources are allocated for trying new things - even if officials know the old approaches aren’t getting good results. As stewards of our hard-earned tax dollars, they are obligated to be risk averse.
One promising innovation to address this is the pay-for-success model. Private funders pay for an innovative program to, say, increase the number of kids who can access quality preschool. Results are rigorously measured, and if the service provider achieves the agreed-upon targets, the government repays the initial funder and takes on the annual funding going forward. This ensures public resources are allocated only after the intervention has been proven to work. We contributed to The Community Outcomes Fund of Maycomb Capital to apply this model.
There are other ways philanthropy can step up more broadly as well. We can instigate and pay for convenings to bring together people from different government systems and the private sector to address a problem from all angles. We can amplify the work of government by funding advocacy to help build good will and understanding for new ideas. Finally, we can support innovative government leaders who want to improve the mechanisms of government, such as by funding consultants like Third Sector Capital Partners to help rewrite contracts so they reward specific outcomes.
Government is where the money is. And the entire community – including philanthropy – is here to help make that money work as hard as it can.