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With the enormous bailouts that the federal government provided over the past several months to myriad sectors of our economy, here's a new twist: How about some relief for the nation's not for profit and social service sector?
Now, perhaps the idea sounds spurious or even facetious at first, that is until we realize that as our economy has increasingly failed the middle and lower class over the past two decades it is the nation's social sector that has essentially served as the "safety net" for our country's most disenfranchised people and communities. This sector has been servicing millions of our country's neediest people for decades. Yet today, as a result of our nation's economy, more and more of our nation's most prominent social, civil and community organizations are in serious financial trouble. And as the economy continues to contract more rapidly contract, far too many of our most valuable and venerable not for profits--organizations that tirelessly service America's most disenfranchised--will likely fold under the pressure.
A new survey by GuideStar, the leading provider of nonprofit information, shows that the proportion of charity representatives reporting decreased contributions nearly doubled between 2007 and 2008, and that almost half of participants from nonprofits that rely on end-of-year gifts expect donations to decline during the last quarter of 2008 compared to the last quarter of 2007. In 2007, approximately 40% of the private funding for the not for profit sector came from the same financial sector that is now in a free fall.
Moreover, as financial and other companies all across America aggressively contract to conserve capital, doubtless corporate giving to the not for profit sector will be among the very first casualties. And while this move may seemingly preserve corporate capital in the short run (i.e. it may be good for short term corporate earnings) in the long run this will only serve to accelerate our national economic demise and further exacerbate and make more permanent the dangerous and historically wide gap between rich and poor in this nation.
Consider that as the economy worsens the private and public sectors' respective financial commitments to the social sector actually wane at the worst possible time. That is, the financial commitment recedes precisely when the sector is needed the most by society.
Today, with an historically high level of people looking for jobs, more people than ever homeless, more in need of emergency medical services with no hospital nearby and no health care plan, more in need of career retraining and new job skills, with all this burgeoning need, the monies available are on the decline.
In the past, charitable workplace giving, in the US at least, was more focused on domestic needs, such as early childhood, health, and social services. Today, charitable giving has a more global outlook. Companies and their employees reflect a global economy and disasters are global events, drawing in individuals through the media, heightening concerns for innocent victims across the globe.
So the demand for the services of this sector of our economy is sharply up, but the sector's ability to "supply" those services is on the decrease, due to rapidly falling financial commitments. This situation is not only counterintuitive, but also quite dangerous for America. It is a trend that we cannot afford to continue. If ever there was a rationale for government intervention, when the market is not acting "rationally", then this is it.
Despite the enormous social, civil and civic contributions to America, the not for profit sector lacks the equivalent lobbying and special interest muscle in Washington that Wall Street uses to influence government policy. There is no such force de jure advancing the not for profit cause in Washington today. But logically, if America can provide an off-budget, $800 billion bailout of the financial sector, an $80 billion rescue of a single insurance company, billions more for auto and other manufacturers, and countless billions for other private sector institutions, then it seems quite reasonable to at least ask why a discussion about the current condition of our nation's not for profit and social service sector is not also on the table. The sector represents our ultimate safety net and it is likely to be the most devastated of all by the economic downturn.
Yet despite what is at stake and the millions who will be further disenfranchised by the sector's continued demise, so far, the sector seemingly remains walled-off from the discussions about federal support and assistance. Mr. Paulson, it's time to tear down that wall!
Blair Hamilton Taylor is the President and CEO of the Los Angeles Urban League