posted on: Monday, September 26, 2011

By Sean Dobson

Sitting in our cushy offices, working on fascinating and important issues, surrounded by sycophantic supplicants –  it’s all too easy for philanthropists to fancy ourselves Masters of the Universe.

But before grabbing our swords and shields, we need to acknowledge that the dollars we invest in the giant social problems we aim to ameliorate amount to a mere drop in the bucket.

For example, promoting health always ranks first or second among the issues in which U.S. foundations invest. In the years 2007-2009, American foundations devoted $2.6 billion annually to promote domestic health. That sounds like a lot of money – until you realize that the U.S. health care sector is a $2.5 trillion industry. In other words, the total U.S. foundation investment equals an infinitesimal 0.1 percent of the U.S. health care sector – literally a drop in the bucket. And for health grantmakers reading this post, just think how that tiny percentage shrinks to near absolute zero if we look only at your individual foundation’s giving.

We would reach the same basic conclusion if we examined other issues foundations work on, such as education, arts and environment.

Thus, the single biggest question facing philanthropists is, “How can foundations maximize the effectiveness of our proverbial drop of water?”

The question is sobering, but at least the answer that I offer is clear: “Fund more advocacy.”

Let’s go back to the issue of improving health in the U.S. Making Americans healthier is of course a complex undertaking, but the big picture that emerges from the transnational evidence is crystal clear: our country, which relies mostly on private markets to deliver health care, ranks a disgraceful 34th among nations when looking at the single most important indicator of health: “Healthy Life Expectancy”. And for this dismaying result, the U.S. pays far more for health care as a percentage of GDP than any other advanced country.

By contrast, every single country that ranks in the top 10 does not rely primarily on private markets and private money to deliver health care, but instead on an ironclad government guarantee to all citizens – backed by sufficient public funds – of access to quality care.

Given such clear evidence as to the health care challenge and solution for the U.S., one would expect that over the past few decades most every foundation working on this issue would have funded advocacy with the goal of inducing the U.S. to copy the basic features of the more successful countries.

With the exception of a handful of health grantmakers, the evidence indicates the exact opposite: of the 880 biggest health care grantmakers analyzed recently by NCRP (see p. 32), only 11 percent of their domestic grant dollars funded systems-change advocacy. In other words, the bulk of the other 89 percent went to fund either or both service delivery and research.

How in the world can so many health care philanthropists actually believe that their 0.1 percent contribution to America’s health care system should take the form of adding an infinitesimal amount of extra health care provision and research?

I would argue that such a strategy is worse than futile – it is positively harmful because it not only wastes the partially public dollars stewarded by foundations, it also helps perpetuate the myth that a “thousand points of light” of private dollars can solve such a huge public problem.

Yet, even this paltry 11 percent for advocacy has done a world of good for the health of the American people, as documented in NCRP’s recent report, Towards Transformative Change in Health Care: High Impact Strategies for Philanthropy. The most notable of the many success stories examined in that report is the investment of the Atlantic Philanthropies and others in Health Care for America Now (HCAN), the grassroots coalition that played an indispensable role in the victorious battle to enact the Affordable Care Act (ACA).

How much return-on-investment did foundations get for funding the nonprofit advocacy that culminated in ACA? Let’s assume that passage of ACA was a 20-year process, starting with the first failed attempt at comprehensive reform in the early 1990s; then the slow regrouping of health reform advocates during the remainder of that decade; then the increasingly powerful movement for reform during the Bush years; and finally its full flowering in the well-organized and successful push for reform in 2008-2009. According to my back-of-the-napkin calculation, foundations invested at most $8.7 billion in this enterprise during the period 1990-2009.[1]

This $8.7 billion surely generated many times that amount in benefits even if we consider only ACA and disregard the many other health reforms enacted during those 19 years at all levels of government. For example, the Congressional Budget Office anticipates that ACA will generate $143 billion in savings for the federal government, and it seems that consumer savings will be so gargantuan that nobody can quantify them precisely. The ACA also produces numerous nonquantifiable benefits, such as the ban on insurance companies denying coverage to children due to "pre-existing conditions”.

What is true for health care advocacy is true for other issues on which foundations work, according to the mountain of unrefuted research showing huge return on investment for foundations that support advocacy. Yet, sadly, just as most health care funders ignore the evidence that advocacy works, so, too, does the entire sector as only 15 percent of all grant dollars go for this purpose.

How come? Below are the most common reasons I hear from grantmakers as to why they refuse to fund advocacy – and my refutation of their logic:

“Funding advocacy is legally risky.” Twenty years ago, maybe – just maybe – we could excuse this fallacy because of widespread ignorance at that time about IRS law. But that confusion was dispelled long ago thanks to the outstanding work of the Alliance for Justice, Center for Lobbying in the Public Interest, NCRP, and others.

“We only fund projects whose results can be measured – and advocacy results can’t be measured.”  This misconception was understandable 10 years ago; but the work of AfJ, GrantCraft, NCRP, and others (handily summarized here) blows this pretext out of the water.

“We funded advocacy once and it did not work out.” By that logic, nobody would ride bicycles because every kid falls off the first time.

“Advocacy is too controversial for us.” My guess is that the word “effective” and
“strategic” appears more often than the term “avoid controversy” in most of foundations’ strategic plans.

“We practice humble philanthropy.” See refutation directly above substituting “humble philanthropy” for “avoid controversy”.


Conclusion

There are lots of reasons why our sector needs to devote more than a mere 15 percent of grant dollars to advocacy. But the single pithiest is this: 0.1%.


Sean Dobson is the Field Director at the National Committee for Responsive Philanthropy (NCRP).

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ENDNOTES

1.    Guesstimated thus: [Total foundation giving 1990-2009 = $496 billion] x [16 percent multiplier as share of all grantdollars for domestic health] x [11 percent multiplier for share of health grantdollars for advocacy] = $8.7 billion. The $496 billion figure comes from adding together annual data reported in the Foundation Center’s series Foundation Growth and Giving Estimates. The 16 percent domestic health multiplier is calculated thus: The NCRP report on health philanthropy found U.S. foundations gave 18 percent of all giving for domestic health during period 2007-2009, a number probably higher than in prior years because 2007-2009 was characterized by heightened hopes of federal health care reform. See p. 32 of Transformative Change in Health Care. Foundation Center “Giving Trends” annual series finds an increase in giving for combined domestic and international health care from 18 percent in 2002 up to 23 percent in 2007.

looking at the Foundation Center’s 2004 and 2009 giving trends,  we can guesstimate an average annual percentage of 16 percent for domestic health during the period 1990-2009. Finally, the 11 percent health advocacy multiplier is calculated thus: The Foundation Center only started tracking advocacy grantmaking (what it calls “social justice grantmaking”) in 1998, a period that saw it increase from 11.2 percent of grant dollars to 14.2 percent in 2009 (an increase driven mostly by the creation of the Gates Foundation). See this fact sheet on social justice grantmaking. If we assume the percentage hovered at about 11 percent during the 1990s and then averaged about 13 percent in the 2000s, then the average percentage during the entire 19-year period was 12 percent. This is corroborated by the NCRP health philanthropy report (p. 32) finding that during the period 2007-2009, 11 percent of foundation health care dollars went to advocacy.  Hence we stick with an 11 percent health advocacy multiplier during the entire period 1990-2009. Of course, on the one hand, not all nonprofit health care advocacy during this period was for ACA-type federal reform. On the other hand, as a trench-level participant in the ACA battle, I know from firsthand experience and insider knowledge that the bill never would have passed without ALL the advocacy infrastructure built up over many years of grassroots public education and organizing culminating in the final two years of the drive spearheaded by HCAN.