Share this story
Close X
Switch to Desktop Site

If Uncle Sam turns stingy, charities will turn to you

Who supports those who can't support themselves in the United States? The answer many people would give is the federal government, through welfare programs, endowments to the arts, and various other grants to states, cities, people, and institutions.

But it appears likely that more people and programs will be counting on corporations and individuals for support in the coming years as Uncle Sam, as well as the major private foundations, become precarious sources.

About these ads

This means that a growing share of what are now government programs will fall to nonprofit organizations -- the "third sector" of the American economy -- according to experts both in and outside nonprofit organizations. And the future of this third sector lies increasingly with private contributions.

"If you're going to cut back government spending, then you've got to give people the incentive to give," suggests Jeffrey Lant, a consultant on management and fund raising for nonprofit groups. "We need to inculcate the individual spirit of philanthropy."

Inflation and the stock market have hobbled the wealthy foundations, and business corporations recently have overtaken them as contributors to worthy causes. "Corporate potential," says Steve Delfin, a spokesman for United Way of America, "is largely untapped."

But individuals still account for 90 percent of charitable contributions -- overshadowed only by the government, with its own social programs and $20 billion-to-$40 billion more each year in grants to others.

And federal largess to nonprofit programs, a lifeline to many of them, is still an open question under new Washington leadership. The so-called third sector is waiting for clues -- and expecting lean times.

"No one knows explicitly what's going to happen when Reagan gets in power," Mr. Delfin says. "But based on what we know of Mr. Reagan's philosophies, he's for decentralization of these things." This means, he explains, federal budgets will be cut and voluntary, community agencies will have to take up the slack in providing services.

If the federal Head Start program is pared down in next year's budget, for example, a greater share of child care will fall to nonprofit day-care centers, Delfin notes, just as the demand for these centers is already straining resources.

About these ads

It is human services -- especially those for less articulate constituencies like children -- that stand to lose most as corporations take over the domain of the independent foundation and the federal fist tightens, consultant Lant forecasts.

Institutions like museums and colleges tend to have sound corporate connections and will fare better, he says. Lant is adamant on one point: "Nobody gets a corporate nickel unless you're connected."

And local arts programs are "always last on the list," Lant says. Corporations favor funding large-scale "glamour projects" for their wide public-relations appeal.

Overall, Lant concludes, "All innovation will suffer" as corporations tend to concentrate their funds on the programs they know.

Meanwhile, the central effort in the nonprofit sector is to build individual contributions.

A charitable contributions bill awaits the 97th Congress.

According to Brian O'Connell, president of the Independent Sector, the bill would allow the roughly 70 percent of American taxtayers who use short forms to deduct contributions without having to shift to the longer tax form. It would mean $3 billion less in tax revenues, Mr. O'Connell figures, but it also would boost giving totals 15 percent, or $6 billion. Both President-elect Reagan and the Republican platform favor the bill.

The independent Sector was formed last March as an organization of nonprofit groups, both contributors and receivers. Its message to Americans, according to Mr. O'Connell: "If they want a society that has alternatives for social welfare, then they have to support them."

And to support them, Jeffrey Lant says, Americans need tax incentives. The Reagan administration, he says, "needs to make it easier for people to give."

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.