It's Time for Charities to Get More Benefit From the Donation Buck

IN this traditional season of charitable giving, it's worth pondering where philanthropy in America should be heading.

This, after all, is the year when Washington told the private sector it should be ready to bear more of the load the federal government has shouldered.

It is also the year in which several highly visible cases raised public doubt about charity stewardship. William Aramony was indicted and sentenced for abusing the public's trust, and the United Way, symbol of amalgamated charity, has been rebuilt.

The Foundation for New Era Philanthropy in Radnor, Pa., which promised to double the money of a number of credulous nonprofit organizations, fraudulently collected hundreds of millions of dollars. And the nation's biggest nonprofit, the American Association of Retired Persons, has been attacked for lobbying and engaging in for-profit businesses.

Charity has lost some of its sanctity at the same time the number of Americans living in poverty - now 32.5 million - is growing.

More than 15 million of these are children under the age of 18; 5 million are under age 6. The further dreadful irony is that the average citizen contributes 3 percent of annual income, a percentage that is falling.

The public is left to ponder the specter of charities that have fallen from grace against the backdrop of the grand American tradition of philanthropy represented so well by such venerable institutions as CARE and the Red Cross, and by a host of local voluntary organizations.

It's time to create a new "midsector" of philanthropy - midway between the government (federal, state, and local) and corporate sectors - that acknowledges the following:

*The economic force - the business - that charities have become.

*The crucial role they play in meeting human needs in an era of shrinking public resources.

*The responsibility they have to fiercely maintain high productivity and unassailable integrity.

The midsector is closer to the problems, closer to the people who care about the problems, closer to the people who benefit from the programs, and more immediately concerned with the impact and efficiency of those programs. The midsector leverages public funds with private money, and at its best, applies private-sector standards to cost/benefit ratios and funds management, and is accountable to those whose voluntary support keeps it alive.

The challenge to those of us in the midsector is as clear as it is pressing.

We must show that we can make a difference, because our supporters will properly expect measurable results. We must work with those who embrace their increasing responsibility for the less fortunate, and we must reach out to those who do not. We must be creative in opening avenues for partnerships with local governments, with groups of people determined to help themselves, with national corporations and small businesses, and with educational and religious organizations and the news media.

And we must remain unquestionably effective in our stewardship of the public's resources. This will involve the difficult restructurings so familiar to the corporate world.

At Save the Children Federation, where I have served as chairman since 1993, we have had to begin our growth by consolidating - closing out less effective programs, streamlining administration, and looking for additional ways to raise funds.

In the Southwest, for example, we consolidated three field offices and phased out of relationships with dozens of communities.

This short-term contraction has positioned us to invest our supporters' resources in much more successful partnerships and to take some of our best programs, such as the Child Care Support Center in Atlanta, toward national scale.

This consolidation has been far from easy. Yet our board of concerned private citizens continues to push for the changes we must make to maintain our reputation and carry out our responsibilities.

Even Save the Children is not immune from media scrutiny.

The entire midsector must cherish its integrity if it is to maintain the widely held public confidence in its ability to pick up where government leaves off.

To succeed, each private/public midsector agency will have to demonstrate higher productivity - more benefit per buck each and every year.

The challenge is enormous, and as the smoke clears, we may find that the government's role has been reduced less dramatically than was feared. But that will not change the need for the midsector to move aggressively to provide opportunity in place of dependency for the nation's needy.

All Americans should ask themselves whether they are doing good well enough, whether they are reinvesting in this marvelous country commensurate with the benefits they have received from it, and whether their own participation in the midsector is needed to preserve those same standards for future generations. Then philanthropy will be on upward wing again.