The uproar in recent weeks over Hillary Clinton’s ties to the foundation created by her husband, Bill, have mostly missed a major point: If Americans want nonprofits and donors to play a bigger role in solving problems so government can be smaller, then there are always going to be questions about conflicts of interest.
You can maximize the free flow of information needed for a successful partnership between business and nonprofits, or you can minimize conflict of interest and the appearance of conflict, but most of the time you can’t do both. So if conservatives want to bash the Clinton Foundation, they need to get ready to support something they also don’t like: more government.
The Bill, Hillary, and Chelsea Clinton Foundation is an unusual case study of the public-private partnerships that have long been important in American life. It is not really a foundation at all; it is a charity that was created in 1997 to raise funds for Bill Clinton’s presidential library. It took on a more ambitious goal after Mr. Clinton left office in 2001: building partnerships “between businesses, NGOs, governments, and individuals everywhere ... to transform lives and communities from what they are today to what they can be, tomorrow.”
Propelled by the visibility and influence of a prominent political family (and its well-connected friends), it has raised over $2 billion and launched 11 major projects throughout the world, such as the Clinton Health Access Initiative and the Clinton Climate Initiative. One of its programs, the Clinton Global Initiative, claims to have obtained many times more in over 1,200 pledges from philanthropists and corporations to address a variety of world problems.
But the continued involvement of its founders in American politics has raised a difficult question: Were supporters of the foundation seeking to use their ties to the Clintons — and especially Ms. Clinton, who became a senator from New York in 2001 and was expected to seek the presidency — to influence the actions of American government?
This issue came to a head when Ms. Clinton was chosen as Secretary of State in the incoming Obama administration. As a condition of her nomination, Ms. Clinton pledged not to “participate personally and substantially in any particular matter” involving the Clinton Foundation; and the foundation took the unprecedented step of signing an agreement with the White House to disclose the names of its donors and accept restrictions on future contributions from foreign sources.
There is now debate about the extent to which Ms. Clinton and the foundation honored their pledges. Even if they did, whether these agreements went far enough is the essence of the current controversy that has erupted as more information about the foundation’s donors and work have emerged in recent weeks.
Close Partnerships
It’s impossible to assess the current controversy without recognizing that Americans have traditionally favored limited government. Private organizations conduct, either independently or with taxpayer support, many of the activities that in other countries are run by governments.
This division of labor not only helps keep the government smaller and less expensive but also creates opportunities for greater variety and efficiency. It means that government officials and nonprofit leaders need frequent and close working relationships; not uncommonly, people who serve on one side of the partnership move into jobs on the other.
These partnerships can also create and strengthen political alliances, enabling government programs to acquire nonpartisan backing among the influential citizens who are typically involved with local nonprofits. However, these relationships offer numerous possibilities for abuse.
Nonprofit organizations involved in such partnerships may gain advantages in dealing with government that groups without such connections lack. Ties between government officials and nonprofit leaders can become too cozy, even self-serving, coloring judgments about activities supposed to benefit the public. Maintaining political alliances often entails exchanging favors, such as shaping legislation or program guidelines in ways that help some government contractors more than others or giving public recognition to particularly helpful office holders.
Over the years, numerous steps have been taken to respond to the more egregious abuses and prevent future ones. The once-common practice of “earmarking” appropriations bills to direct government funds to particular nonprofits is no longer widespread. Various administrative procedures, such as competitive bidding, try to ensure fairness in awarding grants and contracts. Ethics rules have restricted the ability of government officials to benefit personally from their ties to private organizations.
None of these devices are perfect, and keeping up with the ingenuity of those who want to use the arrangements of American government for their own advantage is challenging. But as the rest of the world has been discovering, providing public services exclusively through government agencies has its own problems and is corruptible in its own ways.
Mixed Purposes
And so, what is one to make of the Clinton Foundation’s relations with the State Department? Based on what has come to light so far, they look like those of countless nonprofit organizations with the government agencies to which they are connected. Meetings with officials are arranged, small favors are granted (and sometimes not). Confidants of the secretary are designated as liaisons. Information is exchanged. Even employees can be shared, if their duties and salaries are kept separate.
While suspicions are rife, no evidence has come to light — so far — showing that government business was affected to benefit the Clinton Foundation, its leaders, or its donors.
The real problem posed by the Clinton Foundation is not a general problem of government relations with nonprofits; it is a problem arising from the use of nonprofits as instruments of mixed purposes. The Clinton Foundation is a classic example of a vehicle for the Clinton family’s multiple aspirations: philanthropic, personal, and political. No agreement with the Obama White House about transparency or foreign donations could have been detailed or comprehensive enough to have altered that.
As a result, the foundation’s interactions with the State Department — and the State Department’s with the foundation — invite skepticism about the real purposes of both. That skepticism has now flared into the open, sparked by the flint of presidential politics.
The Clinton Foundation’s activities are already prompting calls for new rules to end “pay to play.” But the complicated relationships between American government and nonprofits will make it extremely difficult to design and enforce such rules without impeding the public work that we have asked nonprofits to carry out.
Leslie Lenkowsky is an Indiana University expert on philanthropy and public affairs and a regular contributor to these pages. He and Suzanne Garment, a visiting fellow at Indiana University, write frequently on philanthropy and public policy.
