Growing philanthropic interest in funding local and state government programs is generally welcome by the recipients, even when it’s controversial.
- 5 Conservative Proposals That Could Reshape Philanthropy — and How to Prepare
- Congressional Scrutiny of Foreign Donors Is a Good Thing for All Nonprofits
- A New Lawsuit Could Erase the Red Line Between Politics and Charity
- Foundation Compensation: When Are CEO Salaries Too High?
- An Unlikely Event — the Israel-Hamas War — Could Finally Spark DAF Reform
For example, the Gates Foundation was harshly criticized for its approach to helping school districts improve education outcomes, but my research found that none of those districts has rejected the foundation’s money. Similarly, Bloomberg Philanthropies’ grants to improve how cities operate and help them secure federal funding has been deemed “unsustainable.” Yet no city to date appears to have given back the funds.
Arrangements between philanthropy and government have remained popular ever since the turn of the last century, when Andrew Carnegie famously invested more than $40 million to build 1,679 local public libraries. In recent years, however, funders have moved from financing buildings to investing in the internal workings of governments. And that is increasingly putting them under fire.
The most notable recent example occurred in August when the MacArthur Foundation received a letter from the San Francisco District Attorney’s office that abruptly ended a multiyear funding relationship between the two entities. The reason? A strong disagreement over how the funds should be spent.
Here’s a brief summary of the saga: MacArthur had made a $5.2 million grant to support former District Attorney Chesa Boudin’s effort to significantly reduce the number of people incarcerated in the city’s jails. But the new DA, Brooke Jenkins — appointed by the mayor after Boudin was unseated in a recall election focused on rising crime — has a mandate to restore public order in San Francisco. One outcome of that promise: an increase in the local jail population.
This development did not sit well with MacArthur. A letter signed by the director of the program responsible for the grant insisted that Jenkins return to the previous strategy of minimal incarceration or lose funding. This demand and the remaining $625,000 in grant funds were sharply rejected by the DA’s office. In a letter signed by the DA’s chief of staff, MacArthur was even accused of treating the DA’s office like “sharecroppers.” (For more about this complicated situation, read William Schambra’s detailed account in the Giving Review.)
Broader Implications
What interests me here are the broader implications of this and similar incidents on philanthropic giving to government programs.
Foundations and major donors are accustomed to working with nonprofit organizations that depend on their support and care about maintaining a good reputation in the charitable sector. The threat of ending a funding relationship for failing to meet a donor’s expectations is a serious matter, and even the largest institutions don’t want to be seen as difficult to work with.
The same is not true for public institutions. MacArthur’s remaining grant to the Office of the San Francisco District Attorney represented less than seven-tenths of 1 percent of the agency’s almost $90 million budget in 2024. This is hardly the sort of money that would give any donor enough leverage to push local officials to meet its performance expectations. Indeed, the letter to MacArthur made it clear that major policy changes were not going to happen simply because the funder threatened to suspend the grant.
This pointed response underscores another key difference between private and public institutions. The former have a diffuse set of stakeholders, of whom big donors may be the most influential and powerful. For government agencies, especially those with elected leadership, there is only one important group — voters. Jenkins became district attorney because her predecessor was considered too lenient on crime. It should come as no surprise then that she was unwilling to comply with MacArthur’s demands to reduce incarceration.
This incident was relatively minor compared with another fairly recent one: the backlash generated by the Chan Zuckerberg Initiative’s more than $400 million investment in 2020 to support local election officials. The genesis for that program was a concern about the effect of Covid-19 on voter turnout and on the safety of election workers. Quickly, however, accusations began flying, with critics charging that the money targeted areas that tend to vote Democratic and that this charitable endeavor was deeply partisan.
While the evidence on partisanship is inconclusive, the backlash has been severe. In February of this year, the House Administration Committee of the U.S. House of Representatives held a contentious hearing on the funding initiative. Federal legislation — the “End Zuckerbucks Act” — has also been introduced.
More significantly, 28 states have banned private funding of election agencies, and Mark Zuckerberg and Priscilla Chan announced that they will no longer fund the program. The result is that relatively little private money is now going to support state and local election officials in 2024. And Zuckerberg has indicated he will now stay far away from supporting anything that could be viewed as partisan.
Potential Pitfalls
What do these two very different cases tell us about the pitfalls of funding government agencies?
First, donors will not get into trouble if their work with local and state officials is not politicized. Education reform stirs up a small storm among advocates and experts; justice reform and election support produce a hurricane.
Second, strong negative responses to private grants are often driven by the perception that the donor has misguided interests and intentions. Zuckerberg is a public figure who has been hauled before Congress multiple times because of concerns about his company, Meta. He shouldn’t have been surprised that his attempts to support election administration were construed as self-interested and partisan.
Third, changing political currents can undermine the ideological alignment between government officials and private donors. When MacArthur made its first grant to the San Francisco DA’s Office in 2018, it likely felt confident that reducing incarceration in one of America’s most liberal cities would remain popular. But even San Franciscans can change their minds when they feel their personal safety is threatened. The upcoming San Francisco mayoral election is, in fact, primarily about crime and public safety.
A recent Chronicle of Philanthropy analysis documents how many major philanthropists are also significant political donors. I have argued that the boundary between the philanthropic and political sectors has eroded as more donors find ways to pursue partisan aims through nonprofit vehicles. If that erosion continues, we should expect that partisans on both sides of the ideological spectrum will give more scrutiny to private donors who want to shape public policy and public institutions.
