Wednesday, April 29, 2009

Can government funding kill nonprofit innovation?

This little light of mine, (the Edward M. Kennedy Serve America Act) gonna let it shine...
Writing in The Wall Street Journal, Howard Husock -- the Manhattan Institute's Vice President, Policy Research and the Director of that organization's Social Entrepreneurship Initiative -- recently wrote:
"This week, the president signed into law the Edward M. Kennedy Serve America Act, which authorizes a huge expansion of the Americorps program, potentially tripling the number of its government-paid "volunteers." The legislation -- which also promises federal funds for "effective solutions developed by social entrepreneurs" -- was heralded as a victory for patriotism and public service...But is it truly good news? Those who cherish the independence of American philanthropy and the nonprofits it supports actually have reason for worry."
He then goes on to conclude::
"Sadly, social entrepreneurs -- who have often started organizations to help us cope with the failure of government programs -- may well be tempted by the big money. But that won't be the best way to serve America."
The crux of his argument is this:
"The Kennedy Act threatens to thwart this creative movement. It will throw so much money at nascent programs that these otherwise independent efforts will lurch after federal dollars and bend toward government directives."
Frankly, I find this idea a bit preposterous. In what other sector would an infusion of capital serve as a barrier to innovation? Yes, there might be some waste -- look at the money that was squandered on funding ridiculous start-ups during the Internet boom of the 90s. However, didn't the flood of angel investors throwing money into dot-coms result in some remarkable breakthroughs in innovation?

Similarly, don't both political parties agree that the government's investment in green technology will drive innovation in the energy economy? Why are we not concerned about the way that these funds will make scientists "bend toward government directives"?

Why is it that we think that nonprofits would not similarly respond with creativity and innovation to this sudden influx of both financial and human capital?

Yes, there will be waste and "money chsing"... just as in any other sector. Let us remember that nonprofits might be charitable in purpose, but they are still businesses: no margin, no mission.

I do not see the Edward M. Kennedy Serve America Act inhibiting innovation. Rather, I think it has the potential to spark an amazing new wave of volunteerism and engaged philanthropy that might not otherwise exist.

What do you think?

Read the article here:
Eating From the Hand That Bites You -

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