Editors’ Note: Claire Dunning continues HistPhil’s forum on philanthropy and the state.
Philanthropy often takes cues from the state. As much as philanthropists celebrate their nimbleness and independence, they operate, of course, within a regulatory framework. Scholars have charted the ways in which philanthropies—from across the political spectrum—have positioned themselves vis-à-vis governments to compensate for weak states and challenge strong ones. Scholars have paid comparably less attention, however, to a related question: what cues do states take from philanthropy? Following this line of inquiry positions the state as the subject of study and reveals aspects of government operations that, in various times and settings, have borrowed programs, ideas, and methods from private philanthropy.
To the extent that scholars have explored how states have learned from or mimicked private philanthropy, they have focused on what states have done and why. Scholars have productively tracked the moving boundary between what states and philanthropy have provided for social welfare, and in the case of the United States, have described a growing federal state in the twentieth century that took on roles previously dominated by the private philanthropic sector. The Sheppard-Towner Act of 1921 is one such example, when the federal state deemed aid to single mothers and their children a public responsibility. The creation of a national public housing program under the 1937 Housing Act to replace the piecemeal philanthropic housing of earlier decades is another example. Historians have also argued that ideas about poverty and other social ills have moved from philanthropic arenas to government ones as ways of justifying action. Social policy embraced the “opportunity theory” that foundations promoted in the 1950s, for example, and free market ideology in the 1980s. For all their strengths, these works tell us very little about how states governed and distributed resources in ways that adapted philanthropic tools for the public sector. Focusing on the evolution of grantmaking as a tool of both philanthropy and the state makes visible the means by which these funders shaped the nonprofit sector and, ultimately, the neighborhoods and people they served and employed.
A shift in federal policy in the 1960s highlights a moment when the U.S. state took a cue from philanthropy to build a new federal grantmaking initiative that targeted private nonprofits as eligible recipients. The federal government had used the grant-in-aid model sparingly in the nineteenth century as a means of distributing public revenue to lower tiers of government for tasks including the creation of colleges and building of hospitals. Over the course of the early twentieth century, the governing tool increased in popularity, but remained limited to transferring funds between public bodies. That all changed in 1961 when Congress authorized a federal agency to issue grants directly to nonprofit entities with the Juvenile Delinquency and Youth Offenses Control Act. No longer just a means to move public revenue within the federalist system, grants-in-aid became a means to link the federal government to the grassroots and to steer the activities of nonprofit organizations. The rise of federal grants-in-aid in the second-half of the twentieth century transformed government and the charitable sector in ways that have not yet been fully appreciated.
Congress shaped the law, but it was up to a federal team—including representatives from foundations, academic researchers, elected officials, and federal bureaucrats—to devise the procedures with which to disburse the public grants to private recipients. In a series of closed door sessions, the team members designed a federal grant program on juvenile delinquency that drew on their collective expertise. They discussed everything from the forms applicants would use to apply to whether the government could coordinate grants with private foundations. From his position as Executive Director of the Russell Sage Foundation, Dr. Leonard Cottrell Jr. steered the group to establish a clear set of criteria against which applications would be evaluated that included a “genuine commitment” from each of the local partners involved and a clear budget outline.[i] Other conversations addressed technical assistance and nonprofit capacity, the benefits of municipal versus nonprofit recipients, when to conduct site visits, and how heavy a hand the federal government should have in shaping local projects.[ii] In short, the group recommended ways for the government to weigh the strength of a grant proposal—not just assess local need—and act as a philanthropist.
Local nonprofits then faced the consequences—material, organizational, administrative—of the decisions made in Washington about federal grant programs. Challenges of covering overhead expenditures, fulfilling reporting requirements from government and philanthropic funders, charting lines of decision-making authority, and brokering new public-private partnerships for welfare provision raised questions for grantees about how nonprofits funded directly by the federal government would or could operate. These questions became all the more pressing in 1964 when the Johnson administration expanded the grantmaking experiment in juvenile delinquency prevention into a multi-front War on Poverty.
Grantees worked to shape this inchoate system from below. Negotiations about overhead and reimbursement procedures provide one example of how nonprofits forged new relationships with government that were at once familiar and unfamiliar. In the early 1960s, federal grants required nonprofit staff to log their time on each program and charge that time to the appropriate grant. This proved relatively straightforward for program staff, but far less so for administrative and accounting personnel whose activities—such as budgeting or bookkeeping—covered multiple programs. In Boston, staff at Action for Boston Community Development pointed out the inefficiencies of this system and, after several years of back-and-forth with federal agencies, agreed to a fixed overhead percentage with each of its federal funders. The Office of Economy Opportunity would allocate 13.2% of its grants for overhead at the Boston nonprofit, whereas the Departments of Labor and of Health, Education and Welfare settled on 6.5% and 10%, respectively.[iii] The details of such agreements can be tedious, but they shaped Boston’s neighborhoods and the capacity of its nonprofit sector. Furthermore, they suggest the difficulty, uncertainty, and malleability that accompanied the federal foray into philanthropic grantmaking.
The 1960s-era experiment in modeling public grant programs on private philanthropic giving—federal programs that targeted nonprofits, devised competitive application procedures, and set requirements for administration and reporting—continued to grow in the decades that followed. In 1975, the federal Commission on Private Philanthropy and Public Needs, more colloquially known as the Filer Commission, concluded that the U.S. government had become “a major philanthropist.”[i] Federal grant-in-aid programs underwrote nonprofit activities in a wide range of social welfare programs: economic development, education, job training, and social services, to name a few.
As this moment in U.S. federal policy suggests, the state took cues from philanthropy in how it operated, in addition to the services it provided and justifications it used for doing so. Scholars from the history of philanthropy have a vocabulary and familiarity with grant records that can and should be applied to the history of the state. Government repositories contain extensive evidence—annual reports, audits, correspondence, grant guidelines, policy memos—that highlight moments when long term strategy and day-to-day operations of the state borrowed from private philanthropy and other times when it chartered a separate course. These analyses are as critical for lower tiers of government as they are for the federal ones. Perhaps most importantly, linking the means by which the state distributes aid to the human consequences of those governing tools can reveal the advantages and disadvantages of adapting a competitive grant system from the private sector to the public and structuring social welfare as award rather than a right.
Claire Dunning is a PhD Candidate in History at Harvard University, currently completing a dissertation entitled “Outsourcing Government: Boston and the Rise of Public-Private Partnerships, 1950-2000.” For the 2016-2017 academic year she will be a Postdoctoral Fellow at the Stanford Center for Philanthropy and Civil Society.
[i] Giving in America: Toward a Stronger Voluntary Sector, Report of the Commission on Private Philanthropy and Public Needs, Commission on Private Philanthropy and Public Needs, 1975.
[i] Notes on Meeting of Demonstration Project Panel, 8-9 January 1962, Box 1, Folder 1, Eleanor Charwat Personal Papers, John F. Kennedy Presidential Library, Boston, Massachusetts.
[ii] Notes on Meeting of Demonstration Project Panel, 8-9 January 1962; Demonstration Projects Technical Advisory Panel, 30 November 1962, Box 4, Folder 14, Daniel Knapp Personal Papers, John F. Kennedy Presidential Library, Boston, Massachusetts.
[iii] Letter from Joseph Slavet to Paul Ylvisaker, 24 August 1965, Grant 62-457, Reel 2632, Ford Foundation Records, Rockefeller Archive Center, Sleepy Hollow, New York.