Philanthropy’s Real Value to the Public Sector

It can catalyze government to take risks, move quickly and pay attention to neglected issues.
October 10, 2018
H.F. "Gerry" Lenfest
Philanthropist H.F. Lenfest died in September. (AP/Matt Rourke)
Feather O'Connor Houstoun
By Feather O'Connor Houstoun  |  Contributor
A senior adviser to the Wyncote Foundation

The passing of Philadelphia philanthropist H.F. Lenfest in September after decades of generosity to his city seemed to leave a particularly big hole. His philanthropy was capped by his role in forestalling the further decline of the storied Philadelphia Inquirer when, after becoming the newspaper's sole owner following a decade of financial and ownership turmoil, he deeded it to an endowed nonprofit institute.

In addition to helping to modernize the Inquirer, the Lenfest Institute for Journalism is charged with testing business models to sustain local journalism more widely in a digital age. If local journalism thrives a decade from now, the innovations that sustain this institution so vital to communities and their governance will probably have origins in Philadelphia and the Lenfest Institute. (The institute is a grantee of the Wyncote Foundation, for which I work.)

Lenfest's death came at a time when the relationship of philanthropy to the public sector has claimed fresh currency. It is common to hear philanthropy criticized as guilt offerings by rich donors and foundations or, alternately, highly strategic attacks to shrink government or bring a socialist utopia. Rather than wading into that debate, I'd rather reflect on the opportunities for productive alliances between philanthropy and the public sector.

Lenfest's transformative act will not quiet the critics of big philanthropy, but in my mind it exemplifies the type of interventions into public affairs for which philanthropy is best suited. Just as Lenfest expected the Inquirer to sustain itself as a business, smart philanthropy neither tries to replace receding public dollars nor works to disable public-sector institutions. Rather, it aspires to provide opportunity to rethink gnarly problems and to give public institutions the financial breathing room and intellectual capital to test new approaches.

In the context of his critique of philanthropy published last year, The Givers: Wealth, Power and Philanthropy in a New Gilded Age, David Callahan makes the central point about why philanthropy engages the government. I'm paraphrasing here, but Callahan, the editor of Inside Philanthropy, argues that if you put aside the ideologues, most of today's philanthropists seek not to replace public solutions with private ones but to catalyze government to take new kinds of action -- to take risks and experiment with new ideas, to move quickly and pivot easily, and to pay attention to issues that have been neglected.

When I was in government, and later in philanthropy, I thought of the relationship as influencing how the "big money" -- public dollars -- was spent. "In other words," as Callahan observes, "the state hasn't been the enemy; the state has been the prize." This in no way suggests an abdication of responsibility by public officials; instead, confident leaders can partner with philanthropy to achieve better results. A few examples from my time in Pennsylvania state government:

• As the state designed its Medicaid program, foundations convened expert advisory panels to help us build practice standards for managed-care organizations and devise scorecards for recipients that could guide their selection of plans for their families.

• We relied heavily on foundation-supported research to structure dramatic changes in welfare programs and welcomed a Philadelphia foundation to underwrite independent evaluations of how well the programs were achieving desired results.

• We were also the target for philanthropy-fueled advocacy for higher standards in day care. The result was the Keystone STARS system, which provides a ladder of quality improvement for day care and early childhood education.

When I moved to the philanthropy side, my public-sector experience informed work with grantees. In our work in Philadelphia, we emphasized the importance of unified voices rather than uncoordinated policy positions. In key issue areas we encouraged our grantees to find common ground, to press their positions on all candidates during mayoral elections. When we supported public-sector program innovations, in public education for example, we worked closely with grantees to see that successful pilots would be taken to scale -- not with additional grant funding but through changes in practice within the school district.

We were certainly not unique. Two examples from our region are the Neubauer Family Foundation and the Fund for New Jersey. Neubauer recognized that its resources had to be aimed at a target in schools where it could have impact; it started the Philadelphia Academy of School Leadership to strengthen the pipeline of well-prepared principals for public, charter and parochial schools. The focus by the Fund for New Jersey (on whose board I serve) on advancing desired policy goals led it to a convening and leadership role that has produced an impressive coalition to address the risks of undercounts in the 2020 census.

Not every foundation wants to engage with public systems, and some public officials view foundations merely as checkbooks to fill holes in their budgets. But for public leaders who want allies in change, there's a lot of room for strategic cooperation.