Why Nonprofits Should Avoid Government Handouts If At All Possible

From Do Government Grants to Charities Crowd Private Donations Out or In?

Yesterday, we posted an opinion piece from PJ O'Rourke, the political commentator who used a lot of words to say that government enforced charity is just taxes.  And people don't like taxes.  Nor do they like top down selection of charitable winners and losers.  But the center has to speak, that's the point of government.  Through government, the majority selects appropriate charitable causes and disdains others.  In order not to suppress charity by a different drummer, we allow individuals to support minoritarian causes and we subsidize those selections via the tax code so long as they meet a wide and evolving definition of charity.  But back to Nonprofits on the government dole.

Out in San Francisco, a whole buncha nonprofits are worried because the Mayor has not signed off on an appropriations approved months ago.  The nonprofits have already provided the services for which they were promised payment and some are on the verge of closing down.  From the Press Release:

San Francisco, CA — Over 30 nonprofits are calling out Mayor Breed’s continued refusal to sign their contracts, with many organizations now on the brink of shutting down or drastically cutting essential services after months of operating without promised City funding. Although these contracts were finalized during City budget negotiations last June, the Mayor has still not released the funds allocated to reimburse the nonprofits for work already performed, nor given any reason for this delay.

 

“There is no other contractor that the City could have refused to pay for this long. It shows a profound disrespect for the work we do for the City, and for San Francisco’s most vulnerable populations,” says Fred Sherburn-Zimmer, Executive Director of the Housing Rights Committee of SF. “We are the people the Mayor calls when she has a housing problem, yet she doesn’t feel the need to pay us for the expertise she relies on.” The Budget Justice Coalition and Housing Rights Committee of SF is holding an emergency protest and press conference outside the Mayor’s Office in City Hall at noon on Tuesday, September 26th.

 

I am willing to assume its just red tape, particularly if everybody is afraid that any spending will be noted by the DOJ attorneys still sniffing around City Hall.  In a more malevolent government action on the opposite and upside down part of the country, Governor DeSatan has yanked eligibility for certain Florida private secondary schools because of their ties to the boogeyman that DeSantis doesn't bother to explain:

Through a thorough investigation, FDOE has determined that Lower and Upper Sagemont Preparatory Schools in Weston, Parke House Academy in Winter Park, and Park Maitland School in Winter Park have direct ties to the CCP and their connections constitute an imminent threat to the health, safety, and welfare of these school’s students and the public,” the DeSantis administration said in a statement.

The Florida DOE is working with nonprofit scholarship-funding organizations to help affected students enroll in nearby schools that are accepted under the program. DeSantis’s order comes after he signed in May a bill that prohibited any school affiliated with a “foreign country of concern” from participating in Florida’s school-choice scholarship programs.

I doubt the constitutionality of DeSantis' action, but he's touting it as if it will help him get out of the single digits.  Anyway, Government can't grant a discretionary benefit and then yank it away on the basis of recipient's constitutional activity.  It can deny a benefit to a group that manufactures hate and some people think that's punishment of speech but they are wrong.  But it can't do what DeSantis is doing.  But who cares if he continues blowing his nose and wiping his other parts with the Constitution?  

The axe I'm actually grinding in this post is that when nonprofits rely on government funding, they stray from the goal of doing good things in alternative fashion and risk their own existence.  Once they take the government drug, they are addicted and government can control their activities by accelerating or decelerating the drug, whether through legitimate bureaucracy, incompetence or as unconstitutional tool to boost votes like DeSantis.  Two of the schools whose state funding has been "suspended" are right here in Orlando.  No word whether they will seek judicial review but they should.  There is also evidence, as demonstrated by the picture above, that government funding of nonprofits "crowds out" individual donations.  The result might be because once nonprofits get on the government dole they neglect fundraising and even the policies that make them answerable to grass roots.    

Both cases help prove the point.  Nonprofits that depend on government can be easily cut off, legitimately or not.  And when they are, there is usually no reservoir of donors prepared to pick up the slack.  In a perfect not illiberal world, nonprofits would thrive and survive on individual funding, not funding by bureaucrats, incompetents or tyrants.  

darryll k. jones