By Richard A. Newman
Overall government support for the nonprofit sector is declining as a result of both competing demands such as war, disaster relief, homeland security, and political theories that seek to reduce the role of the government.
In light of these concerns, many nonprofits are pursuing corporate sponsorship and other for-profit style activities as a means to balancing their budgets.
This was ever so, but it does not reduce the urgency of asking what model we want to have for the support of the nonprofit sector by business and government.
Phrased simply: What is wrong with corporate sponsorship and business-like practices being adopted by the nonprofit sector?
I think this topic is critical, and I am not sure I have the answers to these questions, nor do I know what the right balance of “business” and “mission” is.
But perhaps the following observations might help frame this important debate.
First, commercial television and radio, and public television and radio, are different and, accordingly, we know that the absence of public funding for the arts would make a difference.
Second, the arts are intrinsically a good investment for local governments.
As elected leaders in such diverse cities as New York, Washington and San Francisco have shown by their support for public funding for museums, theaters and other cultural venues that the arts bring economic activity, and taxes, as well as cultural vigor to a community.
These public investments repay themselves both directly in new tax dollars and indirectly by attracting or retaining the educated, higher-income “knowledge classes” whose income taxes support basic public services cities provide to their poorer citizens.
Third, government sponsorship, even in part, can provide a tool for assuring that First Amendment and equal-protection mandates that do not otherwise always extend into the private sector are respected.
Fourth, sound business practices are not bad.
Eliminating waste, bad or sloppy accounting practices and obscene executive compensation not only free up resources for mission, but also increase public confidence in the non-profit sector.
Fifth, business is not the enemy.
Corporate sponsorship is not intrinsically corrupting, although excessive reliance on the corporate sector or on any narrow set of sponsors may undermine public confidence.
And this, of course, may be the most critical risk we must address in setting the ground rules for the business-nonprofit-government partnership.
An independent nonprofit sector is uniquely capable of creating the forums where we, as a geographically and culturally diverse country, create and recreate our national identity.
Whether it is our traditional or non-traditional political parties, our religious institutions or our cultural venues, or through the voluntary, public-service efforts we make, with the possible exception of professional sports, the nonprofit world in America is our only town center, without which we will fail to build or maintain civil consensus.
How the relationship among business, government and the nonprofit sector is balanced is a complex question.
But without involvement of government or business, this three-legged stool will fall.
And exactly how we regulate the interaction of business and the nonprofit sector is a question of great importance that should not be neglected by policymakers or the public.
Richard A. Newman is a partner in Arent Fox, a law firm based in Washington, D.C., and specializes in representation of nonprofits.