Big ‘entrepreneurial’ nonprofits feed at public trough

[Editor’s note: Also see Rick Cohen’s analysis of policy proposals nonprofit groups have submitted to Obama.]

Rick Cohen
Rick Cohen

Rick Cohen

For most small nonprofits, the idea of “social entrepreneur” means earning income from business-related activities.

The message they get is that “earned income” is non-governmental and usually not from foundations either.

But some of the most highly-touted organizations being talked about as “social-entrepreneurship” models by nonprofit leaders influential with the Obama administration demonstrate part of their entrepreneurialism through success at the public trough.

The achievements of organizations such as Teach for America, America’s Promise, City Year, Citizen Schools and others get lots of media attention.

But their access to millions in federal grant assistance, especially during the past eight years of the Bush administration, suggests that top-flight entrepreneurs can also be very successful consumers of federal grant assistance.

The evidence is reported in their IRS Form 990s and searches of federal grant databases:

* Teach for America pulled down $56.9 million in federal grants from fiscal 2001 through 2008, including $17.6 million in 2008. The group’s Forms 990s covering roughly fiscal 2001 through 2007 report $70.9 million in government contributions, including $17.1 million in 2007.

* Between fiscal 2001 and 2008, City Year got $25.5 million in federal grant support. Its Form 990s for roughly fiscal 2001 through 2006 indicate $74.3 million in government support, almost one-third of all of its contributed revenues.

* America’s Promise’s Form 990s for calendar years 2001 through 2007 show $35.2 million in total government assistance. The site indicates the group has received $63.9 million in just federal assistance for those years, including $14.9 million in fiscal 2004 and $14.4 million in 2005, larger numbers than reported in the 990s.

Some of these nonprofit social entrepreneurs have not been hurt by active support from major political figures, such as former First Lady Laura Bush’s engagement with Teach for America and the New Teacher Project and Gen. Colin Powell’s founding of America’s Promise.

Those connections help substantially when organizations look for federal earmarks, an arena in which these social entrepreneurs clearly excel:

* Among Teach for America’s earmarks were $4.25 million from the Fund for Improvement of Education at the U.S. Department of Education between fiscal 2003 and 2005; $2.35 million from the NASA budget proposed by Democratic U.S. Sen. Barbara Mikulski of Maryland in fiscal 2006, 2008, and 2009; and $11.8 million recommended by the Senate Appropriations Committee in fiscal 2008 from the America COMPETES program in the Office of Innovation and Improvement at the Education Department.

* During President Bush’s last year in office, he pushed for a $10 million earmark for Teach for America, plus $4.45 million for America’s Promise, and $8.9 million for the Points of Light Foundation, plus over $20 million for a nonprofit library program affiliated with Laura Bush. America’s Promise itself did get a fiscal 2001 earmark of $7.5 million and smaller
earmarks in other years.

* Federal budgets from fiscal 2004, 2005, 2006 and 2008 show six-figure earmarks for various City Year programs in Washington, D.C., Chicago, New Hampshire, Rhode Island, Philadelphia
and elsewhere.

While most nonprofits are small and local, these models of social entrepreneurialism are large national operations, frequently with multiple program sites and affiliates.

They pull down more in federal grants than 95 percent of nonprofits generate as total revenues.

Not many nonprofits have the scale and heft to lobby for big federal earmarks or pitch for multi-million-dollar competitive grants.

As examples of nonprofit social entrepreneurship in the Obama era, Teach for America, City Year, America’s Promise and others remind all of us that working with government as partners and implementers of public program is as socially entrepreneurial and important as strategies of earned-income business development.

Although the bulk of nonprofits don’t have the savvy PR machines and political connections of these national social entrepreneurs, small community-based nonprofits are no less entrepreneurial, impactful or admirable.

The national government-funded social entrepreneurs have had the attention of — and perhaps inspired — Barack Obama’s advisors, leading to campaign proposals to more than triple the size of the programs under the Corporation for National and Community Service, such as AmeriCorps, and creating new programs such as a fund
for social innovation.

We know these national players are well-settled on the inside track, frequently at the table with President Obama’s nonprofit policy people.

Let’s hope the nonprofit initiatives launched by the Obama administration end up funneling grant support to the local groups on the front lines of social change as well as those big national organizations that have long cornered millions in federal grant assistance.

Rick Cohen is national correspondent for The Nonprofit Quarterly.

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