Government and philanthropy have as much in common as they don’t — and an acute understanding of their commonalities and differences is important to the success of any collaboration between the two.
There are two high-profile examples in the news and only the first passes the acuity test.
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Government and philanthropy have as much in common as they don’t — and an acute understanding of their commonalities and differences is important to the success of any collaboration between the two.
There are two high-profile examples in the news and only the first passes the acuity test.
Here’s the first: In 2017, the CEOs of Aetna, Travelers and The Hartford pledged $50 million to the city of Hartford — payable in five equal annual instalments. Each is conditioned upon evidence that Hartford’s turnaround plan is making forward progress.
These corporate donors are being prudent — they are not paying for Hartford’s past sins but will make annual payments as positive results are shown.
It’s a good way to get results, and the deal seems to be working. The second $10 million installment was made in July, and Mayor Luke Bronin noted recently that “the partnership is an important part of Hartford’s effort to achieve fiscal sustainability.”
Here’s the second: In April, Greenwich billionaire Ray Dalio pledged $100 million to a “partnership” with the state to improve public-school outcomes — payable in five $20 million annual installments. In this case, unlike Hartford, the partnership takes the form of a newly incorporated charitable entity — The Partnership for Connecticut Inc.
The state has made a matching $100 million pledge, and the plan is to raise another $100 million from the private sector ($300 million total). The initial governing board has 13 members — and, significantly, a controlling majority are elected officials and/or their appointees. The board gets to decide how the money is disbursed among applicants, so board seats are important.
This deal has been mired in public criticism since its birth. People are asking why the new entity is exempt from the Freedom of Information Act (FOIA) and the State Code of Ethics? How did the state’s initial contribution bypass the spending cap? And on Aug. 7, Attorney General William Tong issued an opinion advising the public officials on the board that they remain subject to FOIA even though the organization is exempt — such that information they get appears to be disclosable, albeit indirectly.
The inconsistency will make governance very difficult until resolved or reconciled in some way.
There are other questions. We already have many excellent public foundations in the state that could step in and assist with the effort, so why a new one? The Dalio Foundation’s 2017 tax return shows over $2 million in gifts to Connecticut public school systems independent of this deal, so there’s already a giving pattern that could be expanded.
Will the new foundation be competing for private donors (for the final $100 million) with other charitable organizations seeking support? Will donors feel political pressure to favor the new organization?
I started this column by stating that an understanding of the commonalities and differences between philanthropy and government is important to success when the two work together.
They are as follows: Philanthropic dollars are private dollars under private (not political) control even though the dollars must be used for a public purpose. In contrast, everything government does is public in nature, and what it does depends on what happens at the ballot box — so it is political to the core — unlike private philanthropy.
In Hartford, the private/public balance was achieved.
This is not the case with The Partnership for Connecticut Inc., which, to me, seems to have been structured in haste without adequate planning.
The result is the controversy described above, which likely will haunt it from this point forward unless and until it is fixed.
I support creative philanthropic efforts on this scale, and the schools need help. I hope and suggest that the people in charge take the time to draft appropriate amendments to the statutes creating the Partnership to bring an end to the controversy and to improve its chances for success.
John M. Horak is the director of TANGO Nonprofit Education and Consulting. His opinions are his own.
