The outcome of the U.S. debt ceiling debate signals a major shift in future government spending patterns and holds significant implications for philanthropy.
The outcome of the U.S. debt ceiling debate signals a major shift in future government spending patterns and holds significant implications for philanthropy. The pivot will be dramatic: From a federal stimulus plan designed to jump start the economy out of recession (2009 American Recovery and Reinvestment Act) to a deficit reduction plan that will slash $900 billion in government spending over 10 years―and reduce the federal deficit by an additional $1.5 trillion.
It will begin relatively slowly, with cuts that will put FY 2012 spending $98 billion below the Administration’s current proposal, and ramp down spending significantly in subsequent years. This shift is nothing short of tectonic, and will present a major challenge across a broad range of discretionary spending programs.
This transformation in the government’s spending philosophy will put extraordinary pressure on the philanthropic sector, as we are called upon to backfill public sector funding cuts and rescue struggling safety net programs in local communities across the nation. Given that all private, community and operating foundation giving in the US in 2010 totaled $41 billion, our sector will never be up to the task of closing the gap between current and future government spending, even if that were the desired goal.
The challenge to our sector is both clear and daunting. For those of us whose funding touches people who are homeless, we must become increasingly data-driven, strategic, and catalytic. By this I mean that we must fund only what works―practices proven by data to end homelessness. And we must do more than simply react to the current crisis. We must advocate for the solutions that work and leverage funding for them from multiple sources. And we must lead our partners-policymakers, providers, other funders―toward the necessary systems changes required to end homelessness for good.
Or, to use my favorite analogy, which feels more relevant now than ever: Philanthropy must act as a tugboat, helping to bring the supertankers of the federal government programs-at least what’s left of them-into effective and efficient alignment, so they can steer a course that provides the best possible support to Americans with the greatest needs.
David Wertheimer is the Deputy Director of the Pacific Northwest Initiative at the Bill & Melinda Gates Foundation in Seattle, Washington, as well as the Board Chair of Funders Together to End Homelessness.
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