Features » June 26, 2006

The New Funding Heresies (cont’d)

Long-term funding helps organizations focus on those kinds of activities–grassroots organizing and base-building–that by nature require long gestation and don’t readily produce the kind of immediate returns on investment that so many funders look for. Barbara Osborn, communications director at the small progressive Liberty Hill foundation, says that the recent immigration marches, which surprised many observers by turning out millions, are perfect examples of the fruits of this kind of long-term commitment. “Liberty Hill has invested $4.5 million in immigrant rights work in Los Angeles since 2000,” she said by email. “What erupted on the streets March 25 was no accident and no surprise to us.”

Calls for long-term funding and more general operating support are by no means new. Indeed, nonprofit sector expert Pablo Eisenberg and members of the NCRP have been sounding this refrain for years. But the failures of 2004 have succeeded in knocking loose the status quo, even in the uber-conservative and risk-averse world of philanthropy. While Stein cautions that changing the approach is like moving an “oceanliner,” the fact that Democracy Alliance and other groups now exist and can pursue grantmaking that incorporates these critiques signifies the beginning of a sea-change. Stein says he’s even found that program officers at foundations now quietly ask him to tell their bosses that they need to increase the lengths of their grant cycles.

4) Fund innovation, provide startup money.

New organizations, particularly those with a novel approach or issue, face a Catch-22: They can only secure funding if they have a good reputation and a demonstrated record of achieving results, but without any money it’s hard to gain much of a reputation or get much of anything done. This might be called the problem of funding inertia: organizations that are funded tend to stay funded and those broke tend to stay broke. “There’s really only a handful of people that are going to fund new ideas,” a staff member at a small progressive startup told me. “You can be a community arts organization that’s been around for 15 years, and you can get $50,000 from a foundation. For something like our open media software, we’re scrambling to get $50,000.”

The leading voices for a more innovation-oriented, risk-seeking style of progressive investment are Andy and Deborah Rappaport. Andy Rappaport made his fortune investing in communications and technology companies and has been giving to progressive organizations for years. In 2004, the Rappaports started a donor circle called Band of Progressives, modeled after the Band of Angels, a group of fellow Silicon Valley investors who would meet regularly to evaluate start-ups. The couple gained a reputation for giving generously to a variety of non-traditional organizations like Music for America, which sought to mobilize young voters through organizing concerts.

The venture capital model drew lots of converts and last year, the Rappaports set up a new organization called the New Progressive Coalition. NPC functions as a virtual marketplace of progressive giving, connecting organizations seeking money with those with money to give. Its Web site features MySpace-like profiles of different member groups (including In These Times) that investors can browse. The approach and vocabulary is frankly entrepreneurial: There are no donors, only “investors,” staff members talk about measuring the “political return on investment” and setting up “portfolios” of organizations that investors can manage like a mutual fund.

The idea is that by opening up the funding process to a free-market approach NPC can avoid the conservatism that tends to prevail. “The political capital market is broken,” says NPC’s Investor Services Director Catalina Ruiz-Healy. “We’re trying to fix it. The way politics has traditionally worked, there hasn’t been much transparency, analysis or accountability. It’s more someone told you to give to this or your friend is doing that.” Those are valid data points, she says, but you would never use them to decide how to make financial investments.

“We’re trying to build a mutual fund approach,” she says. An investor can come to NPC with some parameters, and they can suggest a bundled set of organizations to invest in. “We can say: ‘Here’s a way for you to invest, we’ve done the due diligence. You need the big elephant and these three startups. One startup might fail, but your money isn’t down the tubes.’ We need to take risks. We create an environment where there is calculated risk-taking.”

5) Expand the small donor base

Due in no small part to Rob Stein’s infamous PowerPoint, the dominant narrative of the Vast Right Wing Conspiracy tells of a nefarious cabal of rich masterminds getting together and single-handedly funding modern conservatism. But “nobody understands that much of the right’s work was self-funded,” says Jean Hardisty, who founded Political Research Associates to study the conservative movement. “The religious right raised its money for the most part from its own people.”

“The Heritage Foundation has 275,000 individual donors,” says Kim Klein. “The Right-To-Life organizations have thousands of small donors. The grassroots of the right wing is actually funded by the grassroots and the grassroots of the left wing is funded by foundations, and I think it’s an enormous problem.”

Self-funded movements were once the norm on the left as well. The labor movement is funded almost entirely through union dues, and the early Civil Rights movement, though it received key support from small, progressive family foundations, was bankrolled overwhelmingly by African-American business people and congregants in black churches.

But in the ’60s and ’70s, progressive organizations outside civil rights and labor came to rely heavily on foundation support. At the same time, conservative mastermind Richard Viguerie pioneered direct mail, a method of mail solicitation that proved enormously successful and helped capture an entire generation of Republican and conservative small donors.

The great hope for progressive organizations is that the Internet can be for the left what direct mail has been for the right. Traditionally small donor cultivation has been relatively expensive, meaning that the largest organizations are best equipped to pursue it. The Internet changes that calculus significantly, providing a means of reaching thousands of potential donors and processing donations with an incredibly low overhead.

But it’s unclear whether Internet giving will simply make small donor fundraising less expensive and more efficient, or whether it has the ability to expand the universe of people who are willing to give money.

Even if Internet small-donor cultivation doesn’t solve an organization’s funding problems, it has a substantive effect that ranges beyond the immediate financial return. “People need to own and run their organizations, elect officers, set the budget for the staff,” says Steven Kest, executive director of ACORN, which requires dues from all of its members. “Paying for the organization is one way of owning the organization.”

————————

It’s almost too obvious a point to articulate, but it bears repetition nonetheless: The arithmetic of fundraising is not the simple arithmetic of democracy. There is no one person, one vote. American hyper-capitalism creates winners and losers, people who can write $20 checks and people who can write $2 million checks. Even if the Internet provides a platform for massive small donor giving, large donors are still going to play a disproportionately large role in funding the progressive movement. But the specter of a progressive movement funded largely by wealthy individuals, or even members of the comfortable upper middle class, raises some thorny issues, ones that hover over the technical and strategic critiques outlined above.

It’s not often stressed, but the conservative movement was motivated as much by class self-interest as it was by ideology. While key funders like Scaife and Coors were furthering their beliefs they were lining their own pockets by agitating for reduced taxes on wealth, union-busting and deregulation. “There’s something much more authentic on the right about what they were doing,” says Jeff Krehely, research director at NCRP. “Spending $5 million on grants would bring so many more rewards in the long run because the policies would change to benefit them. “

This isn’t the case for progressives, who will have to rely upon a kind of What’s the Matter with Kansas? effect in which ideological principles trump personal class interests. “Trying to fund an economically progressive movement from a bunch of rich people is a tough sell,” says Krehely. “I don’t think anyone’s tried to figure out what we do about that. Until we figure that out I don’t think we’re going to get very far.”

Jane Covey, development director for United for a Fair Economy, disagrees. She cites UFE’s work with wealthy individuals in fighting against the repeal of the estate tax. “They ended up being a very surprising voice on the side of economic justice and fairness.”

“All of us want our stock prices to do well,” says Larry Litvak, a former Working Assets executive and current investor with NPC, “but at the same time you’re not satisfied if just that aspect of your goals are being addressed.” The silver lining of the increase of inequality over the last 30 years, Litvak says, is that now a lot of people “both have assets and have this broader set of values.”

But what exactly is in that “broader set of values” is what’s at issue. Last year I spoke to one Democracy Alliance partner who expressed frustration with his fellow partners’ reluctance to fund groups that would attack the free-trade consensus. “I think this is a really dangerous period to be mindless free-traders. I don’t think the Democracy Alliance is wrestling with that stuff,” he said. “That’s one of those things that’s really hard for wealthy people to do, to feel how working people feel.”

There might not be a simple way of resolving this inherent tension, but in all the ink spilled over Soros in the last election cycle, it was easy to miss that Big Money is only part of the picture. In fact, the big donors themselves are the most eager to point that out. “We do not believe that we are the end-all, be-all source of financial security and health,” says Stein. “We will not build a healthy center-left movement in America without a diverse base of small- and medium-sized donors.”

If there’s one answer to the question of how best to fund the left, then, it’s this: Raise as much money from as many sources as possible. For the last 36 years, ACORN has managed to win crucial victories in states and localities around the country. It’s survived and even thrived during a time of conservative ascendancy, growing its staff and operations and spearheading minimum wage campaigns and organizing drives.

Kest chalks up the organization’s longevity to the diversity of its funding sources and its reliance on members. “There are valuable partnerships to be made with wealthy donors and foundations–there’s no way in which we are purists about this.” Indeed, ACORN receives money from the Rappaports and foundations. “But,” says Kest, “if we were solely dependent on contributions from wealthy individuals and foundations, I don’t think we would have survived for 36 years.”