The only industry booming at the moment is recession economics, as policy-makers and opinion-formers pore over the Great Depression of nearly 80 years ago looking for answers to the current crisis. The hapless President Herbert Hoover, who responded to the Wall Street Crash with balanced-budget expenditure cutting, is usually cast as the villain of the piece. As well as mishandling the macro-economics, Hoover is ridiculed for his philanthropy-led response to the consequences of the economic slump – as the victor in the 1932 White House race, Franklin Delano Roosevelt, put it: state aid for the unemployed should be provided “not as a matter of charity, but as a matter of social duty”.
The New Deal rules. But bigger government shouldn’t mean a state monopoly. One of the lessons we have learned since the 1930s is that government does not have all the answers. Hoover got a lot wrong but it would be a mistake to ignore the contribution that philanthropy can make to help families and communities through the economic crisis. As one of America’s most thoughtful philanthropists, Mario Morino, has argued, we are facing an ‘all hands on deck moment’ when philanthropy needs to step up.
We have argued from the beginning of the crisis that the rich need to see this as a moment to get serious about their philanthropy rather than a reason to hunker down and protect their fortunes. The need for really effective philanthropy is greater now than it has been at any time in the past 70 years. Some big donors have been wiped out. Foundation endowments have been hit. Nonprofits are facing a funding crisis just at the moment that demand for their services is rising. Those still with money need to fill the gap (as the Rockefeller Foundation did in the 1930s when it saved the Rosenwald Foundation, which had been crippled by a collapse in the value of Sears-Roebuck stocks). And with less money around philanthropists need to be smarter in the way that they give; donors need to continue to bring the skills and insights of business to their giving – now more than ever we need a productivity miracle in the nonprofit sector.