The dangers of a White House Office on Nonprofits

What is often described as the “independent sector” is one of the core elements of what makes America exceptional. While authoritarian regimes such as China and Russia crack down on civil society by relying on bureaucratic and legal tools to weaken non-state actors, America’s tradition is unique. Nonprofit groups, run outside the government and relying on volunteers, help define the nation’s civil society — that which helps knit us together and address problems in ways neither government nor industry can.

But legislation — bipartisan, at that — which two House members proposed last week, threatens the American exceptionalism of that independent sector.

The Nonprofit Strength and Partnership Act, to be offered by Reps. Betsy McCollum (D-Minn.) and retiring Fred Upton (R-Mich.), would establish a White House Office on Nonprofit Partnership, complete with a special assistant to the president and a formal advisory board appointed by the chief executive. Although its goals can be read as technically inoffensive — “establish an online portal, such that charities could register for fundraising opportunities” — its danger lies in its core idea: “to strengthen the nonprofit sector and its partnership with government.” 

Serving as an arm of government — what has been called “government by contract” — fundamentally compromises the independence of the nonprofit sector. The proposed legislation would formalize the idea of “nonprofits for hire” as the norm, not the exception. In doing so, much is lost.

When the government decides what should be our social goals and turns to nonprofits to implement those goals, it inevitably makes what had been supported by private donors and volunteers dependent upon the preferences of the government. We take such arrangements for granted today but, in historical terms, they are a relatively new development. As I describe in my book, “Who Killed Civil Society?,” it was only in 1962, with the Public Welfare Amendments to the Social Security Act, that the first federal grants to nonprofits were authorized — and quickly rose into the many billions of dollars.

The goal was noble: to extend the scale of social service programs to address such matters as juvenile delinquency (a term of the day). But doing so turned out to be a qualitative as much as a quantitative change. As political scientists Stephen Rathgreb Smith and Michael Lipsky have written, the once-independent sector became a group of “street-level bureaucrats,” spending as much time applying for and reporting on grants, and no longer “free to interact with clients without the pressure of bureaucratic or market accountability.”

The results have not been happy. Our social ills, by many measures — drug abuse, single-parenthood, child abuse — have worsened, even as federal spending to ameliorate such problems has skyrocketed. The Administration for Children and Families in the Department of Health and Human Services alone disbursed more than $50 billion in social service grants annually.

Making it even easier to obtain such grants is hardly a guarantee of their effectiveness. Just as worrisome is the prospect, to which the proposed legislation alludes, of a “commission on federal grant reform to offer recommendations to improve the operational relationship between all levels of government and the nonprofit sector.” 

This easily could turn into government setting priorities for the nonprofit sector as a whole. That’s something we saw in the Obama administration’s Office of Social Innovation and Civic Participation, which designated specific social problems to address and called on charitable foundations to provide money to match government funding. Similarly, the George W. Bush administration’s Office of Faith-Based and Community Initiatives drew religious groups into an embrace with the government — for cynical political reasons. 

One can imagine even worse coming of the proposed legislation, including the IRS confining nonprofit status to organizations addressing specific types of matters, as some progressives have called for. Indeed, the proposed bill would seek to establish, through the White House, an “IRS Advisory Committee on Tax-Exempt and Government Entities.”

One cannot, of course, rule out the possibility that federal grant-making improved the lives of some it affected. But its danger lies in the government’s inherent inability to invest in “unknown unknowns,” whether mRNA vaccine research or local efforts to halt drug overdoses. It is the true independence — which brings with it rapid response, local volunteers, and citizen boards of donors — that help bind and maintain our social fabric and strengthen civic ties.

A White House Office on Nonprofits would simply affirm and cement the idea that government is — and should be — intertwined with our civil society.  Far better for the government to maintain an arms-length relationship, not a partnership — to be generous and agnostic about the establishment of new nonprofits but not to seek to direct them (except, of course, to root out fraud and corruption). Those seeking to retain the vitality of our civil society would be best advised to support groups that do not seek or receive government grants but retain the time-honored independence of the independent sector.

Howard Husock is a senior fellow in domestic policy studies at the American Enterprise Institute, where he focuses on municipal government, urban housing policy, civil society and philanthropy. He is the author of “Who Killed Civil Society? The Rise of Big Government and the Decline of Bourgeois Norms.”