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Richard Walden Headshot

Invest, Don't Donate!: The Shredding of the Social Safety Net

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Aside from faux nonprofits like some of the major health insurance companies, universities, trade groups, influential cultural organizations and many high end hospitals -- which are really take-no-prisoners businesses with million dollar-plus executives -- the vast number of nonprofits in our communities struggle to provide essential services in health, education, help to the homeless, battered women and children, and environmental clean-up. The list of essential services provided by community-based nonprofits goes on and on.

It's no secret that private contributions to nonprofits have dropped precipitously as our economy has tanked. Paralysis in federal and state government and the drop in tax revenues have led to drastic cut-backs in public services and publicly-funded nonprofit services. (been to the library on a Monday or Tuesday lately? Expecting Saturday mail next year? Need a legal services lawyer?).

What then to make of the new trend towards investing in for-profits whose goals are both profitability for investors and to generate excess cash which might go to support social services and other traditional nonprofit activities or, as is likely, will be reinvested in new media, environmental or energy generating activities?

I introduce you to the new world of "invest-don't-donate"

Lest you think this is just a fringe activity or passing fancy, it grows out of a decade of "venture philanthropy" and has attracted hundreds of millions of dollars from good people who might otherwise support their local school, library or shelter.

Combine this with our privately-funded $5 billion-$6 billion 2012 election cycle, the vacuum cleaner effect of increased fund raising by powerful foundations (see The Clinton Foundation) and fund raising oriented national charities, and the small nonprofits are left well behind....their services are just not sexy or compelling vis-a-vis the go-go social investments.

Here's a late but ever-hopeful holiday list as you ponder the ramifications of all this:

1. Match dollar for dollar what you give a politician or political party with a dollar to meet basic community needs through your favorite (and local!!) nonprofit service provider.

2. If "investing" turns you on, consider the amazing leverage that each dollar of micro-finance loans or livelihood grants yields. Returns on "investments" in that field are amazing (see The Grameen Bank model and then find a micro-lender amoung the long list of nonprofit US groups which do that)

3. While I found "Black Friday" and "Cyber Monday" the ultimate in manipulation, if you played that game, stop now and give your friends and family a real gift by giving in their name to people who really need an essential.