Tackling Today’s Poverty with Yesterday’s Philanthropy

Rising poverty and persistent unemployment have become as prominent in suburbs as in cities over the past decade. The Great Recession hit suburbs as hard as cities and currently there are more poor people living in the suburbs of our largest metropolitan areas than in the central cities of those metros.

Successful alleviation of poverty in urban and suburban areas is contingent on both government programs (now perhaps more in flux due to the debt crisis) and private philanthropy. We tend to pay little attention, however, to the role that private philanthropy and charitable foundations play in reducing poverty or need. Charitable foundations often support the most innovative social programs and nonprofit entrepreneurs. Foundations convene community stakeholders to discuss pressing needs, which can shape policy agendas and promote more effective deployment of public program resources.

Against this backdrop, a new analysis by Sarah Reckhow and Margaret Weir explores the presence of charitable foundations in the suburbs of four major metropolitan areas (Atlanta, Chicago, Denver, and Detroit). The authors’ findings are based on recent interviews with leading community foundations and analysis of nearly 16,000 foundation grants between 2003 and 2007 that totaled more than $650 million.

One finding clearly emerges from this report: Philanthropic foundations are not terribly well-equipped to tackle the changing geography of poverty. Even though the geography of poverty has shifted in recent years, the geography of private foundation grantmaking has not. Reckhow and Weir find few well-resourced foundations in the suburbs and few foundation grants making it to suburban areas struggling with rising poverty rates. Even when grants make it to suburban communities, the dollar amounts may be too small to have any meaningful impact.

The authors identify several reasons why the work of charitable foundations lags behind changes in the geography of poverty. Perceptions persist that poverty remains a central city phenomenon. Foundations commonly are constrained by the preferences of donors to target resources at particular issues or communities. Few suburban communities have nonprofit human service organizations capable of fostering partnerships with private foundations. Suburban municipal governments often lack the administrative capacity and expertise to lead or coordinate responses to recent increases in poverty. Perhaps most frustrating for advocates and social entrepreneurs, many suburban communities are unwilling to support new programs or organizations that would address issues of poverty.

Limited foundation and philanthropic activity in suburbs compound the challenges those communities face in addressing rising rates of poverty and joblessness. Not only are there fewer programs of assistance in suburban areas where need has increased rapidly, but suburbs lack the capacity necessary to strengthen suburban nonprofit human service organizations or respond to shifting community needs.

Efforts to strengthen existing regional collaborations, organizations, and partnerships are necessary to overcome these structural impediments. The authors point to promising collaborations between foundations located in the city of Chicago and suburban Chicago municipalities to address the recent housing crisis. Such efforts have succeeded at overcoming gaps in capacity and they have prepared the groundwork for future collaborations to address other consequences of rising suburban poverty.

Yet, the challenges of tackling today’s poverty with yesterday’s philanthropy are not just structural. Our private commitments to supporting nonprofit charities and foundations also lag the times.  At a moment when federal and state government spending is falling amidst dramatic increases in poverty, private giving by foundations and individuals to nonprofit human service charities has remained roughly constant in recent years at about $30 billion annually–only about 10 percent of all charitable giving. If we are to strengthen the role of private foundations in suburban communities, we must provide greater financial support to private foundations and nonprofit charities–particularly given ongoing cuts in public program expenditures at the federal, state, and local levels.

Finally, we should keep in mind that suburbs and cities have a shared fate in these matters. In today’s global economy, strong metropolitan economies are necessary to pave the way for regional recovery. Likewise, strong public and private commitments to regional safety nets are necessary if we are to alleviate poverty in our metro areas today, support low-wage workers and job-seekers who commute between cities and suburbs each day, and continue moving toward economic recovery.