Economist Arnold Kling on government, for-profit, and charity | Michael Hartmann posted on the topic | LinkedIn (2024)

In 1st part of 2-part conversation, economist Arnold Kling talks about his government service, his Substack page, the role nonprofits should and actually do play in America, and outlines potential policy reforms related to nonprofits …“I think a very naive view of profit-seeking businesses versus nonprofits is that the profit-seeking businesses are takers and the nonprofits are givers,” according to Kling. “I think that’s not the correct way to look at it.“I would try to reduce the prejudice against profit-seeking firms,” he says, generally recommending a “more economically sensible tax system that creates less of a distinction between the profit-seeking and nonprofit sectors try to reduce that difference as much as possible,” without negatively affecting churches and other grassroots charities.

Recent articles, op-eds, and research about philanthropy and giving …

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Noting more overstatement of “Powell memo’s” role, this time in Mehrsa Baradaran’s new book The Quiet Coup …

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Noting description by Daniel Schlozman and San Rosenfeld in their new The Hollow Parties of how wealthy givers on both the left and the right have played a part in weakening political parties, and thus also politics and policymaking, in America …They convincingly argue that satellite, “paraparty” groups amorphously swirling around both actual parties—in what they call “the party blobs,” many of them nonprofits supported by grants and donations—make it harder for the actual parties to properly order politics.Donors should be held to account for, and we should all work for less of, that which the book shows so well that lies between the well-funded, party-supplanting blobs, on both the left and right, and those people who don’t fund and aren’t in them: distance.

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Recent articles, op-eds, and research about philanthropy and giving …

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In 2nd part of 2-part conversation, nonprofit consultant Al Cantor talks about those against reform of donor-advised funds (DAFs), some of the different kinds of nonprofit board members, different types of grantmaking strategies and tactics, and the underappreciated value of staffs at nonprofits …The estimated $11 million spent on lobbying against the most-recent legislative DAF-reform proposal, “probably in the world of lobbying, is a pebble in the Grand Canyon. It’s not a lot of money,” according to Cantor, “but it’s probably $11 million more than was spent on lobbying on the other side. There’s really no counter-effort.“Nonprofit boards hire the CEO, but in most cases, almost all the cases, the expertise lies with the staff,” he later says.In the nonprofit sector overall, “salaries for staff are not like painful overhead,” he concludes. “People who work for nonprofits should not be paid near-poverty wages … to do the good work. “I would love the public-policy discussion to focus more on helping the nonprofits be effective and a little less on helping people of great wealth get big deductions and have freedom to do whatever they want.”

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In 1st part of 2-part conversation, nonprofit consultant Alan Cantor talks about how the nature of charitable giving has changed since the beginning of his career and how those changes affect fundraising challenges, including because of donor-advised funds (DAFs) …“I became an executive director on my 27th birthday. I was really young,” and a member of the nonprofit’s board “explained to me the 80-20 rule—80% of the money came from 20%” of its supporters, according to He realized, “Okay. It’s about major donors. That is so quaint now. … It’s 95-5 now, maybe 98-2.“There’s less money flowing from the donor community to what I’ll call the working nonprofits, the ones who are feeding people and putting on concerts and teaching kids, all the stuff that nonprofits do,” he says. When “41% or so of the money is going into these intermediaries,” including DAFs, “there’s just less money coming out at the end.”When Cantor talks to journalists about these issues, they sometimes ask, “Could we hear it from a nonprofit leader?” He quotes himself as answering, “Well, I need to find somebody who’s retiring next week and dying next month. … We are beholden. We, the nonprofit community, don’t want to alienate our donors, and many of them feel like if you criticize, … then you’re impugning their reputation, and they’re very sensitive … You also don’t want to alienate the local community foundation, often the largest funder in the area, and their bread and butter is donor-advised funds.”“Nonprofit leaders do not talk about these things, so I feel like I can say it for them. … [M]ost of them really appreciate it. They come up to me at conferences and whisper in my ear, ‘Thank you.’”

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In 2nd part of 2-part conversation, Richard J. Tofel talks more about the relationship between funding and content in nonprofit and for-profit journalism, groupthink and diversity in the news business overall, and some specific challenges facing both foundation funders and management teams of nonprofit news organizations in particular …“A lot of the money for nonprofit journalism comes from readers,” according to Tofel. “You are, I think, effectively dependent on your readers in ways … that people have not yet fully come to grips with.” Realistically, he says, the more-concerning question is “how much editors may be willing to discomfort their readers than how much they are willing to discomfort their donors or their advertisers.“I think groupthink is a big problem in almost any industry and in almost any large organization,” he says. “I think it’s a real problem. I think it’s a problem on the right and a problem on the left. I think it’s frequently a problem, yes, in philanthropy, especially when different philanthropies get together.”Tofel: “Institutional foundations have this unfortunate habit of changing their strategies every time they get a new president. Strategies should change when the world changes, not when somebody retires or gets fired. That’s an unfortunate, but widespread practice.”And: “You do not have to take a program grant, and if funders are trying to restrict your activities or to unbalance the activities you’re engaged in or are unwilling to support the central apparatus that makes the whole thing go, you can say no and you can be smaller, and sometimes you need to be.”

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