Send Economic Stimulus Money to the Nation's Charities

By Joel L. Fleishman and Edward Skloot

The unraveling of the nation's economic and social institutions over the past year has been horrible to watch, but as a new year opens, America has a special opportunity to rebuild its social capital and bolster its economy.

As President-elect Obama shapes his response to the perils the nation faces, he and Congress should take steps to spur governments, communities, and individuals to work together in volunteer and charitable projects to rebuild society. To do this, we urge Congress to include a focused investment in national service and other parts of the nonprofit world that have already demonstrated their ability to provide vitally needed services.

What is clear is that government's feckless effort to stimulate the liquidity marketplace and rebuild trust in the financial system has not yet succeeded. Of the approximately $350-billion spent to date under the economic-stimulus bill Congress passed last year, there are still virtually no publicly available data (and probably no privately available data, either) on who owns and owes what amounts of debt. Nor is there any relief from the mixed efforts simultaneously to calm and stimulate frozen, trust-absent financial markets or any accounting of the billions of dollars that have disappeared into the pockets of corporations and their senior executives. Their past actions and current opaque behavior give no reason for national and global confidence.

Despite the infusion of a once unimaginable sum of money, the social safety net is tearing, 8.1 million homes are projected to be in foreclosure by 2012, thousands of jobs are evaporating daily, small-business loans are almost impossible to secure, and unemployment has (officially) risen to more than 10 million this year alone. According to Bill Drayton, chief executive of Ashoka, a nonprofit group that promotes social entrepreneurship, the real number of unemployed is at least 70 million higher than the official estimate.

As unemployment and homelessness rise, the demand for health, human, and housing services climbs. But the shrinking economy and laid-off labor force only diminish America's capacity to provide for basic human needs.

Though perhaps counterintuitive, reactively throwing large amounts of stabilization money into markets in disarray only provokes confusion and further withdrawal of confidence. Without accountability and a willingness to take modest, focused, cost-effective risks, we will not escape from a kind of firefighting that clearly resembles the sorties of planes airdropping retardants over the woodlands of Southern California.

One way to avoid the mistakes of the previous stimulus effort is to focus on ways to build nonprofit organizations. Those organizations, often buttressed by millions of volunteers, provide a big share of the nation's health care; private elementary, secondary, and higher education; social services; aid for young people and the elderly; food for the hungry; and basic research. Nonprofit groups make up almost 6 percent of the national gross domestic product, and they efficiently and skillfully hold together the economic, social, and community fabric of the country at low cost — certainly when compared with what it would take businesses to do the same things.

Americans have always stepped up when the need is accurately presented and solutions are clearly spelled out. Besides the 11 million people employed by charities, 61 million people of all ages now provide free work to charities or receive small service stipends in exchange for their efforts. Those volunteers contributed 12.9 billion hours of service last year — equivalent to the work that could be done by 7.6 million full-time employees. A major task is to keep those employees and volunteers productively working and adding to their numbers.

One unanticipated result of the bottoming out of the economy is that more talented and skilled Americans are available to provide needed services than at any time since the Great Depression. While jobs in financial services and real-estate development continue to shrivel, for example, applications to Teach for America have grown by 50 percent this year. Next year Teach for America will deploy a corps of 6,200 people who will educate 400,000 students in disadvantaged urban and rural neighborhoods.

Further, the rise in what are now called "encore careers" is starting to make its presence felt across the country. Many people in their 60s, 70s, and older are seeking out — and finding — places to contribute their knowledge, skills, and emotional maturity.

So what can be done rapidly to expand employment, provide services, enhance economic revival, and even restore a national sense of optimism?

The immediate answer is to take a small amount of money from the next stimulus measure, say $3-billion to $5-billion over two years, and channel it to communityand national-service organizations, monitor their progress rigorously and, all the while, keep the safety net operating while the economy stabilizes.

According to organizations that study and advocate for ex­panding national-service programs, putting that much money into national and community service efforts — as well as providing it to other nonprofit groups that have proved their effectiveness — could create at least 150,000 new jobs by summer 2009 and an additional 50,000 jobs by mid-2010, directed to serving the needs of the country and helping us lift ourselves by our own bootstraps.

The AmeriCorps national-service program, as well as local efforts that run preschool education, tutoring, and other training to prepare needy youngsters for college, and thousands of other projects across the country are already hard at work and ready to bring on new workers.

Here are two specific actions that can make the stimulus package effective and propulsive on a human scale:

First, fold into the stimulus package President-elect Obama's ambitious service plan, measures that are included in the bipartisan Serve America Act bill, legislation that was introduced last year in the Senate by Sens. Hillary Rodham Clinton, Orrin G. Hatch, Edward M. Kennedy, John McCain, and Barack Obama, among others.

It is notable that both presidential candidates supported the expansion of national-service programs during the campaign. Mr. Obama seems ready to make good on his pledge and his experience as a community organizer to call all Americans to serve at this time of urgent national need.

Second, include provisions that encourage foundations, individuals, and corporations to match government contributions. A nonprofit stimulus fund, patterned after the network of social-innovation funds that Mr. Obama called for in the campaign, could focus on organizations whose mission is to build America's human capital and whose results have been proven. Such organizations would include preschool programs, education efforts for people of all ages, and job-training programs.

As nonprofit organizations become more expert in identifying successful social programs, they should begin the effort to identify what works and seek government and private aid to finance their expansion locally, and, in some cases, nationally. By supporting effective organizations that are teaching and training our future (and current) work force, the nation will get a double stimulus: jobs for service workers in the short-run, and better educated workers — and citizens — in the future.

Will this push to provide ready, hands-on help succeed? There are no guarantees. But the groundwork for this kind of involvement by citizens has proved its effectiveness since the 1960s, through the Peace Corps, Vista, and other programs. In fact, its roots go back to America's response to the Depression of the 1930s — and even a century before that. That is the civic spirit identified in this country by the Frenchman Alexis de Tocqueville, who visited the United States in the 1830s and wrote about American volunteerism and community building in his Democracy in America.

So the table is now set for action — and it is work that Americans know how to do very well.

Joel L. Fleishman is a professor of law and public policy and Edward Skloot is director of the Center for Strategic Philanthropy and Civil Society and a professor of the practice of public policy, both at Duke University.