Why Philanthropy Can’t Replace Government in Helping Illinois Thrive

The demand for human services is greater today than ever. At the same time, ongoing funding cuts at the state and federal level continue to destabilize the nonprofit organizations that provide those services.

And while the philanthropic community has always played an essential role in supporting the well-being of our communities, philanthropy should not—and cannot—fill the resource gaps created by lack of government support.

That’s according to a report released this week by Illinois Partners for Human Service. Government is the Foundation of Well-Being: Why Philanthropy Cannot Replace Government in Helping Illinois Communities Reach Their Potential makes the case that state government must fully fund human services, because no other entity can do so at that capacity.

The report—which analyzes government funding, individual income data, charitable contributions, local foundations and tax policy—was funded by The Chicago Community Trust.

“The philanthropic community supports innovative, out-of-the-box thinking and strategies that aim to prevent or eliminate issues negatively impacting residents, so we believe that it is important for people to understand why private funding cannot match or fill in all the gaps created by lack of government support at both the local and federal levels,” said Anna Lee, the Trust’s program officer for basic human needs and social services.

Among the report’s key messages:

• Government funding is essential.
  Government funding for human services is essential because no other entity can provide the capacity of support that government does. Government resources provide a significant amount of funding in most fields of service, particularly downstate.
• The majority of wealth lies in northern Illinois.
  Analysis of individual income data statewide indicates that the vast majority of individual income and wealth from which to solicit donations lies in Chicago and its suburbs.

• Downstate Illinois is at highest risk.
  Studies show that most donors and foundations give to causes within their geographic area, which will leave downstate Illinois dramatically underfunded if cuts in government funding continue.

• Foundations lack resources to offset government spending.
  Private, community and corporate foundations lack the resources to offset government spending because 1) charters and missions of large foundations focus their resources on current giving strategies, of which human services is already one of many, and 2) what few shifts in mission foundations could make will likely provide little help to downstate human services given the location of those foundations.

• Tax policy will not change conditions.
  Changing tax policy will not change these conditions. Review of national research on the relationship of tax rates and giving suggests that while lowered taxation might result in minimal increases in giving, these increases would not offset significant reductions in tax revenue at the state level.

• Donors cannot match government funding.
  Even if charitable contributions did somehow match losses of tax revenue dollar-for-dollar, it is unlikely that donors will direct their contributions to human service providers in the proportions that government currently does.

Illinois Partners for Human Service is a coalition of more than 800 organizations located in every county and district throughout Illinois, representing fields of work ranging from education to healthcare to public safety. Formed in 2008 by the Chicago Alliance for Collaborative Effort, an umbrella federation of more than 20 service organizations in Chicago, Illinois Partners for Human Service provides important research, information and updates on policy, and builds capacity in the human service community across the state.

“As the largest voice of human service providers in Illinois we recognize that there is no quick fix to Illinois’ financial situation and we are grateful to philanthropy for its support of government-funded human services, as well as government’s irreplaceable role in addressing the scale of common human needs in our state,” said Judith Gethner, Illinois Partners for Human Service executive
director.

“By design, government provides significant resources and funding in most fields of service, especially in the rural areas of Illinois. That is why it is important for our policymakers to recognize their obligation to secure the financial future and stability of our state knowing that foundations are doing their part to help Illinoisans reach their potential.”

Read and download the complete report at illinoispartners.org.