What is good for nonprofits is frequently bad for Democratic politics — and for the administration of American cities.
Urban governance in the contemporary United States is at once politicized and depoliticized. Politicized, because almost every large city, and most university towns, are one-party Democratic monopolies. Depoliticized, because much of the work of policymaking and administration that used to be performed by political parties, elected politicians and appointed officials, and career civil servants who answered to them, has been outsourced to contractors — nonprofit contractors, in particular.
Over the past six decades, a paragovernmental network of nongovernmental organizations (or NGOs) that some call the “nonprofit industrial complex” has grown up to supplement, and in some cases replace, the old party machines and municipal government agencies. As a result, many urban governments pursue policies unpopular with many urban voters while relying on nonprofits with little accountability and frequent conflicts of interest.
Heading into 2024, only 16% of the United States’ largest 100 cities had Republican mayors. Among the biggest 20 cities, 17 had Democratic mayors, two Republicans and one independent. At the beginning of 2023, before Mayor Eric Johnson of Dallas switched to the Republicans, 9 of the 10 cities with the largest populations had Democratic mayors, and the 10th, San Antonio, had an independent mayor, Ronald Nirnberg, who was indistinguishable from a progressive Democrat in his views. In 2000, 4 of the same 10 cities had Republican mayors.
In addition to sending Republicans to Washington, voters across the country have been sending strong signals about how they feel about progressive urban governments. California, the vanguard of American progressivism, is also the epicenter of the grassroots backlash against it. In Oakland, 62% of voters removed Mayor Sheng Thao from office, while 64% of voters voted to recall Alameda County District Attorney Pamela Price in an election marked by citizens’ concerns that she was too soft on criminals. In San Francisco, Daniel Lurie, promising to reduce crime and chaos in the streets, defeated Mayor London Breed. Reversing years of municipal and state policies reducing penalties for crime, California voters passed Proposition 36 to impose harsher penalties on theft and drug offenses.
All of these votes can be viewed as referendums on the dominant model of Democratic urban governance in the last generation — a model in which the Democratic Party has been largely fused with progressive nonprofits in the form of both advocacy groups and municipal service providers. The Democratic agenda at city, state and national levels has been shaped by the demands of various single-issue advocacy nonprofits pushing issues like defunding the police, decriminalizing drugs and minor theft, treating homelessness as a right, pressing cities to become “sanctuary cities” that refuse to cooperate with federal immigration law enforcement, and promoting radical gender ideology. On issues ranging from banning gas stoves and gas lawnmowers to claiming there is no immigration crisis, Democrats have frequently adopted unpopular positions pushed by single-issue advocacy groups on the left, instead of taking stances that, according to polls, are popular with Democratic voters and swing voters.
The Democratic party has been largely fused with progressive nonprofits in the form of both advocacy groups and municipal service providers.
What explains this self-defeating deference to progressive NGOs by Democratic elected officials, particularly those in major cities? Nonprofit organizations that are mass-membership organizations like churches can claim to represent large groups of ordinary citizens and voters. But many progressive nonprofits are “astroturf” outfits, not grassroots federations. They are run by professional staffers and typically depend on a small number of large contributions from major center-left foundations or rich individuals.
The disproportionate influence of progressive nonprofits on Democratic policies can partly be explained by social factors. Democratic politicians and nonprofit employees both tend to come from similar college-educated, professional backgrounds.
In addition, many major political donors also donate directly or indirectly to nonprofits. The donors expect that the politicians and the NGOs that they fund will be aligned on the issues that the donors care about, whether or not the views of the donors on this or that issue are shared by many voters.
The lack of democratic legitimacy of single-issue advocacy nonprofits is paralleled by the lack of democratic accountability of many social-service nonprofits that function as contractors for city, state and federal governments. Transparency and accountability are maximized when salaried public servants carry out policies chosen by elected officials. The situation is much murkier when nonprofits are deputized and given grants to act as government contractors. It is difficult to adequately monitor spending by a multitude of nonprofit contractors which are not governed by the rules that apply to public employees. And whereas public servants are responsible only to the mayor and city council or state government, a nonprofit that mingles public grants with private foundation or individual or corporate gifts may have to answer for its actions to multiple donors, hopelessly tangling lines of responsibility.
In addition, there are ineradicable conflicts of interest between political parties and local governments, on the one hand, and nonprofit groups on the other. The secret of electoral success is selecting issues that unite as many voters as possible while alienating as few voters as possible. But nonprofits are focused on raising grant money, not winning elections. It is in their interest to motivate donors to write checks through exaggeration and alarm, turning this or that social challenge into a “crisis” or “emergency.”
Attacks on progressive nonprofits by conservatives can help them raise money by claiming that they are under assault by the forces of reaction. NGOs therefore have no incentive to moderate extreme causes or apocalyptic rhetoric. But the same conservative assaults can doom Democratic politicians by driving away centrists and independents who are repelled by the strident rhetoric and policies of the single-issue advocacy groups.
Nonprofits are focused on raising grant money, not winning elections. It is in their interest to motivate donors to write checks through exaggeration and alarm, turning this or that social challenge into a “crisis” or “emergency.”
Social service nonprofits, too, have built-in conflicts of interest with the governments and politicians that fund them to carry out public functions. For one thing, if they recycle some of their grant money in the form of campaign contributions or in-kind get-out-the-vote efforts, nonprofit employees look less like outsourced civil servants and more like corrupt patronage employees of urban political machines.
Moreover, the dependence of service nonprofits on grants creates multiple opportunities for corruption. Consider, for example, the “behested payment” — a charitable contribution made by an individual or institutional donor to a nonprofit organization at the behest, or request, of a politician.
Under California law, behested contributions over $5,000 must be reported by the elected officials who request them, but there is no limit on their amount. In 2020, California Gov. Gavin Newsom by request directed a total of $88 million from donors to nonprofits. The largest tax-exempt charitable donations ($45 million) went to Enterprise Community Partners Inc., a national NGO based in Maryland that co-leads Power Forward Communities, a coalition of “community development, climate and housing organizations” which received $2 billion from the Biden administration’s National Clean Investment Fund; the other grant recipients were the Climate United Fund and the Coalition for Green Capital. The second largest amount of behested donor money requested by Newsom ($43 million) flowed to the office of the governor, while other recipients included the Tides Foundation ($11 million), which is notorious for funneling money to left-wing nonprofit activist groups. This kind of thing may be legal but it is unethical and incompatible with good government by any theory.
The biggest problem with taxpayer-subsidized service nonprofits is that they have no financial incentive to actually solve, or even significantly reduce, the problem they are deputized to deal with on behalf of local governments. Unlike old-fashioned mass-membership nonprofits like religious organizations, or multipurpose civic organizations like local chambers of commerce, single-issue nonprofits can keep raising grants and paying their professional staffers only if a particular problem — homelessness, say — is never solved. It is in the rational self-interest of nonprofits to tell public and private donors that they are making progress, but more funding will be needed for many years, rather than to announce that because they have succeeded, their efforts are no longer necessary and they will be winding up their operations and shutting down. (The same perverse incentive exists in the case of for-profit government contractors as well.)
What is good for nonprofits, then, frequently is bad for politics and bad for public administration. Rebuilding the Democratic Party following electoral setbacks in many urban Democratic jurisdictions will require Democratic politicians to stop deferring uncritically to the unpopular positions of single-issue advocacy groups. At the same time, Democratic local and state officials should think twice before outsourcing more public functions to nonprofit contractors rather than assigning them to public employees. What is needed, particularly in the big cities and college towns characterized by one-party Democratic rule, is greater distance between nonprofit and party and greater separation of nonprofit and state.