“The economic issue has never been whether one is a liberal or conservative, Democrat or Republican, or other such misleading taxonomic delineation. The issue revolves exclusively around one’s perception of human behavior.”
– Arthur B. Laffer, Ph.D. (Los Angeles Times, 1981)
I became interested in Arthur Laffer and his work during a luncheon held in spring, 2011 in Austin by the Texas Public Policy Foundation. During the event, the establishment of The Laffer Center for Supply-Side Economics was announced.
Why should nonprofit organizations care about the economy?
I have friends of all political persuasions, and I hold two degrees from The University of Texas at Austin, one in cultural studies and the other in art history. I have no formal training in economics. But I do have 30 years of experience working in trenches of the nonprofit sector raising significant funds. And, I am constantly in touch with donors of all political persuasions, many of them significant philanthropists. Most would agree a strong economy sets the stage for significant charitable gift fundraising activities.
As well-meaning and sincere as nonprofit organizations can be, generally speaking I have not known them to pay attention to the one thing that could make their work of securing financial support easier, the one thing that ultimately enables them to attain their many worth missions: a healthy, thriving economy (made up of healthy, thriving corporations and capitalists).
A colleague affiliated with CharityChannel Press mentioned to me in the midst of the recent economic crisis, “we all know what’s wrong with fundraising today, its the economy.” I couldn’t agree more.
From The Laffer Center, some insightful economic analysis:
… “In the roughly 30 years from the 1980s through the first decade of the new century, supply-side ideas contributed to the longest boom in United States history and an incredible transformation of the world economy. According to the National Bureau of Economic Research, 1982-1999 was one continuous mega-economic expansion. In fact, as it stretched into 2007, this 25 Year Boom saw a tripling in the net wealth of U.S. households and businesses from $20 trillion in 1981 to $60 trillion by 2007. When adjusted for inflation, more wealth was created in this 25 year boom than in the previous 200 years.”
Although some of my nonprofit colleagues decry the “trickle down” theory promoted by President Reagan, I find it noteworthy. But I am also inspired by the theories of new economic thinkers such as those discussed in the World Economic Forum’s blog, “9 economists whose ideas are changing the world” (August 27, 2015). The 1980s are long gone, and new forces are undoubtedly at work.
Regardless of your view about the best economic system, nonprofits must pay attention, both from an historical and contemporary context, and act appropriately. The nonprofit sector should educate itself about what drives a healthy economy and enables it to flourish, and we should do our respective parts to support those activities.
Few are aware that nonprofit organizations as a group have a strong impact on our nation’s economy. The National Council on Nonprofits notes,
“In addition to the economic activity encouraged by nonprofits and the countless dollars that nonprofits save governments through their efficient service delivery, nonprofits are also one of the greatest sources of employment across the country. According to the Bureau of Labor Statistics, the nonprofit sector employs 11.4 million people – that’s 10.2 percent of the American workforce!”
In my opinion, nonprofits should be working harder to point out these kinds of facts and be constantly emphasizing their importance so that society as a whole gains a better understanding and appreciation of the role nonprofit organizations play in our world today.
The hard economic lessons of the past few years are clear. Whatever your political opinion, take the time to understand how the nation’s economy works and be part of the solution, not part of the problem.
- Trickle down or … trickle up? Michael Evans writes for Forbes, “Job Creation In The New Political Economy: Small Companies, Not Big Companies, Create Jobs” (February 8, 2017).
- Alan Murray, CEO Daily, Fortune, “How to Make Capitalism More Inclusive” (November 16, 2018). “I’ve spent a lot of time recently talking to corporate leaders about how to encourage business to better serve the needs of society. Those conversations inevitably turn to the importance of time horizon. In the short term, pressure to earn a profit often conflicts with the interests of customers, employees and the communities in which they live. But in the long term, the two converge.” Times are changing!
- Jason Hickel and Martin Kirk write for Fast Company, “Don’t Be Scared About The About The End Of Capitalism—Be Excited To Build What Comes Next” (September 11, 2017).
- Bill Roth writes for TriplePundit, “Will Our Political Divide Cause a Recession?” (February 13, 2017). ” … Counties that voted Democrat in Election 2016 account for two-thirds of our nation’s annual gross domestic product (GDP). What happens if Democratic consumers, or our country’s invaluable immigrant entrepreneurs, turn bearish? Could this trigger a recession?”
- Douglas Rushkoff was interviewed by Nonprofit Quarterly, “The Sustainability Prerogative: Nonprofits in the Future of Our Economy” (April 25, 2017). “I think that the nonprofit sector in particular is perfectly situated to help us transition to a different economic landscape. You know, most nonprofits think of themselves as doing something good, but what I want to try to make them more aware of is that the nonprofit structure itself, the way the business is actually structured, may be doing more good than whatever their particular business is.”
- Devin D. Thorpe of Forbes featuring John Taft, “Wall Street Can Be a Force for Good” (March 31, 2015).
For additional information and discussion, please see the next page, “Economy and Philanthropy: Further Discussion and Resources.“