Egger vs. Eisenberg

Why is the Egger vs. Eisenberg debating drawing so much interest? Bill Schambra emailed me his thoughts, which I share with you below. As you read it, recall discussions we’ve had here about “nonprofit vs. for-profit”, “new philanthropy”, “renaming the nonprofit sector”, and “venture philanthropy” and you can see how the Egger vs. Eisenberg debate strikes at the heart of the philanthropy sector:

On the surface [Egger vs. Eisenberg] appears to be a debate over a very minor difference — both parties obviously agree that a more politically active nonprofit sector is desirable, and the only issue seems to be whether that’s possible within the current 501c3 regime. But in fact the debate lays bare a deeper and much more profound question about the nature of the sector. 

Egger, like many new generation philanthropists and nonprofit leaders, seems to think that nonprofits aren’t in essence different from other types of organizations in the marketplace or politics — they are whatever they’re doing at the moment, as the institutional forms become ever more intermingled and indistinguishable. If they act like a business or "social enterprise," which is how he would like more of them to act (DC Kitchen is trying to become economically self-sustaining), then that’s how they should be treated.  So of course they should be able to do what any business can do — lobby, contribute to campaigns, etc. 

But for Pablo, the nonprofit sector has a peculiar nature or essence that sets it apart from business and politics. As he makes clear in this op-ed and in many others he’s written for [The Chronicle of Philanthropy], the nonprofit sector’s peculiar mission is to stand for social justice or the broader public interest against the depredations of the market and politics, governed as they are by the selfish interests of the powerful. He properly points out that tax exemption is awarded because of the "public interest" served by the sector, and that were a nonprofit to become just another business or political organization, Congress and the public would be inclined to treat it as such and rescind the exemption. 

But more important for Pablo, I think, is the fear that this would betray the essential purpose of the sector, for which he’s fought so long. Although we might wish that "social enterprises" would serve the poor and the public interest, and although Egger might personally choose that clientele, why should they continue to side with the relatively powerless over the long haul? After all, their "business" orientation calls them to focus on profits and political clout, both of which are much easier to come by with attachment to the wealthy rather than the marginalized. (Recall the Washington Post series on the Nature Conservancy and its reorientation to the needs of its wealthy supporters, rather than neglected species and habitats).

That is Pablo’s strongest argument against Egger. But against Pablo, it must be said that a nonprofit sector as strongly oriented toward activism and advocacy as he would wish it to be is probably in practice indistinguishable from the sector that Egger would like. Isn’t Pablo just reluctant finally to give up the privileged sanctuary of the nonprofit status, back to which nonprofits scoot as soon as a regulatory body begins to scrutinize their activity? In other words, isn’t Pablo trying to have his nonprofit cake and politically eat it, too? As you know, many conservatives [e.g. “public choice” libertarians] already say about the current nonprofit sector’s "advocacy" that it’s just a smokescreen for liberal activism, and that it’s dishonest for the sector to pretend to speak for a larger public interest and to collect the tax privileges pertaining thereto. In other words, Egger’s view of the sector simply and honestly brings into the open what many already say about it.

Anyway, the fact that the discussion finally carries us into these deeper waters is what makes it interesting, I think. On the one hand, it’s the eager, dynamic younger generation plowing full speed ahead without minding the forms and formalities of the past, just doing what needs to be done to get results no matter how "mixed" the form of the organization is. On the other, it’s an older, more philosophically sophisticated and idealistic generation, still committed to the idea that there is a distinct nonprofit sector rooted in social justice or the public interest; it will and should remain apart from business and politics, with only some trivial "blurring" of institutional forms at the margins. It appears to be a very small difference of opinion that in fact opens up to the question, Is there any such thing as a nonprofit?