What do we know about democracy reform funding?
When all you have to go on is a 990, not a whole lot. But it's clear institution-strengthening work is at the bottom of the barrel.
Thanks for clicking on my first real post. I mentioned in my welcome that the unbalance in philanthropy’s funding of the US democracy sector is a major motivator for me writing this Substack. Some activities and issues get gobs of money while others, like institution-focused reform, see only scraps. The problem with that, as I will delve into in more later, is that we have evidence that investments that improve government performance are really efficient.
Efficiency has two meanings here. At the grantmaking level, I mean how far an amount of money went in producing tangible change in a system. At the macro scale, it means how much societal change interventions in a particular system produced.
Fields of typically-small nonprofits have played a catalytic role in helping internal stakeholders make significant institutional improvements. Because government plays such an important role in modern life, the better government gets at setting policy or delivering services, the more likely it become that these interventions can have positive impact for American society. Conversely, I think it’s fair to say philanthropy has little to show in terms of tangible outcomes for hundreds of millions of dollars (at least) a year that’s pumped into other activities.
The data we have
It’s hard to grapple with the issue of efficiency in healthy democracy promotion because getting good data about philanthropic and nonprofit activities is very difficult. The main source is the public filings nonprofits and foundations submit to the IRS annually on form 990. Although the agency offers bulk downloads of this data, it is not formatted in ways that make for easy use. It also doesn’t contain anything about what the organization does: that has to be supplied by humans. Guidestar (now Candid) took the entrepreneurial step of developing a taxonomy of democracy-related work in 2015. Unfortunately, it has retired the free US democracy data tool it developed based on this work.
Two data resources popped up outside the hefty paywall recently. A team at Democracy Fund surveyed institutional funders to get a sense of the scope of pro-democracy work and major areas of focus. This September, the Democracy Funders Network launched its US Democracy Hub, which includes 990 data for more than 4,200 nonprofits and 30,000 funders. It developed its own taxonomy to sort these entities into 70 “ecosystems,” or types of activity.
Both of these resources are helpful in starting to understand the contours of pro-democracy activity. But they are limited. Both include data only as fresh as 2022. Although the research team supplemented their data in several ways, the Democracy Fund data is based on a voluntary survey of 70 foundations, out of which 37 responded.
The US Democracy Hub is impressive in the granularity of how it categorized different activities. But the data available cannot separate out specific budget lines a nonprofit or foundation may dedicate to programs that fit in particular categories. The 990s don’t contain this information. Each record in the database, therefore, contains the full financial data of the entire organization, often times distorting the scale of activities of larger entities whose work fits into many buckets. For example, it lists the entire $41.55 million budget of the William J. Brennan Center as being part of the “Congress” ecosystem, when (not to pick on the Brennan Center) its presence in the field is a small research team. To really understand what’s happening, we’d have to ask nearly 35,000 organizations for their itemized annual budgets. That’s not going to happen.
What does the data say?
As imperfect as it may be, the Democracy Fund and US Democracy Hub data gives us something to work with to understand the pro-democracy work going on in civil society. Democracy Fund provides a long-elusive topline of money: they estimate between $2.7 and $3.4 billion per year went to pro-democracy work in 2021-22. That is an increase of between 42 and 61% over the previous four years. Democracy Fund’s team notes that the high estimate for 2022 would still amount to only 0.7% of all charitable giving in the US that year.
The survey also gives a sense of how those billions are distributed across democracy-related fields. The overwhelming number of respondents listed voting rights protection, election administration, and voter engagement as work they were funding (between 73 and 86%). Another 70% were engaged in social or racial justice work and nearly 60% in media policy or mis/disinformation.
In terms of dollars out the door, respondents reported a total of $412 million in funding for “public and issue-based participation” in 2021-2 and $248 million for “social and racial justice.” For “government oversight and reform:” $80 million. Interestingly, that figure is about half of what foundations reported allocating on the voter-related categories mentioned as their most frequent activities of support, suggesting that this field is saturated with nonprofit support.
Taking the category nearest to my own experience — Congress — the US Democracy Hub lists $188.24 million in ecosystem revenue in 2022, a 30% decrease from the previous year. The real number is certainly a fraction of that. The top 10 of the 25 nonprofits listed in this data account for nearly $152 million of that total. I’ve already mentioned the problem with the Brennan Center data, but of that top 10, I can think of only three that have significant congressionally-focused programs, and the budgets for those programs are below a million dollars (I might be wrong about the Bipartisan Policy Center’s c(3) work, but it’s close).
By my eyes, the US Democracy Hub is missing some Congress-related grants that were part of the Democracy Fund Governance Initiative. Some were part of my portfolio, which amounted to a total of about $800,000 a year, including $400,000 for technology related grants of which I was the only person in philanthropy making. So restore some but take most of $152 million away from the ecosystem total and we’re talking about a field that received less than $40 million in 2022.
(with the previous caveat about topline distortions in the data) What about some other ecosystems in the Hub?
Voter mobilization: $1.03 billion
Just society advocacy and litigation: $6.46 billion
Placemaking and community development: $2.36 billion
Disinformation and information integrity: $387.5 million
Campaign finance reform: $206.4 million
Democratic storytelling and narrative building: $405.4 million
Executive branch reform: $8.6 million
These are worthy things to support, of course. This data, even with its limits, nevertheless puts into context the support for the congressional field I will be describing in future posts.
Oh, and it gets worse: in 2022, Democracy Fund started a drawdown process of its congressional work as it shifted to new strategic priorities.