State of the South: More Philanthropy Needed

N.C. — Editor's note: Todd Cohen is editor and publisher of The Philanthropy Journal, a publication of the A.J. Fletcher Foundation.

CHAPEL HILL—To thrive in an increasingly competitive global marketplace, the South must give its poorest citizens greater opportunities, and foundations in the region must do more to help create those opportunities, a new report says.

Despite healthy growth in its economy and philanthropy, says the report by Chapel Hill-based MDC Inc., the South still suffers from big gaps in economic well-being, education and health for poor families, and its foundations focus mainly relieving immediate needs.

Foundations must be more strategic and collaborative, invest in change and work more closely with one another and with government and business to address the roots of social problems, says The State of the South 2007: Philanthropy as the South's "Passing Gear".

The report spells out four critical needs in the region that require more innovative approaches by foundations, including education from kindergarten through college; development of the economy and labor force; reduction of poverty; and public health and prevention of disease.

"If the region is to compete effectively with the rest of the world, we can't do it with one hand tied behind our back, with the bottom 40 percent losing ground and not being connected to opportunity," says David Dodson, president of MDC and a co-author of the report, the sixth in a biennial series that MDC publishes.

Home to 74.1 million people, or one-fourth of the U.S. population, the 12 states in the South have enjoyed rapid growth.

The region's population since 1980 has surged by more than 20 million people, or 40 percent, compared with 30 percent for the U.S.

Expected to grow another 20 percent by 2015, the region also has moved from a biracial society to one that is multiracial, with Hispanics, for example, accounting for 8 percent of the population in 2004, up from 2.5 percent in 1980.

Fueling the region's growth and diversity has been an increase in jobs, to 40 million in 2000 from 25.4 million in 1980.

Yet despite the boom, the report says, income gaps in the region also have grown, with poverty rates rising in nearly every state.

The South is "the land of the working poor and working near-poor," it says.

"Poverty remains a characteristic blot upon the face of the South, a region with large swaths of rural destitution," the report says.

Nearly one in five children in the region, for example, lives in a household below the poverty level.

Since 2000, poverty rates have risen in nearly every state in the region because of the stagnating economy over the past five years.

Much of the South's poverty is "legacy poverty," stemming from the region's "history of racial segregation and destitution amid a small-scale farm and factory economy," the report says.

Poverty hurts the region's economic competitiveness by curbing efforts to advance student achievement and good health, the report says.

"Success on the field of global competition increasingly depends on how decisively the South acts to lower the social and economic costs of inequity by making everyone fit for the race," the report says. "Today, competitiveness requires a commitment to equity."

Southerners are generous, the report says, with average charitable giving by individuals in all but three Southern states in 2003 exceeding the U.S. average of $3,274.

The region is home to 11,500 foundations with nearly $56 million in assets, up from 2,600 foundations with $2.2 billion in assets in 1975, and 4,700 foundations with $8.2 billion in assets in 1990.

Yet the distribution of philanthropic assets is "tremendously uneven," the report says, with four states – Florida, North Carolina, Georgia and Virginia – housing roughly 70 percent of the region's philanthropic assets.

Resources are "especially lacking in the most economically distressed states," the report says.

Foundation giving "tends to focus on places where assets are concentrated," it says, and under-endowed communities "may have substantial 'charity' but not enough long-term 'philanthropy,'" creating yet another "divide" in the region.

While several states in the region are home to big national foundations, and all states have foundations that focus on individual communities, the report says, the South needs more foundations "with a statewide and regional reach because it needs more statewide and regional approaches to competitiveness and equity issues."

Citing research that maps four traditions of American philanthropy – philanthropy as "relief," "improvement," "social reform" and "civic engagement" – the report says that eliminating the region's "embedded inequities" will require Southern philanthropy to be more strategic.

"The South needs different philanthropy," the report says. "Charity and improvement, however worthy, are no longer enough to take us where we must go."

The report recommends that philanthropy:

Coming at a time of sweeping change in the economy and the charitable world, the report represents a call to arms to foundations to learn from innovative philanthropy of the past and move beyond business as usual, Dodson says.

In the past, he says, foundations both inside and outside the South functioned as the "passing gear" by taking on the underlying causes of critical problems like poverty and disease in the region.

With philanthropic assets in the region growing, he says, "passing-gear philanthropy is not only a possibility but is an imperative, given our times."

Joan Lipsitz, a senior fellow at MDC and a co-author of the report, says it was designed to help foundation boards and staffs, as well as people in government and business, understand the more strategic role that philanthropy has played in the past and should play now to address the critical issues of competition and equity that the region faces.

While the report documents its wealth and charity, she says, the region lacks a "strong philanthropic sector" because it does not look to the future or address the causes of social problems.

Philanthropy in the region also is fragmented, she says.

So in addition to focusing on the roots of problems, she says, foundations need to "collaborate for scale and impact," particularly because the region is home to few big foundations.

"This was a very poor region and it still has a self-image of a region that needs to turn outward to other parts of the country as it did before" in securing support from funders like the Ford Foundation and the Rockefeller Foundation, she says.

"We have always relied on the kindness of strangers," she says.

By thinking and working differently, she says, foundations can "help communities overcome divisions so there can be shared public will."

Dodson says foundations must change.

"If we do more of the same, if we invest our growing philanthropic resources in the same way -- that is, toward the relief of immediate needs we have historically favored – that will not help us change the underlying circumstances that make us inequitable and not competitive.

"In other words," he says, "philanthropy as charity is not a solution to the circumstances we face."