Can philanthropy solve one of its biggest problems with...philanthropy?

The US is in a bit of an employment conundrum that continues to be a drag on GDP growth and, by extension, investment returns. Statistically, we are at the point economists call “full employment” and in numerous job markets (including the one right here in the Southern Tier), employers have unfiled openings due to a lack of qualified applicants.

Meanwhile, we all know people that are un/under-employed. Seriously, what is the deal? We hear about all these jobs, yet we see poverty rates stay stubbornly flat (or worse, increase) over time.

Researchers at Goldman Sachs[1] have suggested that the drag on our labor force can be attributed to three dimensions unique to the United States: higher rates of painkiller/opioid abuse and the corresponding middle-aged mortality rate, the Unites States’ high rate of incarceration compared to other countries and the employability-challenges that creates for former inmates, and sluggish retraining systems for people left without the necessary skills for new work when their job goes away due to globalization or automation.

Philanthropy typically talks about these problems as they relate to our grantmaking. We nibble around the edges with grants aimed at tackling these issues on a community-level. We might fund a new roof at a drug treatment facility or half-way house for people leaving prison. When a community college asks for equipment to improve instruction in a nursing program, we are happy to help.

But do we ever really address the massive issues propping up the clearly broken systems? No, we don’t. We admit that.

But what would happen if we really, truly solved these problems? What if a bunch of foundations and other philanthropists focused our energy for a decade or so on the disconnect between skills required by job-creators and the skills missing from job-seekers? What if we eradicated the school-to-prison pipeline and put an end to opioid addiction and gave our community colleges the resources they need to train people in advanced manufacturing and other 21st (or even 22nd!) century jobs?

It is highly likely that these actions would nudge those GDP growth figures up above 3% - maybe all the way into the 4% or 4.5% range. And guess what would grow along with the economy? Our endowments.

With those enhanced returns, we would have more money available to grant. By solving a few key social problems, we would end up creating a climate that would produce the investment returns we need to support all the other essential programs in the arts, environment, education, health care we care about… you name it, we could fund it.

Farewell social problems. Hello economic growth.


[1] If you would like to receive a PDF of the original study, “The Decline of US Participation Rate in Global Perspective” please send me an email at rlh@communityfund.org.