The Art Of Doling Out Stimulus Dollars
RENEE MONTAGNE, host:
And as the federal government begins doling out tens of billions of stimulus dollars to states and cities, some are wondering how fast they can spend that money. NPR's Wendy Kaufman checked in with some philanthropies who had a similar experience, and she offers this cautionary tale.
WENDY KAUFMAN: Federal stimulus money comes with strings attached. Officials getting the dollars are being told how much to spend and on what kinds of programs. But within those programs they'll have some latitude and discretion, and Greg Shaw, a director of advocacy and policy at the Bill and Melinda Gates Foundation, suggests they may be in for a surprise.
Mr. GREG SHAW (Bill and Melinda Gates Foundation): It is not easy to give away lots of money. If you want to really have outcomes and results, it's not easy. What makes it difficult is large amounts of money needs to go some place, and then the question becomes what place are you going to spend those dollars.
KAUFMAN: His perspective is from a charitable foundation, but that doesn't negate the idea that dollars can't be put to work effectively unless systems are in place to make that happen. What's more, goals and objectives should be clear, says Grant Oliphant, president and CEO of the Pittsburgh Foundation.
Mr. GRANT OLIPHANT (Pittsburgh Foundation): The whole idea that we as a government could have given away $350 billion to banks without setting clear expectations for how that money would be used, it boggles the mind for those of us who work in philanthropy.
KAUFMAN: The reference, of course, is to the first round of bank bailout money. The idea was, with the infusion of cash the banks would markedly increase lending. It didn't happen. Spending money quickly yet effectively can also be a problem. Phil Buchanan, president of the Center for Effective Philanthropy, says the Gates Foundation learned that when it ramped up its spending after receiving a gift totaling tens of billions of dollars from Warren Buffett. The problem?
Mr. PHIL BUCHANAN (Center for Effective Philanthropy): Simply staffing up. I think that's been a challenge for the Gates Foundation.
KAUFMAN: And Patrick Rooney, interim director of the Center on Philanthropy at Indiana University, says finding and using the right people is a must.
Mr. PATRICK ROONEY (Center on Philanthropy at Indiana University): You want to have people monitoring the situation who know something about it, rather than someone who is just simply accounting for the transactions.
KAUFMAN: Rooney is talking about using stimulus dollars, but his advice stems from watching well-run foundations.
Mr. ROONEY: So if you're doing roads and bridges, you want someone who can evaluate what's the marginal benefit of this particular road and bridge. Or if you're doing other infrastructure projects, what's the expected social rate of return.
KAUFMAN: More advice from the experts? The Center for Philanthropy's Buchanan says those dealing with stimulus money have to stay focused on their objective, be it creating jobs or improving health care and education.
Mr. BUCHANAN: Foundations struggled with that all the time because there are all kinds of forces that push you in another direction. Often foundations find that they drift.
KAUFMAN: But drifting should not be confused with changing course midstream if programs aren't working. The Gates Foundation, for example, jettisoned a strategy of breaking up big high schools into small ones when it learned that the approach didn't increase student achievement. The foundation relied on hard data to determine what worked and what didn't. Again, Greg Shaw from the Gates Foundation.
Mr. SHAW: We've really tried to create a culture of evidence. If there isn't that culture of evidence, it means that you're flying by the seat of your pants.
KAUFMAN: Not a good thing when hundreds of billions of dollars, and the American economy, are at stake.
Wendy Kaufman, NPR news, Seattle.