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Nonprofit model entirely misleading

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One of the many virtues of the United States is it has an exceptionally lively nonprofit sector. There is an organization for everyone, and every organization speaks for itself. Europe is less fortunate: there, government funding of nonprofits is the norm. But at least Europe is waking up to the dangers of subsidies. We seem to be going to sleep.

In the United States, it is possible to be ideological -- to be conservative, for example -- but not Republican. In Europe, by contrast, most think tanks are affiliated with political parties. But what is less well known is that the European Union gives vast sums to supposedly independent nonprofits.

Earlier this month, a German member of the European Parliament estimated that in 2013, the EU handed out 4.5 billion euros (about $6.1 billion, or 4 percent of its entire budget) to more than 8,000 nongovernmental organizations. If anything, that is an underestimate: a Lithuanian expert believes the total might be as high as 7.5 billion euros. The grants are so numerous it is impossible to audit their value.

The EU is not alone. A report by the prestigious Institute of Economic Affairs in London reveals that the British government gives billions of pounds to political campaign groups, NGOs, and charities. You might imagine that, since the British government is led by the Conservative Party, much of this funding would flow to organizations on the right.

In fact, the majority of the recipients are not conservative: More than three-quarters of their leading figures back the left-leaning Labour Party. Ridiculously, the British government is even funding groups that exist largely to campaign against its policies on welfare reform.

But as the author of the Institute of Economic Affairs report, Christopher Snowdon, points out, the proper criticism of this funding is not that it is biased toward the left. It is that it is "both immoral and an inefficient use of public money." It crowds out genuinely voluntary organizations, forces taxpayers to back causes they oppose, and creates a subsidized voice that is all the louder for being nominally independent.

We may think that this can't happen here, but Snowdon says there is "strong evidence of similar funding patterns in the USA." If you examine the annual reports of many U.S. think tanks, you will find that they are funded in part by both the U.S. and foreign governments.

But Snowdon's broader point is worthy of investigation. We have heard in recent years about how the Internal Revenue Service has treated conservative nonprofits, but the other side of the coin is the question of funding. It's all to the credit of the Institute of Economic Affairs that we know what is happening in Britain. A similar report on the activities of U.S. federal and state governments is overdue.

Of course, the IRS investigations are hardly insignificant. House Ways and Means chairman Dave Camp (R-Mich.) said that of the tax-exempt "social welfare" organizations selected for audit by the IRS, 100 percent were conservative.

At least when governments hand out money, they merely create fake voices. IRS investigations chill those that are active, which is far more toxic.

In the end, though, it's about the government. And that's wrong, no matter what's being done or who is benefiting. The entire idea of the nonprofit, in a way, is misleading. It implies that nonprofits are just a relatively limited part of society, one sandwiched between government and companies.

In reality, most of life is about nonprofit activities. Government subsidies and regulations inherently imply that the job of government is to control those vast parts of your life. And while that may be a European vision, it's not one that befits the United States.

 - Ted R. Bromund is a senior research fellow in The Heritage Foundation's Thatcher Center for Freedom.

Originally appeared in Long Island Newsday

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