WHEN SHOULD FINANCIAL FEDERATIONS BE
STARTED

William C. White, President, Centralized Budget of Philanthropies,

Milwaukee

In presenting to this Conference the question, When Should Financial Federations be Started, I shall have to refer more than once to the report of the special committee of the American Association for Organizing Charity, issued at 130 East Twenty-Second Street, New York, in 1917, on the general subject Financial Federations, a quarto volume of nearly three hundred pages. This special committee of the American Association was appointed May 11, 1915, for the purpose of studying financial federations and its members were four in number, its chairman being the director of general work of the New York Charity Organization Society. One of its three other members is on the board of managers of the Washington Associated Charities, one the secretary of the Boston Associated Charities and one the general superintendent of the Chicago United Charities.

This committee was aided in its work by the associate director of the Russell Sage Foundation, who appears to have given a great deal of time and study to the subject and to the preparation of the report of the committee.

The report of the committee was not signed until July 31, 1917, and was not issued in printed form until the close of the summer of that year; so that it appears that something like two years of investigation and consideration of statistics was given by the very able men who composed the committee before they were ready to make their final report.

As to the personnel of the committee, I have but one criticism to make, and that is, that the committee was constituted of workers in charity organizations in cities which had none of them attempted financial federation of their local charities or philanthropies; nor was the gentleman from the Russell Sage Foundation connected in any way with any financial federation; so that the committee was composed entirely of people who were not qualified by personal experience or knowledge of the subject for the undertaking in hand; a handicap of a kind that has often been known to lead men far astray. If it was true in the days of Chaucer that "the thief of venison that hath forelaft his lickerousness and all his conne craft can catch a thief the best of any man," is it wise or fair at the present day to constitute a search (or research) committee entirely of those whose sole qualification for the task (aside from native ability) is an entire absence of knowledge of the thing to be investigated?

Conclusions of the A. S. O. S. Committee

On page 9, which is the first page of their report, the committee state their conclusion very briefly in these words: "We believe that it has not been demonstrated whether the federation means a net social advantage, or the reverse, and our recommendation is against the adoption of the plan at present in other cities."

I think that those who live in cities where financial federation has been attempted were not greatly surprised that this particular committee, constituted as it was, should have come exactly to this conclusion, in spite of the fact that on page 15 of the report the committee says: "We approached the subject with an entirely open mind." If the attitude of mind of the committee was neutral, I very much fear that it was not a benevolent neutrality, for in the month of October, 1917, the general secretary of the American Society for Organizing Charity felt himself called upon to issue the committee's report as propaganda in connection with letters to the various associated charities throughout the United States and to the newspapers in the cities where these were established, warning them and the larger givers to charity against the adoption of any plan of financial federation at present.

The primary question is this: Is the idea a corect one, is the system better than the old one? If it be, then what is needed is the translation of the idea into the right sort of a working plan, and the fact that the best plan has not yet been found is no argument against the search for a better plan and its adoption when found.

Many here today will recall that when the question of dependency laws was raised a very few years ago (the laws that have since ripened into "mothers' compensation laws") the East were strongly and sometimes violently opposed to them and gave this same sort of advice "against the adoption of the plan"; but the East will not today fail to admit the good that has come from its adoption. Suppose that the men who were opposed to such legislation had been able to prevent those who were favorable to it from undertaking the "experiment," when would we have blundered upon the system which is now in successful operation? If Wilbur Wright had quit experimenting with the aeroplane because his predecessors had not succeeded in their experiments, will anyone picture to me the tremendous difference that his timidity would have made to the world in the present cataclysmic struggle?

Should Benefit by Mistakes

The committee's report has cited failures in certain cities. Suppose we see if the res gestae in these cities do not show the reasons for failure and aid us in answering our question, When Should Financial Federations Be Started? To do this it will hardly be necessary to go outside the pages of the committee's report.

Begin with the city of New Orleans. In this city there were probably other minor causes, but the cause for failure that seems to stand out most prominently was the lack of clarity in definition, which bred mtsunderstanding at the outset. If I am not misinformed, the New Orleans federation was organized as "non-sectarian" and out of the use of this term, without qualifying words of any sort, arose the chief difficulty. An officer of one of the leading philanthropies of New Orleans states that certain Protestant organizations were included in the federation, while certain Roman Catholic organizations were excluded because they were sectarian. This statement is borne out by the report of the committee, page 245. I have said that there was a lack of clarity in definition: it should have been made clear in the articles of association that the sectarianism which would exclude an organization was sectarianism, not in name or in creed, but in service.

With a provision of that sort, no such dissension could have arisen and all organizations that applied would have been admitted or excluded on their merits, provided only that their work be city-wide and independent of religious creed or affiliation.

The city of Birmingham, cited also among the failures, was doomed from the beginning for the reason that it attempted to unite dissimilar or rival organizations without first having eliminated the dissension between them, and all chance for its renewal. It is absolutely essential to the success of any federation that there be agreement among its members, and that no organization be admitted to affiliation which cannot co-operate heartily with all member organizations.

The city of Oshkosh is another city which has begun to experiment in federation without observing this essential. One of its citizens states that a number of very fine people insisted that one or two of its activities (meaning organizations) be omitted entirely or they would decline to give to the federation. Institutions that are antagonistic among themselves or that provoke the antagonism of the generous people of the city, may expect trouble, if federated, just as long as these antagonisms remain unhealed. This is especially true where the financial federation, as in Oshkosh, has been so formed that no pledgor can designate any particular organization, but all contributions must go into a general fund to be used at the discretion of the federation; for this forces, or seems to force, upon each pledgor a contribution to all of the allied organizations, whether he will or no.

The failure in the city of San Antonio was due to the fact that an attempt was there made to organize and dominate a financial federation from without, by a body of business men who seem to have been ignorant both of the needs of social service and of the proper methods to accomplish their own aims. They arbitrarily attempted a financial federation whose fund was to be a common one, undesignated, and the management to be under a committee selected by the chamber of commerce, a body in no way competent to judge properly the social or financial needs of the organizations which they attempted to force into the federation; and on the heels of their attempt they expected the affiliated organizations to do their own collecting of money.

It is axiomatic that no federation can succeed whose leaders are not to some extent at least, acquainted with the social service end of community needs. A chamber of commerce may very well initiate a federation of social agencies, but no greater blunder could by any chance be made than to have such a body undertake completely to control the federation after its creation.

Of this I shall have something more to say later.

Attention was called by the committee in its report to the cities (not including Oshkosh) that I have named and also to certain other cities which have attempted financial federation of their charities and philanthropies, and have been successful only in part, and the conclusion arrived at by them was that those who are thinking of adopting the plan should wait until those cities have proceeded further and carried the "experiment" to a successful issue. As I have said, this conclusion is not legitimate; a much more logical one is that it would be wise to study these cities and their methods and then not to wait for them to wake up, but to profit by what is good in them and avoid their mistakes.

There are many reasons for the partial failure or partial success of financial federation in certain cities that are now actively attempting it, which it would be rather unfair to them to discuss publicly. We have no desire to make invidious comparisons, but prefer to discuss the partial failures in question without direct reference to the particular places in which they have occurred.

There are cities like Denver in which federation was early attempted and where there have been several reorganizations of the work, which it will pay to study closely, because the reasons for reorganization are very apparent as they are studied, and if there is even now less than a complete success, a scientific investigation will undoubtedly develop the reason for this. A cursory glance at the various statements made by Denver will show one very sufficient reason why that city has failed of complete success in the past; which is that (as quoted from their statement) "in no case were they able to give any society the amount they asked for or even as much as they felt they should have to enable them to do their work as it should be done . . . they simply divided the funds they had as fairly as they knew how between the different institutions."

This suggests the query at the outset of organization, whether a financial federation should assume the expense accounts or budgets of the affiliated organizations in toto or should announce its intention to collect as much as possible while the organizations do likewise; a query that cannot be discussed in this paper, but the correct answer to which I deem of great importance.

Denver adds to what has been quoted, a further statement that a number of needy and worthy charities have sought admission to its organization, but that the state of its treasury did not seem to justify it in assuming additional burdens. This indicates a lack of growth and expansion to meet the city's needs, which seems to me to be inherent in the failure to obtain pledges sufficient to cover the needs of the various organizations already affiliated. May I add, that there are few exceptions to the rule, that organizations, as individuals, that do not progress, will retrograde.

We find another trouble in certain cases growing out of the failure of the central organization to live up to its pledges, one of which is the pledge of immunity from solicitation by any of the affiliated organizations. This is one of the inducements held out to the subscribers to federations, of which as much has been made, probably, as of any feature in the new plan, and if this promise of immunity to those who subscribe to any of the affiliated organizations is not lived up to, to the letter, the reaction is inevitable. The pledgor is disappointed and makes up his mind that instead of being freed from the annoyance of constant solicitation, he not only is not immune, but is in fact merely contributing to another organization with a new overhead expense, that is doing him individually no good.

Again, we find that the citizens are informed that under the new plan they will be relieved of the necessity of donating to institutions through adventitious benefits, etc., which cost much but return little. Having had this inducement to subscription held out to them, they find themselves still the victims of solicitation for materials for bazaars, tickets for charity balls and theatre benefits and what not, given by individual organizations for the making up of deficits or for some unforseen extension of their work beyond their supposed needs.

While this may not be the fault directly of the central organization, it seems to the subscriber to be a breach of contract and no explanation, that the central organization cannot control the actions of its affiliated bodies, will suffice to satisfy the pledgor to any of them. Either the inducement should not be held out at all, or the affiliated organizations should understand that a breach of faith by any of them in these regards will be visited directly upon the offending institution by its expulsion. No agreement must be made on behalf of an alliance of organizations that is not equally and under all circumstances binding upon each of them, as long as they remain members of the alliance.

I have touched lightly on certain of the most obvious reasons for failure or partial failure of financial federations and I might touch upon many more, but the limits of this paper do not permit me further to discuss that side of the question. This may be brought out in other papers or in oral discussions and I have gone into it thus for the purpose of enabling myself to indicate certain things on which I base my conclusions as to the time at which financial federations should be started.

After all, the question is not vastly different from that which is pertinent in the starting of any business or organization. Some doctors, lawyers, merchants, have failed where others have succeeded. I suppose it is true that nine merchants out of every ten who have started in business have made ultimate failures. The proportion is certainly greater than that thus far shown among financial federations of charities and