Sunday, July 03, 2011

Private Money for Stem Cell Agency: 'Not That Simple'

The new chairman of the California stem cell agency, Jonathan Thomas, is talking about raising vast sums of money from the private sector to support CIRM's research efforts – enough to significantly reduce the size of another state bond measure that could run as high as $5 billion.

The proposal may be necessary at a time when state government is slashing services for the poor, elderly and children, but it raises a number of major ethical questions. Coincidentally, the Los Angeles Times last week addressed some of those questions, albeit in a different area of government.

Here is what Thomas told Nature magazine,
"I think that the agency could put together a non-profit fund into which would go donations from individuals of high net worth or medical foundations. If it is very successful you might reduce the amount of general-obligation bond authorization that you would go for in 2014 or 2016."
On July 1, The Times editorialized on the matter of private funds going to help support the governor and schools. It also suggested some common sense rules that should be applied in such cases. The Times said,
"Last Sunday(June 26), The Times reported that Gov. Jerry Brown has been taking thousands of dollars each month from donors to pay the rent on his Sacramento loft, while refusing his official state housing stipend.
"In the same day's paper, it was reported that as part of a "public-private partnership," corporations and foundations would pay several million dollars toward the successful Summer Night Lights anti-gang program in L.A. parks this year. And a few weeks earlier, the paper noted that the Los Angeles Unified School District was taking money from developer Eli Broad, entrepreneur Casey Wasserman and the Bill & Melinda Gates Foundation to pay the salaries of about 20 top officials in the school bureaucracy.
"In each of these cases, government officials are accepting private dollars to cover the kind of costs that used to be borne by the taxpayers. And why shouldn't they? Times are tough and money is scarce. The state and city are cutting billions of dollars' worth of vital services, and struggling Californians seem strongly disinclined to tax themselves further to pay for the common good.
"So if a generous, civic-minded citizen like Broad, or a rich corporation like Wal-Mart or AT&T, offers to step forward to fill some of the gaps, it would be foolish to say no, right?
"Unfortunately, it's not always that simple."
The Times noted that donors may be seeking to curry favor with the governmental recipients. They may seek contracts or simply priority access to important governmental agencies or officials. Their donations could skew the actions on the part of the recipients. The Times did not say private donations should be barred but came up with a "few basic rules" to help address what may be a burgeoning trend in California government.

The proposed "rules" represent something for the CIRM board to consider as it moves ahead on financing issues. Here are the rules in abbreviated form.
  • "When private donors give money to help government do its job, the law should require that the donor's name and affiliation be disclosed. (In the case of CIRM, it should simply disclose the names as it has in the past and not wait for passage of a new law.)
  • "Private donors should be required to disclose whether they have any direct interest in pending legislation or are seeking government contracts or other assistance. Transparency is essential so the public can make judgments about potential conflicts of interest."
  • "If private money is accepted, it should be used to advance the goals of the government, not the giver."
  • "Private money shouldn't pay the personal expenses of public officials or enrich them in any way."
The Times concluded:
"All in all, the system works best when government pays for government. Not only is it ethically complicated to rely on private dollars, but even Bill Gates and Eli Broad don't have enough money to fund California for very long. The state's voters have to acknowledge eventually that if they still want to live in a first-class state with the kind of services they've long been used to — great and affordable state universities, safe streets, magnificent parks, public schools that rival any in the nation, and a safety net for those who fall on hard times — they're going to have to pay for those things. For too long, Californians have been encouraged by politicians to believe that they can have all the services they want without the responsibility of paying for them. That myth has been shattered. And there aren't enough white-knight billionaires to make up the difference."
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1 comment:

  1. Jim Fossett10:13 AM

    I don't think it's completely true that all donations to a state entity become the property of the state to do with as they wish. State entities and non-profits are obligated to observe any restrictions as to use placed by the donor. State universities can't, for example, use money donated for scholarships or the athletic program to support faculty salaries. In similar fashion, CIRM and the state of California are obligated to observe restrictions placed on private donations. They can't be used as if they were tax revenue. If the donations are unrestricted, of course, that's another matter. But if private donors gave money with the restriction that it be used to support CIRM's administrative activities, then that's how the funds have to be used.

    Jim Fossett