By James B. Hyatt

Foundations and nonprofits in the South must work with the region's civic leadership to find creative solutions to the region's historic economic disadvantages and racial issues in the face of government cutbacks of social programs, a new report states.

At the same time, the wealth created in the South during this time of unprecedented economic growth must be put to use through new foundations to augment the work of other groups and government agencies, according to Chapel Hill, N.C.-based think tank MDC Inc. in its report, "The State of the South 1998."

While Atlanta, Charlotte, N.C., the Research Triangle (Raleigh, Durham and Chapel Hill, N.C.) and the Triad (Greensboro, Winston-Salem and High Point, N.C.) often are seen as representative of progress, the South is burdened with 40 percent of the nation's poverty, but only holds 10 percent of America's philanthropic wealth, according to U.S. Census data cited in the MDC report.

The State of the South 1998 follows MDC's initial report two years ago that tracked progress made during the last three decades. The new report examines Southern race, gender and ethnicity issues in greater detail, and studies how these issues affect and are affected by the region's economic development. The report is based on demographic studies of 14 Southern states: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.

The South also must resolve long-lived problems caused by its traditional lack of a broad industrial base and historic racial issues. The region may not progress as far as it could during the 1990s' economic boom if philanthropy for social support programs doesn't exceed reductions to these programs, the report states.

"There has been an evaporation of federal funding for research, evaluation and demonstration, and also programs," says George B. Autry, president of MDC and an author of the report. "The government historically has a short attention span to enduring problems."

Rather than blaming the region's political leadership, the report says innovative programs will be established by new foundations set up by "Southerners who see the nonprofit sector as a necessary complement to government and business in the task of improving people's lives. It is important that voices be raised to say that the South particularly needs increased homegrown philanthropy ... to establish priorities and promote innovation."

This innovation will come from the region's good relationship among philanthropy, higher education and civic leadership, which Autry described as "true assets of the South."

While philanthropy can't take the place of government funding, foundations and nonprofits should work with government by identifying long-term social needs and trends and placing them on the social agenda, and sponsoring research, demonstrations and evaluations to test solutions to long-term problems.

"Endowed institutions have the benefit of the long-term view, with perpetual insulation from the distractions of ephemeral issues and fleeting popular opinion that beset elected officials," the report states.

One problem is that new foundations are not being established as new wealth is created in the South. In fact, the region's "economic energy does not seem matched these days by equal energy in civic and public service," Autry says. A section on philanthropy in the report makes specific recommendations about the role of foundations and nonprofits as they examine the region's problems. "What does the region most need from philanthropy? First, the South needs more philanthropy - more homegrown philanthropy ...," the report states. "(T)he creation of new foundations should be a high priority for the civic and business leadership of the region."

Any new foundations likely will be based on wealth created in the banking, telecommunications, computer technology, pharmaceutical and insurance industries, Autry says. While Southern companies in these industries have seen revenues soar as their operations become national and even international in scope, "the question really is, will they (the new industry leaders) step forward to help?"

The role of these wealthy, rapidly growing companies from "clean" industries stands in marked contrast to the role played by tobacco firms and tobacco families, who have taken Southern philanthropy to "unmatched" levels.

"The remarkable irony of the South is that its most despised crop has produced unmatched advances in health research, higher education and community development," Autry says. The same holds true for the works done by foundations funded by the region's furniture- and textile-based wealth.

"How these foundations do their business here has become a model for the rest of the nation," he says.

The report also calls for foundations to play a central role in helping the South resolve its racial problems.

"There is a special place for foundations in remedying the region's lingering racial divisions and the growing potential for ethnic tensions," the report says.

WRITER can be reached at
jbhyatt@mindspring.com