Tin Man’s Promise

Steven D. Chan, DDS

Copyright 2002 Journal of the California Dental Association.

We called the project to create the CDA Foundation, "Tin Man." The project was named after the Wizard of Oz character who searched for the source of his compassion. In the birth of the Foundation, CDA has found its source of compassion, which holds great promise to make the universe of dentistry better.

The CDA Foundation was born from the association’s intent to help those who cannot help themselves. CDA, the parent company, has had a long history of humanitarian efforts to improve the dental segment of our society, but these efforts were episodically driven. There are greater opportunities in the charitable and philanthropic world than those available to the association itself. These opportunities can best be maximized if efforts are coordinated, leveraged, and constructed with strategic intent.

CDA is a professional association, an advocacy group. It exists to improve and defend the profession. Two decades ago, framers of the association planned for future philanthropic opportunities beyond the scope of the advocacy group. They chartered three separate charitable entities, distinctly independent from CDA. Under the Internal Revenue Code, these entities enjoyed favorable tax benefits not given to professional associations.

The CDA Relief Fund provided financial assistance to those in our professional community who suffered from catastrophic misfortune. The CDA Charitable Trust supported scholarships, disaster relief, and local dental health projects. The CDA Research Fund initially supported dental scientific research and education. This fund would later house the California Endowment grant to fluoridate California. In 2000, these entities were consolidated in a single company to form the CDA Foundation.

Why a Foundation?

The federal government understands that it cannot provide for all societal needs or solve all societal problems. It created avenues for Americans to fund vehicles to improve society. It created opportunities for experimentation to "lessen the burden of government" and to mitigate society’s problems. Such organizations are given tax-exempt, nonprofit status under Section 501 (c) of the Internal Revenue Code.

The term nonprofit is often confusing. "Nonprofit" refers to a tax-exempt status granted to an organization where none of the earnings may "inure" or personally benefit any private shareholder or individual. This federal tax exemption status is granted for very different and very specific purposes. Specific tests and rules are applied to each category of nonprofit, and activities are confined to specific purposes.

The California Dental Association operates under Section 501 (c) 6, known as a "business league" or professional association. By definition, this "business league" has some common business interest, the purpose of which is to promote that common interest. It must be devoted to the improvement of the business condition. It must be shown that the conditions of a trade or interests of the community will be advanced. Inherent in its activity is lobbying. The limitations of scope of activities allowed under this provision are specifically defined.

A charitable organization is defined in Section 501 (c) 3 of the Internal Revenue Code. The term charitable is used in its generally accepted legal sense and includes:

* Relief of the poor, distressed, or underprivileged;

* Advancement of education and science, and;

* Lessening the burdens of government.

Categories of organizations granted this designation include charitable, educational, and scientific.

Unlike 501 (c) 6 organizations, 501 (c) 3 organizations can receive tax deductible funds from individual donors, other 501(c) 3 organizations such as endowments and other foundations, and governmental grants. How big is this universe?

In 2000, the USA Giving Report estimated that $203 billion was donated to philanthropic organizations. A total of 9.3 percent went to health-related endeavors, an estimated $18.9 billion.

Access to Care and Foundations

The federal government enabled foundations to be created to improve society and serve the public benefit. Access to care is a formidable social problem. The January 2002 issue of the CDA Journal examined the scope of access to dental care in California. The issue is multitextured. The philosophical debate centers around why organized dentistry should engage in developing solutions. Some of the origins of charitable behavior in U.S. culture are found in our history.

The Carnegies and Rockefellers defined modern-day philanthropy. In the 1880s, Andrew Carnegie advocated the case for the wealthy to establish foundations not for charity ("the relief of immediate needs and wants") but for philanthropy ("which provides a ladder upon which the aspiring can rise"). In the 1920s, Rockefeller espoused the principle that people who have been successful in creating wealth in the private sector should dedicate the wealth to support the public benefit in the nonprofit sector. These icons of American wealth and American philanthropy continue to drive modern-day philosophy on philanthropy. William Simms once wrote, "Our true acquisitions lie only in our charities, we get only what we give."

Contemporary philanthropy is based on the precept that foundations play a significant role in improving society. They should:

* Primarily concentrate on philanthropy (root causes) as opposed to charity (meeting immediate needs);

* Concentrate on leveraging funds as opposed to being the sole source of funds; and

* Primarily concentrate on helping good ideas get a trial and start as opposed to funding tested program approaches.

To address those ends, foundations must pool donor resources, broker donors, and prospective projects, and leverage successes for building future successes. They can broker funding sources with strategic needy projects that deliver care. They gather the experiences of these projects to develop a ledger of evidence to craft public policy. By funding or gathering the experience of pilot projects, foundations leverage these experiences with larger funding sources.

It is unreasonable to expect that any one entity can solve such a massive problem of society as access to care. Foundations enable pooled resources of individuals of the same profession to leverage a greater good. Solutions to the problem are seen more as a ledger. The incremental successes or benefits must improve the human condition. Certainly cost-benefit analysis enters into the equation.

We balance the social obligations as a learned professional who has been given the skill sets by society to treat disease with the real world costs of delivering the care. Possessing the skill sets and doing nothing enters into this equation.

Some argue that the redistribution of wealth is a form of socialism. Others argue that the nobility of a profession is in its charity. The greater question is who has control of the redistribution. Will it be the government or the professional who decides?

Political Pressure and Public Policy

State governments have come under increasingly intense political pressures to address access to care. The costs are staggering burdens for state budgets. In California, with the depressed economy and budget deficits from the energy crisis, the anticipated Denti-Cal budget is still projected to be in the $750 million range.

Policymakers spotlight organized dentistry for solutions, often giving incomplete tools. There are implied and overt quid pro quo demands of the profession. Attend to the access problem in exchange for attention to other public policy questions that affect the profession. It is a gladiator arena of special interests.

Philanthropy and Public Policy

Foundations have a role in developing public policy. The government understood the slow process of governmental bureaucracy moving from concept to implementation. Foundations can implement innovative solutions faster. In the foundation universe, multiple permutations arise. Market forces cull the most cost-effective experimental models. Policy experimentation is facilitated. Foundations are seen as impartial vehicles to bring these solutions to policymakers.

Broadly, public policy development is conducted in two primary arenas: policy analysis and policy advocacy. Policy analysis is the development of models and solutions to perpetual problems. It explains the cause and consequences of various policies. Policy advocacy is the prescription of what policy governments should enact. The key role the foundations play is to provide policy experimentation.

Policy analysis is the prerequisite for advocacy. The primary concern is to determine the explanation rather than the prescription. Analysis searches for the root cause for a public policy. Finally, analysis continually tests the consequence of a proposed policy. It assesses adverse consequences, impact of deferral to other systems, and implications of effects of immediate decisions on systems downstream.

Policymakers are governed by the principles that governments should choose policies that will result in gains to society that exceed costs by the greatest measurable amount. No policy should be adopted if costs exceed benefits. Policymakers should choose policies that produce the greatest benefit over costs. Policymakers are wary if costs "savings" in one arena are shifted to another arena, thereby increasing overall costs to society.

In political science, health policy is developed consistent with the "rational" decision-making model. Policy is rational when the difference between the value of a policy society perceives and the value it sacrifices is positive and greater than any other policy alternative. Policymakers must calculate all socioeconomic value sacrificed or achieved by public policy, not just those measured in dollars. The object is to derive a maximum social gain.

To select rational policy, policymakers must:

* Know all society value preferences and relative weights;

* Know all policy alternatives available;

* Know all consequences of all policy alternatives;

* Calculate relation of benefit/costs for each alternative; and

* Select the most efficient policy alternatives.

The role of the CDA Foundation is to dissect the pertinent elements of policy analysis, fund innovative solutions, gather a portfolio of experience, and become an authoritative source to craft dental public policy. The building blocks of a foundation’s reputation to craft policy are the portfolio of projects it supports.

Just as in any competitive market, contemporary foundations compete for positions in their markets. They compete using typical business principles of operation. They pursue mission statements as their reasons to exist, develop niches, adopt and continuously refine core competencies. They identify and pursue strategic goals. They adopt business plans to define the business operations and environment as well as their roadmap to achieve objectives and goals.

Contemporary thought on support for a professional association-sponsored foundation has expanded beyond solely humanitarian purposes. Contribution to the mission of a foundation can be seen as an investment. By pooling "investor" resources, foundations can leverage greater objectives on behalf of the common interests of those investors. The return on investment is based on two parameters: It is the ability to advance solutions in a highly charged political environment and the adoption of proposed models by decision makers.

Earnings are seen as those incremental successful projects that the profession adopts or society adopts. Equity is seen as the enhanced reputation/credibility of the foundation to develop a dominant voice in the market.

Public policy reaches into other areas of the profession. Some of the more contemporary issues facing the practice of dentistry are biofilm, safety needles, wastewater, and dental materials. The arena of legislation and regulation is driven by special interests. Policymakers attempt to balance views of all stakeholders.

Professional health associations advocate policy based on science. Inherent in this advocacy is a point of view. Foundation-driven research is seen in the market with less inherent biases compared with proprietary-driven research. Foundation analysis of public policy is seen by legislators and regulators with less inherent bias than advocacy positions.

An example of foundation-sponsored scientific research is the ADA Pfaffenbarger Institute analysis of amalgam separators. There are no uniformed standards for the efficacy of these new products. There is pressure on the market to deliver products to serve that need. Proprietary funded research has a vested interest in the outcome. In a strictly market-driven environment, the dental consumer has little ability to differentiate the choices. The axiom "Let the buyer beware" governs the marketplace. Foundations are seen as an impartial third party to deliver objective information.

A compelling argument for supporting a foundation is to improve that part of society in which we reside. We will have greater controls over the destiny of that part of the universe. While other forces seek those controls, how will the force of arguments from outsiders weigh against our efforts to improve our own universe? We improve because it is our choice to do so.

CDA Foundation Business Plan

To form a new company in the foundation universe in California, a business plan was constructed. This business plan would be a blueprint, an organized battle plan to define the company and the reason to exist. In that plan, addressing the access to care issue is identified as one of the CDA Foundation’s reasons to exist. Its mission is to improve the health of Californians.

The access-to-care issue is too massive a social problem to completely solve. The Foundation’s intent is to become a major player in California to influence the course of solutions. The role of the Foundation is to provide health policy analysis and solutions to this multifaceted problem. Among the key strategic program areas are:

* To increase access to health care services for the underserved;

* To promote total health, disease prevention, and risk assessment; and

* To engage in research to assess health needs, epidemiology, service delivery, and outcomes.

The CDA Foundation enters the health foundation universe with a niche and a reputation to acquire. The business plan gives the Foundation a competitive edge and clarity of vision.

Charity and Philanthropy

While charity is the heart of foundations, philanthropy is the dream. Where charity removes the disease, removes the pain, philanthropy enables us to make a lasting difference in our part of the universe.

As a healing profession, we have an overriding vision: that all people -- whatever their status, whatever their age, wherever they live -- deserve access to quality oral health care. At CDA, we are committed to providing the best dental care to every person -- "one patient at a time."

Author

Steven D. Chan, DDS, is president of the California Dental Association. He maintains a pediatric dental practice in Fremont.