Following the democratic norm that gives the parliamentary body the exclusive power to approve the state’s budget, the Puerto Rico Legislature has formally extended this responsibility beyond providing the executive branch with the funds needed to administer public affairs. Specifically, it has taken on the task of providing resources to private, non-profit institutions that work autonomously (outside government control) and provide some type of social service or cultural activity. These funds, although channeled through agencies of the executive branch, are not up to the discretion of the executive. In other words, once they are assigned and approved by the Legislature and signed by the governor, the governmental agencies are obligated to disburse the funds the Legislative Assembly assigned.

The public policy behind this practice of subsidies is based on the fundamental principles of the modern welfare state, which call on the state to provide and facilitate essential social and cultural programs for material and spiritual development that are not commercially viable. Some of these are done through specialized state agencies, such as education, for example (the Department of Education and the University of Puerto Rico), but others in the cultural and social services fields are provided by private, non-profit organizations that are dedicated to providing social services. Well known examples are the Julia de Burgos Shelter, the Sister Isolina Ferré Centers, the CREA Homes and the Oncology Hospital. There are also numerous cultural institutions of this type, such as the Puerto Rican Athenaeum, the San Juan Ballet, the San Juan Children’s Choir, and the Puerto Rico Museum of Art. These non-profit organizations, created by private initiatives, have achieved such a level of acceptance in Puerto Rico for the services they provide that the state provides partial or total subsidies for their operations each year. (The alternative to this system of state subsidy is called social philanthropy, through which people and commercial enterprises provide funds to sustain the operation of these private initiatives.)

As with other public functions, there are various ways of meeting this goal of providing legislative subsidies. In Puerto Rico, three main procedural mechanisms have been established. The first is through the approval of laws that specifically grant recurring funds to certain organizations. These laws detail the amount to be granted to the organization each fiscal year, specify the governmental agency that will make the disbursements and assign that agency the responsibility of monitoring the use of the public funds. This is the case, for example, with the Ponce Museum of Art. The second level consists of a group of organizations that do not have a specific law that guarantees their subsidy but are included in a recurring global allocation by the Legislature, which in practical terms is an automatic donation. The third and most precarious level consists of those organizations that request a legislative donation for one year. If the organization wants to extend the donation, it must present a new request for the following fiscal year. This third system is outlined in the Legislative Donations Law and each house has its own rules and the process is controlled by a committee appointed for that purpose. In all cases in which a public allocation is made to a non-profit organization, regardless of the level of subsidy, rigorous compliance procedures and good fiscal management are stipulated.

Neither the legislative houses nor the agencies that make the disbursements have written qualitative evaluation criteria for the subsidized programs, however. To date, the only emphasis has been on accounting procedures, using professional auditors, to avoid misuse of funds. On main reason for this lack of evaluation is linked to the practice of political patronage. Frequently, legislative donations are the result of the desire by a particular legislator to support a person or community group without putting much emphasis on the social value of the results. In an electoral system, these examples of patronage are inevitable and mix with bona fide subsidy programs, without which the general range of social services and cultural activities in Puerto Rico would be much worse than it is currently.

In some countries, this system is particularly extensive and has deep roots in tradition. In the cultural arena, European countries, for example, have built impressive, centuries-old cultural infrastructures that have spawned institutions recognized worldwide: symphonic orchestras, ballet and opera companies, research institutions in the sciences, social sciences and the humanities, museums of art, science and technology, academic congresses, film festivals, think tanks, cultural affairs and even avant-garde art programs. There are also numerous private, non-profit educational institutions that operate with some kind of public subsidy, such as short training programs, special events, scholarships, exchange programs, linguistic studies, cultural promotions, etc.

In the United States, where this old tradition of state support to culture and research is not deeply rooted, and must often depend more on philanthropy (contributions from businesses and private individuals) than on direct support from the state, there are three national institutions that emerged during the second half of the past century with the task of organizing direct subsidies from the federal government to the sciences, the arts and the humanities: the National Institute of Science, the National Endowment for the Arts and the National Endowment for the Humanities.

In summary, although some agencies of the executive branch of the Puerto Rico government have adopted programs supporting non-profit organizations (and projects) of social value, the Legislature, firmly rooted in the traditional practices of political patronage, today holds a privileged place in the structure of subsidies in the Commonwealth of Puerto Rico.

Author: Roberto Gándara Sánchez
Published: September 11, 2014.

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