The Foundation Business: On Olivier Zunz
Zunz chronicles the efforts of foundations over the past 100 years to influence and change national policies in the realms of science, education, health, economic development and anti-poverty programs. The Rosenwald Foundation’s construction of more than 5,000 schools for African-Americans in the South in the early twentieth century; the Jeanes Foundation’s training of hundreds of African-American teachers in thirteen Southern states; the eradication of hookworm disease and improvements in agriculture—all were elements of a Southern strategy to improve economic and social conditions in a depressed area of the country. More generally, the introduction of humanitarian aid during World War II and the cold war; the financing of the Green Revolution to increase agricultural productivity in developing countries; the support of new, secular universities and colleges; the creation of think tanks to research major national problem areas and recommend solutions; and the provision of additional resources for science and medical research were all launched by large foundations.
Though most of the large foundations involved with these policy and institutional changes could be described as progressive or centrist, conservative institutions soon began to assert themselves. In 1948 the oil millionaire Howard Pew established a small group of foundations, recently merged into The Pew Charitable Trusts, to combat liberalism, underwrite Billy Graham’s Crusade for Christ and support conservative causes and organizations in general. Pew was soon joined by such other foundations as the Olin, Smith Richardson, Sarah Mellon Scaife, Lynde and Harry Bradley, and the various Walton family foundations. These foundations have been major backers of the Heritage Foundation, the American Enterprise Institute, charter schools and voucher programs.
Zunz shines a little light on the “faith-based initiatives” that marked the administration of George W. Bush. Wanting to appeal to evangelical and small black churches, President Bush offered a small pot of money, including direct grants, and technical assistance to these churches as well as to their nonprofit 501(c)(3) organizations, without any real requirements for accountability. The Bush administration also stated as policy that churches receiving federal funds could discriminate in their employment practices—an apparent violation of law—by hiring only employees from their own denominations. Ironically, the Obama administration has not yet revoked this policy, thereby permitting employment discrimination on the basis of religion.
Zunz concludes by discussing recent philanthropic initiatives that are having an impact on both domestic and international fronts. These include the Open Society Institute’s support for nongovernmental institutions in Eastern Europe, which have helped former communist regimes shed their authoritarian practices; the promotion of community foundations overseas by the big foundations to stimulate local giving and grantmaking; the Ford Foundation’s involvement in the creation of the Grameen Bank in Bangladesh to encourage microlending; and the work of the Gates Foundation in assembling and heading a consortium of foundations in a global program to eradicate some of the world’s most dangerous diseases. Zunz also praises the efforts of Bill Gates and Warren Buffett to persuade American billionaires to pledge at least half of their fortunes to charity within their lifetimes: “If there is a lesson from the history I have told, it is that philanthropy enlarges democracy when it is an activity in which the many participate.”
Yet Zunz is uncritical of the claims that “giving pledges” and the growth of gigantic foundations “enlarge democracy” or diminish the scope and power of democratic institutions. I and others have argued that the rapid creation of megafoundations like Gates and the Walton group, governed by two or three family members, are a serious menace to democracy. They are not publicly accountable; they set priorities without any public discussion and operate outside the political process. With their billions of dollars, they can in effect determine national and international policy priorities. As such, they are forces outside the control of representative government, undermining the very democracy that Zunz claims has been a main beneficiary of philanthropic enterprises.
Zunz’s history is essentially a recounting of the successes by wealthy donors and their large foundations. It portrays a very small slice of the foundation world, one of the most elite realms in the nation. Readers might mistakenly assume that all philanthropy has been positive, innovative, accountable and equitable in its distribution of funds. They might not realize that, with few exceptions, foundations are governed by boards composed of the wealthiest and most highly paid professionals in our society, totally unrepresentative of what democratic institutions should look like. They might be surprised to hear that foundation grantmaking procedures are often geared more to the interests of foundation boards and staff than to the needs of grantees. And rather than being an activity of citizen involvement, the setting of priorities among foundations has been an exercise of the “very few.” Like our society in general, philanthropy often reflects the severe inequities of wealth and income in our country. The large, established nonprofit organizations are getting richer, while smaller, more grassroots groups are getting poorer.
Similarly, the overwhelming amount of foundation money flows to established institutions in the fields of higher education, health and the arts. Very little foundation money has been directed to policy, advocacy or organizing efforts, or to risk-taking projects. The poor, minorities, women, the disabled and other disadvantaged constituencies and their nonprofit organizations have historically received only a tiny portion of philanthropy’s largesse.
What is disturbing today is that few observers of philanthropy are asking tough questions about its future. Reporters and analysts seem awed by wealthy people and big donors like Buffett, Gates and George Soros. At press briefings and other media events, they fawn over these benefactors, never asking them penetrating questions or pressing them for clear answers. When Gates and Buffett announced their initiative to secure giving pledges from their billionaire colleagues, few if any reporters or observers asked them if such pledges were good for American democracy. Nobody asked if the pledges might exacerbate inequities in our philanthropic system. It’s reasonable to assume that they could, because research has shown that very wealthy people give little or nothing to local, low-income, minority, grassroots or neighborhood social service groups, and instead give almost all their money to higher education, big health organizations and the arts. For donors with deep pockets, giving more will most likely entail larger sums to the wealthy charities to which they already direct much of their charitable giving.
How can fundamentally elite institutions transform their vision and grantmaking practices into policies and programs that truly promote democracy for all Americans? Can foundations shift their priorities to meet, as the Filer Commission advised, the most urgent public needs of the country? What should be the role of the government and its regulators in ensuring greater accountability and democracy within the foundation world? Olivier Zunz has written a splendid book about philanthropy in America. It now needs to be supplemented by studies that scrutinize how foundations define their missions and manage their business.