of the ford foundation
Philanthropy, in its current institutional form, is only about a century old. Since its inception, both donors and the larger public have debated how individuals can deploy their accumulated wealth to serve the greater good. In fact, the discussion of institutional philanthropy’s role in society, and its relationship to government and markets, was much more heated during the early 20th century. In 1910, when John D. Rockefeller attempted to obtain a federal charter to establish his foundation, Congress turned him down. (He had more success with the New York State Legislature, which granted him a state charter in 1913.) In 1912, the Commission on Industrial Relations recommended that the Rockefeller Foundation be regulated or shut down entirely, arguing that “the domination by the men in whose hands the final control of a large part of American industry rests is not limited to their employees, but is being rapidly extended to control the education and ‘social service’ of the Nation.”
Over 100 years later, the field of philanthropy still wrestles with these important questions, debating the legal frameworks and tax regimes that govern foundations; the diversity of their boards and staff; their democracy in decision-making; and the alignment of their endowments with their program values and goals. In our current Gilded Age, marked by the accumulation of vast fortunes and a new generation of donors who occupy increasingly significant positions in civil society, it’s no coincidence that the big questions about philanthropy’s appropriate role are being rekindled. As Gara LaMarche asks in his online journal Democracy: “Why are we…hypersensitive to the dangers of big money in politics…but blind, it seems, to the dangers of big philanthropy in the public sphere?”
Part of the complexity of today’s philanthropy owes to the fact that wealth is being created more quickly than ever through developments in technology, and yet remains concentrated in the hands of a few. Whereas a previous era’s wealth was created through oil and steel, today’s is being amassed through data and software. And though we seem to have entered a virtual world, its effects are extremely physical. While a new generation of entrepreneurs has significantly democratized access to knowledge and information, it has also concentrated the resulting wealth into a few hands, predominantly male and overwhelmingly white. Companies like Apple make use of tax havens, even as inequality remains on the rise. The new social-media platforms created by the tech industry have been used by movements ranging from the Arab Spring to Occupy Wall Street to Black Lives Matter—and yet children as young as 7 are mining cobalt for smartphone batteries, and families from diverse backgrounds are being pushed out of their homes in cities like San Francisco, where the tech industry has taken over. Can philanthropy do enough to redress these inequalities—or is there something more fundamental at stake?
In “The Gospel of Wealth,” written in 1889 as a manifesto of sorts for the beneficiaries of the first Gilded Age, Andrew Carnegie describes massive inequality as the unavoidable consequence of a free-market system and suggests that philanthropy would ease the pressures created by it.
Perhaps it’s time for a new “Gospel of Wealth.” Darren Walker, president of the Ford Foundation, cites Martin Luther King Jr.’s statement that “Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.”
Taking a leaf from King’s insight, we asked a number of leaders in philanthropy for their answers to the following questions: How does a 21st-century philanthropy contend with the economic system that both produces its conditions of possibility and makes its lofty aspirations necessary? Should it address the structural inequality of which it is a symptom—and if so, how?
The Game Changer
Philanthropy is designed to preserve unequal power.
executive director of resource generation
I dream of a world in which philanthropy is not only unnecessary, but remembered as a bizarre and unfortunate creation of societies past.
In this future world, accumulating resources in the hands of the few—whether for alleged social good or private benefit—will be recognized as fundamentally unequal, unfair, and unjust. My hope is that we will put in place mechanisms not to prevent the creation of wealth and prosperity, but to ensure that the fruits of labor and land are enjoyed by all.
Unfortunately, our current historical moment finds most philanthropic organizations focused on accumulating more wealth for their endowments rather than on putting themselves out of business in the name of ending wealth inequality.
Philanthropy was originally created as a mechanism to keep control in the hands of the wealthy, and it has largely stayed that way: Up until 1969, the wealthy could put their money in a foundation—making it exempt from taxes—but were not required to give any of it away. Even though foundations are now mandated to spend or disburse a minimum of 5 percent of their total assets each year, the small minority of trustees and board members controls where all that wealth goes.
While a small but growing number of foundations practice social-justice philanthropy, most philanthropists are simply not in the business of confronting the economic inequality that undergirds their power. The vast majority of foundation giving serves as a tax write-off for the wealthy, and it’s often directed at shoring up an individual’s or family’s influence culturally, professionally, and politically—not creating deep systemic change. According to the National Committee for Responsive Philanthropy, a mere 14 percent of annual foundation funding goes to “social change,” which it defines broadly as “work for structural change in order to increase the opportunity of those who are the least well off politically, economically and socially.”
The fundamental problem, though, is that philanthropy is voluntary. It is not a long-term solution to society’s ills to rely on the benevolence of the wealthy, even those who are focused on social-justice philanthropy and ending economic inequality.
Instead, we must organize to confront and change the cultural and economic systems that perpetuate economic inequality. By “we,” I mean those of us with wealth and existing foundations. Our long-term goal should be to put ourselves out of business. This means organizing to confront systemic oppression, such as racially segregated and policed communities, and addressing the 1 percent of the world’s population that now has over 50 percent of the world’s wealth. Grassroots groups are building power every day for this purpose. If philanthropy doesn’t join them, we will be on the wrong side of history.
What to do? While the government is far from perfect, the resources currently being accumulated by the wealthy few should be redirected into public coffers to build a robust social infrastructure for all. Higher taxes on financial transactions and capital gains, and the closing of loopholes like those currently used for carried interest and offshore accounts, would go a long way toward redistributing wealth from one class to the broader public. So would other mandates like raising the minimum wage and requiring an annual payout higher than 5 percent for foundations. Such changes wouldn’t be unprecedented: A few decades ago, the requirement was 7 percent, which meant millions of more dollars being circulated, though it still wasn’t enough. We could even consider legislation requiring foundations to share the power and decision-making over where and how their philanthropic dollars are spent with the people who are directly affected by economic injustice. Many social-justice funders already do this, but legally requiring the presence of nonwealthy people on foundation boards would produce a real sea change.
In the end, the real issue is that the wealth in foundations shouldn’t all be theirs to begin with. This country was founded on the genocide of Native Americans and the forced labor of enslaved Africans. The stolen land, stolen labor, and stolen lives served to amass resources for mostly white European men. That is the history of wealth accumulation in the United States, and we need to face it squarely.
And yet our culture reinforces the myth that wealth is accumulated through the hard work of extraordinary individuals (again, disproportionately white men) who deserve every penny, when the reality is anything but. Wealth is generated from the hard work of ordinary individuals, who labor and produce or grant access to their land—or have it taken from them. It isn’t that those who are accumulating wealth don’t work hard to get it or maintain it. It’s that, if the myth of meritocracy were true, there would not be millions of working poor people who struggle through multiple jobs or work over 40 hours a week just to scrape by.
Calling into question the very myths that uphold wealth accumulation and class privilege allows us to reckon with the ways that wealthy people are given unfair boosts in our society. Without recognizing that philanthropy is one of those boosts, we’ll be hard-pressed to actually address wealth inequality as we know it.
The Policy Maker
Philanthropic dollars must change public policy.
cofounder of powerpac+
The introduction to this forum notes that Andrew Carnegie, in his essay “The Gospel of Wealth,” described massive inequality “as the unavoidable consequence of a free-market system.” But Carnegie was quite wrong about inequality being “unavoidable.” Progressives should proceed with caution in heeding his treatise, which argued that the economy was operating just fine and that philanthropists merely needed to give charity to those at the bottom. Carnegie offered an implicit justification for a history of racial injustice, while ignoring the fact that inequality in America—especially the profound inequality between racial groups—is a direct result of deliberate public-policy decisions.
The violent and bloody seizure of this land from its indigenous inhabitants, the creation and enforcement of chattel slavery to generate wealth for a few, the abandonment of Reconstruction-era reforms designed to compensate the victims of slavery, the intentional exclusion of agricultural and domestic workers from the Social Security Act, the practice of racially restricting access to the billions of dollars’ worth of benefits provided by the GI Bill and federal home-loan guarantees of the mid-20th century, and the legal tolerance of racial discrimination in private-sector employment and hiring until the passage of the Civil Rights Act in 1964—all of these were official policies and actions of the US government. Those policies created the inequality that is plaguing America today.
Thus, the most effective way to eliminate inequality is by changing public policy. From a leverage standpoint, far more money can be moved by changing policies than by making individual grants.
Consider one simple policy change that could end poverty in America: implementing a wealth tax on the richest 1 percent of Americans. The collective assets of the top 1 percent—those whose net worth exceeds $18 million—is $23 trillion. Requiring this small cohort of the population to pay a 2 percent tax on their assets would generate about $500 billion per year—six times the total net worth of billionaire philanthropist Bill Gates. Given that the average stock-market return since 1928 has been 11 percent, a 2 percent tax shouldn’t diminish anyone’s net worth; we’d merely be asking them to get even richer a little more slowly. The think tank Demos has calculated that bringing every person in America above the poverty line would cost $193 billion.
Philanthropists can advance such a policy revolution in three significant ways. First, they can influence public opinion by lending their prestige and credibility to the concept. If the nation’s wealthiest people publicly supported a tax on themselves and their peers, it would generate considerable political will for the passage of such a policy.
Second, philanthropists can encourage their grantees to take full advantage of the existing tax-code provisions that allow 501(c)(3) organizations to engage in limited lobbying. The 501(h) provision of the tax code allows nonprofits to use 20 percent of their funds for advocacy. America’s nonprofits collectively spend more than $300 billion per year, and 20 percent of that total could move billions into improving public policy. (Over the medium term, philanthropists should pursue eliminating all restrictions on lobbying by nonprofits: Why can’t charities communicate with their elected representatives in the first place?)
The third strategic step that philanthropists can take to advance public-policy reform is to support efforts to change the makeup of the voting population so that it reflects the true demographics of this country. The electorate is still significantly whiter than the population as a whole, and this stems from immigration policy as well as antidemocratic obstacles to electoral participation. Democratic reforms like online and automatic voter registration can eliminate such hurdles. And while we wait and work for comprehensive immigration reform, there are 9 million immigrants (mainly people of color) who could become voting citizens simply through naturalization. One of the major barriers to becoming naturalized is the prohibitive cost of the $680 application fee; a philanthropic fund of $10 million per year could help bring millions of people of color into the process of electing our policy makers.
Andrew Carnegie made a significant contribution in his day by challenging his contemporaries to become philanthropic rather than hoarding their money to spend on private consumption. Today’s philanthropists can bring about changes that Carnegie never dreamed of by focusing their time, talent, and resources on emending our nation’s public policies to redress and abolish the inequality that they have caused and maintained over the past 400 years.
A bright new generation battles inequality.
president of the ford foundation
When I first shared the foundation’s statement “Toward a New Gospel of Wealth” in October 2015, I had hoped we might kindle a larger conversation (like this one) about the complex relationship between philanthropy and inequality. What I didn’t entirely anticipate—and have been deeply gratified to see—are the numerous ways that our colleagues across philanthropy are not just preaching but practicing this new gospel of giving.
We see it in the work of new philanthropists like Cari Tuna and Dustin Moskovitz. We see it in Leonardo DiCaprio’s bold commitment to those most vulnerable in the face of climate change. We see it in the inspiring commitments of Priscilla Chan and Mark Zuckerberg. Indeed, we see it in an entire generation of philanthropists—visionaries committed to driving social justice by putting grantees and beneficiaries behind the wheel.
This is an extremely exciting moment for philanthropy. The injection of new ideas, new institutions, new money, and new technology all contribute to my own optimism that our sector will continue to build on the progress of the last several decades.
Moreover, this is a pivotal time in our national (and global) conversation about—and our evolving consciousness of—inequality. During this presidential season alone, we’ve seen the rise of populism on both the left and the right—a clear reaction to the unprecedented levels of inequality afflicting both our country and the world. We’ve also seen polls showing that dissatisfaction with the capitalist system is on the rise, particularly among young people—a reminder that these frustrations will only continue, if not increase, in the coming years. This discontent will inevitably (and necessarily) raise hard questions that all of us must be prepared to answer.
At the same time, as more people—particularly in positions of power—become more comfortable addressing this crisis of inequality in all its forms, our chances of disrupting this pervasive imbalance improve.
For institutions like the Ford Foundation, which have accumulated large amounts of capital since their founding, we must find new ways to leverage that capital for positive social and financial outcomes. Right now, the foundation is investigating how we might make our endowment strategy align with our program strategy.
For the new generation of donors, this is a tremendous opportunity to get in front of questions about how philanthropy and our economic system intertwine, and to find new ways forward.
Ultimately, the “New Gospel of Wealth” calls on all of us to think differently about how philanthropy operates in the 21st century. New and established institutional donors alike must take this opportunity to evolve our philanthropic enterprise to grapple with the many challenges that we see in our sector, and our world. I could not be more thrilled by—or more hopeful for—the work we’ll do together in the years ahead, or to see this “New Gospel” increasingly preached and practiced across philanthropy.
You don’t need to make a killing to make a difference.
founder of craigslist
The current models of big philan- thropy focus on accumulating massive wealth, followed by the charitable contribution of a very small percentage of that wealth. I’ve practiced a different model, one that’s focused on a commitment to fairness and doing right by others. My philosophy has two basic tenets: First, stay focused on making a difference rather than making a killing. Second, if you’re lucky enough to do well, keep sending the elevator back down.
In 1997, my hobby—something called Craigslist—was doing well enough that folks representing Microsoft Sidewalk offered me significant cash to run banner ads. I figured that I was already doing well enough as a contract software developer and reflected on what I used to call my “nerd values”—namely, that one should make enough to care for family, friends, and oneself (with the occasional luxury thrown in), and that one should do something to make a difference.
I declined Microsoft’s offer.
In early 1999, venture capitalists and bankers suggested a conventional monetization strategy for Craigslist. If I adopted one, they promised to invest lavishly in my company. But since I’d already done very well, I figured enough was enough. Most likely, the people posting ads on Craigslist could spend their money better than I could. They were better off keeping it to support their families rather than starting to pay me for a service that had been free, thereby increasing my profits, and then hoping I’d give back by making charitable contributions.
The minimal monetization of our site meant no huge windfall profits. And it’s been just fine.
That no-making-a-killing approach evolved into a business model that you might call “doing well by doing good.” The good was a free, accessible marketplace that helped people buy a table, put food on that table, and find a roof to put the table under.
And even as I was doing well for family, friends, and myself, I was sending the elevator back down. With my philanthropic initiative, Craigconnects.org, I can find good people accomplishing good things and then help them by offering ongoing social-media support and my personal involvement. Cash and photo ops are easy (and important), but the ongoing involvement is more serious. I’m currently involved in working with veterans and military families, boosting women in tech, supporting voting rights where they’re at risk, increasing peer-to-peer funding, and backing worthwhile journalism, since as I’ve argued in the past, a trustworthy press is “the immune system of democracy.”
This combination of ethical business practices (treating people the way I’d like to be treated on the way up) and philanthropic contributions (sending that elevator back down) is my effort to reflect the simple sense of fairness I learned as a kid. I think it’s a pretty good model for a new philanthropy, and I hope that others in Silicon Valley join me.
The Tactical Investors
Put your money where your mouth is.
codirector of the global development
and environment institute at tufts university
author and board member at the center for constitutional rights
The two of us exist within the Rockefeller family legacy. One (Neva) was born into it, but—after reckoning with the economic and environmental consequences of the decisions made by previous generations—decided to forge an alternative path to philanthropic giving and social change. The other (Rosemary) came from very different social and economic circumstances and married into the family after prolonged deliberation about whether her political commitments would make that possible. What we share is a commitment to a new economic paradigm in which all resources (from material assets to social and political power) are distributed more equitably. We sometimes pursue these goals through different strategies, but we’re united in seeing our current economic system—including the many philanthropic institutions that rely on it—as unsustainable, environmentally and socially.
As an economist, Neva is dedicated to developing a comprehensive economic theory that will better serve human needs and respond to changing ecological realities. Among other things, she has led the way in pushing oil companies to become better corporate citizens and environmental stewards. After years of shareholder activism failed to yield these results, Neva not only publicly divested her portfolio of stock in these companies and encouraged others to do likewise, she also donated the money to fight climate change directly. The recipient of those proceeds, the Rockefeller Family Fund (chaired by David Kaiser, Neva’s son and Rosemary’s husband), like the Rockefeller Brothers Fund, has not only engaged in decades of climate-change activism, but is also divesting itself of all of its fossil-fuel holdings.
These developments point to an underlying strategy that we both believe is necessary to change the economic system and the power dynamics in which philanthropic institutions operate: a strategy of divestment and reinvestment that directs funds away from fossil-fuel companies and businesses operating in apartheid countries, to take just two examples, and reallocates them to enterprises that embody sustainability, good-governance practices (including racial, ethnic, gender, and sexual diversity in staff and leadership), and socially just behavior. Such measures are crucial for bringing philanthropic foundations in line with their professed aim: the promotion of social good.
Yet even with such realigned investing, foundations often contribute to inequitable power dynamics while promoting social change. (For an overview of this process, read Gara LaMarche’s 2014 piece in The Atlantic, which discusses how the foundation boards that oversee vast sums of untaxed money are bastions of unaccountable decision-making dominated by older straight white men—and how even the best of these foundations devote merely a quarter of their grant-making to social-justice initiatives.) We thus must ask ourselves: Are there ways to make philanthropy more radical? Can we use this imperfect tool to dismantle, rather than exacerbate, the hierarchies producing the social and material inequality that foundations profess to alleviate?
One could rightly quote Audre Lorde questioning the feasibility of using the master’s tools to dismantle his house. (And the lobbying by both right-wing and progressive foundations will keep that house standing for some time.) One could also think, meanwhile, about ways to redistribute resources from the master’s house to underrepresented communities, which could then erect edifices of their own. Diversifying the makeup of foundation boards is one way to accomplish this. Such a move would require the education of the “old guard” in understanding the language of the new—rather than assuming that the new members will, chameleon-like, adopt older mores. Less restrictive giving to community organizations led by women (cis- and transgendered), queer activists, immigrants, and people of color is another way.
As an academic and activist, Rosemary is committed to increasing the social, political, and economic power of underrepresented communities. Among other things, she sits on the board of the Center for Constitutional Rights (a grantee of the David Rockefeller Fund, of which we are both trustees). The CCR is a legal-advocacy and social-justice organization that works to build power among such communities—partnering with community organizations and representatives, allowing them to lead in identifying salient problems and solutions, recruiting board members who are deeply embedded in community issues, and all the while fighting the powers that repress them. In a country where foundation leaders often come from the nonprofit sector, such intentional engagement and opportunity is necessary for effective social change—as well as for transforming the foundations that claim to support it.
The Seed Planter
We need to create a philanthropy at the service of organizers and activists.
co-founder and executive director of solidaire
If we understand philanthropy as the product of an economic system that produces great inequality, then thoughtful funders must come to terms with their role in that system. They can choose to do palliative work, tinkering around the edges. Or they can take big risks and challenge the ways in which wealth and power are accumulated.
At Solidaire, the donor community that I helped found and now direct, we’ve identified two basic steps to address this paradox. First, we acknowledge the role that the accumulation of wealth plays in creating the problems we need to solve. Second, we understand that giving is a form of power and control, and that we must find ways to share this power. For us, the distribution of philanthropic power doesn’t mean finding and funding this or that solution ourselves. Rather, it means being led by the social movements of our time, and working in partnership with those who are experiencing the burdens of an inequitable society, and who are trying to change the deep social structures that perpetuate this inequality and injustice.
In the 1950s and ’60s, several family foundations—including New World, Field, Stern, and Taconic—contributed support to the civil-rights movement. They funded training; spaces like the Highlander Folk School; and anchored organizations like the Southern Christian Leadership Conference, the Student Nonviolent Coordinating Committee, and the NAACP. While other philanthropists sought to address the ills of racism in America by supporting education or poverty alleviation, these donors understood that it would take a mass movement, with thousands of people in the street, to pressure politicians and change the laws of the nation. They stood in solidarity behind black organizers and leaders who sought to address racial injustice, rather than dictating the process from above.
Social movements like those for civil rights, abolition, and women’s suffrage change culture. They transform the landscape of what’s considered possible. In the beginning, no one believes that their goals can be achieved, but years later, the world before them seems unthinkable. The potent feature of social movements is that they’re led by the communities most affected by particular forms of injustice. They certainly involve ecosystems of diverse work, from advocacy in Washington, DC, to organizing in marginalized communities, to engaging the mass media and the business community. But the solutions are not technocratically fashioned from above; they are wrought by those most in need of change.
At Solidaire, we’ve created systems to be as responsive as possible to movement moments and to increase their chances for long-term success. When crises emerge and funds are needed for bail money, supplies for a protest, or an emergency strategy meeting, we’re ready to act. In contrast to the typical funding process, which can take many months and laborious proposals, we aspire to move “at the speed of trust,” in the words of Mervyn Marcano from the Movement for Black Lives. We want to be in a relationship with movement leaders so that when these needs arise, we can mobilize our resources to meet them.
In addition to speed and nimbleness, we also seek to support long-term “movement infrastructure,” by which we mean the lasting networks of organizations that are building power to transform society. Movement infrastructure includes all that is needed to support those who are fighting for themselves and their communities, transforming experiences of injustice into opportunities for leadership. This involves leadership development, centers for retreats and meetings, training around strategy and structure, and the deep work needed to build collective power. This work seeks to create deep structural change over the long haul, ensuring that moments of outrage and uprising are not flames that burn out quickly, but instead are fires that are tended over the decades.
We won’t hesitate to take risks. If what’s needed is a general strike or reparations or a new political party, we are ready and willing to explore how we can be supportive. We are not confined by notions of what’s “feasible,” but instead seek to achieve what we know is necessary. We have a long way to go and much to learn, but we’re attempting to seed a philanthropic practice through which we’re at the service of activists and organizers who are risking everything to create significant cultural and political transformation.
Instead of altruism (“for the other”), which characterizes a philanthropy that might be based on ephemeral feelings—or, alternatively, on the cold calculation of impartial metrics—we need a philanthropy of solidarity (“standing together”), which emphasizes real relationships. A gospel of solidarity means forging deep and sturdy alliances with those seeking to create a world where all can flourish.
THE BRIDGE BUILDER
Partnering with the public sector is crucial.
ceo and founder of tipping point community
Should philanthropy address its existential crisis: the fact that the wealth it relies on comes from the same system that perpetuates the problems it aims to solve? Yes. Can we do this alone? No.
With 1.3 million people too poor to make ends meet in the Bay Area alone, the need for philanthropy—and accountability—is urgent. We must act now, but we must also be willing to examine ourselves and our practices, to reflect on root causes and ask if fundamental change is needed. As Peter Buffett wrote a few years ago, “It’s time for a new operating system [in philanthropy]. Not a 2.0 or a 3.0, but something built from the ground up. New code.”
At Tipping Point Community, we have no endowment; we start from zero every year. This is an intentionally hungry model with a quick and complete return to the community. At the same time, our closest supporters bring the experience and connections necessary to convene diverse stakeholders. We can borrow best practices from venture-capital firms to unleash research and development dollars that allow nonprofits to learn and create. We can unite competitors like Google and Microsoft by asking them to invest in the same cause.
Partnership with the public sector is also needed now more than ever. There are ways that local governments can maneuver—thanks to their sheer size and tax revenues alone—that others in the business of providing human services simply cannot. Philanthropy will never have the scale and the infrastructure that the public sector has. But philanthropic dollars are nimble; they can be used to try and to inform new things.
However, in the absence of ongoing education and candid conversation, even the most progressive philanthropy will be limited in its effect. Above all, we must be willing to have open and uncomfortable dialogue about issues like race and class. For decades in this country, black people were not allowed to purchase homes—the ultimate symbol of wealth, prosperity, and the American dream. Today in the Bay Area, one out of every two Latinos and African Americans lives in poverty.
We have entrenched histories and systems of oppression in this country that we must acknowledge before we can begin to heal, and before real change can take place. As Bryan Stevenson of the Equal Justice Initiative has argued, we need to change the narrative about how we came to be where we are.
Raising millions of dollars from wealthy individuals will not in and of itself fix the multigenerational poverty we see in America today—but to reimagine our whole system feels daunting. It’s hard to know where to start.
The most important thing is that we start somewhere. We must commit to honest communication, leveraged public-private partnerships, and the type of willful optimism that can feel scarce in times of great inequality. We must ask questions of those who have lived lives unlike our own. And we must truly listen to their answers.