Can Philanthropy’s Anti-Democratic Strains Be Tamed?

For the uninitiated, ARNOVA stands for the Association for Research on Nonprofit Organizations and Voluntary Action. The organization is holding its annual conference this week in San Diego. ARNOVA is where academics present their research findings on the work done by all of us in civil society. So, the frameworks within which these researchers examine the questions we face inform a good deal of the academic research that is done, as well as influencing how others discuss critical issues.

This year, ARNOVA’s opening plenary session at its annual conference was entitled “The Promises and Perils of Philanthropy in a Polarized World.” But was that the topic? Not exactly. The topic might have been more precisely described as “Philanthropy’s Threat to Democracy and What to Do about It.” This is a newish but actively pursued understanding of the real function of philanthropy, as you likely already are aware, but the choice to center it at this conference where it will inform research on the sector was refreshing.

The panel yesterday included Kristin Goss of Duke University, Erica Kohl-Arenas of Imagining America, and Rob Reich of Stanford University. The panel started with Goss, who went back over some of the usual theory about the purposes of the nonprofit sector, including: 1) as a response to market or government failure, 2) as an incubator of democratic norms, and 3) as training systems for democracy. She acknowledged that these purposes are not playing out in the most productive way currently, though there have been some exceptions to that, as in the philanthropic investments to seed the anti-gun-violence movement. While there has been little significant lawmaking in Congress on that issue to date, she said, there has been movement in state legislatures. This mirrors the larger realm of criminal justice reform and a host of other issues that may not move nationally until the states have essentially acted as small laboratories.

Goss was followed by Kohl-Arenas, who talked about the act of negotiation between grassroots organizations and foundations as a kind of lopsided struggle for control of the “logic model” defining the work. She talked about the many acts of compromise and brokering required, and the too often resultant disappointment and disempowerment of community groups in those exchanges.

From there, the panel was off and running. Reich joined the other two with a plea for analysts to continue to take a structural view of philanthropy, because (to paraphrase quite a bit) these creatures that make up big philanthropy are simply acting true to form. Foundations and large philanthropy are very much a part of this country’s “political economy,” Reich said, and they are unlikely to act against the interests of the markets that made them rich and powerful. In most cases, they can be expected to act consistently in accord with their financial interests. And they do so, he and the other panelists pointed out, with an unusually robust lack of accountability. They do not answer to shareholders, voters, or customers. They are required to justify almost nothing to no one, and that makes them enormously dangerous—a plutocratic interloper that belies, rather than supports, the very same democracy that Goss previously described as a large part of the purpose of the civil sector.

Philanthropy is nothing less, he continued, than the bald imposition of unaccountable money-based power into the political economy. In the end, he asked, “Would you really predict that especially wealthy people who have won big from the market would voluntarily serve as a countervailing force to capitalism?”

“It’s a simple social science question,” Reich said, while observing we end up with proxies for how to judge nonprofit activity that fade against the potential change capacity of the sector:

My observation is that we need to be clear on what we define as success because effectiveness is a secondary or derivative value. What are we effective at, carrying out donor preferences?

Here, the whole panel turned its attention to philanthropy’s role in democracy—or as someone put it, the question of how to “domesticate philanthropy” to democratic norms. Perhaps, said one, each grant should be screened first and foremost for its capacity to build, or to bypass and harm, democratic systems, with the longer-term goal being to build democratic institutions and action, and thus build back some degree of faith in the power of democracy.

In some ways, foundations’ lack of accountability is so unusually intense, and their power is so close to absolute, that they are a quite extreme example of democratic and societal dysfunction. They have what panelists described as “freedom,” but it is a freedom that comes at the expense of the freedom of others.

Reich ended with an appeal to understand big philanthropy as being at least as likely to harm as benefit the public, especially when so much money is granted to elite institutions rather than being devoted to a more dispersed democratic action. This kind of grantmaking is not just unproductive, but it also creates harm, he said. Here, he cited Dylan Matthews’ critique of Phil Knight’s $400 million donation made to Stanford in 2016. Under the title “For the Love of God, Rich People, Stop Sending Your Money to Stanford,” Matthews wrote:

The idea of fixing the world by sending smart people to elite institutions and then having them run everything has been tried, and whatever else can be said about it, it didn’t end poverty. It didn’t end climate change. It very well might have left the world worse off overall. I simply can’t think of any empirical basis for Phil Knight and Stanford’s faith in the ability of elite education to solve major problems.

Reich commented that if one were to have placed that pile of money in the backyard and set fire to it, at least the taxes would not have been excused, and theoretically democracy would not have been thwarted by so-called charity.

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Generally, this panel did a good job of reinforcing what we already know. The current system of philanthropy, flowing in more and more concentrated ways out of the wealth gap from which so many of our problems stem, is unlikely to reform itself. Its self-reinforcing loop is supported by the sector’s resource dependence and the culture of “omerta” thereby produced. And to make matters worse, the crowding out of small donations we see now promises an even greater reliance on plutocracy unless the trend is curbed.

In other words, big philanthropy will resist any attempts at domestication by the faint of heart, the risk averse, or those who become distracted from the core structural realities of our political economy. The question becomes, how important is an active and inclusive democracy to this sector, whose purposes include the deployment of democratic intention? Can its centrality to a healthy political economy be traded for a grant? Will it?

NPQ will be presenting a series of original articles on the topic of the rapid decline of the small giver next week. Look for our articles, and please chime in.