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October 20, 2017; New York Times, “Business Day”
“What if?” What if a cadre of superrich individuals tried to become a driving force in America to organize and institutionalize the interests of the citizens of this troubled nation?
So read the blurb for a tongue-in-cheek work of utopian fantasy penned by consumer activist Ralph Nader eight years ago called “Only the super-rich can save us!” Now, life imitates art, as the New York Times features the folks who are “Giving Away Billions as Fast as They Can.”
At one level, it is hard to object to seeing more resources made available for social good. However, as Eileen Heisman, chief executive of the National Philanthropic Trust, points out:
This isn’t the government collecting taxes and deciding which social problems it wants to solve through a democratic process. This is a small group of people, who have made way more money than they need, deciding what issues they care about. That affects us all.
Specifically, it can undermine our democratic processes by shifting decision-making from the public to an elite-driven private realm. Our public process, flawed though it may be, allows for the resolution of different points of view and interests; with private philanthropy, a single person’s voice is amplified by ungodly amounts of money, a phenomenon that NPQ has described before as philanthropic plutocracy.
Joanne Barkan called philanthropic plutocracy a “peculiarly American phenomenon” in which “Multibillionaire philanthropists use their personal wealth, their tax-exempt private foundations, and their high-profile identities as philanthropists to mold public policy to a degree not possible for other citizens.” This, of course, forms part and parcel of a broader political shift in the United States toward oligarchy—defined millennia ago by Aristotle as “rule by the few.”
As Times reporter David Gelles explains, “For the better part of a century, a few Gilded Age names dominated the ranks of big philanthropy.” But now, “a new crop of ultra-wealthy Americans has eclipsed the old guard of philanthropic titans. With names like Soros, Gates, Bloomberg, Mercer, Koch, and Zuckerberg, these new megadonors are upending long-established norms in the staid world of big philanthropy.” That statement may not end up holding water; when it comes to shifts in donor orientation, living donors may feel more license in taking impulsive risks than subsequent stewards in legacy foundations, especially if they believe it’s their money to do with as they please.
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According to David Callahan, founder of the website Inside Philanthropy, new billionaire givers “have a problem-solving mentality rather than a stewardship mentality” and “want to have impact now.” As a field, there is “a real changing of the guard. The top foundations, especially measured by annual giving, are more and more piloted by people who are alive.”
In some cases, those who make decisions over billions of philanthropic dollars can be counted easily on the fingers of one hand. The Chan Zuckerberg Initiative, established by Facebook co-founder Mark Zuckerberg and his wife Priscilla Chan in an LLC form that provides no oversight access, aims to help “cure, prevent, or manage all diseases by the end of the century,” with grants in science, education, and justice. The Bill and Melinda Gates Foundation, where three people sit on the decision-making board, is the world’s largest foundation, giving out $5.5 billion in 2016. Its focus areas including discouraging tobacco use, combating HIV-AIDS, and improving education in Washington state, as well as funding efforts to reduce malaria and eliminate polio. On the other hand, George Soros’s Open Society initiative has been purposely distributed across geographic boundaries which is appropriate in that it “aims to promote values like democracy, tolerance and inclusion.”
Bloomberg Philanthropies, built on the wealth of the former New York City mayor, has spent “hundreds of millions of dollars on issues including gun control and obesity prevention.” Laurene Powell Jobs, widow of Apple co-founder Steve Jobs, recently launched the Emerson Collective, with a focus on education and immigration. All told, about 170 people with a combined net worth approaching $1 trillion have signed the Giving Pledge, which commits signatories to giving away the majority of their wealth during their lifetime or upon death.
One can easily critique the practices of some of the new crop of philanthropists. Here at NPQ, we have penned critical articles on both the Chan Zuckerberg Initiative and the Bill and Melinda Gates Foundation. We have been more supportive of the Open Society foundations. But a broader concern is to consider what value the new philanthropy is delivering…and what democratic and equity values it thwarts.
As Rob Reich, co-director of the Stanford Center on Philanthropy and Civil Society, observes, increasingly “ordinary services [are] being funneled downward to private philanthropy for their maintenance…That’s philanthropic regress, not progress.” In Michigan, for example, foundation funding often replaces spending by public authorities, including parks, transit systems, water—and, in Kalamazoo, even direct funding of the city government. “Federal and state disinvestment and dysfunction have pushed the responsibility for meeting many public needs to local levels. And facing their own tight budgets, municipalities have been unable, or unwilling, to step in,” writes Sherri Welch in Crain’s Detroit.
And it’s not just Michigan. The Times profile ends with a bit of a paradox. While Gelles acknowledges that “For the better part of a century, a few Gilded Age names dominated the ranks of big philanthropy”—names like Ford, Rockefeller, and Carnegie—now new names such “as Mr. Soros, Mr. Gates, Mr. Zuckerberg and the others in their cohort have eclipsed the titans of the Gilded Age.” In turn, Gelles writes, the new generation is “likely to one day be overtaken by an even newer crop of immensely wealthy and impatient optimists.”
But why did it take multiple generations for Ford, Rockefeller, and Carnegie to be superseded? The answer is obvious and yet it goes unremarked: It took multiple generations for the New Deal to decay, for tax rates on the wealthy to fall, for anti-trust laws to be cast asunder, for finance to wrest itself loose from federal regulation, and for a new Gilded Age to come upon us. The defunding of the state, too, is why the purpose of US philanthropy has increasingly shifted from funding innovative new solutions to plugging holes in city services. In short, today’s new “Gilded Age” generation need not be followed by a third, although it will if we allow it.—Steve Dubb
