LaMarche: Do Philanthropy and Democracy Mix?

Fall 2014; Democracy

Gara LaMarche has been a respected grantmaker for many years, first at the Open Society Institute and later at Atlantic Philanthropies. In this essay, he recounts the doubts he had “about the legitimacy of philanthropy in its engagement with the democratic process.” It is an interesting issue for LaMarche, given that his grantmaking for Health Care for America—at $27 million, the largest advocacy grant ever made by a foundation, he says—played a significant role in pushing President Obama’s Affordable Care Act over the finish line toward congressional enactment. He examines philanthropy’s virulent opposition to President Obama’s proposal to limit the charitable giving deduction for wealthy taxpayers, the savings from which would help advance universal healthcare and other issues of philanthropic self interest and reaches a very powerful conclusion:

“What that situation made plain to me was not just that philanthropy is quite capable of acting like agribusiness, oil, banks, or any other special-interest pleader when it thinks its interests are jeopardized. It helped me to see that however many well-intentioned and high-minded impulses animate philanthropy, the favorable tax treatment that supports it is a form of privatization. Money that would otherwise be available for tax revenue that could be democratically directed is shielded from public control for private use.”

LaMarche appears struck by the unanimity within philanthropy, left and right, when it comes to protecting the tax-privileged nature of private philanthropy, particularly the stance of his fellow progressive philanthropists:

“I do wonder, though, about my progressive friends. They believe in a strong government, in a fair tax system, in a robust social-welfare system, and in a vibrant democracy where all voices count equally. Why are they are not more concerned about the undemocratic and largely unaccountable nature of philanthropy? Why are we—since I too have failed, for years, to ask these big questions—hypersensitive to the dangers of big money in politics, and the way it perpetuates advantage and inequality, but blind, it seems, to the dangers of big philanthropy in the public sphere?”

LaMarche acknowledges that one of the ways that potential critics of philanthropic power evade the issue is by considering what the foundation grant dollars are being used for. If the grantmaking of George Soros’s Open Society Foundations or Charles Feeney’s Atlantic Philanthropies was being used for positive social change, such as universal health coverage, perhaps progressives might convince themselves to overlook the discomfort of the privatized power behind the grantmaking. It leads to a critique that focuses not on the private control of philanthropy, but on the uses of grant dollars. LaMarche, a board member of the National Committee for Responsive Philanthropy, notes that NCRP belies that only seven percent of foundations spend 25 percent or more of their grantmaking budgets on social justice issues. “That leaves,” LaMarche says, “the vast bulk of American philanthropy focused on safer things that do little to affect the titanic issues of inequality, poverty, human rights, and environmental degradation.” Few foundations, he adds, have focused on helping build or expand “a more democratic base of support” for social justice issues. (Full disclosure: this writer was once the executive director of NCRP.)

Though he raises many important issues about philanthropy’s public policy power, LaMarche doesn’t offer a program of change. His solutions are more idiosyncratic and limited than his broad critique. He suggests that exploring a limitation on the maximum size of any individual foundation might be useful to ensure ‘that no foundation has disproportionate power.” He also hints at possibilities of limiting the lifespan of foundations, adding community representation to foundation boards, and mandated racial/ethnic reporting along the lines of the very controversial AB 624 legislation of some years ago. Those might be mechanisms for democratizing private philanthropy a bit, but the appetite for pursuing those ideas or more robust mechanisms for reducing the negative impacts of institutional philanthropy on democracy is hard to spot in the nonprofit sector.—Rick Cohen