A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Gifts of Freedom
A new history illustrates the intimate connection between philanthropy and democracy.
2 March 2012
Philanthropy in America: A History, by Olivier Zunz (Princeton, 396 pp., $29.95)
In May 2011, the New York Times ran a front-page story on the education work of the Bill and Melinda Gates Foundation, noting the concerns of some about assertive philanthropy . . . squelching independent thought. It painted a picture of a large-scale effort to undermine schools, teachers, and students.
Such concerns fit right in with the story Olivier Zunz tells in his excellent new history, Philanthropy in America. Zunz, a history professor at the University of Virginia, explores the dynamic between philanthropy and politics, charting the succession of experiments in government-civil society cooperation. The themes he draws out have important resonance today, as we debate the proper role of philanthropy and its relationship with government.
Zunz begins with the rise of modern philanthropy after the Civil War, when the appearance of the first general-purpose foundations necessitated important legal changes. Beginning in the 1880s, a new generation of benefactors, led by John D. Rockefeller and Andrew Carnegie, created a golden age of American philanthropy. Their new private foundations reshaped higher education, scientific research, and social work, helping usher in a decidedly modern America. Herbert Hoovers associative state—in which a new economic-planning mentality developed between government and business—the rise of mass fundraising drives, the New Deal, and two world wars irrevocably transformed philanthropys relationship with government. While Hoover, for one, saw popular fundraising initiatives—initially targeting diseases such as tuberculosis—as legitimate complements to government efforts, federal government growth encroached on the independence of private foundations. And the Roosevelt administrations New Deal czar, Harry Hopkins, distrusted civil-society intermediaries such as charities and foundations, preferring a direct line between the state and citizen.
Philanthropys relationship with government shifted again in the 1940s and 1950s, shaped by the Cold War and the emergence of a new charitable internationalism that saw foundations and nonprofits work as partners with U.S. officials in consolidating Pax Americana. The ensuing developmental-educational-humanitarian ideal didnt always produce salutary outcomes: foundations supported involuntary sterilization programs, for instance, in developing countries. Theirs was a vision that turned out to be more utopian than real, Zunz concludes.
Utopianism gone wrong was embodied, at midcentury, by the massively endowed Ford Foundation, which pledged to help people adjust to modern life. The presumption, of course, was that those working for Ford were well-adjusted already and could aid those who werent. Sun Oil (now Sunoco) president J. Howard Pew, reacting against what he saw as a collectivist agenda, began funding Norman Vincent Peale and Billy Graham and cofounded the Pew Charitable Trusts. In time, his efforts helped spark the rise of the modern evangelical movement.
From a contemporary point of view, the pivotal period in Zunzs narrative is the 1960s, when foundations came under full-scale public assault. The civil rights movement blossomed and enjoyed foundation support, provoking the wrath of Southern congressmen, particularly Wright Patman, an inveterate New Dealer [who] saw little use for civil societys intervention in public affairs. Meanwhile, tax shenanigans at some smaller family foundations drew Treasury Department suspicion. The ensuing battle over what Zunz calls the politics of philanthropy culminated in the Tax Reform Act of 1969, which imposed a range of new restrictions on nonprofits and foundations. Zunz is not the first to tell this story, but he is one of the first to highlight the role of civil rights funding in the larger narrative.
Over the next three decades, the philanthropy-government relationship continued to evolve. Zunz reminds us that many of the battles over philanthropy and nonprofits in past decades were not as ideologically clear-cut as they later appeared. Leaders such as John Gardner and Daniel Patrick Moynihan, who helped found Independent Sector, a federated alliance of nonprofits, worried about increased dependency among nonprofits on government funding in the 1970s and the crowding out of private giving. Ironically, Independent Sector later became a major critic of cuts in government funding.
The end of the Cold War brought a rush of new philanthropic players in the 1990s from across the ideological spectrum, working together on humanitarian projects and spreading American values. The emergence of conservative philanthropy, especially through the funding of think tanks, wasnt solely a story of big-money contributions: organizations like the Heritage Foundation also counted on many small, individual donations. Indeed, an important part of Zunzs story is the phenomenon of mass philanthropy, which provides a counterweight to the fetishizing of billionaire benefactors—on both sides of the political aisle.
While Zunz is otherwise balanced on ideological issues, his distinction between conservative and pluralistic views is unconvincing. Conservative philanthropy has not been nearly as narrow-minded as this rhetorical distinction suggests. He also skates over the question of who can lay claim to private foundation money, casually (and dubiously) describing philanthropic funds as public assets. Likewise, he ignores the issue of perpetuity. During the investigations of the 1960s, the Senate tried but failed to impose a lifetime limit of 40 years on private foundations. Zunz cheers that result as a victory for the virtue of open-endedness, but open-endedness has its drawbacks: vagueness of philanthropic purpose can be a source of mischief. The past four decades have seen renewed controversies over donor intent and, in foundations at least, struggles with the principal-agent dilemma that arises when trustees and professional staff are charged with carrying out a deceased donors wishes.
Zunz lumps foundation philanthropy together with nonprofits and mass fundraising. But foundations stand apart because they have their resources in hand—in the form of endowments—unlike other institutions, which must seek outside revenues and face a more strenuous standard of accountability. Thus the great potential of foundations is simultaneously their greatest vulnerability, making them an easy target for both critics and government regulators.
Its easy to criticize foundations today for lacking the boldness and imagination of prior eras. But critics tend to overlook the influence of a constantly shifting political environment. Many are dismayed to confront this reality, but they should find inspiration in Zunzs larger theme: the intimate connection between philanthropy—whether institutional, through foundations, or from individual giving—and democratic capitalism. Each has helped strengthen the other.