The Philanthropic Complex

In the fall of 2009 I was approached by Hal Clifford, executive editor of Orion Magazine, and asked to write an essay about American philanthropy, especially in relation to environmentalism. From the first I was dubious about the assignment. I said, “Not-for-profit organizations like you cannot afford to attack philanthropy because if you attack one foundation you may as well attack them all. You’ll be cutting your own throat.”

Hal assured me that while all this might be true someone had to take up the issue, and Orion was willing to do so. And I was the right person to write the essay precisely because I was not an insider but simply an honest intelligence. So, with many misgivings I said I’d try.

I interviewed about a dozen people on both sides of the field, both givers and getters, and some in the middle. The people I spoke to were eager to articulate their grievances even if they were just as eager to be anonymous. I also should acknowledge that the development of these grievances was no doubt colored by my own experiences as a board member and president of the board of two not-for-profit organizations in the arts.

After working for several months writing and revising the essay, Hal Clifford announced that he would be leaving Orion. My first thought was “uh-oh.” The editor-in-chief, Chip Blake, took over my essay and at that point things got dicey. Ultimately he explained that he hadn’t been fully aware of my assignment, that he hadn’t known the essay would be an attack on “the oligarchy,” that it didn’t seem to be fully a part of the magazine’s usual interests, and that — fatally — from the magazine’s point of view publishing the essay would be an exercise in “self-mutilation.”

Which was exactly what I said at the beginning! They had come to their senses even if it had taken a long time and cost me a lot of work to get there.

But, secretly, I was pleased. This editorial catastrophe was the best possible confirmation of everything I argue in the essay.

Part One: What Organizations Experience

In the United States, everyone may enjoy freedom of speech so long as it doesn’t matter.  For those who would like what they say to matter, freedom of speech is very expensive. It is for this reason that organizations with a strong sense of public mission but not much money are dependent on the “blonde child of capitalism,” private philanthropy. This dependence is true for both conservative and progressive causes, but there is an important difference in the philanthropic cultures that they appeal to.

The conservative foundations happily fund “big picture” work.  They are eager to be the means for disseminating free market, anti-government ideology. Hence the steady growth and influence of conservative think-tanks like the Heritage Foundation, Accuracy in Media, the American Majority Institute, the Cato Institute, the Brookings Institute, the Manhattan Institute, the Hoover Institute, and on (and frighteningly) on.

On the other hand, progressive foundations may understand that the organizations they fund have visions, but it’s not the vision that they will give money to. In fact, foundations are so reluctant to fund “public advocacy” of progressive ideas that it is almost as if they were afraid to do so. If there is need for a vision the foundation itself will provide it. Unfortunately, according to one source, the foundation’s vision too often amounts to this: “If we had enough money, and access to enough markets, and enough technological expertise, we could solve all the problems.” The source concludes that such a vision “doesn’t address sociological and spiritual problems.”


The truth is that organizations whose missions foreground the “sociological and spiritual” go mostly without funding. Take for instance the sad tale of the Center for the New American Dream (NAD), created in 1997 by Betsy Taylor (herself a funder with the Merck Family Fund).  NAD’s original mission statement gave a priority to “quality of life” issues.

We envision a society that values more of what matters—not just more…a new emphasis on non-material values like financial security, fairness, community, health, time, nature, and fun.

This is exactly the sort of “big picture” that philanthropy has been mostly unwilling to fund because, it argues, it is so difficult to provide “accountability” data for issues like “work and time” and “fun” (!).  (To which one might reasonably reply, “Why do you fund only those things that are driven by data?”)

In any event, in 2007 NAD ran an enormous deficit, $500,000 in a budget of less than $2,000,000.  In 2008, however, NAD staged a remarkable recovery.  Suddenly, its restricted grants grew from $234,000 in 2007 to $647,000 in 2008.  The cavalry, apparently, had arrived.  NAD’s savior was the Richard and Rhoda Goldman Foundation which had given a restricted grant of $350,000 for 2008.

Good news except that the money did not fund NAD’s vision; it was restricted to a narrow project.  NAD was now in the bottled water business, as in “don’t buy bottled water.”  NAD’s 2008 Take Action! section in its newsletters was devoted to the Goldman Gospel: get local athletic teams off bottled beverages, etc.  In short, a visionary organization had become a money chaser.

One source summarized the general situation in this way, “Progressive funders say all things are connected, but act as if all things are disconnected.  Conservative funders never argue that all things are connected, but then they act—and spend money—as if they were.”

One of the most maddening experiences for those who seek the support of private philanthropy is the lack of transparency, that is, the difficulty of knowing why the foundation makes the decisions it makes. In fact, most foundations treat this “lack” as a kind of privilege: our reasons are our own.  One of the devices employed by philanthropy for maintaining this privilege is what I call the mystique of the foundation’s Secret Wisdom.

So you want to ask, “What do you know that I don’t know?  What do you know that makes your decisions wise?”  The closest thing to an answer you’re likely to hear is something like this: “The staff met with some Board members last night to discuss your proposal, and we’re very interested in it.  But we don’t think that you have the capacity [a useful bit of jargon that means essentially that the organization should give up on what it thought it was going to do] to achieve these goals.  So what we’d suggest is that you define a smaller project that will allow you to test your abilities [read: allow you to do something that you have little interest in but that will suck up valuable staff time like a Hoover].  Meanwhile, we’d like to meet with your Board in six months and see where you are.”

And on you go one year at a time. But cheer up, you’ve made your budget for the year!

The uncertainty and opacity of this reality leave organizations frustrated and bewildered. No matter how many meetings are held, no matter how carefully the questions are posed, the fundamentals remain maddeningly elusive. It is as if grant seekers were Kafka’s K in The Trial searching absurdly for someone to tell him exactly what crime he has committed.

The foundation has money but it has no organic idea (no idea that is native to its being) what to do with it.  Perhaps the foundation really would like to help someone somewhere, but it can’t quite bring itself simply to trust the organizations it funds and set them free to do their work, in part because it fears that once freed this intelligence and competence might produce results not in keeping with the interests of the foundation.

Not wanting to acknowledge that brutal fact, all that the foundation is left with is the chilling satisfaction of its own undiminished and unaccountable authority. None of this, of course, can be said, least of all by the organizations that are still hoping for support.

Like the system of patronage that served the arts and charity from the Renaissance through the eighteenth century, private foundations have the rarest privilege of all: they do not have to explain themselves. They do not have to justify the origins of their wealth, or how they use that wealth, or what the real benefit of their largesse is.

In the end, what the foundation can be trusted to understand is not forest health, or climate change, or the imperatives of recycling; what it can be trusted to understand is the thing that gives it its privileges: its endowment.  Unfortunately, managing how the endowment is invested often leads to conflicts with the stated social purpose of the foundation.

For example, one of the emerging controversies in the world of private philanthropy is the 95-5 question.  Foundations are required to give away just 5 percent of their endowment each year.  The other 95 percent is invested.  But invested where?  Environmentalists are particularly sensitive to this question because if the money is invested in companies that continue to pollute, you have a very disturbing reality.  Five percent does (theoretical) good while 95 percent does demonstrable bad: chasing profits in the same old dirty and irresponsible way.

This issue came to a head when the Los Angeles Times concluded a long investigation into the investment practices of foundations by revealing that the Gates Foundation funded a polio vaccination clinic in Ebocha, Nigeria, in the shadow of a giant petroleum processing plant in which the Gates Foundation was invested.

The Los Angeles Times report states:

But polio is not the only threat Justice [a Nigerian child] faces. Almost since birth, he has had respiratory trouble. His neighbors call it “the cough.” People blame fumes and soot spewing from flames that tower 300 feet into the air over a nearby oil plant. It is owned by the Italian petroleum giant Eni, whose investors include the Bill & Melinda Gates Foundation.

Say what you like about the need to invest wisely for the future of the foundation, but this is prima facie evidence of a deep moral conflict not just at Gates but in all of private philanthropy.  The simple fact is that most boards actually don’t know if their investments and their missions align.  When pushed on the matter, most foundations respond as Gates did:  investments are the foundation’s private concern and no business of ours.

But the problem remains, when organizations receive funding, what confidence do they have that this happy money is not itself the expression of a distant destruction?  (Perhaps your funder owns stock in British Petroleum.  Of course, for the people of Louisiana, that’s anything but distant.)  When philanthropy proceeds without acknowledging this reality, it proceeds without conscience.  It proceeds pathologically.  It destroys the thing it claims to love.  And it makes the organizations it funds complicit.

Because this culture of unaccountable authority is rarely challenged, especially by the organizations that receive funding, the foundations become little more than, as one source put it, dramas of “self-aggrandizement.” — the lavish year-end celebrations in which many indulge being a particularly noxious demonstration. They like to be thanked for their generosity, and they like the warm feeling of virtue that washes over them when they receive their thanks.

It is as if they could not tell which was the more worthy: the organization for its work or the foundation itself for its generosity.  You can sense this tension in the films that the big  foundations underwrite for PBS.  “Support is provided by the John D. and Catherine T. MacArthur Foundation,” emblazed on the screen with heraldic force, as if it had been struck with a single blow into brass.

Without an understanding of this psychology, it’s difficult to explain the most perplexing question asked of private philanthropy: why do most foundations give away only 5 percent of their endowment each year, the legal minimum?

Let’s say the funding is going to address the problem of global warming.  If that problem must be successfully addressed within the next two decades, if it’s really the critical moral issue of our time, or any time, why spend only 5 percent?  For a simple reason: spending 5 percent annually will allow the foundation to do its work into eternity. Sadly, a world without a livable climate is easier for the philanthropist to imagine than a world without the dear old family foundation.

Most of the sources that I contacted for this essay requested anonymity.  The reasons for this may be obvious and hardly worth mentioning except that what’s hardly worth mentioning is a powerful emotion: fear.  Fear of losing a grant or a job, fear of harming a client, or fear of becoming persona non grata in the field. Everyone has skin in the game, so “discretion is the better part of valor,” as Falstaff put it. One source spoke of being threatened with blackballing by one wealthy donor.  His error? He’d supported Ralph Nader rather than Barack Obama.

Mark Dowie reports in his book Losing Ground that in the early 1990s the Pew Charitable Trust entered the fray over public land forestry.  Josh Reichert, Pew’s environmental program officer, created a foundation coalition, the National Environmental Trust, to address forestry among other issues.  Once the money was held out, large organizations like the Sierra Club fell in line, talked the talk, and took the money.

The downside was that this program was not allowed to consider a “zero cut” position.  The organization would be about moderating policy on behalf of corporate interests.  Smaller, more principled organizations like the Native Forest Council were “left out in the cold.”  But Reichert was unapologetic.  According to Dowie, “Reichert stipulated that no one advocating zero cut, criticizing corporations by name, or producing ads that did so would be eligible for membership in the forest coalition — or for funding.”

All of this leads to the reasonable assumption that to criticize is to invite punishment.  All that’s left is a lot of smiling and bad faith.

Part Two: Why Organizations Experience What They Experience

In the end, philanthropy wants the wrong thing.  It may think that it ought to want what the lovers-of-nature want, but its actions reveal that, come what may, it loves other things first: the maintenance of its privileges, the survival of its self-identity, and the stability of the social and economic systems that made it possible in the first place.

This is not an inhuman feeling.  As Nietzsche put it, it is “all-too-human.”  The people who live within the culture of wealth can’t do the things that grassroots environmentalists want them to do without feeling that they are dying.  They can’t fund the creation of ideas that are hostile to their very existence; they can’t abandon control over the projects they do fund because they fear freedom in others; and they can’t give away all of their wealth (“spending out”) without feeling like they’ve become the Wicked Witch of the West (“I’m melting!”). Instead, philanthropy clings to the assumption of its virtues. Its very being, it tells itself, is the doing of good. It cannot respond to criticism because to do so might lead it to self-doubt, might lead it to honesty. And that would be fatal.

The great paradox of environmental philanthropy is this: How do institutions founded on property, wealth, and privilege (in short, plutocrats) seek to address the root source of environmental destruction if that source is essentially the unbridled use of property, wealth, and privilege?   And yet when we ask that foundations abandon their privileges and simply provide funding so that we activists can do our work without hindrance, what the foundation hears is a request that they will their own destruction.  Not unreasonably, they are bewildered by the suggestion and unwilling to do so.

There’s an old saying on the Left that goes something like this: Capitalism accepts the idea that it will have enemies, but if it must have enemies it will create them itself and in its own image.  In fact, it needs them in the same way that it needs the federal government: as a limit on its own natural destructiveness.

The periodic Wall Street meltdown aside, the most dramatic problem facing capitalism for the last thirty years has been its tendency to destroy the very world in which it acts: the environmental crisis in all its manifestations.  The response to this crisis has been the growth of the mainstream environmental movement, especially the Environmental Protection Agency and what we call Big Green (the Sierra Club, et. al.).  But, it should go without saying, Big Green was not the pure consequence of an up-swelling of popular passion; it was also the creation of philanthropic, federal, and corporate “gift giving”.

For instance, the Natural Resources Defense Council was created by the Ford Foundation, just as Pew created the National Environmental Fund.  (Pew itself was first endowed with money from the Sun Oil Company.  At its inception, Pew’s political views were deeply conservative.  It advocated free markets and small government, and funded the John Birch Society.)  These large environmental organizations are more dependent on federal and foundation support, and accordingly tend to take a “soft” line on economic and industrial reform.  As Mark Dowie reports, “They are safe havens for foundation philanthropy, for their directors are sensitive to the economic orthodoxies that lead to the formation of foundations and careful not to do anything that might diminish the benefactor’s endowment.”

As with the Environmental Protection Agency, Big Green is not so much an enemy as a self-regulator within the capitalist state itself. The Sierra Club is not run by visionary rebels, it is upper management.  It really does have effects that are beneficial to the environment (many!), but in no way are those benefits part of an emerging new world that is hostile to the industries that are the most immediate origin of environmental destruction.

Consequently, a given industry may attack environmentalism when it interferes with its business, but the plutocracy as such is dependent on Big Green and will regularly replenish its coffers so that it may stay in existence, never mind the occasional annoyance for an oil company that wants to spread its rigs and pipelines across delicate tundra.

Capitalism has taught environmentalism how to protect it from itself.  Federal and philanthropic funding allows Big Green to play a forceful national role, but it also provides the means for managing and limiting the ambitions of environmentalism: no fundamental change. Sadly left out of negotiations between government, industry and environmental NGOs are the communities of people who must live with whatever decision is reached. As Paula Swearengin of Beckley, West Virginia, commented after House Republicans stripped the EPA of its authority to refuse a permit for yet another project for mountain top coal mining, “The people of Appalachia are treated like we’re just disposable casualties of the coal industry. We live in the land of the lost, because nobody wants to hear us.”

Will environmental philanthropy ever convince the federal government to limit the ability of the coal industry to destroy mountaintops in West Virginia?  Maybe. But will they seek to curb that industry’s constitutional freedom to deploy capital in their ruinous “pursuit of happiness”?  No.  Absolutely not.  In the aftermath of the British Petroleum disaster in the Gulf of Mexico, no one understands the importance of environmentalism better than the stockholders of BP.  They will be very happy for environmental groups to put pressure on the oil industry to provide more safety for deep sea drilling.  But they are most unlikely to welcome the end of deep sea drilling itself, and putting an end to the reign of corporations is utterly beyond the pale.

Philanthropy and the organizations it funds are what they are. They are not in the revolution business. They are in risk management.