Foundation Domination
The domination of public life by foundations is something very new. Today small numbers of the wealthiest individuals in the world are using their foundations to shape public life. Educational, health, city planning and land use policies are being dictated by wealthy donors who use foundation money, tax exempt status and clout to implement their private visions to address community issues. With a combination of targeted projects, public relations campaigns and selected research, they are determining the direction of how we approach urgent community issues.
Many people see nothing wrong with this. After all, philanthropy has a long history in the USA. Early colonial preachers stressed the social obligations of the rich to the poor. John Harvard, Ben Franklin and Thomas Jefferson gave us our first libraries. Ann Radcliff our first scholarship. The Peabody Fund, the first modern foundation, was established after the Civil War for the free education of black and white students. The great industrialists of the 19th and 20th centuries, Carnegie, Mellon, Rockefeller, and Ford, have become synonymous with charitable giving and support for the arts and civic life.
Of course, these efforts have always been met with criticism. Some, including my favorite American philosopher, Kenneth Burke, talked of this charity as a thinly-veiled effort by unscrupulous men to redeem themselves after a lifetime of exploitation and assault on the dignity of working people. The earliest foundations were so troubling to some people that Congress organized a commission on industrial relations in 1912. Their concern was whether or not the emerging foundations posed “a menace to the Republic’s future” because they concentrated so much wealth in the hands of unelected and unaccountable trustees.
In the last 25 years the philanthropic sector has grown enormously as elected governments have become more dysfunctional. Fed by favorable tax policies, charitable giving totaled more than $300 billion in 2009. This is fully 2.1 percent of the GDP. Individuals and/or estates gave 83 percent of this total, mostly from a small number of the 3% of Americans with incomes greater than $200,000 and/or assets exceeding $1 million.
In spite of its outsized impact on educational policy, only 13 percent of this total goes to education and about 10 percent goes to the poor. Likewise only 4 percent goes to art and culture. In an analysis of foundation giving, Robert Reich, former U.S. Secretary of Labor, concluded that it is often hard to quantify just where all this money is going, but much of it goes to causes that directly or indirectly benefit the donors.
This new type of philanthropy, sometimes called venture philanthropy, is being fueled by the newly made billionaires of the dot.com world and the sellers of cheap products produced by outrageously exploitative global labor practices. The giant among them of course is the Gates Foundation, closely followed by the Waltons of Wal-mart. While the individual founders are clearly ideologically distinct, they share a neo-liberal view of public concerns. They back free market approaches to the solving of social problems. This means they are using tax-sheltered money to help dismantle the public sector, encourage private, competitive delivery of essential goods and services, undermine unions, shape research, direct debate and dictate development.
In a recent issue of the Atlantic, Chrystia Freeland describes this emerging plutocracy “in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.”
Today in Detroit we are witnessing our own local expression of this philanthropic trend. Skillman, Kresge, Broad, Gates, and the Community Foundation have all been meeting behind closed doors, deciding the future of our children and our city. They are not only damaging and disrupting the lives of individuals, they are distorting our democracy.