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« How 300 Wealthy Progressives Connect to Make Green Grants | Main | Why Mac's Big Give for Docs Is So Important »
Friday
Oct312014

Be Afraid: The Five Scariest Trends in Philanthropy

My six-year-old son and I had a macabre idea for a costume last night: We were going to put a bullseye on his front and back, and call him a "moving target." 

Of course, second thoughts interceded: In an era of school shootings, you don't dress your kid up as a target. Oy. 

We live in scary times. And while I tend to think of philanthropy as a bright spot, with lots of well-meaning people trying to make the world a better place, I'm often unnerved by the developments I'm seeing.

Many readers will have their own list of troubling trends in U.S. philanthropy. Here's mine.

1.  The growing push to convert wealth into power through philanthropy

Look at nearly any sector of U.S. society, and you'll find private funders wielding growing power. Most dramatic has been the reshaping of public education by philanthropists like Gates and the Waltons, but the footprint of private money has also grown when it comes to healthcare, the environment, the economy, social policy, science, and the arts.

Whether you agree or disagree with the specific views pushed by private funders, you've got to be disturbed by the growing army of hands-on mega donors and foundations that seems to get more clever every year about converting their money into societal influence. Love it or hate it, the Common Core is a great example: In effect, private funders are helping determine how tens of millions of kids will be educated for years to come. And to think that we once saw public education as America's most democratic institution!

See all our articles about K-12 philanthropy here

Inevitably, the upshot of all this is a weaker voice for ordinary folks over the direction of American life. The veteran funder Gara LaMarche has a recent piece in Democracy that crystallizes the worries that many people have that philanthropy has become a powerful agent of civic inequality. 

2. How philanthropic dollars have become another form of political money

Zeroing in on politics, we see philanthropic money increasingly shaping public policy and legislative outcomes. This trend isn't new, of course, and along with Sally Covington, I wrote in the 1990s about the huge influence that conservative foundations like Bradley and Olin had over policy debates of that era by funding a network of think tanks and legal groups like the Heritage Foundation and the Federalist Society. Perhaps the greatest achievement of these funders was knocking off the federal welfare entitlement, after investing millions in work by Charles Murray and others. 

What's different today is that many more funders, with much more money, are playing the policy game. On the right, top funders like the Kochs are exponentially wealthier than they were twenty years ago, and have been joined by many deep-pocketed newcomers to activist philanthropy. On the left, we've seen a major counter-mobilization by funders who've rallied around the Democracy Alliance and, over the past decade, have built a new progressive infrastructure. Meanwhile, policy institutions long perceived as centrist and impartial, like Brookings and the Peterson Institute for International Economics, are increasingly controlled and shaped by corporate funders. (The Washington Post just ran a piece about funder influence over Brookings, while I wrote here about PIIE's deeply problematic reliance on interested money.)

Many of us love what some funders are doing to change public policy, and it can be tempting to just cheer your side's team without thinking too hardhooray for the donors bankrolling the same-sex marriage push! But if you do stop and think, you'll have to admit how corrosive all this is to the ideal of an equal voice for all in our democracy. 

3. The decline of the public sector relative to private funders

Rising philanthropic activism is happening at a time when the public sector is in decline, and that's helping shift the balance of power to private funders. Cuts in discretionary federal spending stretch out as far as the eye can see, while pension costs also promise to crimp state and local budgetsall of which limits government's ability to tackle problems with new initiatives. As government funds flow more to old people and debt payments, those with ideas to improve society will think more about how to sell the rich and foundations on their ideas, as opposed to fellow citizens and legislators. 

What's more, government officials themselves will increasingly turn to private funders to deal with funding shortfalls, a trend we're already seeing in some cities like Boston. Philanthropists are responding, but all money comes with strings attached. 

4. The rise of the know-it-all funder

Just because you were great at making software or shorting stocks doesn't mean that you'll be great at eradicating malaria or ensuring that kids can read by third grade. If you're worth billions, though, nobody may tell you that. 

Self-prepossessed funders are hardly a new phenomenon, but there are more of them running around these days, and with bigger bank accounts. Why? Because great fortunes can be made much more quickly in today's information economy, and so it's not uncommon to find retired multi-billionaires in their 30s and 40s launching second careers in philanthropy. Many of these people have very high confidence in their problem-solving abilities.

In an age of hands-on living mega donors, the possibilities for big screwups are self-evident and we've seen some doozies so farlike, say, turning urban school districts upside down to create small high schools and then realizing that this idea wasn't as brilliant as MS-DOS.

Pierre Omidyar's troubles getting First Look Media up and running illustrate a different kind of pitfall here. 

5. A rising flood of anonymous money

The explosion of donor-advised funds in recent years is on nearly every list of troubling trends in philanthropy, and it's on mine, too. But my concern is less that the money just piles up for years than about how hard it is to trace spending by these funds.

Some folks think that black box philanthropy is just fine, because there are good reasons for anonymous giving and a rich tradition of it in the United States. I get those arguments, but it's one thing to avoid pestering because everyone knows you gave a million bucks to MoMA, and quite another to avoid getting your fingerprints on donations aimed at influencing public policy.

Reformers fought long and hard to bring transparency to political donations, and now we're seeing that progress reversed as nonprofit vehicles become major conduits for de facto political spending. That's troubling. 

***

I could go on with more scary trends, but that's probably enough for now. I need to hustle out and buy candy before my doorbell starts ringing. 

David Callahan is founder and editor of Inside Philanthropy (davidc@insidephilanthropy.com)

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