Editor's Note: Since its publication in April, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age has generated much discussion and also drawn criticism. Here, Sean Parnell and I engage in a dialogue about the book. Parnell is vice president for public policy at The Philanthropy Roundtable.
Ill-Defined Concept of Democracy Mars The Givers—Sean Parnell
It probably needs to be said upfront that, despite a general disagreement with several of the book’s basic premises and conclusions, I thoroughly enjoyed reading The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, and I highly recommend it to anyone interested in understanding the modern world of philanthropy. The book’s interviews with and analysis of some of the leading philanthropists today (dubbed “mega-donors”) are insightful and provide readers with a good look at the different ways philanthropists approach giving.
But The Givers isn’t supposed to be a book primarily about the giving strategies of “mega-donors,” and when considering that the aim of the book is to persuade readers that wealthy philanthropists pose a danger to democracy and notions of civic equality, there are some pretty significant problems. I’ll start with the most glaring, namely that there is no working definition of what The Givers means by the term “democracy.” This would seem to be a critical flaw, because it is difficult to evaluate the book’s arguments without understanding what sort of democracy is supposedly threatened.
This is hardly a semantic or technical failing. Our nation’s Founding Fathers, to pick one prominent example, had a rather intense distrust of pure democracy, which helps to explain why they established a republic instead. It’s unlikely that the intent of The Givers was to promote the sort of raw majoritarianism that threatens basic rights of minorities, of course, but without giving much of an explanation it’s not clear what it does favor, other than scaling back philanthropic freedom (loosely defined as allowing philanthropists to direct their own giving to the organizations and causes they choose, with only minimal oversight) and imposing greater government control (perhaps “influence” is a more appropriate term) over charitable giving.
Summarizing the supposed justification for reining in philanthropic freedom (and raising again the question of exactly what sort of democracy is being promoted here), The Givers states that “In a democratic society, all powerful institutions that affect our lives need vigilant oversight.”
This is one of the more alarming statements in the book. There are several fairly powerful institutions I can think of where the introduction of “vigilant oversight” would be a horrific concept. Religious institutions (which, seemingly relevant here, haul in about a third of all charitable giving) are among the most influential in our society, and whether one regards that as a positive or negative, or perhaps a mixed bag, there are few who would argue the state should be more involved in the affairs of religious institutions by engaging in “vigilant oversight.”
Likewise the free press, which helps to shape the information possessed by citizens as well as the discussion and debate around that information. Would anyone suggest that the New York Times, FOX News, and countless other news outlets aren’t powerful institutions that affect our lives? Would anyone subsequently suggest that the press requires “vigilant oversight” by the government? Hopefully not!
There are other powerful institutions as well that any meaningful notion of freedom requires be kept well away from the “vigilant oversight” The Givers casually asserts as necessary, such as America’s political parties and marriage. Freedom of all sorts, not just for philanthropy, is a deeply cherished value in our nation and one that requires a lack of “vigilant oversight” in order to flourish.
The general sense provided by the book is that if government is doing it, it must be democratic. State-led scientific research and support for the arts, for example, is supposedly vastly preferable to allowing private citizens to lead such endeavors. Consider the book’s description of the supposed nascent golden era beginning in the 1950s and 1960s when “the United States seemed headed toward a future in which these critical parts would be shaped by democratic governance. We wouldn’t depend on the munificence and preferences of millionaires… We’d do it together as citizens, through public agencies like the National Science Foundation… and the National Endowment for the Arts.”
This is a paradigm that appeals to some, perhaps, but seems a dull and dreadful society where the state determines, or at least has a dominant role in determining, which art is to be supported and which research is to be pursued. Totalitarian, even—Mussolini said, “Everything within the state, nothing outside the state, nothing against the state.”
It’s unfair to ascribe that particular sentiment to The Givers, of course, but it’s also not terribly easy to disentangle it from one of the key assumptions of the book, which appears to be that anything of importance should not lie outside of the control of a democratically elected state, because to allow this threatens civic health.
Is philanthropy undemocratic, or a threat to American democracy? It’s impossible even to consider the question without a clear understanding of how democracy is being defined. But to the extent the complaint is that the government doesn’t control philanthropic dollars and is limited in its ability to thwart giving to causes that do not align with majority sentiments, the answer is yes, and thankfully so, and I suspect many other citizens would also prefer that at least some institutions lie far outside of the “vigilant oversight” of the state.
Philanthropy Is Fueling Civic Inequality. That's a Problem—David Callahan
I’m glad that Sean Parnell enjoyed reading The Givers, even if he doesn’t agree with key arguments of the book. I think that anyone watching philanthropy right now can’t help but be excited by how dynamic this sector has lately become. The Givers tries to capture what’s so interesting about the moment—while also sounding an alarm about the negative effects that the new philanthropy may have on U.S. democracy.
While Sean is right that I don’t offer a definition of democracy, I make it quite clear that I’m worried about how giving by a growing class of “super-citizen” donors might further exacerbate rising civic inequality in the United States. As I note in the book, there’s much evidence that greater economic inequality over recent decades has translated into greater civic and political inequality. Of course, that makes sense intuitively: People with superior wealth and economic power will seek ways to use these resources to have a larger say in civic life. We’re most familiar with how this has played out in our political system, where large donors and private lobbyists have come to wield increasing influence as economic inequality has grown. I believe, along with many others, that this growing aggregation of power in the hands of a tiny, wealthy minority is bad news in a country founded on egalitarian principles.
In The Givers, I argue that today’s new philanthropy—for all its many upsides—is fueling this larger problem. It’s increasingly becoming a way for the wealthy to translate their economic resources into growing influence. The Givers is filled with examples of philanthropic dollars being used to shape policy outcomes and civic life broadly. Anyone worried about how economic inequality is translating into civic inequality and harming U.S. democracy needs to be scrutinizing recent trends in philanthropy.
If Sean Parnell isn’t worried about rising civic inequality in America or philanthropy’s role in exacerbating this problem, I’d like to hear why.
Meanwhile, I stand by my claim that “all powerful institutions that affect our lives need vigilant oversight.” Sean recoils at the thought of applying such oversight to, say, religious institutions or the media. But I would remind him that we’ve recently lived through one of the biggest scandals ever to hit organized religion, with the revelation of widespread sexual abuse in the Catholic Church going back decades. Both investigative journalists and law enforcement agencies played key oversight roles in bringing that scandal to light—and in addition, our civil court system has been a means for victims to seek redress.
As for oversight of the media, we do have the Federal Communications Commission, which exercises far more oversight of the media than any agency now does of the nonprofit sector. The Justice Department’s Antitrust Division also keeps a close eye on media, and rightly so.
I’ll say it again: In a democratic society, power of every kind needs to be accompanied by vigilant oversight. Otherwise, bad things happen. Philanthropy should be no exception. And anyone who cares about the sector should welcome more oversight—before bad things do happen. Remember, the public subsidy of philanthropy, in the form of the charitable tax deduction, depends on the sector maintaining the trust of ordinary Americans.
The Choice is Between Freedom or “Vigilant Oversight”—Sean Parnell
David makes a number of points in his response to my initial critique, and my first reaction is to note that they are marred by the same shortcoming I pointed out earlier—vague, undefined terms that probably push the right buttons among those who share his progressive outlook, but are not terribly helpful to anyone trying seriously to consider his arguments.
The references to economic inequality and “super-citizen” donors are plain enough, but what does civic inequality even mean? What sort of “egalitarian principles” are being recalled in our nation’s founding, which was led in large part by wealthy landowners, merchants and professionals? And what does “vigilant oversight” entail?
If it were simply a matter of ensuring that criminal activity that might occur in civil society is prosecuted when uncovered, and that a free press is allowed to raise questions and probe troublesome actions by charitable actors, count me in for “vigilant oversight.” But The Givers clearly seeks something far more intrusive, and those concerned with philanthropic freedom, and civic freedom for that matter, ought to be concerned.
David suggests that “vigilant oversight” currently exists over the media and religious institutions, but the examples cited are dubious. The FCC and DoJ Antitrust Division do, indeed, enforce some laws that seem aimed at limiting the influence of media entities, such as the prohibition of a single company owning more than 39 percent of the television stations in the country. But those laws are aimed at preventing dominance by a single entity, not preventing the media industry as a whole from having “too much” influence.
No such concentration exists in philanthropy. The Gates Foundation, the largest foundation in the country, gave about $527 million in 2015 to U.S. charities out of the $373 billion Americans gave away that year. Philanthropy is far from the sort of concentration that lawmakers had in mind when establishing the FCC and U.S. antitrust law.
And the wrongdoing within the Catholic Church was not uncovered through any “vigilant oversight” directed at it but through ordinary police work and investigative journalism looking at activity that was horrific and illegal, regardless of the setting. There is, thankfully, no Federal Religion Commission to provide “vigilant oversight.”
David asks if I am worried by growing civic inequality in America, and the short answer is no, at least not if I understand the way he’s using the term, which seems to boil down to a concern that some people are more influential than others and that philanthropy is a source for some of that influence. David is concerned that “unaccountable” people are free to try to influence public policy and society at large, while I am far more concerned by the notion that the government might deny the freedom of people to try to influence government and society. Such a denial, in my mind, would constitute a violation of the fundamental freedoms our nation holds dear.
Differences over the core premises of The Givers aside, there are some serious contextual and factual shortcomings that also suggest the case for curtailing philanthropic freedom isn’t all that strong.
For example, the book expresses dismay over growing philanthropic support for scientific research that may not align with priorities set by the National Science Foundation and other government-run entities, and bemoans that science is becoming “a private enterprise.” But it manages to neglect completely that both government and philanthropic spending in this area are dwarfed by private enterprise—about 69 percent of the country’s $500 billion annual research and development spending comes from private enterprise, compared to the federal government’s 23 percent share.
Knowing this is one of the reasons I find it difficult to be too exercised over philanthropically supported research, particularly given that such support was crucial to the recent development of a promising gene therapy treatment for cancer, an area of research viewed as “too risky” by the National Institutes of Health (the publication in which I read about this was, ironically, Inside Philanthropy).
As for factual problems, consider the book’s characterization of what happened at the University of Virginia in 2012, where “a cabal of wealthy donors forced out the school’s president.” That does sound terrible, particularly to this Virginia resident. But that “cabal of wealthy donors” operated under a somewhat less ominous sobriquet: the Board of Visitors of the University of Virginia. In other words, the board of directors, appointed by the governor and confirmed by the General Assembly.
And am I missing something, or isn’t this the sort of democratic accountability being sought? It appears we are, again, back to the definitional problem of what is meant by democracy in The Givers.
Ultimately, the book seems to seek a state without rival, where the public is insulated by government from independent influences that perhaps have minority, heterodox or non-authorized preferences and perspectives. This wouldn’t just curb philanthropic freedom, but freedom of all types.
Balancing Freedom and Equality—David Callahan
I'm glad that Sean has made it clear that he's not worried about growing civic inequality, since this helps us get to the heart of our disagreement about the influence of private donors in public life.
Some level of both economic and civic inequality are inevitable in any country that embraces both capitalism and democratic freedoms. America has always had such inequalities and we always will. One question, though, is, "How much inequality is too much?" Another is, "What can be done when economic or civic inequities rise to levels that most Americans deem to be unacceptable?" There are no absolute answers to the questions, of course. But there are lots of indications that the U.S. now has too much inequality of all forms.
I'll skip a discussion of why today's high level of economic inequality is a bad thing and focus instead on the problems of rising civic inequality—and how philanthropy is exacerbating this trend. Polling data over recent years show that a strong majority of Americans believe that ordinary citizens have too little voice in decisions that affect their lives and believe that the wealthy and elites have too much power in U.S. society. The recent upsurge of populism—including the Tea Party, Occupy Wall Street and Trump's election—point to rising public anger across the political spectrum that America has become too dominated by the upper class and/or the professional managerial elite. So while Sean is not worried about civic inequality, many of his fellows citizens are.
Millions of people are alarmed about this problem for good reasons. Big disparities in civic power produce distorted political outcomes—with public policies more likely to reflect the preferences of a tiny, empowered minority while the needs of most citizens get short shrift. Perhaps more insidiously, the perception that the "system" is "stacked against" ordinary people is deeply poisonous to democratic societies, which depend on public trust in key institutions and in the broader idea of the social contract.
Yet, even as we are already seeing signs of the damaging effects of high civic inequality, things are likely to get even more unequal—and philanthropy is playing a role in this. For all the good that the new mega-donors are often doing, my book documents in detail how rising giving is amplifying the voice of the far upper class in American life and further exacerbating civic inequality.
What can we do about this? Well, as a starting point, I argue that we should not treat philanthropic freedom as an absolutist value. It's a very important value that needs to be balanced against other important American values, including civic equality. In similar fashion, our society balances a strong belief in economic freedom with such values as mutual obligation and protection from harm. We also balance our strong belief in social freedom with our desire to maintain order and security.
So what does it mean to achieve a better balance between the values of philanthropic freedom and civic equality? Besides strengthening enforcement of existing oversight, my only new big regulatory idea is stricter rules to limit the ability of tax-deductible philanthropic gifts to be used to advance political goals. Donors will be always be free to advance their ideological views, but I don't see why the U.S. Treasury should be subsidizing such activity—especially at a moment of growing public alarm about high civic inequality.
Diminishing Philanthropic Freedom Won’t Help Democracy—Sean Parnell
I’m not sure David correctly summarized my view regarding civic inequality, which is that I am not overly worried about this problem as he presents it—certainly not enough to upend basic civic and philanthropic freedoms.
He raises some valid concerns about citizens feeling they have “too little voice in decisions that affect their lives” and that “the perception that the ‘system’ is ‘stacked against’ ordinary people is deeply poisonous to democratic societies.” But I think David misattributes much of the cause of these feelings.
Consider the erosion of “public trust” in institutions, particularly in government. It’s hard to pin this on unchecked philanthropy, in my opinion. For starters, it’s almost impossible to have a serious discussion on this topic that doesn’t start with the conflict in Vietnam. Add in the Hurricane Katrina response, the Tuskegee syphilis experiment, the wait list scandal at the Veterans Health Administration, and the rollout of the Obamacare website, among countless other examples, and it’s not hard to see why many distrust their government.
It isn’t just failure, corruption and ineptitude that drive a wedge between the people and their government, of course. It’s also the basic structure of our nation’s modern government that makes many of the details of citizens’ daily lives subject to the control of faraway politicians, bureaucrats and judges. To pick one random example, I doubt it would matter much whether federal guidance on school lunch nutrition is the result of a paper from the Center for American Progress or was inspired by a mass movement of citizens—lots of Americans are going to be peeved over it. After all, it was more than 50 years ago that Ronald Reagan spoke of an “intellectual elite in a far-distant capital” trying to “plan our lives for us better than we can plan them ourselves”—the sentiments that trouble David were around long before the “New Gilded Age.”
These critiques aren’t likely to find much support on the progressive left, I suppose. But if the concern is that Americans are distrustful of government and feel they have little voice in decisions that affect their lives, perhaps it is worth a moment’s reflection on a government that too often fails to deliver on promises made and shows too much determination to press national solutions wherever possible.
David proposes to deny (or at least sharply limit) the tax deduction of charitable contributions made to advance “political” goals. But there are several problems with this proposal. For starters, it would be a big step toward a “hierarchy of giving,” with politicians and bureaucrats deciding which sorts of charitable giving should be favored or disfavored, showering preferential treatment on some charities while stifling others. It is hard to see this as a win for either philanthropy or civic equality.
It would also be almost impossible to make the necessary determinations. While David clearly has in mind entities like the Heritage Foundation or the Center for American Progress, what about other institutions that engage to some degree on “political” matters? If the Red Cross weighs in on the appointment of a new FEMA head, is that political? A nonprofit that produces a film documentary on the Michael Brown shooting in Ferguson, Missouri—is that political? What about a zoo that includes displays on how its scientists believe climate change will affect the natural habitats of animals?
What about a church, synagogue, mosque or other house of worship that tries to speak to congregants, elected officials, and the public at large on “political” issues? Would these faith communities lose their tax deductibility for bringing their moral voices to pressing public issues?
Whatever measures might be proposed to navigate these thorny issues, the thicket of regulations required could only serve to radically diminish the voice of all civil society, not merely the policy-focused entities David has in mind. It would also invite intolerable intrusions into civil society—recall the city of Houston’s subpoena demanding local pastors turn over sermons and other communications and documents, including emails, related to a local ordinance.
David also proposes to force disclosure of gifts made to support policy or advocacy work, but as noted above, that is nearly meaningless—civil society institutions routinely speak out on public issues and only the most cautious (i.e., those that self-censor the most aggressively to avoid giving offense to anyone) will be able to avoid being dragged into the regulatory labyrinth necessary to enforce this dictate.
As for why allowing donors to remain anonymous is an important component of philanthropic freedom, the short version is that there is a long tradition of anonymous giving in philanthropy, and the right to privately associate is a core element of the First Amendment’s protections recognized by the U.S. Supreme Court in 1958, when it unanimously ruled the state of Alabama could not force the NAACP to turn over its membership lists. For a (much) longer explanation, I’ve recently written a paper on the importance of anonymous giving.
Ultimately, the disagreement here may stem from different concepts of how our democratic republic should work. David seems to believe that absent the external force of philanthropy (and other institutions as well, no doubt—in particular, private money in the campaign realm) there would exist some natural and righteous public consensus on politics, policy and culture, or at least the ability to form “mass movements” that will bring about such consensus. The way to arrive at this desired state, then, is to hack away at the freedoms that allow a robust, independent civil society.
Needless to say, that is not a paradigm I agree with. Among other forms of unruliness, I prefer houses of worship, media outlets, and institutions of civil society largely out of control and unaccountable, at least regarding efforts to diminish their voices and put them under some vague notion of democratic control. I suspect that many Americans, perhaps a majority, agree with me, but regardless, I’m grateful for the philanthropic freedom that allows both David and I to offer our views without the “vigilant oversight” of the state.
More Debate and Public Engagement on Philanthropy Is Needed - David Callahan
Sean has claimed in this exchange that I want to undermine strong civil society. But he misses a key point raised by The Givers, which is that civil society is increasingly distorted by an influx of hands-on mega-donors who call more of the shots in the nonprofit sector. As I document in the book, the civil society of earlier eras—one in which the largest and most influential nonprofits were sustained by mass memberships—is long gone. It's been replaced by a more top-down, funder-dominated landscape in which many top nonprofits are fueled almost exclusively by wealthy philanthropists and foundations. A vast array of policy and advocacy organizations, sustained by a relatively tiny donor class, wield influence at the federal and state level—and yet often have no real constituencies within the public at large.
The distortions that have occurred in the nonprofit sector closely parallel what's happened in politics. Mass-based political parties with deep roots in communities have declined in influence. Instead, mega-donors and super-PACs now often call the shots—driving polarization and leaving many voters feeling marginalized.
Sean may feel that all is well in U.S. civil society. But there's a lot of evidence that this is yet another part of American life that's been harmed by the rise of vast new inequities in income and wealth over the past half-century.
Sean has also claimed in this exchange that I seek to grant too much authority to the state, empowering it to the point that it has "no rivals." If you read The Givers, though, you'll notice that my main concern about government is that it's facing a period of sustained decline and is less able to serve as an effective vehicle by which citizens solve problems together. Private philanthropists are increasingly stepping into the breach, taking on a leadership role in charting society's direction—with ordinary citizens ending up on the sidelines. In addition, through their vast new investments in public policy, these same donors have a greater say in the activities of government.
I'm hardly alone in voicing alarm that the upper class has gained too much power over what government does; a majority of Americans share this concern. The contribution of The Givers to this familiar conversation is to draw a clear line between the philanthropic activism of the rich and their growing influence over public policy. I favor more oversight of private money in public life not because I want an all-powerful state, but because I want a government that's more responsive to real people as opposed to the ascendant donor class.
I'm glad that Sean ended his final response by mentioning the American public and where they might come down on these issues. This is obviously important, since the rules that govern philanthropy are determined by the public's elected representatives in Congress.
Because of a scarcity of polling, the views of the public about philanthropy are a bit of a mystery. While there is a lot of evidence to suggest that Americans generally have high regard for the charitable sector, at least relative to other key institutions in U.S. society, I think it's also safe to say that many people don't know much about philanthropy or the rules that govern giving.
Sean suggests that a majority of Americans are likely to agree with his views about philanthropic freedom, and, presumably, the overall arrangements that now govern this sector. I suspect that the opposite is true. I believe that if the public actually knew more about how philanthropic power operates in the U.S. and the details of current tax rules, they'd be quite alarmed.
As I mentioned several times, distrust of both the wealthy and elites have been growing for years. We live in populist times, with many Americans of various ideological stripes worried—and rightly so—about the concentration of wealth and power in so few hands. These concerns explain why strong majorities of Americans favor tighter restrictions on campaign giving and lobbying, along with greater regulation of banks and a crackdown on tax loopholes that favor the wealthy. They also explain recent populist movements like Occupy Wall Street and the election of Donald Trump.
Will organized philanthropy—a sector heavily clustered on the coasts and filled with empowered rich people and credentialed experts—escape greater scrutiny by a public worried about the hijacking of American life by affluent elites?
Maybe so. But one of these days, Americans may well become more aware of how the current system gives generous tax breaks to the richest citizens to amplify their preferences in public life. And they may come to see how this arrangement often works in close concert with the other mechanisms by which the wealthy wield influence, like our money-saturated campaign finance system.
My hunch is that a public that's more informed about philanthropic power will be more alarmed by it. It's also quite possible that, amid a future populist backlash to a sector that's strayed far from "charity," the reform proposals I'm suggesting may seem modest compared to what the public and their representatives favor. The charitable tax credit itself could be imperiled thanks to the growing politicization of philanthropy. I've argued elsewhere that nonprofit trade associations would be wise to get ahead of this curve and embrace certain reforms now.
Regardless, I think Sean and I can agree that more public debate about philanthropy is a good thing. This is a rich and complex sector, and it's important that Americans better understand it. I'm glad The Givers has received attention and prompted more public discussion. And I'm glad that Sean Parnell and The Philanthropy Roundtable have engaged with the book's ideas in a thoughtful way.