Gift Horse or Trojan Horse?

AP Photo/Nati Harnik

Berkshire Hathaway Chairman and CEO Warren Buffett, right, and Bill Gates, Microsoft co-founder, sit together during an interview with the Fox Business Network. 

The Givers: Wealth, Power, and Philanthropy in a New Gilded Age
by David Callahan
Knopf

This article appears in the Summer 2017 issue of The American Prospect magazine. Subscribe here

During the first Gilded Age, the public response to the birth of modern philanthropy was intense ambivalence. The nation had long celebrated individual acts of generosity. Many appreciated that the new, enormous industrial fortunes, some of which were channeled into private foundations, could be applied to the pressing social needs brought on by urbanization and mass immigration. But the belief that those piles of wealth threatened the nation’s egalitarian traditions was equally strong. For some of the most astute observers of American society, philanthropy simultaneously represented a social good and a social menace.

The Congregational minister Washington Gladden summed up this uncertainty in a 1910 sermon. “Never before have such colossal fortunes been heaped together in so short a time and never have such gigantic plans for gratuitous distribution of wealth been conceived.” Gladden cautioned that this new phenomenon warranted careful monitoring. “Nothing like this has ever happened to the people of any nation. What it will do for us no one can be sure.”

For much of the rest of the 20th century, the major players that dominated the philanthropic scene remained largely the same. In the last few decades, though, the landscape has experienced a dramatic transformation with the arrival of a corps of hands-on living donors, the product of the overcharged and inequitable wealth creation of recent years. The capacities and ambitions of these new philanthropists now rival, and in many respects surpass, the older legacy foundations. The Gates Foundation dwarfs the Rockefeller Foundation; the resources pledged to the newly formed Chan Zuckerberg Initiative greatly exceed those available to the Ford Foundation. And what these new philanthropists will do for us no one can be sure.

In his important new book, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, David Callahan offers a survey of this landscape, suffused with the same ambivalence, uncertainty, and moral hedging that has characterized much of the best work on American philanthropy. Many of the names in his book will be familiar to the general reader: Gates, Buffett, Soros, Koch. But the cast of characters that Callahan, the founder and editor of the online journal Inside Philanthropy, features is much broader. It includes hedge-fund billionaires like John Arnold (who has funded pension and criminal justice reform) and Jim Simons (a major backer of basic scientific research), techies like Tim Gill (a leading champion of LGBT causes), and old-economy one-percenters, such as Amos and Barbara Hostetter (cable TV moguls who have supported arts organizations and environmental work in Boston).

It’s a Star Wars cantina of mega-donors, a dramatis personae that defies easy generalizations or narrative coherence. But this complexity is itself worthy of note. Unlike a half-century ago, as Callahan argues, there no longer is a single, cohesive, and homogeneous philanthropy establishment. That makes the job of any surveyor that much more difficult.

 

IN APPROACHING HIS subject, Callahan has positioned himself between the poles that define most contemporary discourse surrounding philanthropy. He tacks between commendation and condemnation, between the messianism of the philanthro-capitalist crowd, who believe that “the rich can save the world,” and the irreconcilability of many academic and political critics, who link philanthropy to broader systems of exploitation and inequality, and often seem reluctant to concede that it can provide any social benefit whatsoever.

What makes Callahan’s account distinctive is that he does not stake his claim entirely in either of these camps. He borrows from each, often presenting their contending perspectives in a single paragraph. The result is less a synthesis than a stalemate—one that is not always analytically satisfying but that honestly reflects the unstable grounds of philanthropy’s legitimacy in the United States. “In many ways, today’s new philanthropy is exciting and inspiring. In other ways, it’s scary and feels profoundly undemocratic,” he writes in one typical passage. “The deeper I’ve dug into today’s mega-giving, the more I’ve come to feel whiplashed between hope and fear,” he writes in another (and the reader could say the same).

The reasons for hope and for fear that Callahan offers stem from the same fundamental dynamics. First there is the issue of increased scale. As Callahan demonstrates, with the requisite references to Piketty and the Forbes 400, the massive concentration of wealth we’ve witnessed over the last few decades has produced an unprecedentedly large and varied class of potential mega-donors, able to drop multimillion-dollar gifts with little damage to their bank accounts. Second, the philanthropy of many of these donors has become increasingly sophisticated and politically aggressive, abetted by a mushrooming of policy-oriented nonprofits and surging hyper-partisanship. In fact, it’s policy-oriented philanthropy that attracts much of Callahan’s scrutiny and apprehension. Finally, the growth of this politicized philanthropy has coincided with a decline in the status of and resources available to public systems of governance.

On the one hand, the rise of mega-philanthropy can be regarded as a blessing—at precisely the moment when discretionary government funding has reached historically low levels, philanthropy is stepping in to fill important gaps. Callahan is willing to acknowledge the inadequacies and inefficiencies of government and to recognize that philanthropy can play a role in circumventing entrenched interest groups, bypassing gridlock, advancing pluralism, and promoting the interests of groups ignored by majoritarian preferences.

But he is never entirely convinced by these arguments, at least not enough to override his suspicion that the intervention of “super-citizens” constitutes a severe threat to democratic institutions and norms. In the strongest formulation of this claim, he gestures toward a causal relationship between increased political philanthropy and decreasing civic engagement. The rising power of the philanthropic elite, he writes, necessarily “push[es] ordinary Americans to the margins of civic life.” In making this claim, Callahan discounts both the power of the bogeyman partisan benefactor—think Koch or Soros—to mobilize grassroots activism, and the impact of philanthropic investment on civic engagement and democracy-building, which according to the Foundation Center has totaled some $3.6 billion since 2011. Then there’s the fact that the resistance to Trump’s presidency has been fed by grassroots activism that has relied relatively little on major donors.

Which is not to say that Callahan’s critique is without real merit. There has always been a democratic challenge to private philanthropy, and it grows stronger when you are dealing with even more zeroes at the end of a gift. His argument gains particular force when it is directed across the entire ideological spectrum. Unlike Jane Mayer, whose investigations of the Koch network proceeded from the assumption that libertarian philanthropy was uniquely suspect, but did not consider the threat to democracy posed by progressive philanthropy, Callahan has an issue with unaccountable philanthropic power and privilege, even when directed toward causes he favors.

Ultimately, these concerns lead Callahan to insist that the damage philanthropy does to civic equality outweighs the fact that it is likely “a net positive in its substantive effects on U.S. society.” He ends with a series of lightly sketched reforms meant to make the philanthropic sector more transparent, accountable, responsive—and less aggressively political. Some are reasonable—more oversight from state regulators, for instance. Others seem quixotic, such as the establishment of an independent federal office of charitable affairs that would analyze the effectiveness of philanthropic giving. Still others are intriguing but need more time in the conceptual oven, such as his call to strip nonprofits working to shape policy of their ability to receive tax-deductible donations, even if they operate outside the political arena—or “upstream,” in the realm of ideas and public education.

Yet Callahan, in the book’s final paragraphs, also appreciates the limits of these modest reforms. Only the inauguration of a “new era of economic democracy” will truly reduce the influence of private donors over public life. But how will that age come about, and what paradoxical role should philanthropy have in bringing it on? Callahan leaves this question unresolved. But it’s an important one that has its own Gilded Age precedents.

One way the early 20th-century philanthropists dealt with their own ambivalence to philanthropy was to dedicate their philanthropy to the project of ending the need for philanthropy. Sometimes this meant searching for the root causes of social ills; sometimes it meant seeking to transform the economic system that made the accumulation of wealth possible. What Callahan’s book calls out for is a philanthropy that would mitigate, and even undermine, its own political power. It is, at the least, a worthy ambition, if one not likely to be realized anytime soon.  

 

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