The corrupting influence of concentrated wealth on our democracy has never been starker. Elon Musk spent $290 million to steer the 2024 election, securing unprecedented influence in the Trump administration and extraordinary power to dismantle the federal government. He stands to reap billions in government contracts while working hand-in-glove with President Trump to drive a wrecking ball through federal agencies that support all Americans. Yet a large faction of voters has so profoundly lost trust in government that they cheer as Trump and Musk tear it all down.
How did we get to this rock-bottom moment, and how do we find our way out?
The economic order of the last 50 years has generated widening economic inequality and a pervasive cynicism and despair within which a politics of nihilism has taken root. Beyond the urgent work to defend the rule of law and rebalance federal power, rolling back authoritarianism will require efforts to curb concentrated wealth, rebuild the social contract with the American working and middle classes, and restore trust.
Americans want change. Consider the record-breaking crowds that have turned out in recent weeks for Vermont Sen. Bernie Sanders and New York Rep. Alexandria Ocasio-Cortez’s “Fighting Oligarchy” tour: 34,000 in Denver; 11,000 in Greeley, Colo.; 20,000 in Tucson.
Channeling Outrage
Funders should take note of this display of collective outrage at a political and economic system overtaken by billionaires. And they should consider investing in four often-overlooked areas critical to addressing economic inequality, removing the corrosive influence of money in politics, and restoring faith in democratic institutions.
Progressive taxation. Extreme wealth is the root of unequal power in America, and reining it in is fundamental to healing our democracy. Fortunately, the evidence already exists for how to get this done: In the middle of the last century, a highly progressive federal tax system reduced wealth inequality and broadened the distribution of political power in the United States.
From the 1930s to the 1950s, the top 0.01 percent of income earners paid effective tax rates in excess of 60 percent, while the bottom 50 percent paid less than 20 percent. The tax code remained highly progressive into the 1970s. During that timeframe, the middle 40 percent of Americans roughly doubled their share of the nation’s wealth. But in the decades since, Congress has significantly reduced effective tax rates for the wealthy — the fruit of a multi-decade organizing effort by conservative tax advocates and their wealthy benefactors. The result has been widening wealth inequality.
Creating a more progressive federal tax code and fairer state tax systems can reduce the economic and political power of the ultrawealthy and enhance trust in government. And such reforms enjoy popular support.
Until recently, foundations have invested scant resources in progressive tax reform, but that may be changing. A new donor collaborative, Better Taxes for a Better America, was launched in 2023 to attract and align funds for state and federal tax-reform efforts. And groups such as the State Revenue Alliance support state-based organizing and advocacy for progressive tax policies, including campaigns to enact new state-level millionaires’ taxes.
While federal tax policy is headed in the wrong direction in the near term, funders can lay the groundwork for a long-term organizing and advocacy strategy for progressive tax reforms through investments in state efforts. And as Congress begins debate to extend the Tax Cuts and Jobs Act of 2017, philanthropy can support communications efforts that call attention to the harms of slashing taxes on the wealthy. Simultaneously, they can spotlight the benefits of a more progressive federal tax code, including increased support for child care, affordable health care, education, and housing.
Campaign finance reform. Achieving true democracy in a capitalist society with unequal wealth distribution requires erecting strong barriers against the influence of money in politics. While Citizens United and earlier Supreme Court decisions made it more difficult to meaningfully limit political spending, there are other ways to moderate the influence of wealth.
One of the most promising is public financing systems that match government dollars to contributions from small-dollar donors and elevate the influence of middle- and working-class Americans in the political process. New York State’s new public financing law for state offices, which went into effect during the 2024 election, helped double the number of small-dollar, local donors, increasing their share of contributions to candidates from 5 percent to 45 percent, according to a Brennan Center analysis.
A multiyear investment strategy to advance similar public financing reforms in other states, counties, and large cities could generate a pipeline of new political talent less beholden to the wealthy and more accountable to ordinary Americans. It could also help build public demand for a federal financing system.
Funders have a lot of room to grow in this area. Just $78 million, or 1.4 percent of total philanthropic investments in democracy issues, went toward campaign-finance reform in 2023. And much of that spending focused on research and data initiatives to increase the transparency of political contributions, according to people I’ve spoken to who work in the field. More funding needs to go toward advocacy for structural reforms that would shift power to ordinary Americans.
As David Donnelly, executive director of the Pro-Democracy Center, told me, “It’s like taking an MRI over and over that tells you that you have cancer, which is important to know, of course, but then there’s no money for treatment.”
Rebuilding labor power. A vibrant labor movement is crucial for increasing workers’ share of national income, reducing wealth inequality, and counteracting the cynicism that allows authoritarianism to take root.
Through the collective-bargaining process, unions nurture the skills of democratic citizenship — consensus building, negotiation, collective action — and provide people with an experience of democratic agency in shaping their working conditions. Labor unions also serve as important mediating institutions for working people, advancing their interests in state and national politics and policymaking in ways they cannot do as individual, unorganized citizens.
The labor movement has gained traction in recent years through high-profile organizing drives by Amazon and Starbucks workers and successful efforts to unionize autoworkers in the South. In stark contrast to almost every other major U.S. institution, a large majority of Americans have a favorable view of unions.
And yet, a mere 6 percent of workers in the private sector belong to a union, and weak state and federal labor protections provide wide latitude for employers to bust unionization drives. Corporate stonewalling has prevented those Amazon and Starbucks workers from negotiating contracts. And last week, the Trump administration issued an executive order stripping collective-bargaining rights from more than 1 million federal employees, a brazen assault on federal unions.
Philanthropic investment in organized labor has increased in recent years, reaching $358 million in 2022, according to data from Candid. However, foundation funding for the labor movement lags far behind investment in areas such as education, at $65 billion, and the arts, at $12 billion.
An infusion of philanthropic dollars into worker organizing and pro-labor policy reform could bolster the labor movement, giving millions of workers who are eager to organize a chance to see how the democratic process can work for them. Such an investment strategy could include funding nonprofit workers’ rights or “alt” labor groups that organize nonunionized workers through activities such as advocacy and litigation, and pooled funds like the LIFT Fund, which supports worker organizing in the South.
Advancing a new economic vision. Neoliberal ideas favoring free-market capitalism, deregulation, and less government spending played an important role in reshaping the economic landscape of the last five decades. Neoliberalism gained traction because it offered a way of understanding and responding to economic challenges such as the high inflation and slow economic growth of the 1970s known as stagflation. But neoliberalism’s success was equally the product of an organized and well-resourced movement, conceived of and funded by conservative elites who created a sprawling ecosystem of think tanks and advocacy groups to promote its ideas and policies.
Funders who wish to build an economy more aligned with democratic ideals of self-governance must undertake a similar project. That means investing in scholars, think tanks, advocacy, and organizing to develop and spread a new vision for a democratic economy — one that distributes wealth more equitability and gives people the power to shape the institutions that affect their lives.
Funders such as the Hewlett Foundation and Omidyar Network have paved the way with recent initiatives that take a hard look at neoliberalism and lay the groundwork for an alternative economic paradigm. The Global Fund for a New Economy, launched just last year, aims to nurture organizations dedicated to creating an equitable and sustainable economy.
Rescuing U.S. democracy from the thrall of right-wing populism requires recognizing the interrelationship between our economic structures and the project of self-governance. A democracy cannot thrive within a plutocratic economic system that denies people democratic agency. Changing our voting system will do little to solve our democracy crisis if we don’t also address the spiraling economic inequality that is corrupting the political process and undermining public faith in government institutions. Democracy funders need to steer some of their billions toward a democratic reordering of our economic system.
The Hewlett Foundation is a financial supporter of the Chronicle of Philanthropy.
Loren McArthur is a consultant to two groups referenced in this op-ed — the Pro-Democracy Center and Better Taxes for a Better America.
