March 03, 2016

Presidential Race’s Insider-Outsider Revolt Holds Important Lessons for Philanthropy

Seth Wenig, AP Images
In their annual letter, Melinda and Bill Gates, the world's richest couple, talked candidly about power and democracy.

The fury of America’s strangest presidential campaign season in generations has exposed deep fissures that will reverberate across nonprofit America.

As we digest the Super Tuesday results, nobody involved in a charity or foundation can afford to ignore the national revolt against institutions and organizations. Some of us may worry that the sizable portion of the public consumed with wrath at the political establishment could soon come knocking at the door of our own establishment.

In many ways, the bitter presidential race between outsiders and insiders mirrors the clash in philanthropy between plutocracy and democracy. The debate over who gets to decide where the money goes — and how much transparency we demand of philanthropists who give billions — is intensifying, especially as we see more and more dollars hoarded in foundation coffers rather than flowing to worthy causes or to the federal treasury.

Amid all the campaign squabbling, it was easy to miss two important examples in recent weeks that illustrate the different ways two generations of donors are dealing with the pressure to be accountable to the public.

Bill and Melinda Gates, the wealthiest couple in the world, last month issued their annual letter on philanthropy — and tackled questions about power and democracy head-on. Meanwhile, a new book laid bare the secretive techniques and tactics that have given Charles and David Koch greater influence over public policy than perhaps any other Americans.

Rabbani and Solimene Photography/Getty Images; Patrick T. Fallon/The Washington Post/Getty Images
David and Charles Koch give to museums, hospitals, and other institutions but also to public-policy institutions that don’t have to disclose their contributors.

The Gateses’ annual letter introduced the issue of power with a dose of whimsy. The couple started the piece with a question posed to them by high-school students in Kentucky: If you could have one superpower, what would it be?

They riffed about flying, invisibility, time travel, and Superman. But Bill and Melinda Gates know they already have a superpower: They get to determine the agenda in global health, education, and other areas where they throw their foundation’s money.

As the world’s largest philanthropy, with assets of $39 billion, the Gates Foundation can gather the top players on any cause at a moment’s notice. It can tilt the scales by giving lots of money to groups working on its favorite causes and proposing its favorite solutions. It can rally a large network of powerful allies behind the foundation’s ideas. And it can play for the long run, committing funds over many years to pursue ambitious goals.

Perhaps most important, Bill and Melinda Gates can command the attention of governments. I was particularly taken with this note in the section of their letter on environmental funding and climate change:

"Governments have a big role to play in sparking new advances, as they have for other scientific research. U.S. government funding was behind breakthrough cancer treatments and the moon landing. If you’re reading this online, you have the government to thank for that, too. Research paid for by the U.S. government helped create the Internet."

It’s absolutely true, as the Gateses argue, that government plays a big role. That’s because government budgets dwarf those of organized philanthropy. Only U.S. government policy, for example, could have expedited the philanthropic response to the HIV/AIDS crisis in sub-Saharan Africa in the 2000s, saving millions of lives. American citizens should be proud of these large-scale efforts that happen in partnership with the private sector.

But there’s another reason I’m glad the Gates letter pointed out government’s outsize role in combating climate change: We elect that government, and its decisions are an extension of the will of the people.

No one can pretend that the Gates Foundation doesn’t have a much bigger thumb to drop on the policy scales than John Q. Citizen. It does. But unlike other billionaire philanthropies, the Gates Foundation goes about its work in a forthright and somewhat transparent fashion. In truth, I’m a fan of both the annual letter and the foundation’s willingness to admit mistakes over time and to learn by trying.

While I might strongly disagree with its investments in education and views on teachers, for example, at least that policy discussion took place in public, and the Gates Foundation freely acknowledges the role of government.

Such candor and understanding of the limits of power are essential in this new world where the establishment can no longer expect to hold complete sway. Yes, the Gates Foundation is the plutocracy, but it may be a version of it in its most open form: When the public knocks on the establishment’s door demanding change, at least Gates might have an answer and a way to collaborate.

This is in strong contrast to the kind of philanthropy outlined in Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right. The latest book by investigative reporter Jane Mayer tells the story of Charles and David Koch, their family business, their philanthropy, and their shadowy libertarian campaign against government and communitarian solutions.

In Ms. Mayer’s deeply researched and well-written account, Koch philanthropy is a sticky and not very transparent mix, allowing the brothers to reap publicity and tax deductions for their gifts to museums, hospitals, and other institutions that will burnish their images and at the same time stay in the shadows by supporting public-policy institutions that don’t have to disclose their contributors.

In other words, it’s a closed system. It’s not so much the ideology involved (though I disagree with it) as it is the hazy nature of the Koch network. It’s an establishment that doesn’t want you to necessarily understand what it’s doing.

In a year when the voters are trying to knock down the fortresses of modern political parties, it may seem strange to contrast two obviously plutocratic organizations run by two billionaire families. Neither is a crowdsourced democratic movement like Giving Tuesday or Kiva or Kickstarter or the Bernie Sanders campaign. But the contrast between the two is instructive. One looks outward and recognizes its necessary partnership with elected government and the public to bring about social change; the other does not.

The question that major philanthropies face is whether they earn the public trust — and thus justify the extraordinary exemption they receive from taxation so that they can direct their funds for the common good rather than sending their money to the IRS so it can be distributed by an elected government.

That the presidential campaigns are being strongly influenced by groups of clear outsiders — from the Tea Party to Black Lives Matter — shows that the political landscape of our democracy is changing. But that influence should also show us that our ideas about democratic philanthropy may also be changing. It’s time to pay close attention.

Tom Watson is president of CauseWired, a consulting firm that advises nonprofits, and a lecturer at Columbia University. He is a regular columnist for The Chronicle of Philanthropy.