December 04, 2015

Will Zuckerberg and Chan End the Philanthropic Oligarchy?

Gary He/Insider Images / Polaris/Newscom

Priscilla Chan and Mark Zuckerberg have the chance to usher in new ways of sharing wealth and opportunity.

The size of this week’s $45 billion pledge from Priscilla Chan and Mark Zuckerberg is remarkable, but for all the hype that they are doing philanthropy in new ways, in reality they are following a very well-worn path.

The problem is that this path leads nowhere except to failure and resentment. What’s really needed is a thoroughgoing transformation of philanthropy in which elite control is upended and the citizenry is empowered to shape a future that’s in everybody’s interests.

Ms. Chan and Mr. Zuckerberg could be part of this revolution. Perhaps they could even help to lead it. I hope they do. But that will require some fundamental changes inside themselves and in the institutions they create.

Let me explain.

Both "old" and new" philanthropy are predicated on an incredibly inefficient model of problem solving: encourage 1 percent of the population to accumulate vast fortunes at considerable social and environmental cost while the other 99 per cent struggles to stay afloat.

Then watch as billionaires and the foundations they create reinvest their money in ways that promise much but deliver very little: There’s no evidence that philanthropy has influenced the course of poverty, inequality, violence, or environmental degradation in the last century or so (though there have probably been a few improvements in global health).

Meanwhile, the size, profile, and ambition of these investments — designed to shape the world in the image of their donors — inevitably stirs up suspicion, and eventual opposition, when the rest of society objects to the privatization of public policy and the subversion of democracy it represents. This opposition then produces a political reaction to curb the influence of big donors, as in the Tax Reform Act of 1969, which set some new (though admittedly-flimsy) rules on foundation spending.

We are some way from an equivalent point in the current cycle of philanthropic expansion, but the rising scale of bequests and the activist intentions of their donors actually make further blowback more likely, unless that basic model of problem solving can be turned on its head: Instead of giving back from a system that’s so inefficient, why not give forward to create something new, as an equal partner in a shared endeavor of social transformation?

That’s the opportunity that’s waiting to be seized, and it represents a role for philanthropy that’s 100 times healthier and more effective than the one we have today. How so?

In every period of large-scale social progress in recent history (as opposed to simple economic growth or gains in productivity), a strong and visionary government and a strong and independent civil society have been able to channel the fruits of an expanding market economy toward the public good — think post World War II recovery in the United States and Europe, for example, or the social achievements of the 1960s or the East Asian "miracle," and the democratization of Eastern Europe.

All these examples were marked out by substantial social conflict but also by a growing sense of shared or common purpose (with everyone paying taxes). Progress was slow but sure. Social and economic horizons expanded gradually toward a vision that was democratically determined. Resources (including philanthropy) were used to support the independent agency of others so that they could take control of their destiny. Change was messy and unpredictable but worthwhile for the sustained gains it brought in the longer run.

Today, at least in the United States, none of these conditions apply.

Large parts of government and civil society are subservient to business.

Prosperity is monopolized by a few supernovas instead of being shared among the population. Time scales for social change have collapsed to two- or three-year chunks. No common vision exists of which groups can organize.

Technology has made enormous strides, but with little spillover effects on any of these problems. And philanthropy is an increasingly divisive force — used as a control mechanism instead of a support system for the self-governing efforts of other institutions. The lessons of history have been ignored by a new generation of philanthropists who believe that they, and they alone, can make a difference.

This is the context in which Ms. Chan and Mr. Zuckerberg’s announcement must be assessed. Is there any sign that they recognize the depth of change that is required?

In the long and thoughtful letter they published to coincide with their announcement about their Facebook shares, there is much to applaud and some signs that the pair have learned from mistakes — like the failure to involve communities in Newark’s school overhaul and the short time horizons that philanthrocapitalists employ. But on the crucial issue of control versus empowerment, the signs are less encouraging.

"We must participate in policy and advocacy to shape debates," the letter says. "Many institutions are unwilling to do this, but progress must be supported by movements to be sustainable." But in reality, "we" is really "they" — a talented and generous couple but with no more right to "shape debates" than you or I have.

More private money flooding into the policy process will be met by even more from protagonists with different views, relegating the public to an even more marginal position. The funding of social movements could be disastrous, removing them from their base and making them dependent on the whims of donors.

None of this supports the independent, self-generating processes that underpinned earlier episodes of social change, and there’s nothing so new or different about technology that means that history is defunct.

The key issue here is control. Faced by the challenges of spending money effectively, the natural temptation is to see yourself as the key actor in the process. That’s why foundations spend so much time readjusting strategies and putting new labels on old wine: They actually think it makes a difference.

But philanthropists are not key actors, nor should they be, since they are not the ones who do the work or suffer the consequences or know what’s happening on the ground. That’s how it has to be in any successful social process, since "social" means people, and people want to do things for themselves.

Paradoxically, the more you try to control social change, the less you succeed and the more opposition you create along the way. So it’s a self-defeating process. Far better to let go and take advantage of the multiplier effects that come from liberating other people to get on with the work they want to do. But that implies a major reversal of power relations so that philanthropists are no longer the sole decision makers at the top of the financial tree.

If you want to advance equality, then you must practice it yourself. If you want people to follow you, then you must be consistent in your behavior (and in that respect it’s high time that Facebook paid its taxes in the territories in which it works). No more giving with one hand and taking with the other.

Unfortunately, it’s extremely difficult to do any of these things within the structure of a conventional foundation or corporation. So it’s here that there’s most room and most need for creativity, so long as donors are prepared to use their resources in ways that strengthen the independence, capacity, and connectivity of broad swaths of society.

Let the money flow freely. Let others decide how to use it. Perhaps then philanthropy can bring people together instead of forcing them apart.

I only have a vague idea of what this means in practice — decentralized self-governing funds perhaps? Support for a much bigger and independent, noncommercial public sphere? Using funds to guarantee a pension scheme for all community organizers in the country? It’s tough to think this way but far more exciting and effective than trying to shoehorn people into your own small vision of success.

Philanthropy is supposed to be private funding for the public good, but increasingly it’s become a playground for private interests. Who will step forward to reverse this noxious trend? Will Priscilla Chan and Mark Zuckerberg turn out to be another pair of well-meaning philanthropic oligarchs or progenitors of new ways of sharing wealth and opportunity to go with their beautiful new daughter? Now that really would be progress.

Michael Edwards is a distinguished senior fellow at Demos and editor of Transformation. He formerly worked as a grant maker at the Ford Foundation.