Four long years ago, just after Donald Trump’s election, philanthropy historian Benjamin Soskis set out a new manifesto for the philanthropic world in the Trump era. “The fundamental liberal values, those of tolerance and respect for others, of decency, charity, and moderation, have been enfeebled in our public life …. Philanthropy must be a place in which those values are preserved, defended, and championed,” Soskis wrote. “Philanthropy must serve not as an instrument of accommodation but as an agent of resistance.”
So how did philanthropy do over the last four years?
Conservative philanthropists may well describe these years as a success. The laissez-faire, anti-tax, and anti-regulatory agenda funded by the Koch brothers, the Mercers, and others has borne fruit. No fewer than 16 high-ranking officials in the Trump White House had ties to the Koch Brothers, who, over four decades, had invested hundreds of millions of dollars in conservative think tanks, climate-change-denying lobbyists, and university institutes with neutral-sounding names but unashamedly right-wing agendas.
From their White House perch, those 16 officials put the Koch worldview into action — neutralizing or abolishing government services, scrapping environmental regulations, opposing universal health care, and much more. This “Kochtopus,” as it was dubbed by The Economist, succeeded in significantly shifting the window of political discourse.
Meanwhile philanthropists who regard themselves as liberal or progressive have spent too much time and money ameliorating symptoms rather than addressing causes. They have funded projects to feed the hungry, create jobs, build housing, and improve services. All admirable, but all quickly offset by government spending cuts, predatory lending, low wages, and the effects of systemic racism. Philanthropy has done little to address the problems arising from growing inequality, which were exacerbated in the Trump era but have been a feature of politics in the United States and Europe for almost five decades.
What Happens Next?
So, what happens next? Where does philanthropy go under a new presidential administration likely to be much more accommodating to progressive changes?
The philanthropic world could start by taking an honest look at a tax system that benefits wealthy donors at the expense of those they seek to help. Calls for higher taxes on the rich are growing. A survey by the Organization for Economic Cooperation and Development last year suggested that voters across developed countries want governments to raise taxes on the wealthy. Political reality may well incline President-elect Joe Biden to distance himself from the more radical proposals made by some Democrats to increase taxes on the superrich. But pressure for serious tax increases will grow when the pandemic bills start piling up — and they could well be accompanied by calls to reduce tax deductions granted to philanthropists.
The democratic deficit in philanthropy is clear. The personal choices of the rich do not closely match the spending choices of the majority of the electorate. Yet these wealthy donors are allowed to claim hefty tax deductions on their favored charitable gifts. What they are giving away, however, is not entirely their own money, since tax relief effectively means ordinary citizens are supporting causes chosen by the rich. And their choices often reinforce, rather than reduce, social inequality.
Why, for instance, should the poor pay taxes to subsidize the opera houses patronized by the wealthy? There is a strong argument that the money donated by philanthropists might be put to better use if it were collected as taxes and spent according to the priorities of a democratically elected government. Some worry such changes would lead many philanthropists to simply stop giving, increasing problems for already-strained nonprofits. But advocates for change have a ready response: Create differential rates for tax deductions so that donations to, say, a charity for women facing domestic violence would attract more generous tax concessions than gifts to a well-endowed alma mater.
But who would decide on the hierarchy of approved causes? To allow government to choose throws up a more fundamental problem. “That’s giving the state a dangerously high level of discretion,” says Rowan Williams, former archbishop of Canterbury in an interview for my new book, Philanthropy — from Aristotle to Zuckerberg. “The more the state takes on a role of moral scrutiny, the more I worry .… The history of the last hundred years ought to tell us that a hyperactivist state with lots of moral convictions is pretty bad for everybody.”
Greater Agility
How, then, can philanthropy make itself compatible with democracy? The answer lies in discerning the role of philanthropy in relation to the market and to government. Philanthropy has three vital functions. It can support the kind of higher-risk research and innovation generally avoided by government and business. It can plug gaps left by market failure and government incompetence. And it can fund the nonprofits that mediate between the individual, the market, and the state.
The coronavirus pandemic has underscored philanthropy’s critical role as an independent entity, rather than as a spinoff of the business world or an adjunct to government. So far, major foundations and individual donors have pledged or paid out $16 billion in the fight against Covid-19. And they have looked a good deal more agile in their responses than many governments.
One of the singular strengths of philanthropists is that they can develop a long-term vision, which eludes governments and big private companies. Bill Gates’s work to address global pandemics is a prime example. After funding the 2014 fight against Ebola, Gates gave a TED Talk in which he warned that a disease as deadly as Ebola but as infectious as influenza could kill 10 million people. He repeated the warning every year, even seeking a private meeting with Donald Trump in 2018, only to find that the president’s response was to cut funding for the Centers for Disease Control and Prevention and pull out of the World Health Organization during the pandemic.
Philanthropy has gone some way to fill the gap.. Google has pledged more than $1.2 billion in cash and in-kind support. Rockefeller Foundation has committed $1 billion, as has Twitter’s Jack Dorsey. Cisco Systems, the Mellon Foundation, the Open Society Foundations, and Tata Trusts have each made pledges of about $200 million.
Now, of course, they need to deliver on those pledges. Gates has already spent $694 million on building capacity for vaccine distribution in the developing world. He has awarded grants or made investments in five of the companies leading the race to discover a successful coronavirus vaccine and is backing the world’s largest vaccine maker, Serum Institute of India, to produce 100 million doses, priced at less than $3 a shot for poorer countries.
Nurture a Plurality of Voices
Philanthropy is doing its best to remedy the failures of both the pharmaceutical industry and governments across the world — funding the kind of high-risk innovations avoided by businesses, which are focused only on maximizing profit, and politicians, who rarely look beyond the next election.
Yet if philanthropy is to make the best case for its compatibility with democracy, it needs to do more. It needs greater self-awareness of the dangers that come from favoring causes that reflect the interests of the wealthy. It needs to be more open and transparent, and revamp its own governance so that it reflects the social, ethnic, and gender balance of the communities it seeks to serve. And it needs to more directly address economic inequality.
That will require nurturing the plurality of voices essential to keeping government and the free-market accountable by directly supporting community organizers, racial-justice leaders, human-rights activists, and tax-justice advocates. If philanthropists can use grant making to empower ordinary people to challenge misdirected governments or bad business practices, then they can strengthen, rather than weaken, democracy.
Philanthropy as a whole can learn much from the tactics of the conservative donors who laid the groundwork for the Trump era. Like them, the larger philanthropic world needs to support those seeking to change the public debate on social inequality, racial injustice, and climate responsibility. Some may consider this too political. But real change won’t happen without shifting the political discourse back to where most philanthropists want it to be — away from tax and fiscal policies that favor the wealthy and toward those that eradicate poverty and racism and protect our planet.
