For anybody who wants to learn how foundations have changed in the past 50 years, a new paper by the historians Stanley Katz and Ben Soskis is essential reading. Commissioned by the William and Flora Hewlett Foundation to mark its first half-century of operations, the paper looks at how philanthropy has operated in response to big changes in American society, such as the rise of the Great Society and the growth of inequality.
But the historians fail to examine a key issue: What has happened to the recipients of this largess — and the nonprofits that were left out of the grant making?
It is one of the lasting weaknesses of philanthropic history that it has rarely come to grips with donors’ impact on nonprofits. We should expect an assessment of whether all the billions of dollars foundations and other donors have poured into our communities have enabled nonprofits to solve the nation’s most serious and recalcitrant issues and problems. And we need to have a better understanding of how nonprofits have been changed because of the money philanthropies have provided.
Close observers of philanthropy see little change in the past century. As the philanthropy adviser Betsy Brill noted in a Forbes opinion piece, “Despite the obvious progress we’ve made over the past 100 years, it’s clear that some aspects of philanthropy remained unchanged.”
Here are some of the things that are unchanged that I hope future histories of philanthropy will note.
Philanthropic giving priorities have remained the same.
Grant-making priorities still ignore the constituencies that form the majority of the American population: low-income and working-class people and their families, minorities, the disabled, and others in need. A small share of foundation money goes to help such people while far more significant dollars go to colleges, hospitals, and other institutions that may help such people — but do not make that their primary focus.
A tinier percentage of philanthropic money is directed to advocacy groups and those that work on community organization, marking little or no change in the behavior of foundations since their early days.
Wealthy donors make the same omissions as foundations — still giving most of their money to establishment organizations in higher education, health, and the arts, while providing little support for local, grass-roots, social-justice, and advocacy organizations.
Elite boards still govern foundations.
The composition of foundation boards remains essentially the same as a century ago. Most board members are wealthy people, typically highly paid professionals, making their institutions the most elite in the country. While many more people of color and women serve on foundation boards than they did throughout the past century, they come from the same wealthy and highly professional backgrounds as their white and male counterparts.
Very few community people, grass-roots leaders, teachers, social workers, union members, and small-business representatives serve on foundation boards. Membership has become a class issue.
It is little wonder, therefore, that philanthropic priorities have changed little over time. Unrepresentative boards still determine the direction and nature of foundation giving.
Foundation access has become even more limited. Though it has always been difficult for small, relatively unknown nonprofits to gain access to the foundation system, recently such difficulties have increased, even for more established groups. Today over 80 percent of foundations do not accept unsolicited proposals. That figure is expected to rise to over 90 percent in coming years, given the growth the Foundation Center has already tracked in recent years.
No longer is it just a question of small and controversial organizations being left out; foundations today often refuse to consider proposals from large organizations that do not fit into their strategic priorities.
Despite the huge tax benefits donors to foundations receive, they are being permitted to deny philanthropic access to a large majority of Americans, an undemocratic process if there ever was one.
Foundations continue to administer their grants in a slow, bureaucratic style, unchanged by technology.
Grant-making procedures and operations remain relatively unchanged. Foundation boards still meet infrequently, as a rule no more than four times a year, and many don’t award grants more than twice a year. Very few have adopted a system of “rolling” grant making that permits nonprofits to receive funds between a foundation’s board meetings, and that often puts nonprofits in a budget squeeze.
Staff members at foundations have limited authority to make grants that could help nonprofits meet their budgets, even for small sums.
General-support grants remain difficult to obtain despite their importance to the flexibility and stability of nonprofit organizations. To date, no more than 20 percent of all foundation grants go to general support. And only a relative handful of foundations are willing to provide multiyear funding to their grantees.
After all these years, the nature of grant making reflects the needs and whims of grant makers, not the interests of nonprofits.
It is remarkable that associations of foundations and other organizations dedicated to improving philanthropic effectiveness have done little or nothing to change the ways foundations and other donors treat nonprofits.
Philanthropy continues to abet the spread of inequality.
The growing wealth of individual donors and the proliferation of foundations, especially large ones, have contributed to the vast increase in inequality in recent years. For more than a century, wealthy individuals have always given most of their charitable money to organizations that have benefited them — their colleges, cultural organizations, hospitals, and medical-research institutions.
The Giving Pledge, which now has attracted signatures from almost 170 billionaires, has exacerbated this problem. In pledging greater giving in their lifetimes, billionaires are likely to give even more money to the largest and richest nonprofits and bypass those groups they have historically ignored, thereby widening the inequality gap.
For their part, foundations, with a few exceptions, have followed the patterns of giving of wealthy individual donors, contributing to the “haves” and ignoring the “have-nots.” Some major grant makers — led by the Ford Foundation — have announced that they will shift their priorities to eliminating inequality.
But there is no indication that such efforts will seriously tackle problems of inequality, except at the edges. There are few signs that even Ford, perhaps America’s most conscientious foundation, is prepared to fund tough investigations of the nation’s economic system, financial institutions, tax policies, antitrust measures, financial regulatory and enforcement policies — those institutions and issues that are the basis and cause of inequality. Nor is it clear it will support advocacy and lobbying that could transform the economy in a substantive way.
Unless philanthropy is willing to support fundamental changes in the economic system, inequality will continue to be the American way of life.
Worrisome Trend
While historians would find too little change if they examined foundation giving from the nonprofit point of view, they would find at least one big and worrying trend.
Large foundations have always been able to exert greater influence on public policy than nonprofits, but grant makers today now overshadow the efforts of their grantees. Public education is an example of this new aggressive policy stance by major foundations.
The Gates Foundation has poured hundreds of millions of dollars into the development of the Common Core standards for public schools, providing grants to school superintendents and other school officials, state legislators, and media sources in an attempt to promote the idea nationally, rather unsuccessfully as it turns out.
This effort left nonprofits with little capacity or money to counter the push for Common Core. In the State of Washington, Gates pumped millions of dollars into an effort to persuade voters to pass a measure creating charter schools, succeeding in its third try despite the opposition of teachers’ unions, civic organizations, and other groups that were outspent,
Betsy DeVos, President Trump’s nominee for secretary of education; the Walton Family Foundation; and the Broad Foundation similarly have used their money and muscle to support charter schools and school-voucher programs. Nonprofits opposed to these measures have not had the resources to compete to influence public policy.
With the growth of many more multibillion-dollar foundations, it is likely that philanthropy will continue to crowd out nonprofits, even the larger ones, from shaping public policy. In the coming four years, many progressive organizations may have to face the increasing policy pressures of large conservative foundations on issues like civil rights, health care, voter registration, reproductive rights, and climate change. How nonprofits respond to this new challenge will test the strength of our democratic institutions.
We Americans tend to celebrate philanthropy and philanthropists with an uncritical eye. Charitable giving is applauded regardless of its impact or consequences. The media swoons before the largess of big donors or the accomplishments of foundations. Rarely do we look behind charitable giving to examine the recipients and their problems, even though they are the raison d’être for philanthropy.
Without nonprofits, there would be no philanthropy, only charity. It’s time we pay attention to the organizations that put donor money to use.
Pablo Eisenberg, a regular Chronicle contributor, is a senior fellow at the Center for Public & Nonprofit Leadership at Georgetown University’s McCourt School of Public Policy. His email address is pseisenberg@verizon.net.