There was no audio component to the recently released “Giving USA 2017,” the comprehensive annual snapshot of American giving patterns, but I could almost make out the sigh of relief that accompanied the text on page 41 of the report. That’s where the authors noted that the number of megadonations — defined this year as gifts that crossed the $200 million threshold — had declined from the heights of 2015.
“In a reversal of recent trends,” the report noted, “very large ‘megagifts’ by individuals were not as prominent in 2016.”
It might seem strange to mark a decline in any sort of giving without some token hand-wringing, But, as the latest “Giving USA” notes in its opening line, with just a touch of understatement, “In many ways, 2016 was an unusual year.”
Part of the year’s oddness was reflected in the confused perspective it introduced on questions of power and privilege in American giving.
On the one hand, populist critiques of philanthropy flared. The Institute for Policy Studies, for instance, released a much-discussed report, “Gilded Giving,” which showed that charities are increasingly relying on a small number of large gifts from wealthy philanthropists, while contributions from lower and middle-income donors are making up a smaller proportion of total giving. David Callahan’s much-remarked upon new book The Givers has continued the discussion, sparking intense debate about the threat a new generation of megadonors poses to civic equality.
The drop in megadonations last year may mask larger truths about inequities within the nonprofit world.
On the other hand, the grass-roots activism and civic engagement that surged throughout the presidential campaign and exploded in the wake of Donald Trump’s election seemed to be nourished as much by small donors as by large ones.
The weekend after President Trump issued his travel ban, for instance, the American Civil Liberties Union, which vowed to challenge the order, brought in $24 million in online donations from more than 356,000 donors. A new survey by the PMX Agency and the National Research Group determined that small donors (those who contributed $100 or less last year) were eight times more likely to increase their giving in 2017 than donors who contributed more than $500 in 2016.
Gap in Philanthropy
What are we to make of these two contending views? Figuring out the relationship between the top-down and bottom-up dynamics within American civil society is one of the more consequential questions in national life.
The “Giving USA” researchers at Indiana University’s the Lilly Family School of Philanthropy offered one particularly compelling answer.
Because total charitable giving increased in 2016 but the number of very large donations fell, “more of that growth in 2016 may have come from giving by donors among the general population compared to recent years,” Patrick Rooney, associate dean for academic affairs and research at the Lilly School, explained in a news release. This represents “something of a democratization of philanthropy.”
That’s a phrase we’ve heard with increasing frequency in recent years, though it’s been around since the birth of modern philanthropy more than a century ago. Its usage tends to peak when the gap between philanthropy’s egalitarian pretensions and the realities of social and economic inequality grow especially wide.
But much of the phrase’s rhetorical punch comes from its slipperiness, from the range of relationships to social change that it allows. Democratizing philanthropy often is meant to suggest expanding access to the charitable establishment as it is currently configured — providing more seats at the table while serving the same fare. It can also mean transforming philanthropy by reallocating power over its decision making and resources. It can even involve rethinking how we define philanthropy itself.
And yet, though the concept of democracy has been imported from the political realm, paradoxically, when we speak about the democratization of philanthropy, we too often do so without explicitly addressing considerations of power — how we define it, who holds it, and who lacks it. If we are to treat the democratization of philanthropy as more than a sort of mystical watchword that conveys instant legitimacy on any philanthropic enterprise, we need to take those questions more seriously.
Democracy and philanthropy have long been understood in tandem. But it didn’t make much sense to talk about the democratization of philanthropy until the turn of the last century, when philanthropy itself became associated with the monetary contributions of the financial elite.
Small-Scale Giving
One way in which the term was used involved inviting small donors to participate in the sorts of institutions the wealthy had developed to harness and discipline their own giving. This was, for instance, a motivation behind the establishment of community foundations, which were open to small local donors as well as large ones.
As the banker and lawyer Frederick Goff, who founded the first community foundation, explained, the institution “is especially open to poor people with enough idealism about small amounts of philanthropy to want these to be kept useful as the years go by.” (Mr. Goff didn’t mention that these poor people would rarely have any representation on the boards that controlled these resources.) The federated local fundraising drives, the precursors to the United Way that emerged at the turn of the century, also developed under the banner of democratized philanthropy.
Encouraging widespread small-scale giving was at times also understood as a direct challenge to the legitimacy of elite philanthropy, as with the early 20th-century campaign to fight tuberculosis. As the famed photographer Jacob Riis explained in an influential 1907 article, “no millionaire” had come forward to endow the campaign, and none was wanted; the job would be “far better done by the people themselves.”
The social reformer Jane Addams extended this line of argument even further. There was something fundamentally undemocratic about the relationship between benefactor and beneficiary, she maintained. For this reason, she refused to apply the term “philanthropy” to Hull House, the settlement house she established in Chicago, where immigrants could congregate alongside upper-middle-class citizens like herself to share and learn together as neighbors. “Unless all men and all classes contribute to a good,” Addams wrote in her 1902 book Democracy and Social Ethics, “we cannot even be sure that it is worth having.”
The term ‘democratization of philanthropy’ can mean so much that it threatens to mean very little.
More than a half-century later, the 1960s and 1970s witnessed another surge in campaigns to democratize philanthropy. Some nonprofit leaders tried to introduce more diversity into foundation boards and leadership positions. Others sought to encourage what came to be called participatory philanthropy or social-movement philanthropy, dissolving the boundaries between grantee and grant maker by giving community members a measure of power over the disbursement of philanthropic resources.
Many Meanings
Fifty more years and we are in the midst of another surge in the use of the term. Donor-advised funds, whether sponsored by commercial firms like Fidelity, community foundations, or web-based entities, have all invoked the rhetoric of democratization to promote their cause. Giving circles, Giving Tuesday, and crowdfunding have all been celebrated in similar terms. So, too, has enhanced foundation responsiveness to grantee feedback and the idea of extending the charitable deduction to people who don’t itemize their tax returns. In fact, never has the concept of democratization covered so much territory in philanthropy as now.
But the term now can mean so much that it threatens to mean very little. It can actually be a way not to talk about how changes in patterns of giving might affect the status quo.
At times, “democratizing philanthropy” is invoked to describe the possibility of inviting individuals with diverse backgrounds into the philanthropic establishment. This is, of course, a worthy endeavor, but it is not always clear what power they will have once they arrive.
It is also used to refer to the extension of opportunities previously reserved for the elite to a broader class of givers, as with the establishment of donor-advised funds with extremely low minimum-deposit levels (compared with the $5,000 thresholds in most commercial DAFs).
“Global Impact believes everyone should have the opportunity to change the world,” one charity that sponsors such a DAF has announced. “That’s why we are democratizing philanthropy with Growfund.” Again, a worthy project, but it raises the question: Does the ability, and not just the opportunity, to change the world through charitable giving — as opposed to, say, organizing or volunteering or other forms of service — require a certain threshold of financial resources?
Sometimes, as with crowdfunding, the term describes a process in which donors and recipients are enabled to establish direct relationships, bypassing the mediation of charitable institutions. Power is put into the hands of individuals. But cutting out the institutional middleman doesn’t always translate into democratic empowerment, since — at least when it comes to matching donors and beneficiaries — it tends to aid those with the most compelling pitches. Crowdfunding is a system that favors the social-media-savvy. In other words, when it is defined in these terms, the democratization of philanthropy can leave a lot of folks out.
The term is also often invoked to describe attempts to encourage “microgiving.” At times, the cultivation of small-scale donors is regarded as a way to boost aggregate giving totals. (The Bill & Melinda Gates Foundation’s “Giving by All” project, which aims to push America’s total giving beyond the stubborn threshold of 2 percent of gross domestic product, where it’s remained stuck for decades, seems to take this approach.) On other occasions, democratized giving is understood entirely in qualitative, as opposed to quantitative, terms; aggregate figures are considered beside the point.
As one article on the “democratization of giving” recently explained, for millennials “it’s not necessarily the amount they are contributing but the fact they do give.”
Such thinking often translates into efforts to make giving easier — embedding a donate button in Facebook or Twitter, for instance — but it does not necessarily mean making giving better or more effective or more meaningful. And what is the value of this “fact” of giving? Is the expansion of the base of giving a good in itself, as Jane Addams suggested — one that allows us as a society to understand what we collectively value? If so, how do we better align “democratized” philanthropy with the practice of democracy itself? Giving circles, which encourage small groups of people to get together to pool their donations and do research to choose specific groups to support, seem like one good answer. (You can imagine them meeting in Addams’s Hull House.)
A Relative Term
In all these cases, we should keep in mind that democratization describes a process, one that requires an initial reference point. That is, we should ask: “democratizing philanthropy” compared with what?
Of course, the democratization of philanthropy has always been relative. In the final decades of the 19th century, when professional fundraisers first used public campaigns to recruit Harvard and Yale alumni to give to their universities, they promoted fundraising drives in those terms. It made some sense to speak of democratization, considering that previously universities had relied only on a small corps of extremely wealthy benefactors. If you started with Rockefeller as your baseline, then inviting mere Groton-educated lawyers into the charmed philanthropic circle could count as democratizing.
Which brings us back to the “Giving USA” announcement of a democratization of philanthropy based on a drop in megadonations in 2016. This is certainly a trend worth noting. But there’s also a risk that a relative decline will mask larger truths about inequities within the nonprofit world, where the megawealthy continue to wield inordinate power.
There is a similar dynamic now playing out in election finance, another realm often thought to be “democratizing.”
One commentator recently labeled 2017 “the year of the small donor,” because in two of the high-profile special elections to replace members of Congress appointed to positions within the Trump administration, small donors supplied most of the funds raised by the Democratic candidates.
In both races, however, the impressive aggregate totals raised through donations of less than $200 were swamped by outside “super PAC” spending, coming largely from wealthy donors and corporations. Super PAC money massively favored the Republican candidates, who won both races.
More generally, although there’s been a lot of buzz about a small-donor revolution enabled by online fundraising, and although the number of small donors to political campaigns has in fact increased in the past decades, small-donor contributions now make up a smaller share of the total because of the power that loosened campaign-finance regulations have given big donors.
Which suggests an important lesson: It’s possible that the focus on the democratization of philanthropy must end up pointing back to the political realm from which the term was borrowed. Can one really talk honestly about the democratization of philanthropy without touching on the unequal distribution of resources from which the giving flows? One thing is clear: If that question gets serious traction, 2017, like 2016, will be another unusual year.
Benjamin Soskis, a historian of philanthropy, is a research associate at the Urban Institute’s Center on Nonprofits and Philanthropy and a co-editor of the HistPhil blog. See more of his thoughts on Twitter: @BenSoskis.