My friend and long-time collaborator in studying the history of the philanthropic foundation, Barry Karl, cautioned me that “historians cannot predict the future, they are not even very good at predicting the past.” Wise words, and I have tried to keep them in mind for the forty years in which I have been thinking about the history of foundations. But even though history may not tell us exactly where we are going, it can surely tell us how we got there – and that should help to guide us along the way.
The history of modern philanthropy is only a little more than a century old, but we have seen significant change over the period. The intellectual origin of the philanthropic foundation form was the desire of ultra-wealthy business people like Andrew Carnegie and John D. Rockefeller, Sr. to find a scientific method for donating their wealth so that it would improve the lot of humanity. Their instinct was that the problems that beset human society could only be eliminated by determining their originating causes. When those root causes were identified, strategies could be developed to eliminate or mitigate them. The best mechanism for this task, they believed, was to employ the (then) newly emerging resources of academic research. And so they built grant-making organizations competent to identify significant social problems and to identify grantees (frequently university researchers) to seek out the causes of these problems, and possible solutions for them. These new organizations (nothing like them had existed before) took many forms, but they were mostly perpetuities governed by donor-selected boards of trustees who approved broad grant-making programs which were administered by newly professionalized staffs.
This was the basic model of the private philanthropic foundation until late in the last century, when both new forms of grant-making organizations and new grant-making strategies began to emerge and to transform the field of foundation philanthropy. Subsequent blog posts on HistPhil will explore the range of activities of the traditional philanthropic foundation, and their successes and failures, but I would like to lead off our discussion by showing the ways in which the term “foundation” has come to take on some very new forms and meanings. Let’s use what is most recently called the Bill, Hillary and Chelsea Clinton Foundation as an example of how history can help us to understand what is new and different in this iteration of the foundation form.
The Clinton Foundation (which is actually now a consortium of interrelated organizations inside and outside the United States) is not legally a “private” foundation. It is a “public” foundation, which means that it is permitted to seek funds from donors – rather than being funded by a single wealthy donor. When Bill Clinton began the Foundation he was not a wealthy person (at least by the standards of contemporary America). He was a newly-rich and super-famous former politician who had discovered that he could make significant amounts of money by making speeches to well-heeled organizations around the world. He also discovered that he could induce truly wealthy individuals, corporations and countries to make gifts to his Davos-inspired foundation. The source of Clinton Foundation funding, which is solicited to fund ongoing programs designated by the foundation (but not normally managed by the foundation) is thus industrial strength fundraising. In effect, what Clinton (and subsequently his wife and later his daughter) have done is to take the American tradition of mass giving and transform it into an elite international enterprise. The Clinton Foundation is thus a sort of massive expansion of the Easter Seal or the March of Dimes techniques — Davos meets philanthropy. But although the Foundation has a board, it appears to be driven entirely by Bill Clinton and his family. Neither John D. Rockefeller or Andrew Carnegie, who were old men by the time they established their foundations, by contrast, sought to determine their programmatic decisions. Granted, John D. Rockefeller Sr. and Jr. and Andrew Carnegie played roles in their foundations both by selecting the members of their organizations’ boards and by expressing their funding preferences in these organizations during their lifetimes. However, the Rockefellers and Carnegie had established these organizations with broad missions such as promoting the well-being of mankind. These founders wanted their organizations and their trustees to go far beyond their own idiosyncratic preferences. Of course, their board members remained aware of the founders’ preferences, but also felt empowered to move beyond them in order to meet their grand missions. Unlike the Clintons, these founders structured their organizations in such ways so that they would quickly outgrow their founders’ preferences.
Secondly, although the original philanthropists prided themselves on being patient investors in the identification and investigation of social problems, the Clinton Foundation (like many of the new donor-driven mega-foundations) is opportunistic and seems to be impulse-driven in its choice of new programs. It is a highly transactional organization. Recent articles in the press mention Bill Clinton’s quick decisions to direct his staff to initiate programs after meeting needy individuals or being shown troubling situations – these seem to range from a program to help small business owners in Harlem to a vast, expensive program to address HIV/AIDS (the latter the result of a memo from an important staff member). What’s new here is the instinct to act quickly on big and dramatic problems that have appeal for big donors. This also reflects the extent to which the Foundation has taken on many of the attributes of the (relatively) new venture philanthropy, which places the highest value on speedy and measurable results. Something else that is very new about the Clinton Foundation is the extent to which it frequently seems to offer a quid pro quo to its large donors – large gifts are solicited for particular projects, with which the donors’ names become associated (along with the Foundation).
Finally, in one respect the Clinton Foundation is a throw-back to the earliest days of foundation philanthropy. Let’s remember that many of the early philanthropists were Robber Barons, and the suggestion that they were setting out to benefit humanity provoked a Robin Hood reaction. “Aren’t these self-styled ‘philanthropists’ merely trying to clean up their soiled reputations?,” was the question asked. More importantly, a great many early twentieth century critics expressed the fear that these wealthy philanthropic institutions would somehow purchase political influence and corrupt the democratic process. It would undermine the power of the vote, after all, if wealth alone opened the White House doors to someone such as Andrew Carnegie, John D. Rockefeller, or the staff of their philanthropic organizations. This is why, incidentally, Carnegie abandoned his plan to provide pensions for retired presidents of the United States when he was told that the public would see such a scheme as an elegant philanthropic bribe. That fear has never entirely disappeared, and it has resulted in one of the few federal statutory restrictions on foundation activity – the regulation against “political activity”. “Political activity” has been narrowly interpreted to mean that foundations should not support specific pieces of legislation or particular candidates for office. But now, with former secretary of state and likely candidate for the presidency Hilary Clinton, there is concern that large donations to the Clinton Foundation are attempts to influence public policy. This is another version of the Carnegie presidential pension problem. Once again a large foundation is being accused of threatening the democratic political process, this time as a recipient and not the grantor of funds. It is an old problem in a new form, and one that requires an historical perspective to understand.
-Stanley N. Katz
A co-founder of HistPhil, Stanley N. Katz is Lecturer with rank of Professor in Public and International Affairs and Director of the Center for Arts and Cultural Policy Studies at Princeton University. He is President Emeritus of the American Council of Learned Societies, the national humanities organization in the United States.