Philanthropy and Inequality

Responding to Benjamin Soskis’s ‘New Gospel of Wealth’

Editors’ Note: In the below post, Pablo Eisenberg responds to Benjamin Soskis’s recent contribution to the site’s Philanthropy & Inequality Forum, “Does Ford’s Announcement Signal a New Gospel of Wealth?”

Ben Soskis has raised some searching questions about the potential of new philanthropic initiatives to attack income and wealth inequality and to make major changes in our economic system. How far are our wealthiest benefactors willing to go to alter our fundamental economic structures to level the playingfield on which all of us compete? Can our major philanthropists, he asks, serve as the countervailing force needed to achieve a successful redistribution of wealth in our country?

The answers are not as simple as they might have been decades ago when wealthy donors controlled the foundations they had established. While the Gates, Bloomberg and a few other foundations are still the willing handmaidens of their donors, most of the large foundations are now public institutions with relatively independent boards of directors, no longer serving the mere whims of their creators. This new configuration of philanthropy presents structural and procedural impediments to supporting major changes in our economy. Can these be removed, if not in the short run, then in longer-term efforts of bringing about greater economic equality?

The first obstacle is the composition of our major foundation boards, and indeed those of most midsized and family foundations. They are still composed almost entirely of our elite Americans, highly wealthy individuals and exceedingly well paid professionals, who have shown little willingness to champion changes in the economic status quo. They still determine the direction and priorities of our foundations. Until they are replaced, or diluted, by others more representative of our nation, foundations will experience difficulties in making a turn-around. How likely is it that the composition of foundation boards can be altered in the short run?

If major changes in our economic system are to be made, foundations will have to revise the way in which they allocate their funds. A radical shift to what might be called advocacy grantmaking will be in order, a departure from their conventional investments in programs. Changing systems requires public pressure, solid research, community organizing and political mobilization. It takes solid organizations that have the wherewithal to sustain this type of effort. Today, only a tiny portion of foundation money goes to activist groups and advocacy activities. Are foundations and individual wealthy donors capable of making such a radical rearrangement?

To achieve the goal of restructuring the economy, our philanthropies will have to build new institutions or energize old ones that can focus on altering tax policies, reforming financial institutions, increasing wages for low income and working class people, effectively monitor federal and state agencies that regulate corporate behavior and environmental programs, ensure voting rights for all, tackle student loans, and transform universities and colleges that are dysfunctional and disregard poor students. It is a tall order that will take strong nonprofits and nonprofit leaders. These initiatives will require sustainable funding, not the one, two or three-year grants that are currently the practice. Endowments could strengthen these groups. If universities and colleges are the recipients of hundreds of millions of dollars in endowments and building construction every year, there is no reason our advocacy organizations should receive anything less. But that would be an enormous turn-around for our foundations. Is it possible for them to do so?

The current reluctance of foundations and other donors to provide general support is another obstacle to advocacy grantmaking. While the Ford Foundation will be devoting a substantial part of its grants to general operating support, there is little indication that many others will follow, although such funding is essential to building strong sustainable institutions (About 21 % of foundation grants are for general support).

Since it is clear to all of us who believe that our economic system must be transformed that no major effort can be undertaken without the strong hand of the federal government, our foundations must finance a campaign to restore public confidence in government and, thereby, undermine our politicians’ disdain for the public sector. Not an easy task, and one which our philanthropic community has ignored in recent years.

A final, practical obstacle to surmount is the current lack of real leadership in the philanthropic world. Darren Walker is just what the Ford Foundation needed: a thoughtful, visionary and courageous leader, quite a surprise to many of us who thought foundation CEO selection processes were ineffectual. But Darren doesn’t have much quality company among the large foundations. I venture to say that most of our large foundation CEOs are mediocre, lacking in the qualities essential for any major initiatives to transform our economic system. Where are we to get new leadership? Are they around?

Whether or not our wealthy philanthropists and foundations decide that they can launch a new gospel of economic equality, they will have to contend with the stubborn traditions and practices of foundations that, to date, have not demonstrated much of a capacity to change old habits.

-Pablo Eisenberg

Pablo Eisenberg is a senior fellow at the Center for Public and Nonprofit Leadership at the McCourt School of Public Policy, Georgetown University. He was the ED of the Center for Community Change for 23 years. Prior to this, he was a foreign service officer with USIA, a civil servant, a senior officer at the National Urban Coalition and a freelance consultant to nonprofits and corporations. He is a regular columnist for the Chronicle of Philanthropy and the Huffington Post. The author of many articles, chapters of books and a book on nonprofits, he has a BA from Princeton, a BLitt from Oxford University and an honorary doctorate from Princeton. 

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