Current Events and Philanthropy / Philanthropy in the News

Philanthropy and the quest for Civic Competence

The Chronicle of Philanthropy has just published an editorial I wrote on the responses to the Zuckerberg-Chan announcement and on what they might suggest about the public’s engagement with big philanthropy in the years to come.

I was tempted to include in it some additional reflections on an earlier episode from American philanthropic history in which a massive pledge was met with a mixture of awe, apprehension, and even contempt: the Rockefeller Foundation federal charter controversy. But I wasn’t sure that Chronicle subscribers would care to indulge the historical digression.

Dear HistPhil reader, I have no such doubts about you. So here goes:

My Chronicle piece dealt with the need to balance both an appreciation of the dangers big philanthropy poses to a democracy and its promise to achieve real, lasting social good. I appreciate how hard that balance is to strike. But my research into the federal charter controversy at the turn of the last century convinced me of how essential it is as well.

I’ve always considered one of the heroes of that story to be Edward Devine, who was at the time a leader of the New York Charity Organization Society and one of the founders of the social work profession. In 1910, Rockefeller’s request for a federal charter for his new general-purpose foundation, which the Standard Oil founder would soon endow with gifts of $100 million, met with a chorus of opposition. Rockefeller, a particularly ruthless entrepreneur, was one of the most hated men in America, and some resisted giving a federal imprimatur to his philanthropic efforts, which were assumed to be a ruse to distract from his nefarious business practices. Others worried that the Foundation would amass immense power and would soon be able to counter the federal government itself.

The debate was heated; during a discussion of the charter on the House floor, one representative jumped up and down and shouted repeatedly, “Viper!” But Devine, in the pages of the journal he edited, The Survey, offered one of the more measured, thoughtful considerations of Rockefeller’s charter request, and of the “record-breaking philanthropy” behind it. He praised Rockefeller’s generosity and assumed his good-intentions. But he also made clear that “the brutal power of concentrated wealth, even when embodied in a philanthropic foundation, may not always work on the side of the real public welfare.” And he reminded his readers that the endowment established by Rockefeller would create, in perpetuity, a reservoir of funds not subject to taxation and thus a permanent siphon upon the federal treasury.

He thus demanded an increased level of accountability and transparency of the foundation, insisting that the government should have a voice in the selection of trustees; that the foundation’s endowment should be prohibited from increasing indefinitely through through compound interest; and that the foundation should have a limited lifespan. With this final demand Devine made clear that he believed charitable endowments in perpetuity to be fundamentally suspect, even as he acknowledged the potential of the Rockefeller Foundation to do good.

Devine’s editorial became a focus of the Congressional debate, frequently invoked by opponents of the charter. It was also carefully considered by Rockefeller officials. And a strange thing happened: they seemed to agree with much of it, for they agreed to amend their charter and to incorporate several of Devine’s recommendations. They limited the Foundation’s endowment to $100 million; prohibited the accumulation of income to the principal; and provided for the dissolution of the Foundation after one hundred years, subject to Congressional direction. They also mandated that the election of new members of the Foundation’s board be subject to a veto of the majority of a group of prominent public citizens: the President of the United States, the Chief Justice of the Supreme Court; the Speaker of the House, the President of the Senate, and the presidents of Harvard, Yale, Columbia, Johns Hopkins and the University of Chicago.

In light of these amendments, Devine wrote another editorial in the Survey, urging Congress to grant the charter. He did not suggest relaxing the scrutiny applied to the operations of big philanthropy or the demand to hold the nation’s largest benefactors accountable. But he also made clear that the refusal to acknowledge the potential for such large-scale gifts to be channeled to socially constructive ends by a vigilant public represented a lack of faith in democracy. “To be afraid of large gifts like these would be to confess civic incompetence,” he cautioned.

Congress did not heed Devine’s counsel and rejected Rockefeller’s charter request; the Foundation soon received a state charter from New York without any of the amendments. Ultimately, the episode represents one of the great missed opportunities in the history of American philanthropy; foundation public accountability would look much different today if the Rockefeller Foundation had laid down such a precedent.

The episode, and Devine’s place within it, speaks to me as an example of how philanthropy’s critics should balance their admonitory and affirming imperatives. For Devine, taking philanthropy seriously meant writing both of those editorials, one preoccupied with the dangers big philanthropy posed to the polity and the other staked to the promise that it held.

Now, the historical parallel isn’t perfect with regard to today’s debates over mega-philanthropy (historical parallels never are, of course, or the lines would meet). Most significantly, in Devine’s day, the Rockefeller Foundation agreed to a series of concessions that it is difficult to imagine Mark Zuckerberg and Priscilla Chan making in regards to their own LLC. And Devine held a much greater faith in the power of political institutions to serve as neutral arbiters of the public good than most of us do today.

But I still think he can serve as a powerful model of vigorous and constructive critical engagement with philanthropy. By not losing track of either philanthropy’s dangers or its promise, the public today can follow Devine’s example, and best exercise our own civic competence.

-Benjamin Soskis

Benjamin Soskis is a co-editor of HistPhil and a Fellow at the Center for Nonprofit Management, Philanthropy and Policy at George Mason University.

2 thoughts on “Philanthropy and the quest for Civic Competence

  1. With thanks and respect for this article’s thoughtfulness, I disagree. The essence of philanthropy—”private initiatives for public good”—is the freedom of donors and volunteers to define their own values, and to exercise those in giving and volunteering, thereby “loving what it is to be human”: defining who they are as human beings, completing their own creation, as it were, and as philanthropía was Classically conceived. That fundamental value of personal philanthropy is its predicating incentive, without which there would be a lot less philanthropy.

    The suggestion that an endowment “siphons off” dollars from the federal treasury, which is by definition a bad thing and justifies some sort of public “guidance” or supervision over philanthropic investments to ensure that they are actually for an orthodox public good, is a spurious and pernicious notion—lacking any authority and leading to mischief. American philanthropy created the American Revolution, the anti-slavery and women’s suffrage movements—today’s orthodoxy but not in their times. Freedom and democracy do not include public regulation of loving what it is to be human.

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  2. A fascinating and well-balanced article — thank you, Ben Soskis!

    I know that George McCully feels very differently than I do, but I agree with the author that this was a lost opportunity. At the very moment in 1910 when this new entity — the private foundation — was establishing itself, the nearly adopted guidelines would have created a vastly more high-impact model than what we ended up with: large, perpetual, and insular foundations that distribute a minimal amount each year to charitable causes.

    Oh, what might have been!

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