Book Forum on Reich's Just Giving

Philanthropy, Democratic Scrutiny, and Time: Soskis on Reich’s Just Giving

Editors’ Note: Benjamin Soskis continues HistPhil‘s book forum on Rob Reich’s Just Giving. In the forum’s next post, Reich will response to these reviews.

I think it’s fair to say that Rob Reich’s Just Giving is one of the more “time-sensitive” inquiries into philanthropy in recent decades. By this I don’t just mean that it’s especially topical in an age of mega-philanthropy. I mean also that it incorporates a consideration of the temporal dimensions of philanthropy into a broader analysis of philanthropic practice. Reich shows how the understanding of philanthropy in relation to time—in terms of changes over time and in terms of attitudes toward our responsibilities to the past and the future—can inform what he calls the “democratic scrutiny” that must be applied to the private funding of public goods. As a historian, it’s not surprising that I found Reich’s grappling with time engaging. And yet I wish his book was even more time-sensitive, that his arguments were more firmly staked to particular philanthropic interventions in particular historic moments.

Just Giving opens with a brief snapshot of one of the central dramas in the history of modern American philanthropy: the decision of John D. Rockefeller to establish a general-purpose philanthropic foundation and the efforts of his staff to obtain a Congressional charter for it. (Allow me a quick persnickety aside: Reich repeats an error I’ve seen passed down through various generations of scholarship, like a piece of corrupt genetic code. He refers to Frank Walsh, the chairman of the Commission on Industrial Relations, which took a leading role in investigating foundations during this period, as a senator. He was not; he was a Kansas City attorney who had stumped for President Wilson and was subsequently nominated by him to the commission). Due to a combination of public animus toward Rockefeller and suspicion of the philanthropic foundation as an institution, Congress rejected the request; the Rockefeller Foundation was subsequently chartered in New York State.

Reich positions this episode to set up a sort of declension narrative. “Contrast Rockefeller’s reception in Congress and the court of public opinion,” he writes, “with the ceaseless praise given to the philanthropists of our age. Rather than asking about the purposes of charity and power of philanthropists, we tend instead to celebrate donors, large and small, for their generosity.” You could argue here that Reich’s timing is actually a bit off, that the fall from the Rockefeller-era is not as steep as he suggests. A decade ago, one might have credibly argued that public discourse was dominated by celebrations of philanthropy, but a quick survey of the reception given to Jeff Bezos’ or Michael Bloomberg’s latest mega-donation suggests that this is no longer the case. Yet Reich introduces here an important theme that his book takes up only intermittently: the way that attitudes toward philanthropy are embedded in specific historical moments, and not merely derived from democratic first principles.

What makes Reich’s scholarly offering distinctive is not that he is an academic willing to criticize philanthropy—at least in the humanities, it’s probably rarer these days to find one who gives full-throated, unqualified praise to elite giving—but the conceptual framework from which he makes his critique. He promotes the need for a political theory of philanthropy, one based on a public, as opposed to a private, morality of giving. He wants to determine not what is effective from the perspective of the individual donor but what is just from the perspective of a liberal democratic polity. This means that when considering the relationship between philanthropy and democracy, Reich doesn’t focus on philanthropic practice (questions of responsiveness or accountability, for instance) but on the broader legal rules and regulatory structures that support and condition that practice, but that are rarely at the center of discussions of it.

In order to set up that inquiry, Reich delves even further back in time to highlight three fascinating examples from the past of varying political approaches to philanthropic giving: the liturgical system of ancient Athens, a quasi-compulsory one in which strict rules governed the obligations of the city’s wealthiest citizens to contribute to important civic projects; the Islamic waqf, perpetual charitable endowments developed in the ninth or tenth centuries that Reich explains were central components of Islamic civilization for centuries; and the Enlightenment critique of perpetual endowments offered by Turgot and John Stuart Mill that allowed for the state to interfere in endowments’ operation.

These historical examples serve as a sort of opening tonic to denaturalize philanthropic policy and induce in the reader an appreciation of historical contingency. It’s a good example of how historical analysis and more abstract political theorizing can serve as allies. In this case, the historical approach demonstrates the extent to which philanthropy is, in Reich’s term, an artifact of the state.

If this is the case, then legitimating philanthropic practice requires two tasks, both of which Reich takes on: defining the proper role for philanthropy in a liberal democracy and then determining whether the particular public policies surrounding philanthropy and the particular patterns of philanthropic giving they encourage support that role. Reich spends a chapter dismissing one potential ground of legitimation: that philanthropy might serve as an instrument for the promotion of equality. “If we believe the purpose of philanthropic or charitable giving to be predominately redistributive, an important mechanism to provide for the basic needs of others, the actually existing distribution of giving in the United States does not meet the test,” he writes. There is some confusion in how Reich defines the terms of this potential justification, as shown in the conflation within that first and second clause—it’s possible for a policy to meet the basic needs of others without actually committing to a significant redistribution of power, resources or status. Philanthropic leaders have in fact long appreciated and exploited the distinction. For while they might occasionally have claimed to be addressing the former, until very recently most wouldn’t have tried to defend philanthropy on redistributive terms. They would claim to be fighting poverty or increasing opportunity—but not to be combating inequality.

Reich does not merely show that philanthropy fails on redistributive grounds; he goes further by highlighting the “plutocratic bias” in the regulations governing charitable giving. He specifically addresses the charitable deduction offered those who itemize deductions on their income tax returns, an increasingly small class of the financial elite who receive government subsidy for their charitable gifts. Reich is right to call this policy “indefensible”—though it’s striking how rarely one hears any sort of defense of the charitable deduction on inegalitarian supply-side grounds. There’s a paradox here: for all the celebrated expressive power of charitable giving, we’re strangely inarticulate about the policies that govern that giving. Reich does important work in breaking that silence.

One challenge in defending the charitable deduction is that it is itself a historical artifact, enacted in response to a steep graduated surtax for war revenue imposed on a small set of taxpayers during the First World War and the fears that arose that sapping the wealthy’s discretionary resources would lead to decreased charitable giving. As the tax base broadened and more Americans were able to take the deduction, it became increasingly sticky and difficult to dislodge.

If philanthropy can’t turn to a redistributive rationale for legitimation, what is left? Reich proposes two other justifications, for individual donors and for institutions (primarily foundations): a pluralism rationale and a discovery rationale. (These he developed only after first publishing a series of articles on philanthropy’s inegalitarian failings, and so this collection of his writing can actually be read as a sort of scholarly mini-bildungsroman). Individual giving can promote a diversity of viewpoints—including minority and controversial ones—and can decentralize power in the definition and production of public goods. Philanthropic foundations should be animated by a “discovery” rationale which prioritizes experimentation, risk-taking and long-time-horizons—characteristics that electoral politics rarely rewards but which can generate policies that might eventually be adopted by the state (a view, by the way, that many of the early twentieth century defenders of the grantmaking foundation fully endorsed).

Reich makes use of the pluralism and discovery rationales in the final chapter (co-written with Chiara Cordelli), in which Reich examines philanthropy, and specifically foundations, from the perspective of intergenerational justice, adapting theories developed by the political philosopher John Rawls. What are the philanthropic responsibilities of one generation (a term to which Reich and Cordelli might have applied more scrutiny) to its own members, and to the future? In answering the question, Reich and Cordelli offer an update of Turgot’s and Mill’s briefs against the fundamental injustice represented by the perpetual endowment, which imposes the will of the past on the present and future, by incorporating into the debate the question of the legitimacy of the modern grantmaking foundation.

One wrinkle that they don’t fully consider is that the founders of the modern foundation considered themselves Turgot’s heirs. They disdained the same sclerotic endowments that Mill critiqued. The founder of the community foundation, the Cleveland lawyer Frederick Goff, talked so frequently about the danger of the “dead hand,” that his young daughter grew frightened to walk the halls of her home by herself. The elastic, general-purpose charter and self-perpetuating board were ways of addressing Enlightenment concerns about mortmain, by endowing the foundation with the adaptability to meet changing conditions.

Reich and Cordelli apply the pluralism and discovery rationales to a justification of the intergenerational transfer of philanthropic resources (not, they make clear, to a defense of perpetuity). Foundations can seed the civil society of the future with a diverse set of institutions, consistent with Rawls’ “Just Savings” principle; and, as the discovery rationale would recommend, can mitigate the short-termism of the marketplace and government, adopting a long time-horizon and taking risks with distant pay-offs, or addressing dangers that might not materialize for decades.

It’s hard to do their argument justice in this short space; but suffice it to say the final chapter is a powerful example of recent scholarly and practitioner engagement with the relationship between philanthropy and time—falling between the temporal poles of effective altruism’s focus on the far future and progressive foundations’ embrace of rapid-response grantmaking. (On this note, a small plug: Reich is contributing a chapter to a volume that I am co-editing with Ray Madoff that will be exploring some of the recent scholarship on this topic).

By concluding his book with an affirmation of the discovery and pluralism rationales, Reich gives it a shape that ends up mirroring one of the great peculiarities of the American charitable system as it’s developed over the last half century: the way it incorporates a deep suspicion of the power that private giving represents into a regulatory structure that provides givers with exceptionally wide latitude. The book is animated by Reich’s call to hold philanthropy up to critical scrutiny and his suggestions that when one does so, much philanthropic practice and policy seems illegitimate. But as the subtitle of the book makes clear, Just Giving is meant to be both critical and constructive. He ultimately creates plenty of space for philanthropy to claim legitimacy in a liberal democracy.

So how constructive are the discovery and pluralism rationales? In the abstract, I think they make a lot of sense. But as Just Giving recognizes in other respects, abstracted considerations of philanthropy are only of modest utility. If the values we assign pluralism and discovery are themselves historically contingent, then philanthropy is best assessed in time. (Our analysis, for instance, of the importance of decentralizing the production of public goods depends on the specific nature and capacities of the centralized state). And I think we’re in a moment of such flux (as Reich’s brief conclusion attests, in which he cites the need to give further thought to the spread of LLCs and DAFs, among other recent developments) and of such normative indeterminacy, that our guiding philanthropic principles, even the very ideal of democracy itself, are relatively inert in the absence of careful case-by-case and contextualized adjudication.

On the face of it, pluralism and discovery seem like loopholes of legitimacy that even the most bloated mega-donors should be able to fit through. Would they? How snugly does Jeff Bezos dedicating billions to space exploration fit into the discovery rationale? Does the Koch Brothers’ funding of libertarian research centers count toward the promotion of pluralism? How about alt-right philanthropy? Reich’s analysis raises other questions. Who defines, for instance, what constitutes an emergency that would warrant spending philanthropic funds meant to be saved for the future? Would the Flint water crisis meet that threshold? How about a generation of African-American males devastated by a policy of mass incarceration?

You can’t answer these questions without grounding your response in the socio-political particulars of the giving at hand. Reich briefly mentions a potential mechanism for deliberation on these questions: a sort of peer review system in which foundation officials would review others’ programs to determine if they were upholding philanthropic norms. I’m not sure how much good this would do, but I would have liked for him to start things off in the pages of his own book, delving more deeply into the details of a few philanthropic initiatives, contemporary or historical (Reich briefly cites Carnegie’s library program and the Rockefeller-led Green Revolution) to determine how their promotion of pluralism or discovery might (or might not) earn democratic legitimacy. This task instead falls on Reich’s readers. It’s important and urgent work; time, after all, is of the essence.

-Benjamin Soskis

Benjamin Soskis is the co-editor of HistPhil and a research associate at the Center on Nonprofits and Philanthropy at the Urban Institute.

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