History of Jewish philanthropy / New Works in the Field / Philanthropy and the State

Follow the Tax Incentive: Thoughts on Berman’s The American Jewish Philanthropic Complex

Editors’ Note: Lily Geismer continues HistPhil‘s mini-book forum on Lila Corwin Berman‘s The American Jewish Philanthropic Complex. You can read Ben Ratskoff‘s earlier review of the book here.

Along with Brent Cebul and Mason Williams, I recently co-edited a volume called Shaped by the State: Toward a New Political History of the Twentieth Century United States. The project emerged from our shared frustration that the field of twentieth century United States political history had become overly focused on stories of the divisions of red versus blue, liberalism and conservatism, the decline of the New Deal order and the rise of the Reagan right. We worried this hyper-concentration on partisan polarization, political realignments and moments of political crisis was causing scholars to miss key facets of political life and making the field increasingly less relevant to scholars who did not explicitly identify as political historians. We argued instead for the importance of writing political histories that explored deeper structures of continuity and that examined the state’s relationship to the economy, society and its citizen-subjects. As the title of our volume captured, we sought to illuminate the power of the state in shaping all aspects of American life in the twentieth century while showing how these other arenas in turn came to shape the state. Yet though we sought to offer a more expansive vision of politics that examined the intersections between the public and private sectors, we did not address the topic of philanthropy. In fact, the word appears only once in the almost 400 page volume. Lila Corwin Berman’s The American Jewish Philanthropic Complex shows why that was a major oversight.

The American Jewish Philanthropic Complex makes an important, provocative, and paradigm-shifting intervention into the fields of American Jewish history and the history of philanthropy. Equally significant, though perhaps less immediately obvious, is its contribution to the field of political history. In this meticulously-researched work, Berman deftly explicates the logic of Jewish philanthropic organizations to show how at all turns they were shaped by dynamics of the American state. By closely tracking the tax incentives awarded and lobbied for by the American Jewish philanthropic community, she reveals the complex web of interactions which contributed to the formation of what she deems the “American Jewish Philanthropic Complex.” In doing so, she illustrates how Jewish philanthropy—but really the philanthropic sector more broadly—provides a way for understanding the development of the American state, the changing nature of public-private partnerships and long and complex relationship between capitalism and democracy.

Her analysis upholds our argument in Shaped by the State about the importance of understanding U.S. political economy in terms of continuities and transformations rather than ruptures. She reveals how Jewish philanthropy itself came to reflect these key transformations. Until the 1930s Jewish philanthropic institutions mainly distributed money and resources soon after raising them. However, the combination of the Great Depression and the emergence of the New Deal welfare state led American Jewish leaders to focus on the future and prioritize building endowments. Increasingly, they adopted complex financial tools in order to achieve these aims, which by the 1970s made Jewish philanthropy thoroughly embedded with the structures and logic of American capitalism. Jewish philanthropy’s shift from capital distribution to accumulation parallels and was influenced by shifts in American political economy, especially liberalism. As scholars like Alan Brinkley have demonstrated, the priorities of liberal political economy transformed over the course of the New Deal from promoting a redistributive vision of the state to focusing on fueling economic growth through the private sector and the market to create economic and social stability. Thus, Jewish philanthropic institutions were part of this much broader process that fused the pursuit of the public good to private entities and market forces.

Berman simultaneously highlights how Jewish philanthropic leaders played a crucial role in bending and shaping federal policy, especially the tax code, to serve their ideals and mission. She focuses in particular on a Cleveland-based tax attorney named Norman Sugarman. He used his expert knowledge of tax law, honed from his own tenure at the Internal Revenue Service, to not only ensure favorable tax exemptions for Jewish organizations, but also to shape tax policies for philanthropic foundations more generally. These efforts would culminate in Sugarman’s shaping of key provisions in the landmark Tax Reform Act of 1969. Combining his commitment to Jewish charitable work with a faith in the tax code, Sugarman argued that “government should not stand in the way of private capital intended to benefit the public.” This idea upheld the basic values of post-New Deal liberalism. Berman argues that this philosophy motivated Sugarman to “create the legal scaffolding that would unfetter certain types of private capital and interests from regulatory constraints” that would act in the public good. He developed and received sanction through the 1969 Tax Reform Act for what would become known as donor-advised funds (DAFs) which provided new power and tax benefits to publicly subsidized private entities. The rise of this tool had a significant impact on the practices of Jewish philanthropic institutions. By 2013, as Berman documents, one-third of the endowments of Jewish federations were held in DAFs. The use of DAFs was by no means simply the domain of Jewish institutions and had a significant impact on the philanthropic sector more broadly. She explains that DAFs also became a favored tool of the commercial financial service industry, which recognized them less as a means to serve the public sector than as an opportunity to claim an important state-subsidy that could expand the wealth of their clients.

Berman’s examination of how the American Jewish philanthropic complex blurred the lines between the public and private sectors offers important insight into the development of neoliberal policies and practices. Her analysis aligns with our effort in Shaped by the State, and my own recent scholarship, to show how neoliberalism developed not in opposition to the New Deal state, but, rather, largely out of it. Berman reveals that key features of neoliberalism, especially state recourse to private actors and the government’s role in creating markets, did not suddenly emerge in the 1970s and 1980s. Instead, they have been a fundamental feature of American governance through much of American history and especially since the New Deal.

Berman’s focus on US Jewish philanthropy, nevertheless, provides a unique perspective into neoliberal practices. She offers a very compelling and nuanced interpretation of Jewish philanthropic leaders’ growing understanding of private accumulation and market-based tools as the best way to preserve Jewish identity. This effort fully fused Jewish identity with the increasingly financialized system of American capitalism that emerged in the 1970s and directly aligned with the neoliberal logic that free markets provide a means for individual freedom and empowerment. Yet, as Berman suggests, this project stood in direct tension with the collective and communitarian ideals of American Jewish life and the democratic principles of American society more broadly.

Berman’s argument about how the quest for funding the preservation of Jewish identity became fully intertwined with U.S. political economy is part of her effort to dispel exceptionalist interpretations of Jewish philanthropy. However, there were a few places where I wanted to know more about whether certain features of the American Jewish philanthropic complex were distinctive to American Jews or common among other religious groups and philanthropic sectors in the United States or Jewish organizations in other parts of the world. One of the most fascinating threads in the book is the discussion of the rise of Jewish philanthropic activism. Berman reveals how the Tax Reform Act of 1969’s attempt to limit the political activism of philanthropic foundations did the opposite in the case of Jewish philanthropic leaders. Jewish philanthropic leaders used their material capital as a form of political capital and engaged in what she calls “depoliticized politics.” These efforts brought Jewish philanthropic leaders into the centers of political power, including the offices of the West Wing, in the name of representing the interests of American Jews. These practices reveal the ever tightening bonds between the philanthropic sector and the state. I wondered, however, if this kind of philanthropic activism was unique to Jewish actors or if other religious groups used similar strategies. I was also curious if other philanthropic foundations have adopted their own forms of depoliticized politics. Pursuing this line of analysis would even more clearly illuminate how philanthropy came to influence statecraft and vice versa.

Berman’s ability to “see” like American Jewish institutions constitutes the very strength of the book. She adroitly explicates the worldview and motivations of Jewish philanthropic leaders to reveal how they came to understand and shape the federal policies that governed them. However, the logic of government officials was often less clear. Throughout The American Jewish Philanthropic Complex, the state was something of an amorphous category and the bureaucrats themselves often seemed a faceless mass. I wondered whether any of the IRS bureaucrats or congressional staffers determining key tax policies were themselves Jewish. Did any of them have particular sympathies to the Jewish philanthropic cause? Or did they strictly view the issues presented in terms of the technicalities of the tax code? Making federal bureaucrats into historical actors as Berman does so masterfully with figures like Sugarman would help illuminate why his philosophy and specific proposals would be so appealing to the congressional aides, IRS lawyers, and other staffers tasked with writing and interpreting changes to tax law. 

Building on the work of William Novak, Berman acknowledges that the American state is “slippery” and “protean.” Its elusiveness might make this kind of evidence difficult to access in the archives. However, more interrogation of the worldview of the bureaucrats who both regulated and enabled the sector would offer more understanding of the mutually constitutive relationship between the state and American Jewish philanthropy and philanthropy writ large. It is perhaps a fruitful line for further research.

One of our overriding hopes with Shaped by the State was to soften the rigid walls that had been constructed around the field of political history to show its relevance and overlap with other fields. Berman’s work raises many key sites for potential collaboration and engagement between scholars of American political economy, philanthropy, and Jewish history. These types of conversations will be ever more important in understanding the nature of state power, the relationship between the federal government and markets, and philanthropy’s role in bridging those realms.

-Lily Geismer

Lily Geismer is an associate professor of history at Claremont McKenna College. She is the author of Don’t Blame Us: Suburban Liberals and the Transformation of the Democratic Party (Princeton, 2015) and the co-editor of Shaped by the State: Toward a New Political History of the Twentieth Century (Chicago, 2019). She is currently working on a book project entitled Doing Good: How Market Based Thinking Took Over the Democratic Party (PublicAffairs, forthcoming). 

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