Many of us have a mental picture of nonprofits and philanthropy as one of three circles in a Venn diagram, the other two being government and commercial enterprise. The circles overlap in the center, but each sector also has its own functions.
Yet many contemporary observers have commented on the blurring of these sectors. Nonprofits earn revenue, companies produce environmentally beneficial products, and the government invests in social innovation. We have commercial vendors of charitable giving products, nonprofit producers of some of the world’s most widely used software products, and networks of mobile phone crisis responders who don’t fit into any circle. The creation of new corporate forms for good and the impact investing movement have become standard parts of philanthropy conferences. And the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission has unleashed a new era of nonprofit activity in campaign politics.
Although all of these examples are contemporary, none of them is fully new. Olivier Zunz’s book, Philanthropy in America: A History, tells a 100-year story of how we got to where we are today, focusing on the political choices we’ve made to shape nonprofit organizations and philanthropic foundations. Zunz braids together the tales of small and large donors. This is not an institutional history of major foundations, though many appear in its pages. Nor is it the tale of workplace giving, federated campaigns, or direct fundraising appeals, although those also make appearances. What Zunz does is to set the story of the Easter Seals campaign alongside the founding of the Carnegie Corporation of New York and encircle them with the public policy decisions that make both possible.
In the years between 1913 and 1920 we fought World War I, amended the US Constitution to allow for a federal income tax, and incorporated several major foundations. The connection among these events is not the one you might expect. The foundations preceded the taxes. The income tax financed some of the costs of the war, but a large part was paid for by the voluntary purchase of bonds. And the sale of war bonds by community groups and the fervor with which neighbors engaged around this cause laid the groundwork for direct mail, workplace giving campaigns, viral fundraising, and many of the other mainstays of today’s charitable world.
Zunz begins his history in the late 19th century, with the ofttold story of Julius Rosenwald financing the construction of schools for blacks living in the South. He is careful to note that Rosenwald enabled the education of hundreds of thousands of blacks, but not by challenging segregationist state governments to change their ways. This relationship between private philanthropy and public policy is the story that really interests Zunz. Through each of his chapters, from the turn of one century to the next and with close looks at community philanthropy, civil rights, the war on poverty, and international giving, Zunz returns to the political questions that surround the use of private resources for public good.
Zunz tells of presidents from Hoover to Kennedy seeking to control, influence, or partner with large foundations to provide social services, health care, and education. Not until the late 1950s do we hear stories of foundations pushing back against government policy. Once again, the issue is the education of blacks in the South.
Zunz makes rich use of a limited resource—foundation archives. So few foundations make their records available that the history of American foundations is drawn from the history of a few dozen organizations. Zunz mixes the institutional sources with biographical material, congressional record, court documents, and media coverage to capture both the contributions and contested nature of American philanthropy.
Zunz ends his book in the late 1990s and doesn’t really look into the role of technology in changing philanthropy. This raises an interesting question about the historiography of organizations. Our current communication technologies will change not only how foundations work but also the public record they leave behind, which will be largely outside of their control.
The author’s interest in the political privileges and limits of philanthropic institutions takes him far beyond grantmaking record and internal memos. He begins with 19th-century probate court decisions and folds in the steadily diversifying cast of regulatory characters from state attorneys general to the halls of Congress to the IRS up to the 1969 Tax Reform Act. What unfolds is syncopated progress toward an ever-elusive definition of public good. The tension comes from a public desire to promote charitable assets, while limiting the use of such assets to influence public policy. This produces what Zunz calls the “arbitrary” divide between political and educational activities.
Zunz includes an illustrative anecdote about Lyndon Johnson. Shortly after championing the political independence of Jewish philanthropists to support Israel against the wishes of the Eisenhower administration, the senator faced a tough election challenge in the 1954 primary in Texas. His opponent, Dudley Dougherty, had the support of two nonprofits backed by an oil millionaire and a newspaper magnate. Upon his return to the Senate, Johnson abandoned his support for the political independence of nonprofits and inserted an amendment into the IRS code forbidding them to “participate in, or intervene in … any political campaign on behalf of any candidate for public office.”
This battle is, of course, ongoing. The political economy we’ve created over the last 100 years is a mixed system in which philanthropic resources, public agencies, and commercial enterprise all contribute to our shared social goods. Zunz shows us that the lines of our imagined Venn diagram were never as clear or static as we thought. With impact investing, social enterprise, and social business we’ve increased the tools we use to apply private resources to public good. If Zunz’s historical arc extends into the future, the battles over the rules for those tools will be a defining character in the philanthropic story of the 21st century.
Lucy Bernholz is a visiting scholar at Stanford University’s Center on Philanthropy and Civil Society and a managing director at Arabella Advisors.