Big Philanthropy’s Threat to the American Way

Perhaps it’s no accident that grand philanthropic gestures coincide with moments in our history when wealth becomes concentrated in very few hands and the gap between the rich and the poor becomes intolerably wide.

It was during the time of the great robber barons of the late 19th and early 20th centuries that the first—and some of the largest—American foundations were created.  In our own Gilded Age, the captains of industry try to outdo one another with their philanthropic gifts as corporate profits soar and wages continue to shrink as a proportion of the nation’s GDP.

Some cynics argue that now, as in ages past, philanthropy has functioned as a social safety valve, redistributing just enough wealth to keep people in low-income communities from taking to the streets in protest.

Dramatic philanthropic gestures are not confined to our shores.  Hong Kong billionaire Li Ka-shing recently that he would give a third of his $19 billion fortune to charity.  This was followed days later by news that Mexican billionaire Carlos Slim, the world’s third richest man, would match peso for peso any amount invested by Mexican or foreign foundations in Mexican social work.  Over time we can expect to hear more announcements like these from people who made their fortunes in states that cooperated in concentrating wealth into the hands of a very few.  It’s much less likely, for example, that a Swedish philanthropist will emerge to grab the headlines from the Buffetts and the Gateses.  That country has a progressive tax that functions to redistribute wealth, and a cradle-to-grave welfare system that obviates the need for many privately supported charitable organizations.*

But in the United States, the social safety net is tenuous and under constant attack by fiscal conservatives.  As a result, lower-income people feel a measure of financial insecurity that can be exploited to drive down wages and further widen the gulf between the rich and the poor.  As suggested earlier, big philanthropy, together with other leveling efforts, can provide enough relief to the underclasses to quell social unrest.  Because foundations often fill the gaps left by retreating sources of public support, they’re sanctioned by government and given fairly wide latitude in their operations.  But if they go too far—if, as Bill Schambra, director of the conservative Bradley Center for Philanthropy and Civic Renewal warned, they begin to “undermin[e] traditional sources of authority”—then society must mobilize to curtail their power.

We see this in Schambra’s warning, near the end of his op-ed, that the forces of law and good order** “may not be so complaisant about philanthropy’s license” if it “drift[s] carelessly and inadvertently into … a revolutionary undertaking.”  We see it also in the constant vigilance that nonprofits need to exercise in order to preserve important advocacy rights.

The fear of some is that under the leadership of liberals like Gates, Buffett, and Soros, philanthropy will become the snake that bites its own tail.  Rather than forever satisfying themselves with dressing the wounds inflicted by the periodic convulsions of American-style capitalism, or with performing triage on those who don’t fare well under its rules, these philanthropists might simply decide to change the system.  If unchecked, they might succeed in introducing democracy to the United States by helping to pass meaningful campaign and lobbying reform.  They might shore up support for a public safety net worthy of the richest nation on earth.  They might even curtail our further slide into the barbarism of state-sponsored torture.

It’s our attenuated sense of social responsibility that makes big philanthropy’s interventions appear necessary in the first place.  But big philanthropy also has the potential—largely unrealized, I believe—to be a civilizing force can help us evolve toward our full humanity.
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* The White Courtesy Telephone Center for Advanced Studies recently adduced Ruesga’s Law, represented symbolically as φ α g / (s • w), and read as “phi is proportional to g divided by the product of s and w.”  Here φ is the measure of philanthropic activity in a given state, g is the state’s GDP, s is the degree to which industries in that state are socialized, and w measures the state’s degree of “welfarization.”

** In this passage, Schambra deputizes “the American people.”

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Albert Ruesga blogs on nonprofits and foundations at White Courtesy Telephone.

Read more stories by Albert Ruesga.