In Praise Of Private Philanthropy And The End Of Government Programs

David Callahan in an op-ed piece in the New York Times (6.20.17) writes of the increasing influence of private philanthropy in the United States:

The giving power of private funders has grown more significant as federal spending has flatlined, especially funds that can be used flexibly. Nondefense discretionary spending totaled $518 billion in 2016, compared with charitable giving of $390 billion last year. This gap is likely to keep narrowing as budget cuts hit harder and the wealthy step up their giving. Donors are also using for-profit social investments on a much larger scale — like when Bill Gates recently organized a slew of billionaires to invest in clean energy research.

Philanthropy has always been an important feature of private wealth, and the financial legacy of the fortunes made by early American industrialists like Rockefeller, Carnegie, Ford, and Mellon is still significant today.   These men may have been Robber Barons who used questionable means to acquire great wealth; but whether motivated by patriotism, noblesse oblige, or atonement they were influential in promoting health, education, and social welfare.



The mission of the Rockefeller Foundation, founded in 1913, was “to promote the well-being of humanity throughout the world." As such it helped establish the Harvard and Johns Hopkins Schools of Health, the London School of Hygiene and Tropical Medicine.

The Ford Foundation was set up "to receive and administer funds for scientific, educational and charitable purposes, all for the public welfare”, and has been instrumental in supporting public broadcasting,  Throughout the 1950s, the foundation provided arts and humanities fellowships that supported the work of figures like James Baldwin, Saul Bellow, E.E.Cummings, Flannery O'Connor, Robert Lowell, and Margaret Mead; instituted law school reform to include consideration of local communities; and in the 70s expanded its efforts into civil rights litigation.



The philanthropy of Carnegie, Mellon, Crane, Getty, Vanderbilt, Frick, Morgan, and Stanford are diverse in their investments but common in their intent – to support those social, artistic, and educational institutions and enterprises which had been overlooked during their own laissez-faire era of private economic expansion and fledgling government.

There is a new age of philanthropy today and men and women as wealthy as the industrialists of the early Twentieth Century – Gates, Bezos, Buffet, Diller, Zuckerberg, Winfrey, among many others – continue their tradition.

The Gates Foundation has committed hundreds of millions to world health, especially the eradication of HIV/AIDS, malaria, and TB.  The MacArthur Foundation with its $6.3 billion endowment, funds ‘big bets’ such as climate change and judicial reform.
The Times Callahan goes on:

In Washington, D.C., where it’s already difficult to get things done, governing is likely to get exponentially harder in coming decades as the baby boomers retire and fiscal pressures mount sharply. More states and localities will also face budgetary crises as pension bills come due and as fiscal conservatives prioritize tax cuts over public investment.

So where will the leadership and money come from to take on urgent challenges?
In Michigan and beyond, we’re already seeing an answer: Philanthropy will increasingly slide into the driver’s seat of public life, with private funders tackling problems that government can’t or won’t.

Government interventionism, inefficiency, and political interference  have resulted in wasted trillions of dollars of taxpayers’ money.  Not only have social welfare and education programs failed to stimulate economic development and provide opportunity, they have become part of an immovable, reactionary bureaucracy which has been incapable of innovation, intellectual entrepreneurship, and  risk-taking. 



Taxpayer anger over ill-spent public funds, increasing resentment and mistrust of Washington, and growing antipathy to government itself have had an impact.  Tax rates have been lowered, government spending is  under increased scrutiny, and the old assumption that government is the country’s caretaker tossed aside in favor of private and individual enterprise. 

It is no surprise that private foundations have emerged as the new facilitators of social reform.  Callahan again:

More big league givers keep emerging as the vast fortunes of a second Gilded Age are harnessed to philanthropy. The most recent: The Amazon founder, Jeff Bezos, worth more than $80 billion, last week posted on Twitter a “request for ideas” for a philanthropy strategy he should pursue. Among a Forbes 400 with a combined net worth of at least $2.4 trillion are numerous billionaires who plan to give away much of their wealth. All told, over $20 trillion is likely to find its way to philanthropy in the next half century.

These new philanthropists, however, are not content with highly-focused programs such as those of Bill Gates in health.  They are after ‘systemic’ change; and with their wealth, power, and influence they are likely to be more instrumental in effecting such social shifts as government ever was.

Most Americans have yet to consider what the power shift away from government means for United States democracy. When people think of philanthropy, they tend to imagine giving for museums or hospitals. Yet today’s biggest donors aren’t much interested in such old-style charity, aiming instead to make “systemic” changes in society.

Today’s mega-givers keep charging forward. Although the push for charter schools has created both enormous controversy and mixed results, top philanthropists in this field are doubling down. The Walton family is spending $1 billion to promote school choice over the next five years — almost as much as it spent in the previous two decades. A group of funders in Los Angeles are advancing a plan to move half of all K-12 students in that city into charter schools, stirring fierce debate.

In other words, many Americans are concerned that their control over major social investments is just as insignificant as it ever was under government supervision where social programs were designed by a radical progressive minority with enough influence in Congress to see them funded and implemented.  Although many if not most Americans resented this arrogation of authority and the imposition of a particular, narrow, and highly political agenda, they could only watch as advocates of diversity, inclusivity, and identity politics ruled. 

The same Americans are no concerned that private foundations with infinite resources and politically committed donors will reconfigure American society with no accountability to the electorate.  At least in principle, the public has always had a say in government decisions.

In other words  plus ça change.  Private philanthropists in their desire to reshape American society will be no different from progressives who have imposed their particular brand of idealism on a reluctant populace.

The only difference is that these private social entrepreneurs will be able to do the job quickly and efficiently.  As Mark Zuckerberg’s failed attempt to reform the Newark school system showed, philanthropists with no red tape tying them up can get down to business quickly, but their ideas and programs can be just as naïve and ignorant as government’s. 



This is a good thing.  Get new ideas into the marketplace; fund, implement, and evaluate them quickly and depending on the results either either stay or get out.  None of the long, painful, and expensive process of hearings, revisions, amendments, community councils, and repetitive reviews of government.

It is also clear that despite their universal commitment to social and economic improvement, each of these new philanthropists are individuals with significantly different views.  Lists of major US philanthropists include Jon Bon Jovi, George Clooney, Angelina Jolie, David Koch, and Michael Dell; and their investment priorities reflect their own political philosophies and personal preferences. 
Government by contrast has always been monolithic, bureaucratic, immobile, and resistant to change. 

Nothing comes for free.  Politics, political philosophy, and political preference are as common in the private sector as in the public.  Power and influence breed the desire for more power and influence whether public or private.  The desire to claim credit for major systemic change in American society would be the greatest honor for politician and philanthropist alike.


Yet, when all is said and done, private enterprise, initiative, risk-taking, and entrepreneurial will always yield greater rewards and benefits than old, tired, and predictable public initiatives.