Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better

Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better by Rob Reich, Princeton University Press, 256 pages, Hardcover, November 2018, ISBN 9780691183497

It is the holiday season. It is a season of giving. And, of course, a season of rampant consumerism. There is a similar dichotomy in the nature of the philanthropic foundations many of us donate to at this time of year. And, because of an explosive growth in such foundations over the past century, the choice of where to give is nearly endless. That sounds like a positive development. Rob Reich, professor of political science and faculty codirector for the Stanford Center on Philanthropy and Civil Society, is not so sure. And he makes a compelling case to the contrary in his new book, Just Giving.

We celebrate the act of giving, and those who can afford to do so. As a culture, we lionize the wealthy, and see them as somehow morally superior for their success. It is a viewpoint furthered when they decide to “give back” some of the wealth they’ve accumulated in acts of charity. Of course, a lot of people don’t have anything extra to give—no extra effort to donate time after working multiple jobs to make ends meet, or any extra income left at the end of the month from working them. A lot of us will take on some debt just to give presents to our children this month. And we tend to think something is deficient in the working poor, rather than something being wrong with an economic system that distributes wealth so unevenly. Outgoing House Majority Leader and former Republican vice presidential candidate Paul Ryan gave voice to this in 2010 when he bemoaned that our country is reaching “a moral tipping point” in which there would be more “takers” than “makers” in our society—more people looking for a handout than creating wealth.  This statement came two years after General Motors closed the nation’s oldest operating auto plant in his hometown of Janesville, Wisconsin just two days before Christmas of 2008, putting as many as nine thousand people (according to Amy Goldstein’s Janesville, which we named the business book of the year last year) out of work.

This is all a long way of saying (burying the lede, as it were) that we need to question the system that creates such disparities rather than blindly celebrating those who benefit from it when they share some of their wealth. We should, in fact, question the very vehicles they use to “give back” and gain such good will—their philanthropic foundations. Usually unquestionably accepted as working in the common good today, such concerns were at the center of public debate when the robber barons of the Gilded Age established the first such foundations. Reich relates how there was vociferous opposition in the public debate that raged when John D. Rockefeller sought a federal charter for the Rockefeller Foundation:

American Federation of Labor president Samuel Gompers carped, “The one thing that the world would gratefully accept from Mr. Rockefeller now would be the establishment of a great endowment of research and education to help other people see in time how they can keep from being like him.”

Reverend John Haynes Holmes said at the time that, while he trusted those directing such foundation were men of wisdom and vision, when it came to the “thought of democracy:”

“From this standpoint it seems to me that this foundation, the very character, must be repugnant to the whole idea of a democratic society.”

Senator Frank Walsh of Missouri said such foundations “appear to be a menace to the welfare of society.” Theodore Roosevelt quipped, “No amount of charities in spending such fortunes can compensate in any way for the misconduct in acquiring them.”

In Just Giving, Reich returns to such fundamental questions and concerns. He explains how, in the time of Rockefeller and Carnegie:

For many Americans, foundations were troubling not because they represented the wealth, possibly ill-gotten, of Gilded Age robber barons. They were troubling because they were considered a deeply and fundamentally antidemocratic institution, an entity that would undermine political equality, convert private wealth into the donor’s preferred public policies, could exist in perpetuity, and be unaccountable except to a handpicked assemblage of trustees.

Educating people in how to keep from being like him was, unfortunately, not the purpose of John D. Rockefeller’s foundation. We now have a host of new monopolists trying to be just like him. One of the most successful music moguls of our age, Jay-Z, even named his record label after him!

Jeff Bezos, the richest man in the world, recently announced he was going to put $2 billion into education with the intent to fund free preschools in low-income communities. “We’ll use the same set of principles that have driven Amazon,” said Bezos. “Most important among those will be genuine, intense customer obsession. The child will be the customer.” Well, I have a four- and five-year-old in school in one of Milwaukee’s low-income neighborhoods, and I would very much like Jeff Bezos to stay out of it. We have a great toddler program that my children both started in when they were two-years-old, and while it was decidedly not free (and, in fact, a financial burden my wife and I who—like most new parents—were woefully unprepared for), I would rather pay for it than it be a pet project of a billionaire modern-day robber baron. Of course, I want it to be within reach of every child, to be universal, but I want it to be because we value it as a society, not because Jeff Bezos turns the eye of Sauron to it. Okay, the "eye of Sauron" is a bit much, but I no more want Jeff Bezos' influence in my children's school—or my children thought of as his customers rather than their teachers' students—than I want his company’s personal assistant surveilling my home. I’d even suggest that, if Amazon hadn’t dodged sales taxes for so long while driving local bookstore like the one 800-CEO-READ began in out of business and driving rapid publishing industry consolidation in an effort by publishers to have any semblance of power in their relationship with Amazon’s monopsony, perhaps we wouldn’t be seeing such rising income inequality and other injustices in our current economy. That might be a stretch, but maybe we could at least fund public schools more equally, rather than base them upon local property taxes. Or perhaps we could just pay the hard working teachers who educate our children a living wage like comparably educated professionals in other fields. All of which is to say, can we please just address this issue systemically and democratically rather than turn to the largess of billionaires?

Professor David Nasaw, biographer of another robber baron, Andrew Carnegie, said “Philanthropy is the least democratic institution on earth. It’s rich men deciding what to do.” Reich himself writes that “philanthropy is a form of exercise of power.”

In the case of wealthy donors or private foundations especially, it can be a plutocratic exercise of power, the deployment of vast private assets toward a public purpose, frequently with the goal of changing public policy.

The Rockefeller Foundation’s bid for a federal charter I mentioned earlier failed because of such concerns, so it went back to the state of New York to obtain it. That would be the same state investigating the now-shuttered foundation of Donald J. Trump, current president of the United States of America, the supposed leader of the free world, for “extensive unlawful political conduct" and using the foundation "as his personal checkbook," The fact that his “charity” was used to buy portraits of Donald J. Trump himself would be comical (and still kind of is, in a grotesque way), if it weren’t for the fact that it was illegal. Not only that, but in 2015, Trump's personal attorney, Michael Cohen, sentenced to 36 months in federal prison just this week for violating campaign finance law and several other offenses, solicited a $150,000 donation to the Donald J. Trump Foundation by Ukrainian billionaire Victor Pinchuk in September 2015, just after Trump kicked off his campaign for U.S. President. You can view that as an outlier if you wish, but it is more emblematic of the systemic flaws of philanthropy today, which are as often as tax havens and ways to peddle influence as they are to correct the very real imbalances in society.

What Rob Reich’s Just Giving aims to do is no less than offer a political theory of philanthropy upon which we can “evaluate what the role of philanthropy in a liberal democratic society should be.” He documents the history of philanthropy and its relationship to democracy, from ancient Athens to the Islamic Waqf. He questions why Bill Gates and Warren Buffett, and their Giving Pledge signatories, are so unquestionably lauded for their generosity today, especially considering that “Tax subsidies cost U.S. citizens well more than $50 billion annually.” He asks smart questions about public versus private morality, and challenges how we view charitable giving, asking if it is simply an individual act or a social practice? He looks at the “worrisome forms of paternalism” and “forms of dependence” that such organizations create, concerns that are only compounded by the troubling rise of donor-advised funds and for-profit charities, like that of Mark Zuckerberg and his wife Priscilla Chan, which are even more opaque and unaccountable to the public.

In these questions, he also demonstrates where philanthropy is “compatible with and plays an essential role in a flourishing liberal democratic state” and how it can play a critical role in “promoting justice for future generations.” But what he does more than anything is ask us to keep asking questions, to come up with more solid theories of philanthropy. He suggests his book is “but one such contribution.” We’d suggest Anand Giridharadas' Winners Take All is another. Hopefully both are a genesis in such thought and contributions, which will help shape public perception and policy.