Philanthropy: a matter of public policies or a private venture?

 

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                          In October 2016, Abigail Disney, the granddaughter of Walt Disney, along with many other American billionaires, wrote a letter to President Obama to ask for an increase in taxes paid by the economic elite of the country (“We are New York’s millionaires and we say: raise our taxes”, The Guardian, 21 March 2016). Indeed, according to them, the more money you earn, the less taxes you pay, thus some wealthy people want to make more people benefit from their money through state-spending in public services, granted to everybody, rather than specific foundations or charities. Philanthropy, whose etymology means the “love of humanity”, is still a controversial issue when considered an institution rather than just a theological or political interest. Hence the question raised is the following: is philanthropy a matter of public policies or necessarily a private venture?


       Philanthropic issues find their origin in the British industrial revolution, which allowed the country to thrive quickly, at the expense of the weakest categories of population. The British Victorian age was an era of economic and industrial boom that turned the country into the “workshop of the world”. However, it also revealed a more inegalitarian society, and Pat Thane clearly evokes in The Foundations of Welfare State that “in 1870, it required a considerable imaginative effort to conceive even of Britain without a significant amount of poverty”. In that period, Trade Unions progressively gained influence (creation of the Trade Union Congress in 1868) and rich women got involved in charities to provide for the poor. People seemed to be aware that economic changes could be too radical for the deprived who did not manage to adapt, that “the fault lays in the structure of the economy, from a -moral- to an -economic- diagnosis”. Thane refers to a two-tier society, which was remarkably described by Disraeli [1] in his essay: Sybil, or the Two Nations. Disraeli portrays the Victorian era as a prosperous period, with a “bright and sunny side” of Britain as opposed to a “dark side” which is a majority of destitute British people, who cannot access neither education, nor the advantages of the industrial revolution. Economic boom does not always provide social improvements. In the United States, not everyone benefited from the public services that were essential to a thriving economy. The article from The Atlantic referring to W.E.B Du Bois’s [2] work also underlines the impact of the “Plessy doctrine of separate but equal” public places in the US in the late 1950’s. Black people were excluded from public places and they were not able to access the bare necessities, whereas the country was often described as the “Land whose streets were paved with gold”. Social inequalities have put forward the philanthropic issue, which can also be a means of one’s soul’s salvation.

It seems convoluted to separate philanthropy from its religious meaning. Gray B. Kirkman suggests in his History of English Philanthropy that the “Catholic charity is closely connected with the doctrine of paenitentia”, which consists in paying for one’s sins (with money or through pilgrimage for instance). Charity is one side of philanthropy seen as a means to salvation of the soul. This religious imperative gives more importance to the soul, which is supposed to be the only thing remaining after death, according to Christian Faith. Hence, it is the reason why “men have continued to give of their substance to the poor in recompense or contrition for the sins of their souls”, as it is underlined by Kirkman. It has also influenced right-wing parties, especially the British Conservative Party, which is still supported by Catholic and Anglican people. Margaret Thatcher’s reference to Saint Paul’s epistle in her Speech to the Conservative Political Centre Summer School clearly highlights that philanthropy and people’s welfare are necessarily linked with “the supreme moral quality” of charity. By opposing the improvement of the soul to that of the body, philanthropy may describe mankind as perfecting. Mankind is said to be good, it is not only a body, down-to-earth, it is always perfecting. This idea, evoked by Aristotle in his Ethics, is also supported by John D. Rockefeller in “The Art of giving”. The inner being of people may improve, according to this famous magnate, who created foundations in the 19th century thanks to “the investment of effort or time or money”, for “the only thing which is of lasting benefit to a man is that which he does for himself”. Thanks to that “investment”, mankind may be able to reach perfection, to be separated from a mere body and fulfil its own mind. Philanthropy is a way to oppose nature and nurture, for it may help to bridge “the economic differences between people” coming from “their difference in personality”, according to Rockefeller. This idea points out the political conceptions of “welfare”, and the way through which it is granted.

         On behalf of philanthropy, the question of its efficiency through state interventionism or private ventures may be underlined. The myth of the self-made man is suggested by people advocating the efficiency of private interests in philanthropy. Rockefeller is indeed a prominent figure witnessing the success of a dynasty which has built its fortune upon an industrial and financial empire. In his article, Rockefeller alludes to the self-made man: “under normal conditions the man is strong in body, in mind, in character, and in will need never suffer want. But these qualities can never be developed in a man unless by his own efforts”. The figure of the entrepreneur, able to create by its own hands (or thanks to his money), is not opposed to that of the philanthropist. Andrew Carnegie for instance was born in Scotland from a weavers’ family, and became one of the most influent steel baron of the 19th century, after having fled to the United States. He founded libraries, the “Carnegie’s libraries” and supported education. He also wanted to “give what the country gave to him back”. Private interests may contribute to the “collective welfare”, as Adam Smith pointed out in his most famous essay The Wealth of Nations, thanks to the power of the invisible hand. This would be an argument for people in favour of a more “laissez faire” economy. Margaret Thatcher denounced in her speech that “partly as a result of high taxation, the idea of work well done had almost been forgotten”. After the Winter of Discontent, she was elected the first woman Prime minister in 1979. She always supported free enterprise and tried to encourage companies through decreases in taxes (thought to be too dissuasive to allow their development). Margaret Thatcher was the daughter of a grocery dealer, and may also be seen as a figure of a “self-made woman”. She believed that philanthropy had to help people to bettering themselves, not “to break down personal responsibility and the sense of responsibility to family, neighbourhood and community”. That is the reason why sate interventionism is seen as a threat to individual responsibility, and has to be curtailed for it may lead to dependency and “diminish [people] as a moral being”. Yet some people are let by the wayside and are excluded; public goods are also a way to provide welfare.

The “unequal distribution” of wealth evoked by Thane in The Foundations of the Welfare State is the real explanation of the philanthropy’s emergence, according to him. However, he also suggests that employers finally realized that “the carrot was a more effective means of increasing productivity than the stick”. Philanthropy through the sharing of wealth may hide personal interests, but it is still a way to improve collective welfare. The example of Henry Ford is relevant of that idea: his employees were paid $5 per hour but he decided to raise their wages so as to keep them in the company, for fear that the hard work conditions force them to leave. This may be an unwillingly philanthropic experiment, but it allowed Ford’s employees to have more purchasing power. Furthermore, public goods allow everybody to benefit from services. The article published by Robert Reich in the Boston review underscores the fact that foundations may be a way to allow the “distribution of public goods” for they are numerous and can “operate on a longer time horizon”. Reich alludes to economists’ theories of public welfare, like Samuelson, whose theory of “public goods” described them as “non-rival and non-exclusive”, that is to say that everybody can benefit from them at the same time: “these goods that, like a well-lit harbor, are available to everyone if they are available to anyone”, are free for the consumers. Usually provided by the State, public goods can also be offered by the foundations, which contribute to the expression of democracy by sharing the benefits from everyone’s wealth. People who are excluded or let by the wayside may find new opportunities thanks to philanthropy and public services, or foundations, which associate private interests for the common good. Nonetheless, is everyone able to be a philanthropist, or able to give enough legitimacy to its action?

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      This topic needs to be pointed out for philanthropy may also be a matter of competition. People trying to make philanthropic actions are not always seen through a benevolent eye, owing to the predominance of personal interests. Robert Reich gives an interesting definition of the foundation, for it is an organization fighting for the cause we want to support thanks to funding: “is a majority of citizens prefers police protection and a minority prefers art funding, then politicians will vote to fund the police and not the arts”. The state seems paralyzed by the rule of the majority, prevailing in a democracy, because it must conciliate numerous interests, whereas foundations are more flexible; they can fund “private assets for public benefit, as judged by the donor”. It suggests “à la carte” philanthropy, and some projects may be subjected to the public will: if individuals decide not to fund a project, it will never be realized. Competition between foundations may be noticed, and the example of W.E.B Du Bois’ project of Encyclopedia Africana highlights this idea. Philanthropy relies on time, and some periods of History are more likely to favour individuals action like that of Du Bois. He was an “African-American scholar” and “many leading white Americans perceived black American social scientists -unlike their white American colleagues – to be incapable of producing objective analyses of American race relations”. The legitimacy of African-American scholars was relying on the segregation context of the 1950’s in the United States, even if their work would have helped to challenge law and order by giving a new point of view, by leading philanthropic actions. That is why philanthropy may also be seen as an institution, rather than a personal duty.

To see philanthropy as an institution leads to consider it as a “great weight of inertia”, as Kirkman seems to do. The impact of the “dissolution of the monasteries” right after the Act of Supremacy enforced by Henry VIII in 1534 contributed to dismantle the philanthropy’s monopoly, owned by the Church. Prestige is linked with charity, for it allows people to have more power on behalf of the common good. Rockefeller exposes the behavior of the rich men who “lavish very much money on fine raiment for themselves or their families without suffering from public ridicule”, and suggests that philanthropy must be done for its own sake, for the sake of generosity and not for personal interest only, which would be the end of philanthropy. What Kirkman and Rockefeller saw as a lure and false philanthropy is also described as a source of conflicts for Pat Than, for it led to the separation of the Reformists and the Catholics, and even if “such disharmony at least stimulated competitive charitable effort’, through the regeneration and the alliance of Catholics movements in Europe during the 17th century against the Reform, it cannot be denied that it has been “the true end of philanthropy”, which has progressively come into the States’ hands.

Philanthropy seems to be both a matter of public policies and a private issue. Nevertheless, it cannot be defined through its efficiency for personal interests and collective welfare are intertwined. Philanthropy remains a topical issue, owing to the fact that inequalities are still widening between rich and poor. The question linked with state interventionism and “laissez faire” must not elude that philanthropy is also a matter of individuals who can take risks for the benefit of the common good, and that concern should be its real meaning, as a witness of mankind.

Alexis FULCHÉRON


[1] Benjamin DISRAELI (1804 – 1881) was a British politician and writer who served twice as Prime Minister of the United Kingdom, and also played a significant role in the creation of the modern Conservative Party.

[2] William Edward Burghardt DU BOIS (1868 – 1963) was an American sociologist, historian, civil-rights activist, Pan-Africanist author and editor. DU BOIS graduated from the University of Berlin and Harvard. He was also the first African American to earn a doctorate from Harvard University, in 1895 (he became professor at Atlanta University).


A study made from a set of texts tackling the subject. References and quotes are mostly taken from them, in chronological order:

  • Gray B. KIRKMAN, A History of English Philanthropy from the Dissolution of The Monasteries to the Taking of the First Census, London, King & Son, 1905, Preface, pp. v-vii
He was a British economist and author from the 19th and 20th centuries. His book A History of English Philanthropy covers the period from about 1540 to 1800 is considered a noteworthy contribution to this historical subject
  • John D; ROCKEFELLER, “The Art of Giving”, in Random Reminiscences of Men and Events, New York: Doubleday, 1909, 31-52
John Davidson Rockefeller Sr. was an American oil industry business magnate and philanthropist (1839 – 1937), also described as the richest person in modern history.
  • Margaret THATCHER, Speech to the Conservative Political Centre Summer School (“The Renewal of Britain”), 6 July 1979
Born in 1925, Margaret Thatcher was the British Prime Minister of the United Kingdom from 1979 to 1990 and the leader of the Conservative Party from 1975 to 1990. The « Iron Lady » died in 2013.
  • Pat THANE, The Foundations of the Welfare State, London, Longman, 1982, pp. 10-13 & 20-21
Pat Thane is Professor of Contemporary History at King’s College London. She has written many studies about the emergence of the Welfare State, but also essays about the history of Old Age.
  • Robert REICH, “What are Foundations For?”, Boston Review, March 1st, 2013
He is an American professor and author, who served in the administrations of Presidents Gerald Ford, Jimmy Carter and Bill Clinton. Reich was also a contributing editor to The Atlantic, The New York Times and The Wall Street Journal.
  • “Would Philanthropies Today Fund W.E.B Du Bois’ Encyclopedia Africana?”, The Atlantic, May 23rd, 2014

Extracts from the set of texts:

Text n°1

PHILANTHROPY plays a considerable part in our social economy, and a still larger one in the popular imagination. It is urged as a religious duty by the churches; it is proposed as an honourable occupation to those who wish to do something for their poorer or less healthy neighbours. (.. , ) The one question, in effect, into which all the others resolve themselves is this: ‘What is the meaning and  worth of philanthropy?’

This question, which is in the nature of a challenge, had fashioned itself in my mind as one to which I should endeavour to supply an answer. I had become aware, in the course of several years’ work among the unfortunate subjects of philanthropic activity, of what is, of course, a matter of common knowledge, viz., that philanthropy does not entirely fulfil its aim, since the evils which it seeks to allay still continue, and many of them in an increasing degree. Now philanthropy is something more than a social ideal; it has become a national institution. It has acquired, as all institutions must do, a great weight of inertia, so that, while. it is no doubt modifiable in response to changing ideas, it is not readily susceptible of any radical alteration, whether for better or for worse. It exists, and in very much its present form it is likely to exist for a considerable time to come. The  choice of the period of the dissolution of the monasteries as a starting-point is convenient for two reasons. It was then that modern problems began to formulate themselves with great precision. And charity was then ceasing to be under the immediate direction and tutelage of the Church. Catholic charity is closely connected with the doctrine of paenitentia. The effect of almsgiving. on the soul of the donor was theoretically more important than its effect on the body of the recipient. This motive for charity did not cease with the Reformation: men. have continued to give of their substance to the poor in recompense or contrition for the sin Of their souls. It would hardly be possible to write about pre Reformation philanthropy without considering this subject of motive. It is quite easy to do so for the post- Reformation period when, although this motive was still operative, it was ceasing to be explicit, I do not enter here into the deeply interesting study of the hidden springs of charitable impulse, but confine myself to the more objective study of social effects, to describing the achievement of the executive will, not probing the greater or less worth of soul which may accompany it. I cannot, indeed, avoid the thoughts and feelings of philanthropists, but when I dwell. on them, it is for their bearing on the nature of the work done and its greater or less social efficacy.

The reason for bringing the history to an end with the close of the eighteenth century may not be so obvious, but is really of the same kind as suggests its starting-point. To have begun earlier would have involved us in questions of theological interest, to have continued into the nineteenth century would have involved matters of present-day controversy, and led us from a description of what was to a discussion of what ought to be.

Gray B. Kirkman, A History of English Philanthropy from the Dissolution Of The Monasteries to the Taking of the First Census, London, King & Son, 1905, Preface, pp. v-vii.

Text n°2

The novelty of being able to purchase anything one wants soon passes, because what people most seek cannot be bought with money. These rich men we read about in the newspapers cannot get personal returns beyond a well-defined. limit for their expenditure. They cannot gratify the pleasures of the palate beyond very moderate bounds, since they cannot purchase a good digestion; they cannot  lavish very much money on fine raiment for themselves or their families without suffering from public ridicule; and in their homes they cannot go much beyond the comforts of the less wealthy without involving them in more pain than pleasure. As I study wealthy men, I can see but one way in which they can secure a real equivalent for money spent, and that is to cultivate a taste for giving where the money may produce an effect which will be a lasting gratification. (. )

A man of business may often most properly consider that he does his share in building up a property which gives steady work for few or many people; and his contribution consists in giving to his employees good working conditions, new opportunities, and a strong stimulus to good work. Just so long as he has the welfare of his employees in his mind and follows his convictions, no one can help honoring such a man. It would be the narrowest sort of view to take, and I think the meanest, to consider that good works consist chiefly in the outright giving of money.

The best philanthropy, the help that does the most good and the least harm, the help that nourishes civilization at its very root, that most widely disseminates health, righteousness, and happiness, is not what is usually called charity. It is, in my judgment, the investment of effort or time or money, carefully considered with relation to the power of employing people at a remunerative wage, to expand and develop the resources at hand, and to give opportunity for progress and healthful labor where it did not exist before. No mere money-giving is comparable to this in its lasting and beneficial results. (… ) The only thing which is of lasting benefit to a man is that which he does for himself. Money which comes to him without effort on his part is seldom a benefit and often a curse.

Men who are studying the problem of disease tell us that it is becoming more and more evident that the forces which conquer sickness are within the body itself, and that it is only when these are reduced below the normal that disease can get a foothold. The way to ward off disease, therefore, is to tone up the body generally; and, when disease has secured a foothold, the way tb combat it is to help these natural resisting agencies -which are in the body already. In the same way the failures which a man makes in his life are due almost always to some defect in his personality, some weakness of body, or mind, or character, will, or temperament. The only way to overcome these failings is to build up his personality from within, so that he, by virtue of what is within him, may overcome the weakness which was the cause of the failure. It is only those eff01ts the man himself puts forth that can really help him,

We all desire to see the widest possible distribution of the blessings of life. Many crude plans have been suggested, some of which utterly ignore the essential facts of human nature, and if carried out would perhaps drag our whole civilization down into hopeless misery. It is my belief that the principal cause for the economic differences between people is their in personality, and that it is only as we can assist in the wider distribution of those qualities which go to make up a strong personality that we can assist in the wider distribution of wealth. Under normal conditions the man who is strong in body, in mind, in character, and in will need never suffer want. But these qualities can never be developed in a man unless by his own efforts, and the most that any other can do for him is, as I have said, to help him to help himself. )

I have been frank to say that I believe in the spirit of combination and cooperation when properly and fairly conducted in the world of commercial affairs, on the principle that it helps to reduce waste; and waste is a dissipation of power, I sincerely hope and thoroughly believe that this same principle will eventually prevail in the art of giving as it does in business.

John D Rockefeller, « The Art of Giving », in Random Reminiscences of Men and Events, New York: Doubleday, 1909, 31-52 (adapted),

Text n°3

In 1870, it required a considerable imaginative effort to conceive even of Britain without a significant amount of poverty. Hence thinking tended to be directed towards minimizing both poverty and associated problems, such as those of economic growth and public order, rather than towards its elimination. The debate on these issues continued throughout the last three decades of the 19d1 century, but with certain changes of emphasis. This change is often described as being from a general tendency to blame the fecklessness and idleness of the poor for their poverty, to recognition that the fault lay in the structure of the economy, from a « moral » to an « economic » diagnosis. From this change, it is said, followed another change, from prescribing as the cure more self-help and hard work among the poor, to recognition of the need for government intervention to support the poor in an economic situation over which they had little control, from « individualism » to « collectivism » as it is often put. A change is also detected from a mid-19th century optimism that a free economy left to itself would eventually generate sufficient wealth to solve many problems, to pessimism about whether the British economy was capable of such sustained progress. (. . . )

Advocates of state « collectivism » very rarely wished government action to take the place of self-help, philanthropy, and the duty to work, but rather to supplement and reinforce these attributes. Furthermore there was considerable pessimism among mid-century political economists about the future development of the productive forces of capitalism, and marked optimism among later economists and reformers about a future in which the economy was better understood, the population better educated, and greater cooperation among classes would emerge. Since the beginning of the 19th century there had been voiced a range of analyses of, and solutions to, poverty. Some, such as Robert Owen, among socialists, and conservatives such as Thomas Carlyle, had argued from the beginning of industrial capitalism in Britain that the source of the unequal distribution of wealth, income and power lay in the competitive, individualistic nature of the new economic system and the values it perpetuated and strengthened: the emphasis upon individual rather than co-operative effort, upon self-help for all rather upon mutual obligation, such as the responsibility of the rich to help the poor in return for their labour.

In the 1830s and 40s alternative ideas such as those of Owen for the substitution of co-operation for individualistic competition lost the struggle for ideological hegemony to ideas of liberal laissez-faire, although they survived among groups of radical working people and among philanthropists. The dominant view among those with economic, political and social power — employers, politicians, civil servants, clergy — was that embodied in the Poor Law Amendment Act of 1834 — described vividly by Engels. as  »the most open declaration of war by the bourgeoisie upon the proletariat ». (.. , )

Some •employers were crudely exploitative, others offered their workers shorter hours, better conditions, improved housing and medical care, from a mixture of philanthropy and conviction that the carrot was a more effective means of increasing productivity then the stick. The rapid growth of private charity in these years also gave rise to institutions demonstrating a variety of approaches to the palliation of poverty. Much of this philanthropy was fueled by religious conviction, especially by the realization of evangelical Anglicans and Nonconformists that to save souls it was necessary first to remove the poverty which so consumed lives that the poor had no time for God. (.. . ) Booth described the large number of charities established by religious bodies in London in increasing numbers from the 1860s. From 1865 William Booth, founder of the Salvation Army, grounded his East End missionary work in the belief that to save souls it was essential to save bodies; he did not discriminate between « deserving » and « undeserving poor »,

The largest single inspiration to charitable effort, also religious in character, was that of evangelicalism, following the evangelical revival in the British Isles in the mid-19th century. ( …) The bulk of financial support for evangelical charities came from well-to-do middle-class families, although they also received much from lower income groups. The variety of religious motivations was not always conductive to harmony among philanthropists. The continuing conflict between evangelicals and Roman Catholics at times amounted to undignified scrapping over the souls of the proletariat. Although Catholics in theory regarded poverty as a holy state, they recognized that too much of it was not conducive to spiritual contemplation. Catholics and evangelicals indeed had much in common in regarding spiritual regeneration as the true end of philanthropy. Conflict arose because each wished to convert the poor — indeed the whole of society — to different forms of Christianity. Such disharmony at least stimulated competitive charitable effort.

Pat Thane, The Foundations of the Welfare State, London, Longman, 1982, pp. 10-13 & 20-21 (adapted)

Text n°4

On April 7, 1938, 70„year-01d W.E.B. Du Bois had invited his assistant editor to wait with him for the telephone call that would bring news that the board of trustees of the Rockefellers’ General Education Board (GEB) had voted favorably to fund his « Encyclopedia Africana. « (… ) The famed social scientist would soon find out that neither the GEB nor the other foundation he had been courting, the Carnegie Corporation, would fund the encyclopedia. Adding insult to injury, the Corporation would be commissioning a comprehensive, policy-oriented social scientific study of African Americans of the size, scope, and budget previously unseen. And, they would not be inviting him to direct it. Rather, they had chosen the Swedish economist Gunnar Myrdal for the task and they would afford him unlimited funds to conduct his own research and to commission the work of other social scientists across the country.

Du Bois could only watch from afar with a sense of tempered envy and lost opportunity. Writing to a colleague in 1909, Du Bois had described the significance of the project: « I am venturing to address you on the subject of a Negro Encyclopedia. In celebration of the 50th anniversary of the Emancipation of the American Negro, I am proposing to bring out an Encyclopedia Africana covering the chief points in the history and condition of the Negro race. , . ) The plan was to fund a multivolume encyclopedia to include important phases of black life and history, from « anthropological, ethnographical, biographical, historical, [and] educational » aspects to « industrial, economic, political, religious, psychological (including race relations, artistic, etc., etc). (. . , )

However, the Corporation had a particular vision in mind for a study of black Americans. In contrast to a pan-African encyclopedia which would highlight modern scientific knowledge proving racial equality and present the achievements of black Americans and Africans in the sciences and humanities, the Corporation wanted to study black Americans as a « social phenomenon, » or rather, as part of a broader problem in white-black relations. For the organization’s president, a key requirement was to impact social change. That led him quickly to focus on finding a scholar that both he and the policy establishment would consider « objective. » The Corporation dwindled down the list of candidates and selected a Swede with experience translating empirical analyses of societal problems into policy recommendations in his native country. The 39-year-old Gunnar Myrdal was an economist and a member of the Swedish Parliament whose work was well-received and respected among contemporary policymakers in Washington D.C.

Six years later, Myrdal’s final manuscript on the study of black Americans was published. Much as his funders had expected, the study successfully made a measurable policy impact. Most memorably, the U.S. Supreme Court cited it in Brown v. Board of Education to support its assertion that the Plessy doctrine of « separate but equal » has no place in public school education. The Court reasoned: « Whatever may have been the extent of psychological knowledge at the time of Plessy v,

Ferguson, this finding is amply supported by modern authority, » citing specifically Myrdal’s An American Dilemma: The Negro Problem and Modern Democracy (1944). Against this backdrop, the Carnegie Corporation has gone so far as to call Myrdal’s study « one of the most important results of grant making » at the organization.

Today, it is fair to assume that many philanthropists and foundation leaders would celebrate both the Carnegie Corporation’s decision to fund An American Dilemma and the study’s ultimate impact in the United States. At the same time, contemporary philanthropists and philanthropic managers likely would say that they, unlike their predecessors in philanthropy, never would have left Du Bois out to dry. At the very least, they would have funded both studies. After all, W.E.B. Du Bois was a celebrated African-American scholar whose encyclopedia not only aimed to dispel whites’ racial prejudice against blacks, but also to stimulate racial pride among black Americans and Africans. It would have empowered these communities in ways that Myrdal ‘s An American Dilemma, written by a white European and focused on studying black Americans as part of a social problem, never would have and never did.

However, contemporary philanthropic managers’ discussion on grantmaking in the most recent edition of the Stanford Social Innovation Review suggests that, in today’s philanthropic climate,

Myrdal’s study would still remain an attractive project and Du Bois’s pan-African encyclopedia would still find it difficult to secure funding. (… ) Put differently, contemporary philanthropy seems to see itself as tasked with addressing social problems, both complex and simple, and with measuring the impact of their funding decisions in addressing these various social problems.

Du Bois’s encyclopedia did not plan to analyze or solve a social problem, whether simple or complex. Even if its scientific presentation on African Americans- and Africans would serve to dispel racial prejudice (and in the abstract, serve as useful data for framing public policies), it was to be edited by an individual who had little chance of making a substantial social or policy impact in the U.S. at the time. Many leading white Americans perceived black American social scientists—unlike their white American colleagues—to be incapable of producing objective analyses of American race relations. From this perspective, many white Americans within and outside of the nation’s capital perceived W’.E.B. Du Bois as a biased, impassioned scholar whose scholarship was far from objective, and thus, far from reliable for framing public policies. Du Bois’s encyclopedia likely would have had little impact in changing white Americans’ behavior or their public policies in any short-term, measurable way. Rather, it had the amorphous, long-term goal of correcting racial bias and encouraging racial pride among black Americans and Africans. By contrast, the white Swede’s study of black Americans was set up to analyze a societal problem and to impact public policies in Washington D.C. in the short-term and in measurable ways. (… )

Funding is sometimes a zero sum game; and even as we celebrate the path towards Brown, it is worth remembering what was lost along the way. We could have benefitted from living. in a world that would have produced both Gunnar Myrdal’s An American. Dilemma and W.E.B. Du Bois’s encyclopedia.

« Would Philanthropies Today Fund W.E.B. Du Bois’s Encyclopedia Africana? » The Atlantic, May 23rd, 2014 (Adapted)

Text n°5

When we took over the Government on 4th May, we found a nation disillusioned and dispirited, That was, I believe, the inevitable outcome of the Labour Government’s socialist approach. Last Winter, there can have been few in Britain who did not feel, with mounting alarm, that our society was sick morally, socially and economically. ) Experience has shown the practical failure of two  fundamental Socialist arguments: that nationalisation is justified because it makes economic power accountable to the people whose lives it affects; and that State planning can point to better ways forward than can be charted by free enterprise. The Socialists had grossly expanded State intervention in the economy. They were going so far as to claim that the State should have monopoly rights in the provision of health and education. It is certainly the duty of Government to do all it can to ensure that  effective succour is- given to those in need, and this is a Conservative principle as much as a Socialist one. Where Conservatives part company from Socialists is in the degree of confidence which we can place in the exclusive capacity of a welfare state to relieve suffering and promote well-being. Charity is a personal quality—the supreme moral quality according to St Paul, and public compassion, state philanthropy and institutionalised charity can never be enough. There is no adequate substitute for genuine caring for one another on the part of families, friends and neighbours. I think that this proposition would be widely accepted. And yet the collectivist ethos has made individuals excessively prone to rely on the State to provide for the well-being of their neighbours and indeed of themselves. There cannot be a welfare system in any satisfactory sense which tends, in this way, to break down personal responsibility and the sense of responsibility to family, neighbourhood and community. The balance has moved too far towards collectivism. In recent years, it has been quite widely held to be morally wrong for the individual to choose to make his own provision •för the education of his children or the health of his family. Yet if the State usurps or denies the right of the individual to make, where he is able to do so, the important decisions in his life and to provide the essentials for himself and his family, then he is demeaned and diminished as a moral being. We need, therefore, to achieve a better balance between the spheres of public and private activity. The imbalance that Socialism has brought about is, I believe, part of the explanation for the irresponsibility and the inhumanity displayed by too

many people last winter. The wanton expansion of the State’s responsibilities had been accompanied by a great drop in public spirit. Excessive public spending had (as usual) bred great private discontent. Meantime, it was widely assumed that no large enterprise could be managed successfully without the help of the State. Private philanthropy and voluntary organisations were undermined. Heavy taxation had lowered fiscal morality. The malignant tumour of the so-called black economy was growing. We seemed to be losing our moral standards as well as our competence. Then, partly as a result of high taxation, the idea of work well done had almost been forgotten. « Try to do any bit of work as well as it can be done for the works sake », wrote C.S. Lewis. But that injunction seemed, in the last few years, to have become little more than a memory. ( . . . ) In Britain, we spent too much time dividing. up the cake and pursuing petty sectional interest. For a long time, too, many leaders of the Labour Party refused to recognise the reality of British decline, to which they had contributed more than their fair share. They seemed blind to the evident truth that, all over the world, capitalism was achieving improvements in living Standards and the quality of life, while Socialism was causing economic decay, bureaucracy and, when it took authoritarian or totalitarian forms, cruelty and repression.

Margaret Thatcher, Speech to the Conservative Political Centre Summer School (« The Renewal of Britain »), 6 July 1979, http;//www.margaretthatcher.org /document/104107.

Text n°6

What then are foundations for? If we were starting a democratic society from scratch, would we want foundations in something like the legal form in which they exist today? I believe there is a case for foundations that renders them not merely consistent with democracy but supportive of it.

First, foundations can help to diminish government orthodoxy by decentralizing the definition and distribution of public goods. Call this the pluralism argument. Second, foundations can operate on a longer time horizon than can businesses in the marketplace and elected officials in public institutions, taking risks in social policy experimentation and innovation that we should not routinely expect to see in the commercial or state sector. Call this the discovery argument.

The argument from pluralism begins by identifying the special role of foundations in relation to the market and the State. It has long been understood that the commercial marketplace does not do well at providing what economists call public goods. These are goods that, like a well-lit harbor, are available to everyone if they are available to anyone; and that, like clean air, do not cost more when they are consumed by more people. The standard examples of public goods include national defense, education, arts, parks, and science. The essential point about public goods is that it is difficult or undesirable to block anyone from consuming them, even if they do not pay. Because private businesses like paying customers, public goods are under-produced in the commercial marketplace.

Instead, the state can provide public goods; such provision is one of its basic functions, In a democratic state, one simple way to predict what public goods will be produced is to look at which public goods are favored by a majority of citizens. If a majority of citizens prefer police protection and a minority prefers arts funding, then politicians will vote to fund the police and not the arts, . . ) Foundations can yield more idiosyncratic results. They deploy private assets for public benefit, as judged by the donor. Foundations are thus especially well placed to fund public goods that are under-produced, or not produced at all, by the marketplace or the state. Because donors have diverse preferences about the goods they wish to fund philanthropically, foundations can be a source of funding for the minority public goods or controversial public goods that a democratic state will not or cannot fund.

Foundations thus partially decentralize the definition and production of public goods. (… )

This idea is not novel. It can been seen, for example, in an opinion of Justice Lewis Powell’s in a 1983 case involving whether Bob Jones University, a religious and nonprofit university that had banned interracial dating, should be permitted to keep its tax exempt status if it chose to reject a compelling government interest such as ending racial discrimination. Powell joined the majority in conditioning tax-exempt status on nondiscriminatory racial codes, but rejected the idea that the primary function of a tax-exempt organization is to enact only government-approved policies. For S. Powell, the provision of tax subsidies for nonprofits, including presumably foundations, « is one indispensable means of limiting the influence of government orthodoxy on important areas of community life. »

Foundations ideally take on the long-run, high-risk policy experiments that no one else will.

The argument from pluralism turns foundations’ lack of marketplace and electoral accountability from a defect into an important virtue. Foundations are free, unlike commercial entities, to fund public goods because they need not compete with other firms or exclude people from consuming the goods they fund. And they are free, unlike politicians who face future elections, to fund minority, experimental, or controversial public goods that are not favored by majorities or at levels above the median voter. ( , . . )

The pluralism argument provides a plausible, if not definitive, case for foundations as democracy-supporting institutions.. But foundations supply more than diversity. They also fuel innovation. Let’s say a democracy wishes to advance the general welfare or pursue the aims of justice, but democratic representatives do not know the best means for achieving such aims. For instance, what kinds of policies will best promote educational opportunity and achievement? Some believe universal pre-school is the answer, others a better school finance system, others better and more pervasive educational television, and still others online learning. Or consider environmental policy: What kinds of changes will reduce carbon emissions with the lowest cost to economic growth?

To answer these questions, a democratic society—recognizing that its leaders are not all-la-rowing, that reasonable disagreement on the best means to pursue just ends is likely, and that social conditions are always evolving—might wish to stimulate experimentation in social policy so that better and more effective policies at realizing democratically agreed upon aims can be identified and adopted. ( . . . ) And when it comes to the ongoing work of experimentation,. foundations have a structural advantage over market and state institutions: a longer time horizon. Once more, the lack of accountability may be a surprising advantage. Commercial entities in the marketplace do not have an incentive structure that systematically rewards high-risk, long time horizon experimentation; they need to show quarterly results. Similarly, public officials in a democracy do not have an incentive structure that rewards high-risk, long time horizon experimentation; they need to show results quickly from the expenditure of public dollars in order to get re-elected. In contrast, foundations are not subject to earnings reports, impatient investors or stockholders, or short-term election cycles , . ) In short, unlike business and the state, foundations can « go long. » They can be the seed capital behind innovation in effective social policy in a democratic society. This, I believe, is the stronger argument on behalf of foundations.

Robert Reich, « What are Foundations For? » Boston Review, March 1st, 2013 (adapted).

 

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