Invitation to Liberate Philanthropy: Kodomo no tame ni (for the sake of our children)
Dana Kawaoka-Chen

Philanthropy Will Not Save Us

In seeking solutions to social problems, we overlook the need for systems change — which requires challenging entrenched power, including the institution of organized philanthropy.

This post is part of “Liberate Philanthropy,” a new blog series curated by Justice Funders to re-imagine and practice philanthropy free of its current constraints — the accumulation and privatization of wealth, and the centralization of power and control — to one that redistributes wealth, democratizes power and shifts economic control to communities. Over the next few months, we will be sharing stories from some of our most forward thinking, transformational leaders in philanthropy about how they are facilitating a Just Transition for philanthropy.

Alfa Demmellash, David Korten, and Laura Flanders discuss democratizing power and wealth at the 2017 BALLE Summit.
“Power concedes nothing without a demand. It never did and it never will.” — Frederick Douglass

There was once a time in American history when billionaires and philanthropic institutions were pilloried, not celebrated.

When the titans of their day, Andrew Carnegie and John D. Rockefeller, sought to set up trusts to spend some of their vast wealth for charitable purposes, they were criticized for having endowments that surpassed what the federal government, in the pre-New Deal era, spent on education and public health. Progressives at the time called for the “democratization of private benevolence” through more progressive taxation.

Following the Second World War, U.S. foundations were publicly derided for doing too little given their tax-exempt status and there was widespread opposition to their lack of accountability and general opaqueness. By 1965, government opposition to foundations was so great that the U.S. Treasury requested that Congress limit their powers through a series of regulations and tax laws intended to increase and uphold accountability.

To help broker a compromise between the U.S. government and foundations, the Commission on Foundations and Private Philanthropy, better known as the “Peterson Commission,” was established to shape the Tax Reform Bill of 1969, resulting in the 5 percent payout of investment earnings foundations are required to spend annually.

Nearly 50 years after the Peterson Commission disbanded, foundations and philanthropists maintain disproportionate influence and power in public life. In numerous ways, private philanthropy has stepped into the leadership and financial void left by government, helping to avert disaster.

In their book Philanthrocapitalism — originally subtitled How the Rich Can Save the World — Matthew Bishop and Michael Green describe multibillionaire philanthropists such as Bill Gates as “individuals who can do what it would otherwise take a social movement to do.”

Philanthrocapitalism is the consequence of a decades long growth in extreme wealth inequality. In truth, while the outsized influence of institutional philanthropy and the rich has skyrocketed alongside an explosion in concentrated wealth — concurrent with the decline of our public sector — we have routinely turned to the wealthy and powerful to solve big problems. At best, this approach to philanthropy leaves underlying systemic and structural causes to societal ills unaddressed, and at worst exacerbates them.

Philanthrocapitalists often use their success in business as their qualification to do effective philanthropy. But solving an intractable social problem or eliminating an injustice is a bit more complex than building a business, even a multi-billion enterprise.

After all, there are 2,043 billionaires in the world — How many of them have solved systemic challenges like anti-black racism or homelessness?

The mere assertion that philanthropy can displace social movements is deeply problematic. Social movements are democratic and forged by grassroots leadership — the opposite of philanthropy. Formal philanthropy — intentional or not — is an exercise in privilege, wealth, and entrenched power.

Philanthropy is not synonymous with social justice, social change, or even charity. In fact, philanthropy, like extreme poverty, is simply a byproduct of social, gender, racial, and economic injustice.

The conundrum we face is that philanthropy is used to address problems caused by an economic system that engenders radical wealth inequality — thus making philanthropy necessary in the first place. In 2017, 82 percent of all wealth created went to the richest 1%. The world’s richest 500 billionaires’ net worth grew 24% to $5.38 trillion while the poorest 50 percent saw no increase in wealth at all. Last year, the world’s billionaires saw their collective wealth increase by $762 billion, enough money to put an end to global extreme poverty seven times over.

This massive surge in wealth — or put another way, wealth redistributed to the richest percentile — comes during an era when “workers’ rights” is perfunctory at best, an oxymoron at worse, and Wall Street maintains a myopic focus on shareholder returns.

In seeking solutions to what plagues us, formal philanthropy and the monied class it represents often overlooks the need for systems change, which requires challenging entrenched power.

Philanthropy can and should play a role in systems change — and it has historically. However, we must acknowledge that a smart set of billionaires, millionaires, and their largesse — whose wealth and power are the driving forces that perpetuate systemic inequity — is incapable of displacing social movements and community leadership.

Most importantly, we must collectively interrogate the very economic system that makes philanthropy possible. In other words, is capitalism the system that is best suited to build our future society?

It’s a meaningful question, one that good-intentioned and social justice philanthropists should grapple with. There is already increasing disenchantment with capitalism: A 2016 poll by the Harvard Institute of Politics found that 55 percent of Americans believe capitalism makes inequality worse.

The Millennial generation — my generation — is the first generation in modern history projected to be worse off than our parents. Median earnings for Millennials in 2013 were 43 percent lower than Generation Xers in 1995. Average student debt has climbed from $24,000 to over $37,000 since 2008, and the share of business owners under 30 is at its lowest in 24 years.

In 1985, 35 percent of the nation’s wealth was owned by the bottom 90 percent. That figure has dropped to 23 percent with the lost 12 percent going to the nation’s wealthiest.

“It is not a risk to invest in black and brown people fighting for liberation. It’s the surest bet. When we have the resources to lead our own struggles, the world is transformed.” — Charlene Carruthers, National Director, Black Youth Project 100 (BYP 100)

Our economic system seems to be failing everyone but the 2,043 billionaires and 36 million millionaires in the world. What is philanthropy to do?

A good place to start would be for philanthropy to make big bets (defined as a commitment of $10 million or more) on groups of people — those most adversely affected by the current economic system — working diligently to build economies that enable shared power, economic justice, and community wealth.

Today, only 20 percent of big bets go to social change efforts. Big bets to social justice efforts — including advocacy, community organizing, civic engagement and other systems-change strategies — are fewer and farther between.

And the percentage of big bets made to grassroots organizations led by marginalized communities? While the data doesn’t yet exist, it’s likely infinitesimal, as only 8 percent of philanthropic investment is made into minority-led organizations, for example.

As I know intimately through my work as Executive Director at BALLE, there is no shortage of communities that have been marginalized and extracted from by our existing economic paradigm worthy of a “ big bet” from philanthropy. And as Charlene Carruthers insightfully and correctly surmises, investing in and following leadership from these communities is the surest bet that philanthropy can make.

For example, in Buffalo, New York, an indefatigable community of leaders — including BALLE Fellow Harper Bishop, director of equitable development at Open Buffalo — is modeling a community-controlled economy through the F.B. Community Land Trust, creating an alternative to exclusion and displacement in a neighborhood that has suffered extreme population loss.

Philanthropy can and should be catalytic capital for community-led systems change in places like Buffalo that have been hit hard by post-industrialization, economic dislocation, and laissez faire capitalism. And promising new approaches can lay the foundation for a paradigmatic shift in philanthropy. The Communities Thrive Challenge, a partnership between Rockefeller Foundation and the Chan Zuckerberg Initiative, is such an example. The Gates Foundation’s four-year, $158 million commitment to develop new strategies for fighting poverty in the U.S. is another.

Only one question remains: Can philanthropy be liberated to possess the moral will and urgency to roll the dice on communities best positioned to build an equitable and democratic economy in which philanthropy is no longer needed?

Rodney Foxworth is the Executive Director of BALLE, a network of local economy leaders from across the US and Canada. Read our blog to learn about us. If you’re interested in partnering or learning about how you can support our Network Leaders, reach out to Rodney also serves on the Steering Committee of Justice Funders, a partner and guide for philanthropy in re-imagining practices that advance a thriving and just world.