Rhodri Davies, Programme Leader, Giving Thought

Rhodri Davies

Head of Policy

Charities Aid Foundation

The role of giving

PHILANTHROPY: ANTI-DEMOCRATIC AND PROUD OF IT?

12 July 2017

Difficult questions about the role of philanthropy in a democracy have once more raised their heads in the last few weeks. Suspicions that Mark Zuckerberg is gearing up for a presidential bid in 2020, following news of his recent lecture tour in a handful of key battleground US states, have led to people revisting questions about all aspects of his life and business, including his philanthropic vehicle, the Chan-Zuckerberg Initiative (a topic we have covered previously on this blog)

The publication of David Callahan’s excellent book 'The Givers: Wealth, Power and philanthropy in a new gilded age' has also shone a light on this issue. It focuses on a measured critique of the potentially distorting effect that philanthropy can have on a democracy, and in garnering quite a lot of attention has brought the topic to the attention of a wider audience.

It is worth noting that these criticisms are nothing new. No less a figure than George Washington, for instance, used his farewell speech as US President to warn that philanthropic enterprises could, over time:

“Become potent engines, by which cunning, ambitious and unprincipled men will be able to subvert the Power of the People, and to usurp for themselves the reins of Government; destroying afterwards the very engines which have lifted them to unjust domination.”

In early 20th century America this issue really came to the fore when the US Commission on Industrial Relations (The Walsh Commission) probed the activities of major philanthropists including Carnegie and Rockefeller, and expressed a view that “foundations appear to be a menace to the welfare of society”.

We have covered this issue previously on this blog (including in a post on philanthropy and democracy in which I rehearsed some of the arguments in this post) and also on the Giving Thought podcast, but it seemed worth returning to it in some detail given how central the question is to ensuring the legitimacy of philanthropy. And in this post, I want not only consider why we might consider philanthropy to be antidemocratic, but also to turn things on their head a bit and argue that that is actually a good thing. So here goes…

THE CASE FOR THE PROSECUTION

Firstly we should spell out precisely why one might think that philanthropy is undemocratic. Let’s assume that we are talking about individual rather than institutional philanthropy here: i.e. the decisions about where and how to give are made by a living donor or family of donors. Those decisions are thus essentially voluntary ones, based on some mixture of factors such as emotion, personal connection, circumstance at the time, ideological beliefs or even (whisper it quietly) evidence about where the most pressing needs are and how to address them. No-one has elected these donors, or otherwise given them a mandate to make these decisions, so what they are doing is clearly undemocratic.

The immediate and obvious response to this is “so what?” My choice about what drink to buy for myself in a bar is surely not democratic either, and nobody has a right to criticize that, do they? Likewise, some argue, what wealthy individuals do with their own money is their own business and no-one else’s. But there are a number of objections to this argument, which I will outline and attempt to place within my barroom metaphor.

OBJECTION #1

The first objection is that the sheer scale of the resources available to many wealthy individuals (both financial and in terms of influence and power), mean that they exhibit what philanthropy scholar Paul Schervish has termed “hyper-agency”, i.e. “an array of dispositions and capacities that enable individuals to relatively single-handedly produce the social outcomes they desire.”

The point of this is that even though it is true that we are all free to choose what to donate to, and that therefore philanthropy appears on the surface to be democratic, in reality there is a minority of donors whose giving is of sufficient scale to take on a qualitatively different form in terms of the impact it has on the overall system.


The sheer scale of the resources available to some wealthy individuals (both financial and in terms of influence and power), mean that they exhibit what has been termed "hyper agency".


To take an example; imagine that I decide I want to combat malaria using homeopathy. I am free to do so because it is my money, and the worst that is going to happen is that I will waste a modest amount of resource that could have achieved some actual social good if deployed in a different way. If, however, Bill Gates (sorry Bill - nothing personal, you’ve just become the standard philanthropic yardstick), decided that he wanted to plough all of his resources into the same approach that would be far more alarming. Not only would the opportunity cost be far, far higher, but the fact that he is able to wield such enormous clout would more than likely result in others following suit and in the direction of public policy and spending priorities in some places shifting. And that would be deeply alarming.

The German billionaire Peter Kramer raised this concern when explaining why he was declining to sign the Giving Pledge, saying: “These guys have so much power through their wealth that they, instead of the government elected by the people, can decide what’s good and what should be promoted and subsidized… That can be dangerous.”

Even in a situation where a philanthropist’s intentions are good and the approach less obvious wrong-headed than in my example, we still might have concerns about the level of influence they can wield. The example of charter schools in the US is a case in point: a number of high-profile donors, including Mark Zuckerberg, have put millions of dollars into promoting the charter school model in places such as Newark in order to address the perceived failings of the current public schooling system. This has proven to be highly controversial, both because some people see it as reflecting an ideological rather than evidence-based position and because are concerned that these donors have managed to distort the focus of education policy as a result of their donations.

To put this is bar-room metaphor terms: imagine I was buying huge quantities of one particular type of drink, and that my reputation and status was such that the bar owners were keen to please me as much as possible. As a result, they started stocking my choice of drink at the expense of many others. Well, then other patrons of that bar would have a right to question my choice and the effect it was having on their own drinking experience, wouldn’t they?

OBJECTION #2

The second objection is that, regardless of the practical effects of my donations, I have a responsibility to ensure that they meet the needs of society, and that as such I don’t just get to choose to give to whatever I want. There are a number of ways one can go with this argument. One is to base it in political theory, and to argue that the legitimate role of philanthropy within society is as a means of redistribution of wealth and reparative justice, and that as such all philanthropists have a duty to ensure that their actions are meeting these criteria. This is a position taken by Chiara Cordelli in her paper “Reparative Justice and the Moral Limits of Discretionary Philanthropy” (which you can find in Reich, Cordelli & Bernholz (eds) Philanthropy in Democratic Societies- a volume I have heaped praise on before on this blog). I’m not sure I agree with her, but I think being forced to work out exactly why is an important exercise.

Another, more common, version of this argument comes from ethics and moral philosophy, and centres on the notion of a “social contract” which obliges those who have created wealth to give back in order to support the society which made that wealth creation possible. One might believe that any form of philanthropy is sufficient to discharge this obligation as long as it delivers a public good, but usually people tend to believe that some forms of philanthropy are more desirable than others (poverty relief versus support for an opera house, for instance), so this often raises the questions of what constitutes a public good and what should count as a charitable purpose (which we definitely don’t have the space to get into here).


Often people believe that some forms of philanthropy are more desirable or justifiable than others, which raises questions about what constitutes a public good and what should count as a charitable purpose.


The point, in any case, is that even if philanthropists are free within the law to choose to give to any legal cause they want; there is an additional moral imperative to focus on some causes rather than others. And the rest of us have the right to hold those philanthropists to account if their giving doesn’t meet our expectations.

This one is a bit more difficult to put in a bar-room context, but let’s try anyway! Imagine I live in an area where the primary industry is cider production, and I have made a substantial amount of wealth from selling the drink. Yet I decide that I prefer lager, and start spending all of my money in the local pub on that instead. The other patrons, whilst accepting that this is a technically legitimate choice because lager is on sale, feel that I have a responsibility to acknowledge the importance of cider in my own personal success and to support the industry (which, let’s assume is going through a tough time) through my drinks choice.  They therefore feel entitle to criticize my decision on moral grounds. (I am aware this analogy is a tad on the forced side…)

OBJECTION #3

The third objection is that philanthropic donations are often subsidized through the tax system, and therefore anyone else who is a taxpayer has a right to question how that subsidy is used. Now, before you object along the lines of “hey - tax relief on charitable donations isn’t a subsidy, it’s a right!”, I would direct you to my previous thoughts on this subject in the justification for charitable tax breaks and at far more length in my book, Public Good by Private Means, and to my colleague Adam Pickering’s extensive work on this subject (in the Donation States report in particular). Basically: yes, it is a subsidy, but a generalised one for the support of a healthy civil society, not a subsidy for any particular service that the state might otherwise have to provide.

The upshot of this is that it may well be your money that you are giving, but if you are claiming tax relief on those gifts then it is also my money to some degree too. Hence I have a right to hold an opinion about how it is spent in the same way that I do for any other kind of public spending. (And let’s face it, most people love to have opinions about that…)


When philanthropy is subsidised by tax relief, we as taxpayers have some rigth to hold an opinion about how that money is used.


To return to our bar-room one final time: imagine we have all contributed to a central pot or kitty that we can use to cover the cost of a proportion of each of our drinks. Imagine also that I am spending considerably more money than you on buying rounds of drinks that you think are repellent (sambucca, for the sake of argument…). Whilst I am clearly being generous in buying drinks for other people, I am partly using your money to do so, and the fact that I am spending more means that I am benefitting more from the central fund. You might start to question the legitimacy of my drink selection on these grounds.

AN IMPORTANT CAVEAT

One important thing when making the case for why philanthropy is potentially anti-democratic is to ensure that we differentiate between valid questions about the legitimacy of the role of big-money giving in our society and partisan attacks on individual philanthropists that are driven by dislike for that individual’s ideology or political beliefs. Unfortunately, too often what we hear is the latter dressed up as the former. As David Callahan puts it in The Givers:

“When donors hold views we detest, we tend to see them as unfairly tilting policy debates with their money. Yet when we like their causes, we often view them as heroically stepping forward to level the playing field against powerful special interests or backward public majorities… These sort of a la carte reactions don’t make a lot of sense. Really, the question should be whether we think it’s okay overall for any philanthropists to have so much power to advance their own vision of a better society?”

The historian of philanthropy Ben Soskis has made a similar point, arguing that “Critics of Big Philanthropy [must] be up front about one crucial distinction that is often obscured in the contemporary discourse on philanthropy. They must determine whether it is the practice of philanthropy shaping public policy itself that they fear, or the particular policies in play. Often, critics wrap themselves in the noble – and consistent – absolutism of the former while really taking aim at the latter.”


We must ensure that we differentiate between valid questions about the legitimacy of the role of big-money giving in our society and partisan attacks on individual philanthropists, that are driven by dislike for that individual’s ideology or political beliefs.


This is something we need to guard against, as it clouds important arguments about the role of philanthropy in a democracy. If anything, it is in the cases where we disagree with what is being done that we can determine the strongest arguments in favour of philanthropy. This is much the same as the way in which important debates about freedom of speech often centre on cases where we find what is being said objectionable, and thus have to test our own beliefs and values in order to understand why we maintain the principle that freedom of speech is important. I many not like the Koch brothers using their philanthropy to support climate change denial (spoiler alert: I don’t), but when it comes to considering the democratic legitimacy of philanthropy that is precisely why I need to make sure that any arguments I am advancing apply just as much to this as to causes I do agree with.

So, with that said, let’s move on to the defense of philanthropy, where we will consider three possible arguments.

THE CASE FOR THE DEFENCE

1   The plurality of plutocracy argument

This first argument is a pragmatic one. It concedes that philanthropy may well be anti-democratic, but contends that it doesn’t matter in practice as long as we take a pluralist approach to giving, because all the various ideological and political viewpoints of donors will balance out. This was an argument put forward by some at the time of the 2014 US mid-term elections (reported by Inside Philanthropy), who suggested that as long as the number of Democrat donors using philanthropy as a proxy for political donations roughly matched that of Republican donors, everything was fine. Basically: whilst philanthropy might cause a plutocratic bias within society by offering the wealthy a means to have a disproportionate influence, as long as there is a “plurality of plutocracy” (© me, I think), then everything is fine.

This argument makes me pretty uncomfortable, for two reasons:

Firstly, even if in pragmatic terms the situation is OK because there is some sort of balance, should we really be so sanguine about this? I’m reminded of the episode of the Simpsons in which Mr Burns is told that he is the Sickest Man in America because he has literally all the diseases, but that due to “Three Stooges Syndrome” he is fine because they all get in each others way so that no one of them can make him ill.

The doctor tells him that even a slight breeze could kill him, but Burns doesn’t hear him because he has taken it to mean he is “indestructible…” I worry that if we put forward the plurality of plutocracy argument, on the basis that attempts by philanthropists to subvert democracy are all cancelling each other out, then we are essentially taking the Mr Burns view of the body politic.

Secondly, I’m not sure the practical situation is quite so rosy. The plurality argument only works if we believe that wealthy philanthropists represent an accurate cross-section of the views and political leanings of society. However, there is plenty of evidence that wealthier people are more likely to hold right-wing or conservative views, and that this is particularly marked for those at the highest levels of wealth. And if our plurality is skewed in this way that is a problem.

2   The Democracy is broken argument

The second argument takes the accusation that philanthropy is anti-democratic and essentially adopts it as a badge of honour: arguing that the criticism is only problematic if you believe the current version of democracy in a country is functioning effectively and that if it is not, then philanthropy may represent a truer force for democracy.

This was an idea that underpinned the activities of many western foundations and government aid agencies in Eastern Europe after the collapse of the Soviet Union (as my colleague Adam has explained on our Giving Thought podcast episode on “Democracy & Power”). These organisations sought to “export democracy” by supporting civil society organizations (CSOs) and infrastructure which could support the transition to a form of democracy that would be palatable to Western powers. However, this often put them at odds with the ostensibly democratically-elected governments in those countries, who saw it as undesirable meddling by foreign agents. And this is a situation that many foundations and aid agencies supporting CSOs around the world today still find themselves in.

The crux of it is that simply exporting the concept of democracy is not necessarily enough; as it might still result in countries adopting what you might consider to be the “wrong form” of democracy or electing leaders that you consider to be undesirable (as we saw in a number of countries following the Arab Spring). Hence, funding CSOs to promote a “better” form of democracy or more desirable leaders might make sense, but it does raise challenging questions about the role of philanthropy as an “undemocratic tool for promoting democracy”.

The “democracy is broken” argument is not confined to an international development context, however. In recent times, following the political upheaval in the US and UK that saw the Brexit vote and the election of Donald Trump, there have been those arguing that liberal democracy has been weakened and that philanthropists and foundations who want to defend it can do so by overtly acting against public opinion and the elected government of the day. 

As Ben Soskis wrote in the aftermath of the 2016 US election, concerning the role that foundations could play in Trump’s America:

“The fundamental liberal values, those of tolerance and respect for others, of decency, charity, and moderation, have been enfeebled in our public life… Philanthropy must be a place in which those values are preserved, defended, and championed, a sort of glass-walled sanctuary for the best of American ideals. For long, one of the major legitimizing theories of the nonprofit sector has been that of government failure: Nonprofits can provide goods and services that are not produced or addressed by public institutions. Here we are contemplating government failure of a more troubling sort: Nonprofits and foundations will have to manufacture the civic resources that our contemporary political culture seems incapable of sustaining at the moment.”

The argument is that by being “anti-democratic” in terms of acting counter to the democracy in a given time and place, and advancing ideals that represent a “truer” or “better” version of democracy, philanthropy can sometimes represent a more potent force for democracy than elected government. Does this essentially amount to bootstrapping ourselves into democracy using undemocratic means? And if so, does that raise difficult questions about who gets to decide which version of democracy is most desirable and on what basis?

3   The 'Democracy is working and philanthropy is a vital part of that' argument

This is the argument that, rather than seeing philanthropy as undemocratic when it runs counter to the grain of public opinion or electoral politics, we should instead see this as evidence that democracy is functioning correctly. The idea is that philanthropy, and the work it does in driving social change (either through direct demonstration or through advocacy) is a vital part of the system of checks and balances within a healthy democracy, in the same way as a free press or independent judiciary. As such, philanthropists and philanthropic organizations may sometimes find themselves in opposition to the elected government of the day, and that is only right and proper.


Philanthropy, and the work it does in driving social change (either through direct demonstration or through advocacy) is a vital part of the system of checks and balances within a healthy democracy, in the same way as a free press or independent judiciary.


The distinction between this and the previous argument is that here we are considering philanthropy’s role in challenging on specific issues or policies whilst still recognizing the legitimacy of the existing democratic structure, rather than being seen as a tool for challenging that structure itself. Although I grant that that distinction may sometimes be a blurry one towards the margins.

The political reformer Thomas Hare gave an eloquent defense of the role of philanthropic endowments along these lines back in 1869, when he said:

“I regard endowments as an important element in the experimental branches of political and social science. No doubt the nation at large may take on the cost of such tentative efforts, but this involves taxation; and the assent of the majority to increased taxes could not be justly demanded by philanthropists or projectors, and certainly would not be obtained until their speculations had taken such a hold upon the public mind as no longer to require an exceptional support or propagation. The most important steps in human progress may be opposed to the prejudices, not only of the multitudes, but even of the learned and leaders of thoughts in a particular epoch.” Thomas Hare, quoted in Owen, D. (1964) English Philanthropy 1660-1960

We can find many examples where philanthropic endeavours have played this role of challenging the status quo in order to bring issues into the mainstream, change public and political opinion about them, and drive changes in attitudes, policy or legislation that result in social progress. Some of the well-known ones would be the movement for the abolition of slavery in the 18th century, the campaign for universal suffrage in the late 19th or early 20th century, or the LGBT rights movement of the latter half of the 20th century.

Innovation to garner support

A lesser-known but fascinating example is the campaign to end the use of child chimney sweeps in Victorian Britain, in which the work of the Society for Superseding the Work of Climbing Boys played a pivotal role. This was a philanthropic organization which employed a surprisingly modern array of approaches to pushing for its goal of changing public and political opinion.

For instance, recognizing that tugging at the heartstrings would only get them so far, the society also sought to prove that the use of child chimney sweeps made little economic sense, so they issued a £2,000 challenge prize to any inventor who could devise a machine that could clean chimneys more cost-effectively. They did this successfully, but still struggled to get chimney sweeps to adopt it. Undeterred, however, they decided to start publishing a “White List” of employers who did use the machine in a bid to change consumer behaviour (essentially an early form of kite-mark).

Determination gets results

As a result of these efforts (and, it must be said, those of many other campaigners on this issue) when the issue came to Parliament, the House of Commons voted in favour of a Bill to outlaw the practice of using child chimney sweeps, but this was overturned in the Lords (where many peers had large houses, which presumably had a great number of grubby chimneys…)

The Society was not put off by this clash with the democratic system , however (and obviously the use of the word “democratic” to refer to the House of Lords raises a whole host of its own questions in any case!) Instead, they decided to establish their own network of expert inspectors to watch the conduct of master sweepers. Despite the fact that these inspectors had no statutory authority, their mere presence was said to have had a positive impact on the wellbeing of the remaining climbing boys. (You can find out more about the case of climbing boys in Benjamin Kirkman Gray’s fascinating, obscure and thankfully out of copyright posthumous 1908 volume Philanthropy and the State).

Establishing the Resenwald Fund

Another great example is that of Julius Rosenwald. The CEO of Sears & Roebuck, which at the time was one of the biggest companies in the world, Rosenwald was a Jewish businessman and philanthropist from Chicago who focused a great deal of giving on helping black people in the Deep South during the time of the segregationist Jim Crow laws. Using his own money and some of the resources of his company, Rosenwald helped to build over 3,000 schools to help educate black children.

He later also established the Rosenwald Fund, which gave numerous small grants to individual black artists, scientists, writers, musicians and others to help them overcome obstacles at key points in their career. Some have argued that this played an important catalytic role in developing the generation of black leaders that would go on to be at the forefront of the Civil Rights movement in the 1950s and 60s. (If you want to know more about Rosenwald, try and hunt down the documentary by Aviva Kempner. In the interests of balance, if you want a counter-narrative, check out this really interesting piece from Maribel Morey on histphil.org.

The point of these historical examples is that the role of philanthropy in taking issues from the margins to the mainstream through campaigning and demonstrating different ways of doing things has been a vital part of modern democracy ever since it was invented. As the historian Hugh Cunningham puts it (in Britain at least): “reform is often understood as something which is the outcome of public agitation against an at-best reluctant government.” This suggests that we have to allow philanthropy the space to run counter to prevailing public and political opinion, because it is only with the benefit of hindsight that we can determine who is on the right side of history.


We need to allow philanthropy the space to run counter to prevailing public and political opinion, because it is only with the benefit of hindsight that we can determine who is on the right side of history.


So philanthropy may well be anti-democratic, but perhaps we should accept that. Or even, dare I say, celebrate it...?

A BIT OF CLARIFICATION

Of course, before anyone accuses me of white-washing this issue, I must point out that I’m absolutely not saying we should just let philanthropists do whatever they want when it comes to trying to influence politics and society. Extrapolating from a few examples of when philanthropy got it right by going against the grain doesn’t support a view that all philanthropy is beyond reproach. There is still a huge amount more that we can do to make sure that even if philanthropy runs counter to government or electoral politics, it is more accountable and democratic in its own terms.

For example, there needs to be far greater transparency about who philanthropists are and what they are funding so that we see for ourselves when they are trying to change things in our society and assess whether we think that is a good or bad thing. It is obvious that there is an awfully long way to go on this when you consider that the Foundation Center estimates that less than 10 per cent of US foundations have a website.

Where pressing needs lie

There is also a strong argument that philanthropists should try harder to make their own giving more democratic. This could be by engaging more with the groups and communities that will be affected by their donations; letting them have a role in determining the solutions to their own problems; and seeking ways to transfer not just money but power to those groups. Or it could be by canvassing the views of wider society about where the most pressing needs lie and how best to address them. (Something that the Amazon founder Jeff Bezos has recently attempted to do, and for which he didn’t receive universal praise, it must be said. However, that particular example was muddied ─ partly by the fact that he took a strong and fairly controversial position on the benefits of short-term over long-term giving, and by the fact that he issued his call for ideas on Twitter. Both of which generate quite a lot of column inches).

Philanthropy, and the organizations it supports, can ─ and should ─ be an integral part of the system of checks and balances within a healthy democracy. However, it is only by making philanthropy more accountable (in the ways I have started to outline above) that we can maintain the legitimacy of this role in the face of growing criticism. 

Unless we as citizens are able to see what philanthropists are doing and to challenge them when necessary, and thereby play the role of “watching the watchmen”, it seems likely that the balance of the argument will tip and that the theoretical benefits of the anti-democratic nature of philanthropy will be outweighed by the real-world disadvantages. And we will all lose out as a result.

RELATED CONTENT

CAF Campaigns


We work to build a stronger charitable sector by running campaigns, influencing government and encouraging people to give to a good cause.

Giving Thought blog


The latest on key issues affecting civil society, philanthropy, social investment and using new technologies for social good.

Giving for the City


Looking to philanthropy as a way of reconnecting people with places and spaces.


Charities Aid Foundation © 2018 | Registered Charity Number 268369
25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA Telephone: 03000 123 000
10 St. Bride Street, London EC4A 4AD Telephone: 03000 123 000