How Philanthropy Shapes American Life

A clearheaded look at what nonprofit organizations can and ought to do

Inside American Philanthropy

By Waldemar A. Nielsen

Univ. of Oklahoma Press

292 pp., $26.95

Narcissism and Philanthropy

By Peter Freund


158 pp., $24.95

In some quarters, recent Republican attacks on government have been accompanied by a call for turning over governmental functions to private philanthropy and the nonprofit sector.

It's an illusory call, as attested to by those in the nonprofit sector who are already stretched extremely thin. Far from being "crowded out" by government, they would be crushed by the burden of taking over governmental responsibilities.

In fact, major aspects of government attacked by congressional Republican leadership - from public education to public television and the National Institutes of Health - have their origins (at least in part) in nonprofit foundations, as one can discover by reading "Inside American Philanthropy," by Waldemar Nielsen, one of two new books that examine the promise and pitfalls of philanthropy.

It's a topic well worth our attention, not because philanthropy can take over major governmental functions (it can't), but because it has its own vital, evolving role to play, complementing both the government and the private sector.

Nielsen's focus is on donors who establish philanthropic foundations and how those foundations succeed, or fail, or muddle through somewhere between.

He is remarkably frank about the problems that foundations encounter, especially family foundations, which tend to exacerbate family tensions.

In part this is because he's an optimist who takes the long view, one who knows what can be accomplished when foundations succeed, and one who believes success can be improved upon by learning from past mistakes.

"Inside American Philanthropy" maintains a strong narrative coherence, even as it examines a wide range of contrasts and contradictions, beginning with the contrast between the concrete, material, public nature of philanthropic gifts and the highly personal, idiosyncratic nature of the philanthropic act.

The book establishes itself through a historical survey, from the age of John D. Rockefeller Sr., Andrew Carnegie, and Julius Rosenwald to the uncertain present, counterpoising established international philanthropist George Soros with the philanthropically indifferent Warren Buffet. It then examines particular themes using the same method of comparing and contrasting notable examples.

Nielsen tells of Rosenwald, driving genius behind Sears, Roebuck & Co. who funded hundreds of schools in the South to implement Booker T. Washington's "conservative" vision of racial self-improvement. He brought public education, not just to blacks, but to the South as a whole, and was inevitably seen by some as a "radical" disrupter of the Southern way of life.

He tells of John Olin, the father of many contemporary conservative foundations, which, unlike their liberal counterparts, focus on systematic development of ideological infrastructure, from conservative campus newspapers to university chairs endowed with a conservative mandate, to conferences, magazines, television programs, and more recently whole networks.

And he tells of the women in philanthropy, such as Margaret Sage and Kate Macy Ladd, who used 19th-century fortunes to promote progressive social change and lay the groundwork for 20th-century government-run social programs.

Regardless of which is your hero, nothing in their work suggests an interest in taking over day-to-day social welfare functions of government.

Philanthropists are, for the most part, interested in leaving a mark, not marking time by continuing the work of others; they are at their best making bold gambles on the future.

Indeed, Nielsen devotes three key chapters to what he calls "entrepreneurial philanthropy." Yet, philanthropies are not businesses. They have no bedrock systems of accountability - neither elections nor competition in the marketplace exists to correct their course. This is a simple fact of life.

But Gerald Freund, author of "Narcissism and Philanthropy," refuses to accept this fact. He argues that a variety of trends have combined over the past two decades to exacerbate this inherent vulnerability.

"In the past," he claims, "foundations gave highest priority to discovering, supporting, and elevating to prominence generations of exceptionally talented individuals, who could bring their talents to bear on key issues." He goes on to argue that foundations have abandoned this priority and grown insular in a variety of ways: Their boards are less involved with the great issues of the day; their staffs are professional grantmakers, rather than scientists, historians, philosophers, etc. who see grantmaking as an aspect of their professional work; and they are closed to outside initiatives and shun objective outside reviews of their performance.

Freund presents a good deal of evidence to support this argument, but after reading Nielsen's survey, it's difficult to accept the claim that philanthropy is, ever was, or should be defined in terms of supporting the work of talented individuals.

No doubt that's an important part of philanthropy. But solving society's problems also involves replicating model solutions, educating the public, and creating permanent institutionalized solutions. Nielsen provides examples from the past, and, to cite an ongoing example, the Eisenhower Foundation (successor to the 1968 Kerner Commission on Civil Disorders) reports that we already know what works to solve inner-city problems: "investing in people - especially children and youth - and using those investments as much as possible for reconstructing our cities."

"Enterprise zones" and other programs popular with politicians of both parties are demonstrably less effective. The insularity of foundations is critical precisely because of their ability to continue to propound unpopular truths, such as those pointed out by the Eisenhower Foundation, until they are accepted.

Taken together, Nielsen's sense of historical possibility and Fruend's sense of contemporary peril enrich each other's perspective. What they have to say matters because their subject matters. Foundations aren't an alternative to government funding, but they help us find our way to alternative futures.

*Paul Rosenberg is a writer in Los Angeles and founder of Reason and Democracy, an organization that advocates democratic values and the promotion of cultural diversity.

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