Jeffrey Hart’s 1969 Call for Philanthropy Reform in National Review

“C. Wright Mills, from the Left, called it the Power Elite. William Buckley calls it the (liberal) Establishment. But whatever it’s called, the large tax-exempt foundation is one of its chief instruments of organization and influence,” begins an article by Jeffrey Hart in the September 9, 1969, National Review.

“Today these foundations are very much on the defensive—indeed, as they acutely sense, in some danger,” Hart continues in “The New Class War,” “and they therefore are bringing to bear their immense economic and political resources, as well as their formidable public relations skills, in defense of their controversial position within American society.”

The Tax Reform Act of 1969, which contained several conditions on the benefit of tax-exemption available to foundations and nonprofits, had passed in the Democrat-controlled House the previous month, 395-30—with 219 Democrats and 176 Republicans voting for it. At the time of Hart’s NR piece, the legislation was pending before the Senate, also controlled by Democrats.

In December, it then passed in the Senate, 69-22—with support from 51 Democrats and 18 Republicans. Republican President Richard Nixon signed the bill on December 30. The structure it created for the entire nonprofit sector essentially has remained the same since then.

Hart was a professor of English literature at Dartmouth and had been a writer for National Review, a flagship publication of conservatism, since 1962. He would write and edit for the magazine for decades, and he also had a syndicated column. In 1968, he had worked on the presidential campaign of Ronald Reagan, and he served for a time as a speechwriter for Nixon, too. The Dartmouth Review was founded in his living room in 1980.

Hart was a critic of George W. Bush—whose policies he did not consider conservative—and he supported John Kerry for president in 2004 and Barack Obama in 2008. He died in 2019.

His “The New Class War” article is a refreshing reminder of a previous willingness to offer sharp conservative criticism of establishment philanthropy in America, as well as of that which gave rise to the critique.

Questions

Hart recounts eight years’ worth of aggressive investigation of big foundations led by populist Texas Congressman Wright Patman of—“a maverick and an original, a glorious figure in his own way” and the archetype an “anti-establishmentarian American, skeptical, thorny, iconoclastic.” Patman was subject to derision and, often, ridicule from elites.

“Today,” however, “nobody at the Ford Foundation is laughing, nor at the Rockefeller Foundation, and nobody on the Council on Foreign Relations, or at Time or Fortune or the Times thinks he’s funny either,” according to an apparently gleeful Hart in 1969. “For the first time since 1915, when the Walsh Committee looked into the activities of the private foundations, serious reform seems to be in the air.”

Hart gives three reasons for the grantmakers’ vulnerability. First, they’re tax dodges. Second, “many are frivolous to the point of cookery in the way they dispose of their tax-exempt funds.” And third,

the huge foundations, such as Ford and Rockefeller, dispose of enormous amounts of money and exercise great power; yet they are run by men elected by no one, and accountable only to self-perpetuating boards of directors. These large foundations, moreover, are now embarked upon a course which brings them directly into the political arena; their power is brought to bear for one interest or one cause and against another.

He generally describes the then-current landscape of all foundations, large and small, with overall data and particular anecdotes. “Some of the smaller foundations are marvels to behold, and it is difficult not to ask whether, in fact, they are so indispensable to the public weal that they ought to be subsidized through tax-exemption,” he writes. Perhaps “the public ought to indulge the kook foundations, and the kook activities of the large foundations—though I doubt that I could be persuaded of this on April 15.”

To Hart, the fact that foundations “are acting as a political force” while not being “responsible to the electorate” and “so cannot be ‘voted out of office’ when their political acts prove unacceptable to the majority … on the fact of it, is intolerable in a representative form of government.”

There’s an imbalance of relevance, too, he believes. “[B]eyond the issue of the irresponsibility of the foundations’ power, there is the question of the political and social values which the foundations do espouse, and behind which they put their enormous resources,” he notes. While there are big conservative foundations—he cites the Pew Memorial Trust and the Lilly Endowment as examples—“at least at the present time, the conservative foundations are less aggressive in the political and social spheres, and have less over-all impact.”

After listing the then-familiar names of prominent institutions and people who collectively closely connect the top tiers of philanthropy and the federal executive branch, Hart observes that “[t]he great foundations are an integral part of a clearly delineated and fairly homogeneous social and political entity.” He underscores: “The tax-exempt foundations, then, besides disposing of enormous funds, and functioning as integral parts of vast economic empires, are deeply involved with what can accurately be called the governing class (‘power elite,’ ‘Establishment’) of the United States.”

Hart provides details, seemingly generated from and compiled by the Patman investigations, mostly regarding the Ford Foundation. He mentions its funding of voter-registration activities to help elect a particular candidate for mayor in Cleveland in 1967, controversial school-decentralization experiments in New York City, and “a fat $5 million into a complicated scheme which turns out, on closer inspection, to be a Kennedyite political operation,” among others.

“The foundations have been able to get away with all this flagrantly political activity because of the loose wording of the relevant section of the IRS code,” according to Hart. They can and do “disguis[e] their partisan political activity under the umbrella categories of educational or charitable activities.”

A Pattern, a Concern, a Suggestion, and a Lament

Hart recognizes a general, “no-enemies-to-the-left” pattern in the activist grantmaking of Big Philanthropy—“a) support for ‘respectable’ left Democrats, and b) support for extremist, even revolutionary left minority-group organizations, but c) not much interest in anything to the right of, say, RFK.”

He deduces an overall rationale on the part of the funders, including for the perceived pattern’s part b. “[I]deological sentiment is not enough to explain the political behavior of such foundations as Ford and Rockefeller,” in his analysis. “The primary interest of large corporate wealth is social stability. Only under stable conditions can its vast and complex operations go forward smoothly. No one can suppose that such large corporate wealth, through its foundation investments, supports black and Mexican revolutionary groups because it desires, literally, a revolution.” (Emphasis in original.)

And Hart expresses a serious concern. “If the foundations continue to pursue this strategy, an explosion is inevitable,” he writes. “The fact is that the upper-middle and upper-class governing elite is attempting to carry out a social revolution under forced draft at the expense of the middle and lower-middle classes—who, it is safe to say, won’t put up with it, and don’t have to.”

He asks: what “should the position of an American conservative be on the problems posted by the foundations?” His answers call for reform, providing policy advice to the Senate as it was considering the ’69 Tax Reform Act. They include more clearly defining that which philanthropy can and cannot do in terms of political activities, principally in the context of voter registration. Acknowledging the degree to which categories here would be “almost impossible to apply satisfactorily in practice,” as he puts it, he suggests considering just outright prohibiting tax-advantaged voter registration.

But “if you list one thousand prohibited activities,” the Ford Foundation’s then-president “McGeorge Bundy will find the one thousand and first way of supporting political activity. But then that example of his ingenuity can be added to the list by the committee of Congress having legislative oversight,” Hart concludes.

In 1969.

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This article first appeared in the Giving Review on November 4, 2024.

Source: https://capitalresearch.org/article/jeffrey-harts-1969-call-for-philanthropy-reform-in-national-review/