Eight Things About Big Philanthropy: Renewed Public Scrutiny

Eight Things to Know About Big Philanthropy and the Populist Reaction Against It (full series)
Getting Bigger | More Liberal and Progressive
More Politicized | Renewed Public Scrutiny

6. Big Philanthropy doesn’t appreciate the renewed public scrutiny.

In 1955, former Ford Foundation director and Fund for the Republic president Robert Maynard Hutchins delivered a speech forcefully defending private foundations—their prerogatives, practices, and positions—to an audience that included Reece, who had recently finished leading his investigation of foundations. Perhaps naturally enough, Hutchins’ speech was highly defensive of philanthropy, but it included more than a little arrogance and disdain, if not contempt—certainly for Reece and his colleagues and staff personally, if not also for Congress institutionally.

“In the conduct of the hearings” before Reece and his colleagues, “Mr. Reece added some new wrinkles to the distortions that we have become accustomed to in congressional investigations,” Hutchins said. “The foundations were elaborately attacked by the staff and some witnesses of dubious standing. … The most entertaining of the new wrinkles was that the majority of the Committee took a philosophical position.” Reece and fellow committee member Jesse P. Wolcott, Hutchins added, “came bustling out in second-hand suits of anti-empiricism, supplied them by the sages of the staff …. The Congressmen could not be bothered with history,” and they “could not be bothered with consistency.”

Hutchins continued:

We may as well state it plainly: the Reece investigation in its inception and execution was a fraud. Nobody in his right mind could suppose that the great accumulation of wealth left by our richest men were being intentionally used by their trustees to overthrow the institutions of this country.

In 1969, Ford Foundation president McGeorge Bundy’s testimony before the House Ways Committee was considered by many to similarly be “arrogant and condescending.” According to Karen Ferguson in Top Down: The Ford Foundation, Black Power, and the Reinvention of Racial Liberalism, the committee later produced the 1969 Tax Reform Act, described in No. 5 as “‘McGeorge Bundy’ amendments—as they were called after his defiant performance in front of the House Ways and Means Committee caused him to be blamed for pushing its members over the brink in their quest to shut down liberal foundations’ activism and put strict new controls on philanthropies’ political involvement.”

To some, the 1969 Act “seems an aberrant spasm of Congressional anger at foundations, generated by the unfortunate acts of a handful of individuals and organizations,” including the unapologetic Bundy and Ford. But “it was not a Congressional bolt from the blue,” observes Thomas A. Troyer in a 1999 paper. “The concerns of Congress at which the law struck had roots reaching back for more than two decades.”

In his last “President’s Review,” in the Ford Foundation’s 1978 annual report, Bundy himself looked back, too. “Public and Congressional opinions on the institutions of our society tend to go in cycles,” he writes. “Foundations, including this one, were attacked by the Reece and Cox Committees in the 1950s and lived in an era of good feelings through most of the 1960s. There is no guarantee that the relatively kindly environment of 1979 will last through the 1980s. But on the whole I am optimistic, in part because the troubles of 1969 were not all that bad.”

“Fast-forward” to 2023, when the Ways and Means Committee’s Republican members issued an open letter of inquiry seeking comment on whether charitable nonprofits are functioning as key players in political races, rather than serving charitable causes. The letter succeeded in “drawing the ire of charity experts and professionals across the ideological spectrum,” according to The Chronicle of Philanthropy.

And after that same Chronicle published earlier this year its list (see No. 1) of all those private and community foundations that had $500 million or more in assets—compiled to help track which ones might be subject to one of President Trump’s anti-DEI executive orders—the reaction from many sector leaders was furious, merely for publishing the list. In addition to several harshly disapproving letters to the editor, Nonprofit Quarterly editor Sara Hudson argued online that the naming of donors “handed a target list to a hostile government that has a public practice of threatening its opponents and squashing dissent.”

Quite curiously for an editor, referencing the Chronicle list, Hudson’s post declares—emphasis in original—“I will not link to this piece and I encourage you not to search for, click on, or share it. Doing so only amplifies its reach.” Publishing the list—compiled from tax filings made publicly available because of laws meant to bring the apparently now-quaint notion of transparency to the tax-advantaged philanthropic enterprise—constitutes unethical journalism, in her opinion. Embarrassingly, she called for its retraction.

Hutchins, Bundy, and Hudson

As also noted (in No. 4), as of this writing, Big Philanthropy and nonprofitdom have held many urgent meetings of to express alarm about and make plans to counteract the dangerous “authoritarian attack on civil society,” including through the House budget bill’s provision to progressively increase taxation of private-foundation endowments’ net investment income.

7. If you’re a taxpayer, you contribute to the pool of funds that incentivizes its growth and maintenance.

The taxation from which private foundations are exempt—the large pool of funds from which the incentive of exemption is drawn—is collected by and with the power of the state. For the most part, you and every other citizen are expected—required—to pay those taxes, albeit with all the limits, deductions, credits, and workarounds that have been placed on the system over many decades.

In fact, many consider the tax-preferred status of charitable entities as itself basically a workaround for the rich to avoid paying taxes on their generated or inherited wealth.

8. The conservative and progressive populist reaction against Big Philanthropy is not going to go away.

The populist backlash against Big Philanthropy—coming from both conservatives and progressives—does not seem to be a fleeting phenomenon. It is borne of deep concerns about power, representation, and the role of elites in society. These concerns are likely to persist and may even intensify.

While we’re discussing the previous Trump administration, the damage done to philanthropy and the nonprofit sector by the attention and scrutiny brought to bear on some of its activities by the Department of Government Efficiency (DOGE) in its early days are just the beginning of this persistence. To so many conservative populists now, there is no slack given to any group just calling itself a charity or registering as a charity, whether deserved or not. The invocation doesn’t yield the automatically sympathetic receptivity it used to get in the eyes of the democratic populace—or that the groups’ and their backers’ used to deserve, at least in their own eyes.

Again, as per the allusion above (No. 4), this could and should perhaps have all been avoided, or mitigated, but it sure seems a little late now. Much damage has been and is being done. Too many abuses and misuses of charitable status, including its politicization, have occurred. What many thought would be something of a predictable (see No. 5) response has occurred, too, and it is continuing and will continue. Long-term policy ramifications are inevitable.

The anti-elite critique of Big Philanthropy from populist progressives, unless they’re dissuaded from offering it because of the concomitant conservative one, should remain and intensify—mostly because elites and the managerial class they employ aren’t going away either. Nor is those unelected elites’ desire to use—when they easily can, which is often—their structural power, including though charitable status.