Conference Presentation, Panel
Philanthropy and Democracy in the 21st-Century
- Moderator Latisse Briggs frames the discussion around the tension between rising populism, widening inequality gaps, and the thriving nature of philanthropy, questioning why charitable capital deployment is not effectively narrowing the divide.
- Chuck Harris (Blue Meridian Partners) outlines a strategy focused on scaling proven, evidence-based interventions for youth and families in poverty, rejecting the assumption that donors know better than on-the-ground practitioners.
- Blue Meridian aims to remedy the government funding paradox where most public money flows to non-evidence-based programs despite private capital's focus on proven models.
- The organization employs 10-to-20-year funding plans for partners, emphasizing long-term commitment over short-term market-style returns.
- Harris highlights a shift from the Edna McConnell Clark Foundation's original model to Blue Meridian's fund-based approach, requiring partners to "raise" capital in subsequent rounds based on performance metrics.
- George Pavlov (Bayshore Global Management) identifies two distinct roles for private philanthropy that differ from government action:
- Accepting higher risks earlier in the investment cycle with the explicit knowledge that capital loss is probable, particularly in complex areas like neurodegenerative diseases.
- Spending funds on consultants to facilitate "collusion for good," reducing interface failures between funders and increasing cooperation among groups with overlapping but non-aligned theories of change.
- A specific example cited is a Criminal Justice Reform Funders Forum involving East and West Coast groups, which pooled data and specialized funds (e.g., C3 vs. C4) to maximize impact rather than working in silos.
- Rob Reich (Stanford University) argues that philanthropy must be analyzed as an exercise of private power rather than simple altruism.
- He contends that big philanthropy is a "tax-advantaged exercise of power" that warrants scrutiny because it directs private assets to public ends using a collective subsidy from all citizens.
- Reich advocates for a "long time horizon" approach (20–40 years rather than perpetuity) for social experimentation, distinct from the shorter cycles of government elections or market competition.
- He opposes the legal default of foundation perpetuity, calling it the "dead hand of the donor" that restricts future generations' autonomy.
- Reich identifies the "upside-down effect" of the charitable deduction as a plutocratic mechanism: wealthy donors in higher tax brackets receive larger subsidies for giving than lower-income donors.
- Example: A $1,000 donation costs a wealthy donor in a 40% bracket $600, while the same donation costs a low-income donor in a 15% bracket $850.
- He suggests that while tax deductions should be scrutinized or reformed, the core issue remains the lack of democratic accountability for unaccountable assets, which should be addressed through radical transparency rather than government board members.
- Amy Smith (TOMS) describes the evolution of corporate philanthropy in response to sophisticated consumer demands, particularly from Gen Z and Millennials.
- Consumers demand radical transparency, direct involvement, and emotive experiences, holding companies accountable for their social impact claims.
- TOMS has moved beyond its original "One for One" shoe model after receiving criticism that donating goods can undermine local economies or create dependency.
- Internal research commissioned in 2012 found no significant negative economic impact, but the model was adjusted to integrate giving into existing community programs (e.g., using shoes as incentives for school attendance) rather than distributing goods unilaterally.
- Smith emphasizes that philanthropy must act as an ecosystem piece, leveraging existing government and non-profit infrastructures rather than attempting to solve structural issues alone.
- Panelists discuss the risk of philanthropy entrenching poverty:
- Reich uses the metaphor of a wealthy person riding on a poor person's back; while the wealthy person offers a "glass of water" (charity), the poor person's true need is to remove the wealthy person (address structural conditions).
- Harris and Pavlov note that philanthropic assets pale in comparison to government spending and must focus on influencing government priorities and filling gaps where the state fails to act (e.g., basic research at NIH or enforcing data transparency).
- A critical finding from a 2012 study on TOMS' shoe distribution is that while direct goods distribution can be unsustainable, integrating aid into broader developmental frameworks empowers beneficiaries to support themselves.
- Forward-looking consensus on the future of the sector:
- Accountability & Transparency: There is a unified call for radical transparency to allow ordinary citizens and journalists to inspect philanthropic power and ensure it supports democratic institutions.
- Ecosystem Collaboration: The sector must move away from a "sandbox mentality," where funders compete in isolation, toward "collusion for good" by sharing data, lessons, and coordinating strategies across issue areas.
- Structural Focus: Ideal philanthropy will focus on preventative measures and scalable evidence-based programs that governments can eventually adopt, rather than temporary fixes.
- Diversity: Panelists stress the necessity of diverse teams to ensure community needs are accurately understood and to avoid blind spots in program design.
- Spend-Down Models: There is a growing preference for time-limited foundations that must prove efficacy to secure future funding, challenging the traditional model of perpetual wealth accumulation.