Dana Kawaoka-Chen, executive director of a new group called Justice Funders, issued a rallying cry in a recent talk with the Chronicle of Philanthropy. She said, “There needs to be a shift from wealth and power being accumulated within institutions toward a new vision where philanthropy is about redistributing wealth, democratizing power, and shifting economic control to the community.”
Her colleague, Marie Nakae, put it more succinctly, saying it’s time for foundations to pay “reparations.”
The idea of reparations recently became the rage among 2020 Democratic presidential contenders, with Sen. Kamala Harris of California, former Secretary of Housing and Urban Development Julián Castro, and Sen. Elizabeth Warren of Massachusetts specifically floating the idea. There is also a growing list of institutions wondering if they “owe” reparations too, from the federal government to private businesses to colleges and universities. Georgetown University’s student body recently voted to pay a fee to the descendants of slaves owned by the institution’s Jesuit founders.
But among these institutions, charitable foundations have felt the great sustained pressure to “pay up” for alleged sins against the ideals of racial and economic equality. It started out as pressure from a few vocal activists banging on the doors of large foundations. It’s turned into a movement in which philanthropic leaders are falling over themselves to throw money at their critics in hopes of mollifying them, even if it means ignoring the original mission of their institutions.
[Related: Georgetown University students vote to increase their tuition to pay slavery reparations]
Justice Funders is not a random or rogue group of community activists or small donors. Its membership includes some of the largest foundations in the country that appear committed to serving penance for the wealth and power they have accumulated over generations. Wealthy institutions have decided to let other people decide how to spend their money, regardless of the original instructions of their founders. And it’s worth exploring how this came to pass.
In 2008, the California State Assembly passed a bill requiring foundations with assets of more than $250 million to disclose the race, gender, and sexual orientation of their trustees, staff, and even grantees. The legislation was promoted by the Greenlining Institute, an advocacy group that blamed foundations for failing to donate enough money to “minority-led” think tanks, community groups, and businesses. The group’s president said at the time that he hoped the legislation would “shame” foundations into giving more to groups whose boards and staffs were majority-minority.
The Foundation Diversity and Transparency Act, as it came to be called, didn’t pass the state Senate, but only because 10 of California’s largest foundations agreed in advance to contribute an undisclosed amount of money — hundreds of millions of dollars, according to the Greenlining Institute — to such minority-led organizations. There seems to be little doubt the foundations responded to a political threat. Robert Ross, CEO of the California Endowment, reported that a candidate for the Los Angeles County Board of Supervisors warned him, “If you guys show some problem-solving leadership on this, we’ll look to that kindly.”
In the years since, activists have continued to pile on. The Greenlining Institute attempted to get legislation passed in Pennsylvania and Florida. And the institute has been one of a number of organizations and activists pushing the federal government to do away with the charitable tax deduction if foundations don’t change their giving priorities.
They also favor increasing the estate tax instead of letting the wealthy choose how their estates will be spent after they die. They have pushed for legislation that would force charities to pay out a larger percentage of the income from their endowments each year. They want to put strict limits on the charitable dollars that can be put into donor-advised funds because they claim such funds are not subject to the same kinds of reporting and payout requirements as charitable foundations. This despite the fact that donor-advised funds tend to serve less wealthy donors who lack the resources to create charitable foundations on their own. Some of the largest mutual funds, such as Vanguard and Fidelity, have created donor-advised funds to serve the charitable purposes of precisely these kinds of clients.
[Opinion: The problem with reparations is not why, but how]
Most of these proposals are based on the long-discredited claim that assets held by charitable foundations should be viewed as public funds subject to political control because donors received tax deductions, which, in their view, turn private money into public money. Their logic dictates that these funds should get directed only to causes that serve the public interest. In other words, to causes that they approve.
Rob Reich, a professor of political science at Stanford and co-director of its Center on Philanthropy and Civil Society, published a book last year called Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better. He cites a recent study showing that “at most one-third of charity is directed to providing for the needs of the poor.” Most giving in the United States goes to support religion and local churches. Colleges and universities also receive a large share of charitable contributions. He notes that wealthier givers are less likely to donate to help the poor but instead donate to institutions such as museums, symphony orchestras, and universities that disproportionately serve the rich.
The result, according to Reich, is that “philanthropy exacerbates social inequalities in a way that seems fundamentally at odds with certain egalitarian aims of social policy.” Even the Chronicle of Philanthropy itself asked recently if there was a “crisis” in philanthropy because foundations seem to give more and more money to wealthy institutions such as universities, instead of soup kitchens or United Way. These claims ignore the important fact that many of the largest gifts to universities and hospitals are allocated to support medical research, the results of which benefit everyone, not only in the United States but around the world.
Racial issues in particular always seem to be at the heart of these discussions as well. Foundations, the critics say, need to donate to more racially diverse causes. Edgar Villanueva, the author of Decolonizing Wealth: Indigenous Wisdom to Heal Divides and Restore Balance, argues that foundations should advocate for “a universal basic income and provide reparations to indigenous and African-American people to compensate for the treatment of their ancestors as well as push for ways to close the gap in health care that perpetuates generations of discrimination.” Doing these things, of course, requires that foundation leaders should, in the words of Ford Foundation President Darren Walker, “engage in repairing the very mechanisms that produce, preserve, and promote our privilege.”
[Related: Times columnist David Brooks changes position, endorses reparations]
One problem, as the critics note, is that current foundation leaders are too often insensitive to these obligations due to their race, gender, or economic background. In a recent article in the Chronicle of Philanthropy, one critic directed fire against the board of the liberal MacArthur Foundation for appointing a white man as its new president, arguing that this move set back the fight for “racial equity.”
A little more than a decade after the campaign in California, it appears that large charitable foundations are in danger of becoming a wholly owned subsidiary of the activists they once resisted. The California Endowment, the James Irvine Foundation, and the William and Flora Hewlett Foundation were among nine foundations in the state that showed some “problem-solving leadership” by directing their assets to politically approved causes. And now it appears from the website of Justice Funders, which lists them as members, that these foundations continue to pay what amounts to blackmail.
In an article on the Justice Funders website, Ed Whitfield, co-managing director of the Fund for Democratic Communities and the chairman of the board of the Southern Reparations Loan Fund, questions the “assumption that it is natural and right for the elites who have accumulated the wealth created by others to make all of the decisions about how it is to be allocated, as though we in philanthropy know better than those whose sweat and toil created the wealth.”
He argues that money does not even belong to the foundations or the people who left the money to create them. Rather, “the big pile of money on Wall Street and in other financial markets … is directly traceable back to the US slave system, through the banks that were developed to finance slave trading to the insurance companies that emerged to guarantee slaves as property.” According to Whitfield, the attack on foundations is but an opening salvo in a more ambitious campaign to leverage control over investment funds, banks, insurance companies, and other pockets of wealth.
In another blog post on the Justice Funders website, Sophie Robinson, whose great-grandfather co-founded Wrigley’s gum, and immigrant rights activist Janis Rosheuvel explain the goals of their coalition, Solidaire: “We do not require applications, reporting or site visits but rely on ongoing trust and relationship building to create a shared sense of commitment to Black liberation. These efforts, among others, seek to liberate philanthropy by shifting the power disparities that exist between philanthropy and movements, to build trust with movements and to enable us to move more money, more justly.”
Applications, reporting, and site visits, which many philanthropists believe are valuable ways to allocate money transparently and fairly and to spend it in the way that grantees promised, are, in their view, tools that the white power structure uses to control the poor.
The trustees and executives of these foundations must understand that no amount of money will ever satisfy the demands of Justice Funders and the activists they represent. The foundations, having capitulated once, will have to do so again, until they give up control over their decisions and their hefty endowments. We have seen the same scenario play out in other circumstances, such as in higher education, and we are bound to see it play out the same way in the philanthropic space.
Eleven years ago, Paul Brest, a former NAACP attorney and then-president of the William and Flora Hewlett Foundation, wrote in a letter to the California State Assembly that the foundation’s “fundamental operating principle is to direct our resources to organizations that have the promise of making the greatest difference in achieving [our philanthropic] goals. Thus, we do not focus on the racial composition of our grantees, but rather on how to achieve measurable impact in improving the lives of the communities that our grant recipients serve.” That was the principled position to take at the time, and the proper position now. But it’s one that many California foundations have abandoned. They will inevitably learn, as Rudyard Kipling wrote, “That if once you have paid him the Dane-geld/ You never get rid of the Dane.”
James Piereson is a senior fellow at the Manhattan Institute. Naomi Schaefer Riley is a resident fellow at the American Enterprise Institute and a senior fellow at the Independent Women’s Forum.
