A Call to Modernize American Philanthropy

The reason for only giving away 5% is because if you give away more, eventually there will be nothing. But you can probably give away 5% forever (particularly if there is some additional funding coming in). So, in the long run, giving away 5% per year should translate to giving away more in total than if you gave away 20%. (Similar to living off retirement savings.) Now, whether there should be such a need for philanthropy in a society, and the composition of the governing boards, are other issues...

I work in nonprofit fundraising and study philanthropy, and would love to read this book. I also have a question that I would be curious to know Mr. Villeanueva's response to. When you say that only 7-8% of the 5% distribution goes to communities of color, where does that figure come from and what does it include? I find that a shocking statistic and, if accurate, is highly educational for me. What I am wondering, though, is whether that figure assumes that communities of color only benefit from grants to nonprofits whose missions expressly state a focus on said communities? Or, does it account for the fact that communities of color still benefit greatly from, for example, a major grant to a hospital that happens to serve a large proportion of people of color and therefore improves health in their community? Either way, definitely caught my attention and made me want to check my assumptions!

A few things that are intellectually dishonest here - if white people or the "leadership of the establishment" apologizes for colonization, should they apologize to those people of color who are deceased or just their descendents? Then what? Then do we ask for reparations? What does that accomplish? Also, many leftists fail to understand economics. $ does not grow on trees and those who make $$ dont make it illegally (unless they are drug dealers and smugglers who are usually people of color?) Growing wealth ensures future donations. Most donations go to help minorities and underprivileged as the bulk of donations go to religious groups that often help local communities.

Now we are finding ways to criticize people who give away their money... Only in America!

Kudos to Mr. Villanueva for his honesty and sensitivity. All his points are valid, based on my many years of experience with foundation boards and staff. I will add another problem. Many foundation staff and leaders are committed to charity in the noblesse oblige tradition. Giving is often condescending. And, worst of all, program directors are more interested in advancing their own "ideas" rather than simply supporting the good work the applicants do.

Thank you for covering this topic, with its broad reaching implications. I very much appreciate reading (admittedly abbreviated) Mr. Villanueva's thoughtfully presented, first-hand inside/outside knowledge-based, perspective. Which, really, parallels the points he is making.

I think “colonists” quickly see themselves as much a part of it as “natives.” If your point is that a minority should not control the destiny of a majority, I’d suggest that a majority controlling the destiny of a minority—which many fine people have called “democracy”—may not necessarily be that much more satisfactory for them. You should also consider the mutually beneficial alliances (especially economic) that are made between elites on both sides.

Hey, give away All of YOUR money! You see, it TALKS, and YOU walk.

An article titled "The Billions of Dollars that Made Things Worse” in the fall 1996 City Journal Magazine said that by 1970, the head of the Ford Foundation, McGeorge Bundy, was devoting 40% of Ford grants to minorities. "The most notorious Bundy endeavor, the school decentralization experiment in ... Brooklyn, changed the course of liberalism by fracturing the black-Jewish civil rights coalition and souring race relations in New York for years afterward. It [Ford] chose as the head of its $1.4 million decentralization experiment ... a longtime white-hater, Rhody McCoy … Ford’s experimental school districts soon exploded with anti-Semitic black rage, as militants argued that black and Puerto Rican children failed because Jewish teachers were waging “mental genocide” on them. ... students at a junior high school rampaged through the halls beating up white teachers, ... White teachers at one school found an anti-Semitic screed in their mailboxes, calling Jews “Blood-sucking Exploiters and Murderers” and alleging that “the So-Called Liberal Jewish Friend . . . is Really Our Enemy and He is Responsible For the Serious Educational Retardation of Our Black Children.” McCoy refused to denounce the pamphlet or the anti-Semitism behind it. Nor did Ford publicly denounce such tactics—or take responsibility after the fact. " This article made it sound like the Ford Foundation thought it knew what was best. Their money should not be tax deductible. They are undemocratic.

The reality of charitable giving proceeds from the proposition that, if I cannot personally benefit from the money I earn because of confiscatory taxation, at least when I give it to charity, I have some say as to where it goes. Those advocating eliminating charitable deductions are, in effect, arguing for an end to the bloated not-for-profit/NGO sector, which would be fine by me. Mr. V is butt hurt because donors don't just throw money over the transom, thereby allowing for the types of race-based distributions he favors. The donors, who as he points out are mostly white, turn the money over to fund managers, who are mostly white, who in turn make grants to not-for-profit executives who are mostly white. Is anyone really surprised by that? If communities of color, as he calls them, want more say in this area, we will have to put our own money in the game.

"For private foundations, only 5 percent of the wealth is given away each year on average, and of that 5 percent, only about 7 or 8 percent goes to communities of color. " How does Villanueva define “private foundations” and "communities of color”? Is he aware that the Ford Foundation, George Soros’ Open Society Foundation, the Carnegie Corporation, the Atlantic Philanthropies, and a great many other foundations have been devoting millions to social service agencies that promote citizenship for illegal migrants? Even the Koch Brothers and Mexico’s richest oligarch, Carlos Slim, have been giving money with this aim. Many foundations also help to underwrite public broadcasting which is quick to provide the viewpoint of illegal migrants, but not so forthcoming when it comes to showing the negative aspects of illegal migration (such as overcrowded school; schools that have to devote an unfair percentage of their resources to their illegal students and the children of illegal migrants; fewer jobs and lower wages for citizens and legal residents; less affordable housing; crowded county medical clinics and hospitals; and so on) If all the money foundations have been providing to help “communities of color” were to be added up, I suspect it would constitute at least half of their total grants.

As a founder of a nonprofit startup, I can relate to many things in this article- especially the inability of foundations to listen if you don't have $500K, even if you're positioned to have an impact and have thoughtful solutions. I also agree that there is too much emphasis on the "experts" instead of those who can actually impact change in a community. There's a role for the philanthropic sector to play in advancing social good; yet it won't happen without empathy. I agree that communities of color have been forgotten or not listened to or invested in for solutions. I also agree that those at the source of challenges should also be part of solutions. I have also felt the flipside of the feedback; one foundation once said they had a "visceral" reaction because our cofounders were "too white," and denied funding. While it taught us an important lesson about being proactively inclusive with our leadership team and we made adjustments, it made me turn away a little to the sentiment and of this article. I've been very sensitive my whole life to listening and empathizing and serving others. And we should truly listen to and evaluate individuals for their ideas and ability to serve others regardless of their socioeconomic background, gender, race or appearance,

The Americans profiting from an equities market run up are the ones driving philanthropy. It is those Americans deciding the "who and how" their largess will be distributed. Identity politics play a overly critical role in determining the space those monies are distributed. With the "market" deciding our societal fate, we can't expect our government to compete with the tremendous power leveraged by private group interests.

So much time and energy spent worrying about what other people do with their money. Who's trying to be the colonizer here? Instead, why not make something of yourself Mr. Villanueva.

This phrase knocked me back in my chair because it reflects my own long standing critique of foundations: "When you hold power, the disposition often is one of: “I have an Ivy League degree. I know the answer.” My critique, as an outsider to that whole field, has been that foundations provide nice, cushy employment (usually life time) for graduates of Ivy League and other "elite" colleges regardless of whether their work actually impacts the world in a highly favorable way (the goal). They are employment centers for the well dressed, well groomed graduates who have lived, in the main, largely isolated lives based on the privileges their birth and quick brains (and possibly race) have offered them. This must change. This will not change. Once the philanthropic money passes into the hands of its professionalized caretakers, its purposes changes. A good game is played trying to live up to the wishes of those who gave the money, but, above all, the foundation must continue and must provide employment, travel and other expenses for those who live from the foundations proceeds. Stated simply, foundation money is most likely to go to organizations that can manage to appear similar to the foundation itself in culture, behavior and, most of all, preparing glossy presentations that show prior success and careful organization. These elements are more important than the work they do. Much more.

Many of the Foundations with the largest endowments support unauthorized migrants. The 11/15/14 NYT article "The Big Money Behind the Push for an Immigration Overhaul “ said "When President Obama announces major changes to the nation’s immigration enforcement system as early as next week, his decision will partly be a result of a yearslong campaign of pressure by immigrant rights groups, which have grown from a cluster of lobbying organizations into a national force. A vital part of that expansion has involved money: major donations from some of the nation’s wealthiest liberal foundations, including the Ford Foundation, the Carnegie Corporation of New York, the Open Society Foundations of the financier George Soros, and the Atlantic Philanthropies. Over the past decade those donors have invested more than $300 million in immigrant organizations, including many fighting for a pathway to citizenship for immigrants here illegally. The philanthropies helped the groups rebound after setbacks and financed the infrastructure of a network in constant motion, with marches, rallies, vigils, fasts, bus tours and voter drives. The donors maintained their support as the immigration issue became fiercely partisan on Capitol Hill and the activists intensified their protests, engaging in civil disobedience and brash confrontations with lawmakers and the police." What the article does not say is that the American people do not get to vote on how Foundations spend their tax-free money.

Easy way to change some of this problem? Require "charitable" foundations to spend all their endowment within 10 years. Remove the incentive to keep the foundation going in perpetuity, and the ossified management that comes with it.

Two lines summarize this mistake in this piece, and indeed the whole idea. They are: "D.B.: What are some barriers that make it difficult for communities of color to benefit from philanthropy? E.V.: ... The best thing you can do is go and sit in a community. Participate in a feast day. If you feel a tug of the heart that there’s something special there, fund it" That's the fallacy. Some people are winners, some are losers. Some communities are winners, some are losers. It does no good to give money to losers. What does good is to give money to people or groups that are clear winners, on a modest scale, that look promising. And much of what determines who wins and who loses is built in. Its built into people, mostly, in their DNA. Its built into communities both in their DNA (picking the best) and their culture. You can't change the DNA (except, perhaps, as reported yesterday, in one pair of twins in China) but you can try to change the culture. That does not require money, it requires jawboning. For many losing cultures in the USA, that should start with a simple rule: "stop committing crime". But, of course, the whole left wing culture that this writer espouses does not recognize those facts. There's also this: "E.V.: In every dignified society, when someone does something wrong, he apologizes. In the United States, there’s never been an apology by the government for what happened to indigenous folks here." It does not help to blame the past.

Thank you for this valuable information, Mr. Bornstein: "95 percent of the money in foundations is not actually given away as grants. Rather, these endowments are invested on Wall Street in order to accumulate more wealth." Yes, supposed "philanthropy" has become nothing more than a tax shelter for the inherited/stolen wealth Robber Barons. They pretend they are doing something great but in acuality they are simply feeding their egos with their names on buildings and protecting their stolen wealth. The real prolbem in OUR United States of Aemerica. which is not talked about enough, is a "class" struggle. There are many African American, Chinese, Japenese and other racial minority Robber Barons who became billionaires - like Oprah - and multi-millionaires (Crazy Rich Asians) - as soon as they learned how to work the system. One thing we can do to stop this tax evasion is to take away all non-profit status, along with all deductions for "contributions". Let conscience drive OUR largess - not tax evasion.

I would imagine we wouldn't be so reliant on the charitable givings of Million and Billionaires if they were taxed fairly in the first place. It's not enough that they are already accumulating massive profits off of tax breaks that could have gone to the poor, but then they also get to bask in the euphoria of their meager givings.

I believe that if we get very lucky sometimes philanthropy can do more good than harm, but it is a close run thing. This interview helped to crystallize some of my unease about the industry and the corrupting effect it can have on the character of both the "dispensers" of charity and its recipients. Philanthropy can't exist without a cadre of professionals to manage other people's money. It is unavoidable that they help themselves first. No wonder that foundations only give away 5% of their capital. Any more, and they would be out of business, and there would be no careers in philanthropy. How would that help anyone? Then there is the effect of philanthropy on the recipients. As Adam Smith said, "Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens." That explains why Mr. Villanueva insists on seeing philanthropy through the lens of race and class. It is far less damaging to one's amour propre to see money as reparations than handouts. So to avoid the stigma of beggarhood, recipients construct elaborate victimhood narratives. One of the perverse results of philanthropy then is that it feeds the growing culture of grievance that roils our politics, and it creates a growing class of people who have convinced themselves that they are entitled to other people's money. None dare call it charity. In effect, we pay people to be "victims" and we reap the consequences in terms of inflamed race relations and a professional victim class.

Doing much of what's suggested needs an organizing principle and ways to bring people and resources together. While getting together face to face is one approach, it's also limited by time and distance. Check out the Salesforce Philanthropy Cloud. It eliminates time and distance and makes everyone a philanthropist by giving access to databases of opportunities, needs, and resources. It's a revolution in philanthropy, perhaps the first in a century.

Race is not the issue as much as extremely class-biased policies and culture inside foundations. Compare how for profit businesses obtain financing with how charities have go about getting funds. Do for-profits have to beg for money, get it in one year increments, segregate their funding so that one donor’s money pays for staff memeber A, while another donor pays for computers? Do for-profits have to provide customized financial reports for every investor, because the rich donors can’t be bothered to use a standardized reporting form? Do for-profits need to redesign their service because one investor decides that his ideas are much better than those of the founder of the company? (Well, sometimes they do and it’s usually a disaster or leads to a takeover.). Nonprofits can provide documentation and demonstration of their impact, if they are thoughtful in their work. Foundations need to stop trying to control every aspect of nonprofits’ work, and do more evaluation at the end of a reasonable period, like 5-7 years, to see if their “investment” is paying off. Stop believing that you in the foundations know best, and accept the risk of putting money into an organization that is doing work you believe in. Essentially, respect the people and look at data, just as you would with your peers.

This book seems to fit well with Winner(s?) Take All by Anand Giridharadas, who argues that it is more important that billionaires pay their taxes rather than make (proportionally) small donations. After protests in Baltimore, small, community-based organizations noted that the related resources coming to town were skipping over them in favor of larger, wealthier, whiter philanthropic institutions.

What Mr. Villanueva proposes is to rearrange chairs on the Titanic while ignoring icebergs. His call to "modernize" American Philanthropy is spread more of it around and (aha!) read lots of books about Indians before throwing big money at them without oppressive colonizing practices like checking if grant dollars are spent in conformity with state and federal nonprofit tax regulations, violations of which can cost nonprofit tax status and millions in penalties. The only meaningful reform of philanthropy is to abolish it. Tinkering with the distribution process perpetuates the corruption of democracy by allowing privileged and wealthy citizens to disproportionately control social and political development while awarding them massive tax benefits. The purpose of foundations is to avoid taxes and preserve private wealth. Philanthropy should be an act of conscience and charity, not a scheme to cheat taxpayers of billions in tax revenue by exempting foundations from taxes. It's a case of do good while doing incredibly well perpetuating inequality and protecting dynastic wealth. Public money -- which is what foundation assets are -- in a democracy should be budgeted and spent by elected agents as stipulated in the Constitution. Not by wealthy elites and their entourage. Also, the dress code Villanueva "implies" is culturally oppressive can also be viewed as a sign of respect for grant seekers. Villanueva's vague solution is part of the problem.

When we outsource our societal needs to the ultra-wealthy, we give them the power to decide what's best for us. Betsy DeVos's money allowed her to deeply influence the Michigan educational system, pushing her Christian charter-school beliefs into public schools. She would not have needed to "rescue" these schools if they hadn't been chronically underfunded by tax dollars. Conservatives have done a masterful job of demonizing the public sector. So when rich conservatives swoop in and take over our schools, determine our healthcare priorities, and underwrite the arts they prefer, we are are supposed to be grateful to them for their largesse. But by ceding control to these few, we lose our voice in the critical decisions that affect our lives and our futures. And we can only hope they use their wealth and power for the good of all. I'm not holding my breath.

Interesting, well done interview. Looking forward to reading the book. It seems to be of far reaching importance. Unfortunately, those who need to read it may never do so. The NYT could help by publishing more about philanthropy, philanthropists, where and to whom the money goes.

Foundations should have a certain "shelf Life" of, say, twenty five years, within which all of its assets should be spent. Why they should be perpetual in nature, except to proclaim and extoll the names of the givers?

I run a safe House for boys at-risk. Many self-identify as gay. Many have HIV, and sex work is always lurking somewhere in the background. If you can see past superficial issues of morality, you confront the beast, which is an awesome stigma. Add into this toxic mix: addiction, suicidal adolescents, overt racism, disease, entrenched loneliness, and not-in-my-backyard institutionalized. And rape. Even boys. Philanthropy just runs with their tail between their legs. Moving capital? What capital. No one in philanthropy goes anywhere near the word hate. But this is hate. The government is as irrelevant as philanthropy. One size fits all just doesn't work. This paradigm insinuates a bigger fantasy bang for the buck. Everyone has a great website. That philanthropy only serves the entities that created them is maybe news to you, but not to me. Example: While these boys were alone out there, often homeless, government's response to them, a reaching out to get tested for HIV, was the production of CDC posters with stick figures lecturing. Example: It takes nine months to get an appointment with the nearest public health clinic which is over a hundred miles away. How do they get there. How can they wait nine months. Follow up is a joke. The class gap between who the kid is and who the philanthropy giver is remains too big to cross. How do you know school failure, the pain of sexual exploitation, sleeping, eating in dumpsters like starving animals. You don't. You never will.

Why should they give? We've vilified the 1%ers.

The U.S. Census Bureau 2017 Poverty Report (Table 3: People in Poverty by Selected Characteristics) shows that 26.43 million white Americans, 8.99 million black Americans and 1.95 million Asian Americans live below poverty level. Whites make up 70.72 percent of Americans below poverty level. https://www.census.gov/content/dam/Census/library/publications/2018/demo/p60-263.pdf

First, I find the wording "to decolonize wealth" outright confiscatorily communist-socialist. Second, philanthropy is driven by a variety of motives, from pure charity to minimizing taxes. Third, a decision of an individual of modest means to contribute to a charity should be based on 1. The charity's goals, and 2. The percentage of the intake going to the good cause.

Philanthropic organizations seem closed off by nature. As a white person at a white-led not-for-profit organization, I experience conversations all the time with foundation staff who don't listen, who "know better." And that's with all our organization's leaders coming from a place of white privilege. I can't imagine how shut out a person of color must feel. Some of this attitude surely comes from a "protect our assets" mindset--no matter the audience, the foundation is "right" and the not-for-profit is "suspect" because they want "our" money. But race is present in all these conversations, because money has been earned in this country on the backs of people of color: Black slaves did the labor, we took Native peoples' land, Chinese slaves built the railroad, and it goes on and on. I don't think it's hyperbole to say that most philanthropic dollars are, in fact, blood money.

This article and perspective really blew my hair back. It’s the 1st time I’ve seen privilege connected to the sins of our past not just in a meaningful way, but far more profoundly: a relatable way. -From a 39 year old white guy who believes in fairness and justice and equality of opportunity.

It’s no accident that our boom in foundation forming came right after the passage of the federal income tax. What the Rockefellers, the Morgans, the Fords, etc., realized, and what so many Americans still don’t grasp, is that ownership (for which you can be taxed) is not as important as control. For all practical purposes, the wealth in these foundations still belongs to the families who set them up since they still control the boards (via descendants, in-laws and trusted friends who often serve on multiple boards)—they just don’t have to pay income taxes on all this money. And make no mistake, these extremely rich foundations exert a lot of influence over our society and government. A good first step to curb this abuse would be to raise the minimum distribution requirement to a level that would lead to a charitable foundation’s demise in a few generations. (More so-called charitable foundations are always being formed, especially now that our chief national product seems to be the minting of new billionaires.) Another would be to severely limit the number of non-profit boards a single person may sit on, and redefine their membership rules so that these boards, and their decisions, can become truly independent of the original donors and their families.

Too much wealth tied up in foundations. Giving away a minimum of 5% a year? What a joke. A lot of foundations don't even give that much away in a year. What a scam. Accumulate wealth off the backs of your workers and consumers and decide to set up a foundation to avoid taxes and then be stingy about how you Dole out the money. A good library has a copy of the foundations book. Take a look. It's about two inches thick. Have a look at its figures and requirements listed for each foundation. It's an eye opener.

I don't know that philanthropy is built upon notions of "Colonization", but rather the accepted wisdom that it's best to help those whom will help themselves---a hand up versus a hand out. Or as the old adage goes, 'Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.' What the author describes isn't so much a broken system of philanthropy in need of decolonizing, but a system in need of demystifying. He's right: does one have to have a Masters in fundraising and development along with some pretty swank letterhead and grant-writing skills in order to be taken heard in the corridors of philanthropy? No. But you do need to show some level of sophistication that elevates your status to more than just a come-on. All you really need is an idea, and then oftentimes a mere phone call, tweet or text to a charitable organization or philanthropy to get the ball rolling. The public library (alright, the internet too, of course) is also of great help in learning about the do's and don'ts of charitable appeals. True, people of color may statistically receive a lower percentage of charitable gifts, but then governmental programs, not shown here, take up much of the slack. There is also a matter of perception. For native Americans, some of the nation's largest biggest moneymakers, corporate or private, sit smack dab in the middle of many a reservation: Casinos. A handsome proprietary philanthropy if ever there was one.

I worked for 45 years in development. It's a very white world. I concluded that we need to find large governmental solutions to most inequities--housing, health care, global warming, education, unemployment, inequity of wealth and income. Too much is needed by too many. Our libertarian do-it-all-on-your-own ethic doesn't work. The piecemeal approach of private philanthropy will never solve these problems at anything but a tiny, mostly irrelevant scale. But private philanthropy in that kind of world could join forces with government by, as Bernstein suggests, diversifying staffs and boards more thoroughly and openly, seeking answers at a smaller scale by listening and exploring instead of dragging people into the office to plead their case, banding with other smaller funders, being brave enough to test new ideas, and communicating them to government and other entities. The research arm of philanthropy, if you will. That would be a productive role for the private sector.

The just action to take is taxation. No one is worth a billion dollars no matter how smart you may be. Answer: TAKE 100 billion from mr. Besos and electrify the infrastructure. Answer: TAX Gates at 90% for national health care. Answer: TAX Adelstein 90% For salaries for the hundred thousand teachers you need. Simple.

In a just society philanthropy would not be necessary. Too often philanthropy attempts to fill a gap that good government should fill - for example the homeless who line our sidewalks. The most productive role philanthropy can play is innovation.

"If we do not put race at the center, we’re not going to get solutions that work for all people." If race is at the center, then how can there be a solution that works for all people? What if the money has a history that is specific? Raised by the Jewish community? Catholic Church? Alumni Associations? Women's clubs? Men's clubs? Bowling clubs? On one hand modern-day politics would stress the tribal nature that should guide such donors. Why race? Specifically somebody else's race as a matter of principle? What then if the history is not one of colonization? Is that not possible? Is all wealth in foundations subject to decolonization? Is a foundation not allowed to not want different solutions? Perhaps part of the solution is to see a greater number of foundations set up by successful people of color, even at grass roots level?

Edgar Villanueva is on to something. As a person involved professionally in philanthropy for 30 years, I see the deeply ingrained patterns of "expertise", power and entitlement. Perpetuating wealth by giving away only 5%, which is often much less than the investment proceeds, is a key goal of many foundation trustees and staff. Those of us involved in this need to listen more, talk less. Be more present with the people and programs we're funding. Lose the arrogance. And the race/class gap needs to be front and center in everything we do. Not for a few (Bloomberg!), but for the many. And to those leading the programs and doing the work: don't lose yourself to become more like the funders. I see that all the time.

E.V. says, "People are not aware of our history and there’s not been enough grief about it." Is history simply a burden weighing us down? Sure, to some extent. But it is more. It teaches us not only about oppression and cruelty. It teaches about why and how those arose in particular situations; and how our past is filled also with altruism and wonder. Is colonialism the root cause or the explanatory factor? Surely, oppression, condescension, cruelty existing before colonialism -- which is more a symptom than a cause -- history goes back further than E.V.'s tribe's encounter with Europeans. As for philanthropy -- the 5% rule is simply a way of perpetuating the funding for many years, and what should be focused on is where the money comes from. Paying higher wages and taxes would be a better way of balancing profits. Don't accumulate profits no matter the effect on people and then use some of the profits to help those people. They can do a better job of helping themselves if they had a living wage, health care, good working conditions, child care benefits, sick leave, holidays, pensions. And this goes for businesses doing their thing all over the world. -- a good place to start, huh?