Volcanoes are erupting in The Philippines, but on-fire Australia received some welcome rain. The Iran war cries have been called off and The Donald’s military powers are about to be hamstrung by the Senate. Meanwhile, his impeachment trial is starting, and we’re all on Twitter for a front-row seat.
S2. EPISODE 8
The Philanthropic Moment
Featuring Rachel Pritzker & David Callahan
Is philanthropy helpful? Looking at the giving data during the pandemic as well as the billionaire class philanthropy trends and small-dollar individual political donations, what are the pros and cons of philanthropy? Joining us in this conversation are Rachel Pritzker, founder and president of the Pritzker Innovation Fund, and David Callahan, founder and editor of Inside Philanthropy, to talk through some of the advantages and disadvantages we see in today’s giving economy.
Prefer to read? Check out the Audio Transcript
Zachary Karabell (ZK): What could go right? I’m Zachary Karabell the founder of The Progress Network. And I am joined as always by Emma Varvaloucas, the executive director of The Progress Network. And we are on season two of What Could Go Right?, having a series of engaged conversations with engaging people about vital topics from the perspective of, what can we do to ameliorate our problems, how can we steer ourselves into the future that we hope for and not plunge into the future that we fear?
So today we’re gonna talk about something that doesn’t get talked about a lot in a focused way, and that’s philanthropy and giving. Whether that’s really rich people giving a huge amount of money, or a lot of other people giving a little amount of money. We are in a moment where, particularly coming out of the pandemic, people have given a lot of money away, in the tune of billions and billions of dollars.
And that’s true in the political process, small donors helping campaigns. It’s true of billionaires and the billionaire pledge of “give away half of your money, and do something, be of service, give back. If you have the means, it’s morally incumbent upon you to give back.” You know, we talk about these things a bit, and it’s usually from a negative skew of too many wealthy people unaccountably using their money to pursue agendas and passions that may in fact do social good but aren’t accountable to the political process or the democratic process. But either way, we don’t actually have a lot of conversations about what does this world look like? There’s an entire world of philanthropy. And we’re gonna talk to one person who’s deeply engaged as a practitioner, Rachel Pritzker, [who] has thought deeply about both the pros and cons, the advantages and the failings, and someone else who has built a platform called Inside Philanthropy, David Callahan, [who] has written a book about philanthropy, who is steeped in this world as an honest broker and as an information source for people engaged in the world of giving and foundations, and who probably knows more about the world of giving than anybody else.
So Emma, tell us about Rachel and David.
Emma Varvaloucas (EV): Rachel Pritzker is a member of The Progress Network, and she’s also the founder and president of the Pritzker Innovation Fund. She’s also chair of the board of the Breakthrough Institute. We have another member who’s a part of the Breakthrough Institute; I highly recommend checking them out. And she’s also a board member and co-chair of the Energy Program at Third Way. She’s the co-author of something called An Ecomodernist Manifesto, which outlines an alternative approach to climate mitigation and human development. So if you’re interested in climate change, check that out for a refreshing approach.
And the other person who’s going to be joining our conversation today is David Callahan. And as Zachary mentioned, he’s the founder and editor of Inside Philanthropy. He’s written extensively on trends in philanthropy, American culture, public policy, business—the whole gamut. And he’s the author most recently of a book called The Givers: Wealth, Power, and Philanthropy in a New Gilded Age.
ZK: And we’re gonna do this conversation a little bit differently. We’re gonna start with Rachel and go over some of the big issues confronting American society, democracies worldwide, and philanthropic giving in general. And then we’re gonna bring David into the conversation to add more dimension and depth toward the end.
EV: Perfect. Let’s do it.
ZK: So it’s great to have you with us today, Rachel, someone who’s both thought about the nature of philanthropy and society and is also, for lack of a better word, a philanthropist. And I think about this a lot. The Progress Network certainly started as an outgrowth of my own philanthropy, although I’ve never actually used that word in conversation with anyone.
RP: You don’t have to be embarrassed.
ZK: I know, like… I was at a conference a few weeks ago, and this came up. And there was a discussion about tax breaks and the way the American tax code certainly encourages giving at all levels because of your ability to essentially write off X percentage of every dollar you give that you would otherwise have paid in taxes. And someone was saying they thought this was a terrible skew. And another person pointed out that long before the tax code Americans in particular have been relatively philanthropic, right? There’s been a long tradition of this, and that the tendency to see the contemporary tax code as a cause of this is probably historically inaccurate. That there’s been a lot of this, and the tax code actually reflected the amount of philanthropy that was in place in the 19th and early 20th centuries. I don’t know. I just thought that was an interesting debate, because there’s a contemporary view, I think, that this is all a product of a tax code that’s made to benefit, you know, more people who have the money to give than anybody else. But it does raise this kind of continually churning question about, you know, where are we and what’s the role of this? And I know that’s a big question, but it’s one that you’ve thought about a lot.
RP: Yeah. Well, I mean, this goes all the way back to de Tocqueville who, you know, wandered around our country observing what was different about early America as compared to Europe and in his case France. And one of the things that really struck him was—and I guess he didn’t use the word philanthropy—but there was sort of a culture of mutual aid and of naturally arising, self-organizing civil society. And it was very robust. So I think civil society and philanthropyto just use that word is a deep and longstanding part of American culture. And I think, you know, it’s also on the positive side, or in defense of it existing, is a key bulwark against autocracy, which is why we see all forms of voluntary association and philanthropically supported organizations, you know, all forms of civil society attacked and dismantled throughout history when autocrats want to strengthen their hold on power. So I don’t think that should be overlooked.
EV: I’ll just like, I guess, mention the elephant in the room, which is that both of you just now were a little bit awkward about saying philanthropy, right? Which is interesting. Like, why be embarrassed about it if we’re saying that it’s a positive thing?
ZK: Yeah. Especially given that the Greek meaning of the word is like “love of people.” You shouldn’t be apologetic about it. I think it’s probably that it has negative connotations given the amount of pushback about “it’s just something that wealthy people do and can get away with,” which is an odd trend, but it is the trend. And so the word is now tinged with things that have nothing to do with original root. And it’s also, you know, it can kind of sound like a pretentious word.
RP: Yeah. And it’s also a word de Tocqueville didn’t, as far as I know, use directly. So I think that was part of my “hedginess.” But in general, I do think there is a lot of criticism currently of philanthropy, and like, maybe, you know, even a question about whether it should exist. That is, I think, a new conversation. There are all sorts of critiques, some of which I think are more valid than others. I think one of them is this idea that philanthropy is sort of like reputation laundering for people who are trying to kind of undo the harms of earning that money in the first place. To which I would say, well, not all wealth is ill-begotten, and certainly not all philanthropy is undertaken like just for public perception or ego reasons. Some of it is, but most people in philanthropy that I know are like good people doing good things. And I would say like even the biggest, baddest bogeyman of the left, the Koch Foundation, sure, I disagree with a lot of what they do, but they also focus on things that they genuinely think will help people. Like the United Negro College Fund and having an increasing focus on how to reduce political violence.
So I think the black-and-white way of looking at a really big and hugely diverse sector, just, I don’t know, it seems simplistic. And also, why should we discourage people with resources from doing things they think would make the world better? Obviously there are downsides to a lack of accountability, and that’s like another topic and another area of critique where I think we really should have some conversations. But the upsides are that, especially in a time where we’re not sure where our government isn’t super functional, and we’re not sure it’s gonna be friendly to the democracy, and where you really can’t always count on business to do anything beyond their bottom line, couldn’t a philanthropic sector that isn’t accountable to government actually have a benefit. At least because it would be able to counterweight some of the anti-democratic forces.
I mean, one perfect example, which I think obviously is not ideal, but Congress was so deadlocked around putting the necessary money into fund administering the 2020 election that philanthropic money had to come in and actually, for the first time ever, pay for us to run an election. Which of course, in an ideal world, that would not happen. The government would just fund that stuff. But thank goodness we hadyou know, a quote-unquote unaccountable sector that could sort of swoop in and go, “oh, this is really important and is not gonna happen any other way.”
EV: It’s funny you talk about reputation laundering, Rachel, because I just saw a New York Times article that came out that was like, we haven’t been able to identify most of the super-billionaires in the world. They’re quiet, working behind the scenes. And it’s interesting because I think a lot of this narrative that people have about philanthropy is tied to these like mega names that people know mostly from tech, like Zuckerberg and Elon Musk and Bezos and things like that. But the picture that you’re painting is a little bit different. You said it’s a diverse sector. So I’m wondering if you could give us a little bit more detail about that, about some of the things that might be going on that people aren’t necessarily reading about or seeing on Twitter.
RP: So I think there are a few big funders who sort of get all the headlines, whether it’s because of big dollars, like the Gates Foundation, or because they’re the super-rich, like Bezos. But there are a lot of funders who are not doing anything to kind of publicize their work, their funding, their causes, who are having important impacts. And yeah, I’m not sure about specific impacts, but I mean, I know a lot of sort of low-key funders out there who, you know, as a result, I’m probably not gonna mention their names [laugh], but who are like trying to figure out like, “where are the key levers where I could have a positive impact,” whether it’s to make government more effective, like at delivering services to people, which is not sexy, it’s not gonna get a headline, it’s boring, it’s long term. And that takes a while to figure out, and you’re not doing that in public necessarily. It’s not a big splashy thing.
ZK: It’s funny. So there are two things going on from an American context, right? One is, at the higher end, a lot of these questions and debates have been going on since at least the middle of the 19th century, right? And a lot of the contemporary tensions and debates stem a little bit from Andrew Carnegie and “The Gospel of Wealth.” And the idea that if you’ve made a lot of money in your lifetime, it’s incumbent upon you to basically give that back, give it away. If you die with wealth, you’ve failed somehow in the social contract. That, at least, was Carnegie’s “Gospel of Wealth” thing. And as a result, there are all these Carnegie charitable organizations.
I wanna maybe just switch gears a little to the kind of current trends in like what’s chic and hip in philanthropy. And a lot of it, I think, has become… As a lot of tech wealth has come to dominate the scene, a lot of that ethos of Silicon Valley and tech has also come to dominate the thinking. One of which is like, it has to be scalable, right? If you’re gonna give away a lot of money, it’s gotta be scalable, it’s gotta be measurable and scalable. What do you think of that? I mean, is that the right… Is that a good trend? Because it’s clearly a trend.
RP: Yeah. I think scalable and measurable are two separate issues, which I have different responses for [laugh]. I think especially when folks in tech talk about scalable, in my experience, they often mean how do you make a business out of it that will make money. Which, I’ve talked to so many people in tech who think initially like… for the most part, it’s me talking to people who wanna have a positive impact on climate change. And they spend time thinking about it and meeting with people and looking at, you know, various ways to intervene. And they’re always naturally drawn to investing in companies as opposed to, you know, doing the long, messy, slow, frustrating work of helping to change policies. And you know, that sort of, I guess, makes sense, coming out of the Silicon Valley ethos. It was sort of like, “ah, we can ignore government; we’re recreating stuff and innovating.”
But I do think it’s a shame because there is a lot you can’t accomplish through just investing in companies, which isn’t, you know, we need that too. We need it all. But I worry that increasingly we’re seeing people have just not a lot of interest in making sure that government policies are focused on solving long-term problems and addressing things like climate change. And, you know, funding think tanks and researchers, doing the kind of work that can inform a better government process and decision-making is important.
On the metrics, yeah, I have a big bugaboo about these, like, what I call the tyranny of metrics. Because if you’re only funding things that are easy to measure, you’re often not funding the most impactful, important things. So, easy-to-measure metrics leave little room for funding, the challenges that take longer or are harder to measure, like policy advocacy, which is messy. There are multiple players and unclear causality. So how do you measure that? And of course, the role of ideas and changing paradigms, that is also really important, but very hard to measure.
EV: That’s something that, Zachary, you’ve talked about in terms of The Progress Network, right? That if we were to go and try to collect funds for TPN, it’s hard to say, like, these are the number of minds that we have changed about a more positive zeitgeist. Like how exactly do you measure that? You can’t, right?
EV: [Laugh.] The three people in this room recording right now. And it didn’t change from anything in the first place. So zero.
RP: I think it is important to try. But I think the way you describe impact is gonna be more complex than like, you know, this many tons of carbon abated in like, you know, whatever quarter or year you’re measuring. I think it needs to be a mix of qualitative and quantitative. And I think it’s just, it takes a lot more thought and care to design the right metrics, because if you use the wrong metrics it can really skew, narrow your philanthropy.
ZK: But even metrics… I mean, clearly there are some things that are metric-friendly. Like we know that for every bed netting given out in a mosquito-ridden, malarial area, it will reduce the amount of malaria by X. And so if we give out 10,000 nets, we’re gonna then reduce the amount of malaria by, you know, some mathematical percentage. All of which is quite true and has led to… I mean, the Gates Foundation and others have done a really good job in terms of disease issues, because those things are very metric-friendly. The problem then is what about things that aren’t so metric-friendly? And then, you know, it may be the issue of you start only looking for metric-friendly things,
RP: Right. So in the case of bed nets, you know, funding bed nets, wonderful. But what about funding the long-term research and policy work to make sure people in countries currently exposed to malaria are lifted out of poverty, so their homes aren’t full of mosquitoes in the long run. It’s that kind of like… Let’s raise our ambitions, think longer term, think about the more complex issues that are harder to measure, but potentially more impactful in the long run.
EV: Rachel, would you say that sort of the tyranny of metrics has any relation to a discomfort with, I don’t know if waste is the right word, but like waste or failure or something like that. Because we see in the news recently so much… Mackenzie Scott seems like she like wakes up, has an espresso, writes a million-dollar check, mails it to somebody… You know, it’s like just money flying around. And my understanding was that there’s some critique of that in that it’s irresponsible in that she’s not sure what kind of outcome this money’s gonna have. But yeah, I wanted to get your take on like, is it a discomfort with waste? Is it discomfort with knowing exactly how the money has had an effect on the thing that you’re trying to solve? Or what is it exactly?
ZK: By the way, we really like Emma’s description of MacKenzie Scott’s to-do list on a daily basis, things to do.
EV: [Laugh.] That’s how I imagine it, yeah.
RP: [Laugh.] So, I mean, look, big institutional philanthropy, I have a lot of critiques of what they require of grantees, which is often like incredibly burdensome and time-consuming proposals and reports on their progress. And then they take who knows how long to make a decision, basically just consuming grantees time. And they often also want the grantees to create a new special project just for them. So on the positive side, MacKenzie Scott isn’t doing any of that, right? There’s there’s no burdensome, time-consuming paperwork or process that grantees have to go through. So, you know, she’s created a very lean structure. If you’re consumed about waste you could actually say, well, she’s not spending all this money on an overhead that a lot of big foundations are spending.
On the other hand, I think it’s a little early to judge her strategy in terms of effectiveness. But I will say, I kind of doubt it’s gonna be repeated on a big scale, in part because it would put a lot of people out of business in the field. There’s a lot of people who depend on a big building full of people who are trying to count metrics and write strategy proposals and do strategy refreshes. And it’s like, it’s a whole field. And frankly funders often do wanna be more engaged in the work and get to know the grantees. I mean, I think I would describe my approach as kind of a third option, which is, I spend a lot of time getting to know an issue and then getting to know the people and groups doing work in it that I think is important and effective. And then over time, I develop trust with a few core partners who’ve proven effective. And then I continue to engage closely enough with their work that I have a sense of their strategy, I can judge their effectiveness, and therefore I don’t require burdensome, you know, processes of requests or reporting either. And for the most part, I also offer general operating support because if I trust someone, then I’m gonna trust their judgment about what their strategy should be and where their money should be going.
ZK: I mean, I love that as an approach and as a way of thinking about it. You get to know people, it’s a relationship. It’s based on kind of a trust that you’re buying into whatever revision they have.
RP: I will say, not everyone can do that, you know, for all sorts of reasons. But frankly, one big reason is that it’s very time consuming,
ZK: But isn’t it just as time consuming to do all the reports you’ve talked about and the metrics. And also, what’s the line between oversight and control. You want some oversight. Maybe you don’t even want some oversight. The MacKenzie–Bezos one would suggest, you know, you just throw enough out there and some things are gonna work and some things aren’t, and you accept that that’s part of it. And then there’s oversight, which is, you wanna see how they’re doing and give them some accountability. And then there’s control, which is, I’m not really interested in giving people money. I’m interested in finding people who will execute projects that I’m interested in.
RP: Yeah, I think it’s also a question of scale. It does become a lot harder when you’re giving out massive amounts of money to—I don’t know how many she’s given to now, but you know—maybe hundreds of organizations. And especially if you’re doing it at a really rapid pace, because again, getting to know a field, getting to know an issue and the people doing good work in it, that takes time. You can’t do it at the pace she’s doing it. So again, I’m not… I think there are pros and cons to both approaches.
EV: Rachel, something that we have talked about before, also in the theme of issues with current philanthropic efforts, is that their not aimed at the long term, the complex issues. But also, you’ve mentioned before to us that it’s focused on the problems itself and not solutions. Could you tell us a little bit more about that? What kind of solutions would it be nice to see people focusing on?
RP: To be honest, I think there’s a version of the reverse that may be more what I see [laugh]. Or maybe it’s more of an issue of sequencing. So, I think funders often focus on a simple, sexy solution rather than spending the time, like I just mentioned, to deeply understand the problems they’re trying to solve. First understanding the problem in all its political geopolitical, cultural, technological complexity, I think is really key to figuring out like a truly useful approach, and frankly, a solution that doesn’t accidentally do harm, which is a thing that is possible. But it’s a lot harder and more time consuming than just jumping at the first exciting solution. So my favorite example here of this is the Soccket. I don’t know if you guys remember this. It was a soccer ball that kids in Africa were meant to kick around which would generate a little LED light for a couple hours.
EV: Ah, this is coming back to me as you describe it.
RP: Yeah. As if this is a meaningful solution to anything, to energy poverty or even poverty more broadly, which would require completely different solutions. You’d have to spend a lot more time figuring them out. And we might not come to them if we’re distracted by, you know, the shiny new thing, like the Soccket. But another version of this is, I think, asking the wrong, or in most cases too narrow or short-term, question. Like, how do we stop countries from using coal? Which I think is the wrong question. I think a better question to ask is how do we get people enough, reliable, affordable, clean energy? Because if our focus is on just stopping coal, then that could mean that people just go back down the energy ladder to wood and diesel, which is not better [laugh], or simply it could mean they have less or no access to energy at all, which in human terms is devastating.
So I mean, if you’re not focused on human development or poverty, and really single-mindedly only focused on climate change and specifically closing coal, you might come to that approach. And importantly, if we’re asking the question, how do we get people enough, reliable, affordable, clean energy, that is a much more respectful approach to communities and countries and their own autonomy. So in the democracy space, we see also a lot of focus on that one simple solution. So in some cases, this is without even a lot of clear evidence, and this is where a lot of the money goes because the democracy space is very complicated. There’s not one problem and there’s not one solution. So again, I think people get focused… They wanna immediately do something before they’ve done the research, which I totally understand. And I think it’s valid to do some, like, doing while learning. But we shouldn’t get sort of locked in to the simple answer we came to initially.
And this is why I think ongoing learning and engaging with people outside our political tribe and our issue area expertise, or even our issue area focus is really important to understand how these other concerns and other approaches and ways of viewing the world affect our thinking. And in general, I think we should be suspicious of silver-bullet solutions. But ultimately, we will need to move into solution mode. So again, it’s like a question of sequencing. And I don’t wanna be too disagreeable to your framing. So I’ll add that, in designing an effective solution set, I think it’s also important to look for examples of where we have made progress that we can learn from. So like what approaches have proven effective before, and this might include other times or other places or even right in our own community. But, I think especially on the left, we’re often afraid to acknowledge where progress has been made for fear that it’ll like take away our motivation to address problems that still remain. But I think if we miss out on all these lessons where progress has been made, we might miss out on opportunities to take important lessons that would make our current efforts more effective and make solving the problems we still have easier to fix.
ZK: You know, it’s funny, you mentioned the coal issue because certainly in the Ukraine–Russia War, or the Russian invasion of Ukraine, one issue’s been German dependence and Eastern European dependence on Russian natural gas means that if you’re going to make the political decision to sanction Russian natural gas, the only immediate alternative for all of these countries is to burn more coal, right? Because you know, as much as they were ahead of the curve on a lot of these environmental issues socially, they didn’t really do what you’ve just said, which is find a reliable, renewable source of energy. They just are kind of in the, “where do I get my less reliable, less renewable source of energy?”
RP: Well, I think we should sort of clarify or make some distinctions because there are European countries who’ve done a great job decarbonizing and aren’t relying very much on Russian gas or coal. This includes Sweden, which has done a great job in part because they have a lot of natural hydro resources and they have maintained their nuclear. And France of course, which also has both some hydro and a lot of nuclear. Germany on the other hand basically decided they were willing to close their nuclear, which, just for people who aren’t aware, does not emit carbon dioxide and to replace it with Russian gas and to some degree coal as well. So, you know, I think again, this is, like you said, it’s a good example of if we are focused on a really narrow question and not thinking about the bigger picture, we can accidentally end down these blind alleys that, yeah, I mean, if we forget about the geopolitics, which I think Germany really did we can find ourselves in trouble.
And I would agree with you that the Russian invasion of Ukraine, I think, has reminded people that there is geopolitics in the energy space, which should affect our thinking about the climate solutions and remind us that our climate solutions are gonna have to be in the global context. This is another frustration I have with American, and to some degree European philanthropy, which is that it looks narrowly at their own country, but these questions are all global or at least connected to global challenges. Soyou know it’s clear now that the climate and energy issues are global, and we can’t forget about geopolitics. Like, should we be relying on China to make all our solar panels? That’s a challenge. Where are we gonna get our rare earths for a lot of the renewable technologies that require them from, in some cases, some unsavory work practices and sketchy regimes. And these are all things that I don’t, you know, I don’t think people have fully come to terms with.
But the Russian invasion also in the democracy space, I think has foregrounded even more of the fact that this is an urgent and global challenge. It’s not just us in the US having a problem. I think there’s a real contest between competing governing options, and the autocrats are fighting to show their option is superior to our open societies of liberal democracies. So we need to strengthen and defend and make our democracy more effective so that it can provide a model of what does work, and so that it survives in the long runfor both us and for people everywhere.
So that’s a really good intro, segue into bringing in David Callahan of Inside Philanthropy into the discussion, given that he’s written about the role of philanthropy in American democracy. And it’s, you know, some of the questions, both pro and con that have been… You know, we talked a little bit about it at the beginning of this conversation, and this more trenchant observation you just made about what’s the role of a robust philanthropic community as part of a robust democracy? Or at least clearly you do not see much in evidence of robust, philanthropic activity in autocratic, fascist, or authoritarian societies. You would be hard-pressed, other than, I supposegiving on command, which is a bit of a different thing. Tithing as in taxing.
So David… Whatever you’ve written about and thought about in terms of the challenges and some of the tensions inherent in American society today and the nature of philanthropy, what do you make of this idea that Rachel has highlighted, that a powerful philanthropic culture, giving culture, is a necessary, imperative component of a robust democratic culture?
David Callahan (DC): I think there’s a lot to it. I mean, clearly there’s a big tension between, on the one hand, philanthropy as a bunch of unaccountable power, right, increasingly wielded by a super-wealthy elite with endless amounts of money, ambitious plans for public policy and really kind of aggressive agendas in some areas. On the other hand that unaccountability is part of the strength, right? Because philanthropy can take risks. Philanthropy can do things the government can’t. Philanthropy doesn’t have to worry about the bottom line. So you have this kind of dynamic agent of change in society that can do all these things that the other two big sectors in our society can’t. And I think that one of the things that philanthropy can do is it can empower voices in a democratic society who otherwise wouldn’t have allies. Because they wouldn’t find allies in the private sector. They might not find allies in government, especially if it’s a government that’s hostile to marginalized views or what have you. So I definitely think that philanthropy is a strong component of democracy. Assuming you can get the tension right, and it doesn’t just become yet another tool of kind of plutocratic influence.
EV: So far we’ve been talking a lot about big donors. But along this line of a culture of charitable giving and the United States and American democracy, there is the point that charitable giving spiked over the pandemic, right? With big donors and with small donors.
The New York Times—this is the second time I’ve referenced The New York Times; clearly I’m a fan—but they had a really good article about this where direct cash transfers also spiked between people. I, myself, gave money to random people I didn’t know, during the pandemic to support artists. So, yeah, I was wondering if either of you could say a little bit about that, the culture of charitable giving when it comes to smaller donors, grassroots donors.
RP: Just two quick things. I would say, you know, obviously philanthropy can be a positive and natural response to suffering. On the question of like, you know, well, it spiked even in a time of crisis. Sure, but it’s worth noting that it was likely aided in large measure because the stock market rose and government put cash in people’s pockets, which enabled some of this generosity. Because during the Great Recession, charitable giving decreased.
DC: Yeah, Emma, the unfortunate trend over the last 20 years has been less giving by ordinary Americans and the role of the small donor becoming less and less significant in philanthropy. And that’s a very troublesome trend, and it’s driven by a couple factors scholars have tried to figure out. One is the fact that most of the income gains of the past 20 years have gone to the top 10%. And so, meanwhile, the ordinary middle-class Americans have been crushed by rising healthcare costs, higher ed costs and all the rest. And so there’s just not a lot of extra money in the pockets of Americans. Meanwhile, the wealthy are richer than ever before, have more and more assets to sort of bring to bear to philanthropy. And so that’s kind of produced this kind of top-heavy philanthropic sector that I think is a real cause for concern.
On the other hand, there’s a lot of interesting initiatives underway to try to catalyze giving by smaller donors, giving circles being one example. Donor-Advised funds, for all of the kind of controversy they’ve caused, I think have worked to democratize philanthropy in [some] ways. There’s about a million donor-advised funds at this point, compared to about a hundred thousand private foundations. So if you think about analogizing philanthropy to politics, one of the good things that has happened in politics in the last 10 or 15 years is the rise of small donors, right? Like you don’t… There’s all these animated, small donors in politics who allow politicians to get funded without going to corporations and wealthy donors. And, you know, Bernie Sanders wouldn’t have been able to run for president without all those small donors. The dark side, of course, is you have somebody like Marjorie Greene, who gets a lot of money from small donors. But in philanthropy, we could see a real kind of upsurge and lots of giving by small donors who could help kind of balance out that top-heavy philanthropy we’re seeing today.
EV: I mean, that’s great to hear. I’m happy for my sunny-eyed view to have been wrong so we could end with the inspiring message of, okay guys, let’s all rise up together. And I know, Zachary, you’ve made the point before that Americans being flushed with cash and the pandemic releasing so much spending from governments made for very unusual but beneficial times.
ZK: Yeah, and that’s clearly gonna fade into 2023 and 2024. I mean, we’ll see if it’s replaced by its own self-sustaining, organic giving on the part particularly of those who have. And look, I mean, it is certainly true what David said about the trend line. It’s also true that even with that trend line, the United States does remain a largely charitable nation relative to many other countries in the world. Relative to itself, the trend lines are not as positive. And I do wonder in this, from both of you… Because part of the tension that’s expressed and often articulated to its nth degree is the needs that big philanthropy tries to meet are needs that government ought to have met. I mean, that’s often… The assumption within the critique is, it’s a civil society and political failing that large philanthropists have to play the role they do or ultimately do play some of the role they do. And as you’ve pointed out, David, in your writing, there’s a selectivity to what, you know, big philanthropy wants to address versus other social needs that go unmet. But do we really feel that we would wanna live in a society where every single major social, political, economic, inequity, imbalance problem was met by government?
RP: I mean, I think this is like a version of “should philanthropy exist at all?” that we discussed before, which, I think there are many reasons that it’s useful to have a philanthropic sector. And as David said, there are benefits to having a sector that can experiment. I would argue maybe it isn’t as experimental as it should be. There’s a lot of groupthink and a lot of blind spots based on that groupthink. But I think the idea of government doing everything is a little scary to me, particularly in this moment, because I’m reading Anne Applebaum’s Iron Curtain, about how the Soviets crushed civil society, you know, and many other things in Eastern Europe. And they were very targeted and specific in going after all civil society. Churches, the Boy Scouts and Girl Scouts were a huge focus that they had to shut down, corrupt, make sure it was part of a government program. So of courseI think government should be more effective. I want it to be more effective. I want it to be able to do its job. Like I said before, I want it to be able to sufficiently fund election administration. We shouldn’t have philanthropy doing that. On the other hand, there are all sorts of things that I think it’s great philanthropy can sort of, you know, fund research that may not pan out. Would we want government taking that risk? Probably not.
DC: Yeah. And I would just echo that to say the smart philanthropists go where government won’t, right? So you see in medical research, like the NIH has a $36-billion-a-year budget, right? If you’re a smart philanthropist investing in medical research, you don’t fund the kind of stuff that the NIH funds, right? You fund the kind of stuff that the NIH won’t fund because it is too risk averse. And in fact, Open Philanthropy, which is funded by Dustin Moskovitz, one of the co-founders of Facebook, once had a round of grants where they gave a bunch of money to all these rejected proposals from the NIH saying, this is good stuff. The NIH is too cautious. We’re gonna fund this. The bad thing is when philanthropy feels it has no choice, but to step in to take care of shortfalls created by government’s fiscal lack of capacity or government’s lack of innovative or just pure functional capacity.
So the most extreme example of that, in the city of Kalamazoo, one of these sort of battered, you know, post-industrial cities in Michigan the fiscal situation was so bad that a couple philanthropists stepped up and put up tens of millions of dollars to kind of do basic things in the city, and then raised a bunch of other money from philanthropists just to keep Kalamazoo afloat. And my concern is we’re gonna see a lot more Kalamazoos going forward. Because if you think about the long-term trajectory, the fiscal squeeze on government is gonna get worse at every level. All those state and local pension fund obligations, as they kick in, there’s gonna be more states and localities that are just completely squeezing out all of their sort of discretionary social spending and educational spending and park spending to fund their pension entitlements. And the same thing’s gonna happen in the federal government.
And so you’re gonna have this situation where wealthy people have more and more money than ever, and are more and more active in philanthropy, at the exact same time that an aging population is squeezing the capacity of government at all levels. And I think it’s gonna transfer more power to the philanthropic sector. Now, on the one hand, that’s great in the sense that at least there’ll be somebody to bail us out when we can’t meet basic needs, somebody to fund the national park system. On the other hand, it’s worrisome in terms of who’s in the driver’s seat of US society.
ZK: So on that, I’ll segue into what about those areas where some philanthropic activity has both highlighted a major systemic failing that is government created—so you talked about bailing out society; what about The Bail Project, which was a huge endeavor to say, look, far too many people are being arrested, particularly in urban areas, who can’t pay fines, who then are put into the criminal justice system and in those parts of the country where there’s bail, can’t make bail, and end up essentially being entered into a carceral system without ever having been convicted of or committing any crime. So we’re gonna pay for bail. Part of that led to, you know, massive bail reform in states like New York, which itself is now undergoing huge amounts of political pushback because of some of the unintended consequences, same thing in California.
Certainly you would think in many ways, even though The Bail Project, by the way, [as] in our conversation with Rachel earlier, was conceived very much in the definition of scalable and measurable and repeatable. And you know, it fit the bill perfectly for that kind of philanthropy. But it highlighted a failing of government. Charter schools, to some degree, you know, highlight some of the failings of public education. And then what about areas like Dan Gilbert, the founder of Quicken, who in a totally kind of non-directly philanthropic way becomes part of the redevelopment of downtown Detroit because of his willingness to invest money in an area that neither government nor most private businesses are willing to invest in? Where do those fall on these particular spectrums?
RP: I mean, I would say the same thing I said about philanthropy having to fund elections. It’s probably good we have it, but in an ideal world, they wouldn’t have to. I wish government was doing a better job, was more fair, was funding sufficiently the things that matter. And this is in part why we have spent so much time and energy with a network of people from across the ideological spectrum with a wide range of issue-area expertise to think like about how we got into this political dysfunction, this democratic decline, and where are the solutions that are long term that can address some of the underlying problems. Because I worry if we’re only focused on the Band-Aid level, we’re in trouble.
DC: Yeah. And I think the criminal justice example is a good one in terms of philanthropy intervening in a sector where all the incentives were aligned behind a business-as-usual model that was highly destructive. I mean, once all those draconian sentencing laws were passed in the eighties and nineties, there weren’t a lot of incentives for politicians to undo them, right? And so this was kind of a monster going on autopilot. And then you have a number of pretty bold philanthropists stepping up; I think of John and Laura Arnold as two examples of philanthropists who really plunged into that criminal justice sector to try to kind of stop this kind of government on autopilot incarcerating huge numbers of people. And I think that it’s been successful, and really, philanthropy has played a catalytic role in kind of changing the debate.
In other areas, philanthropy has gotten kind of nowhere. So, housing is a great example, or homelessness, two issues that are really acute in California, where philanthropy keeps trying to do stuff with kind of limited traction because the kind of dysfunction around housing in many places is so entrenched, this kind of interplay between zoning and costs and NIMBYism. And philanthropy for all of its efforts, just doesn’t have enough kind of muscle to get in there and kind of correct for a real shortcoming of the public sector.
RP: I think there’s also been a lot of groupthink in the effort to try to address the housing and homelessness problems. And they’re not issues I work on, but I think—I don’t know all the details here—but I think a lot of funders have failed to look again at the sort of longer-term challenges that got us here. Not, you know, a year ago. Not even five years ago. But it’s been like 40 years that we haven’t been building the housing we’ve needed to make up for the jobs we’re adding? And fundamentally, changing the zoning restrictions is hard. Because you have all sorts of political reasons to maintain them. So government at various levels—city, state—has reasons to maintain all this restrictive zoning. And I think a lot of funders were just like, let’s focus on, you know, we’ll put all this money into low-income housing, which on its own is fine, but it’s not sort of doing the hard, deep, engaging with the politics at the state and local level to allow us to build more housing.
So the pros and cons… You rely on philanthropy, in the case of bail, because it can experiment and isn’t as accountable. It can find things that really need changing that, as you said, David, no other actor in the system was willing or able to do. But here I think there is also the same groupthink in government as in philanthropy, in some areas. And I just worry that if one of the things we rely on philanthropy to do is to be innovative, and to be able to do that thing that would help society that government and business can’t do. It’s not always stepping up.
EV: I’m curious if either of you have any thoughts, just going back to what David said, about who’s in the driver’s seat. I’m thinking about this one particular person. He’s like 30 years old. He has a crypto fortune. He’s living in his van because he wants to give all of his fortune away. Are people like this is someone we should look to for this kind of innovative, non-groupthink thinking or should we expect more of the same going into the future? What do you two think about that?
DC: Well, I do think that there’s a lot of interesting philanthropists coming on the scene, and I don’t think it’s a coincidence that many of them are coming onto the scene from the tech sector. And they are people who, you know, have made their money by thinking outside the box, disrupting key industries. In Wall Street, you make a lot of moneyoften by just having more and more assets under management over a longer and longer period of time. Real estate fortunes tend to be made over many decades. In tech you often make your money by coming up with something really disruptive and powerful. And so when those kinds of people turn to philanthropy, they often wanna do things very differently. And I don’t think it’s surprising, for example, that the push for universal basic income has attracted so many people from the tech sector who wanna basically disintermediate the whole social services and global aid sector by saying, hey, let’s get rid of all these middlemen who help poor people at home and around the world, and let’s just give the money directly to poor people. And let’s research that.
So I think that that has been a really cool and hopeful dynamic. I don’t wanna overplay it because if you look at many of these tech philanthropists over time, they start to behave a lot more like traditional philanthropists. And maybe to Rachel’s point, some and then get sort of sucked into groupthink, or they get sort of embedded in the traditional sort of philanthropic sector and hire philanthropists to do their giving, and are no longer as dynamic as they might be.
ZK: So final question for both of you: If we’re having this conversation in 10 years, is the conversation any different, given current trends? Or is it simply more acute, in that more agglomerations of wealth at the very high end, more expectation on the part of those… And again, I realize this is something I’ve harped on a bit in this conversation, but the American billionaire class certainly is more inclined to leave large amounts of money than the equivalent groups of people in China or India or Russia or Brazil. And you know, I suppose you could say “so what” to that. Making a comparison of relative moral grays doesn’t really get you anywhere, but it is worth looking at that this is a global human phenomenon, not just an American issue per se, you know, what to do with a large amount of wealth at the top. Or is there, you know, we talked a bit about giving circles, and it’s been true, as you said, in politics, individual donors giving $5 to their candidate in a way that if you have a lot of people doing that it ends up being some significant amount of money for a short time. So are we having the same conversation in 10 years, do you think?
RP: I don’t think we’re ever having the same conversation 10 years ahead of whenever you ask the question [laugh].
ZK: That is a very wise answer, by the way.
RP: I don’t have a crystal ball, but I am deeply worried about where we’re headed politically, geopolitically. It just feels like we’re heading into a potentially rocky number of years, however many they are. And I think inequality is definitely one of the drivers of some of this, you know, just what feels like real global outrage. And it’s not just here. You’re seeing frustrations bubbling to the top and a lack of trust in various institutions, but in particular in governments all over the world. And so I don’t think the philanthropic sector alone is big enough to countervail all of that, but I would love to see more funders take the time to understand how complex the moment we’re in… Like, we didn’t get into this political, cultural stew that we’re in now overnight. And we’re not gonna get out of it tomorrow. So I think if philanthropy can really think long and hard and get out of their own sort of tribal, ideological, and frankly toxic, partisan and high conflict approaches, then they would be able to actually help address some of these underlying challenges that are not gonna be the quick, easy, sexy, most obvious thing in front of them. So that’s my hope, that they do more of that.
DC: I think in 10 years, one exciting thing is we’ll be talking about a lot more global philanthropy because 2,500 billionaires in the world, maybe a quarter of them live in the United States. And I think we’re gonna see a real upsurge in philanthropy worldwide. And that I think is gonna be really interesting to watch. In places like Africa and India and China, Southeast Asia. Here in the United States, I think that the conversation we’ve been having about government pulling back as philanthropy steps forward is going to become a lot more acute. I think we’re gonna see more Kalamazoos. I think we’re gonna see more kind of big initiatives by philanthropy to kind of compensate for government’s failings as polarization, dysfunction, you know, lack of fiscal capacity, all make government less capable. And hopefully in 10 years, we’re not gonna be talking about a new era of crisis philanthropy. You know, I think that Rachel’s right, we’re heading into a rocky period. And, you know, if our democracy falls apart you could have philanthropy really as a weaponized part of a civil war of some kind. And I don’t even really wanna think about that. But you know, in many ways philanthropy is already kind of on the front lines of our civil discord on both sides. And you could see a significant escalation of that.
ZK: Or, you know, I liked Rachel’s… The idea of there are significant societal challenges and problems that are not amenable to “I will spend X amount of money now and see a tangible, explicit result in a specific short timeframe that I can then say, ‘look, this is what that money did,'” as opposed to the more systemic things. And certainly, you know, part of the point of The Progress Network wasthere will never be an upsurge of constructive news. You know, it is a structural impossibility given the incentives of contemporary media. Full stop. But that doesn’t mean you can’t try to change the tenor of the conversation. It just means you have to make the effort to do so with the belief, I think, that you can substantiate, that it does have a constructive outcome. But not in that immediately, “I said this and it got that amount of attention,” or “I spent this and it had this kind of result.” And so I think that’s where, you know, the best of this lies. And while it’s certainly true that philanthropy can as a neutral be used and abused in a highly partisan, toxic environment, it can also be a bulwark, as Rachel’s pointed out against a partisan and toxic environment, like any good tool, right?
Anyway, thank you both for having this conversation. I don’t think these are… As vital as these issues are and as much as it kind of occupies a lot of people’s mind-space, it’s not something that a lot of people ever talk about in a focused way. So I’m glad to have had the conversation. And I know, David, you have a bread-and-butter platform that does talk about these in a focused way, but that’s also often talking within a world of people who are focused on these things. It’s interesting that we don’t have these conversations in a more non-inside-baseball way. So hopefully this is the first and not the last [laugh]. But thank you both for having the conversation with uswith each other, and with the world.
RP: Thank you.
DC: Thanks, Zachary.
EV: Thank you both.
ZK: So Emma, I thought that was a really stimulating conversation. Of course, I thought it was a really stimulating conversation. All of our conversations are stimulating.
EV: Or so we hope.
ZK: Or so we hope. That was done… I mean, you can’t really tell in audio. That was done with a wry self-deprecating smile. One thing we didn’t get into, and it kind of occurred to me at the end, was what does that leave most of us individually to dogiven that most of us individually make a series of choices of I’ve got a limited pot of money that I want to be able to utilize constructively for the greater social good. You have this world that’s increasingly dominated by, you know, billionaires and millionaires giving away huge chunks of money. What then to do, right? Am I supposed to give a little bit to a whole bunch of organizations? Am I supposed to give a lot to a few? Am I supposed to throw up my hands like it doesn’t really matter anyway, because it’s too little? Other than the political we talked about, which was quite an interesting evolution, where people I think realized collectively because they were being, you know, told it collectively, that if a lot of people give a little money, it’s a lot of money.
EV: Right. I mean, that’s kind of what David was pointing at in the middle, right? Which I thought was useful for myself as a new small donor. You know, five years ago, I didn’t have any money to give away. Now I have a little bit of money to give away. And for me it was like, okay, can I identify where I might be a part of a swelling wave? Right? And he mentioned Bernie Sanders. I think other listeners on the left might identify with someone like Stacey Abrams, where you see that there are a lot of smaller donors coming together. If you can see that wave starting to gather steam, that would be a great place to throw, you know, a little bit of money. So that was one thing for me. And also just, you know, I mentioned this in the middle as well, you know, with COVID, there was an initiative that I joined where you sent $10 in the middle of the pandemic to an artist that you don’t know. They don’t know who you are. You just Venmo them the money because you know they aren’t getting paid right now. And that was for me really powerful. It’s not gonna lead to large societal change. And of course that was a very unusual moment. But the act of knowing it was just going directly into someone’s pockets, which, you know, we talked about as well, was really powerful, just on a psychological level for me.
ZK: Yeah. And then there are things like GoFundMe, right, where people just… I mean, sometimes that’s for an entrepreneurial thing, but often it’s for somebody saying, “Hey, I really need X,” or “I want to do that.” A lot of that was being done around the immediate response to Ukraine. And what can people do? There were a lot of GoFundMe campaigns. And again, we didn’t get into this in the conversation, but none of that money, the money that you just talked about for someone who needed something during the pandemic or these GoFundMe campaigns, show up in a, in a 501(c)(3) tax exempt fashion, right? These are just people saying, “look, there is a need here. I can help. I’m not gonna get any benefit in my taxes from this. It’s just the right thing to do. And it’s something I can do right now.”
And I think that, you know, again, if we could have had another hour talking about this, the whole crowdfunding and crowdsourcing of needs, some of which is purely, “Hey, you know, I wanna start this cool company,” a lot of which we talked about last year when we had the conversation about Kickstarter, right, in one of our episodes in season one of What Could Go Right? I wonder what you think about the more…You know, Rachel in particular is animated by a real sense that we’re on a precipice, a democratic precipice. David, too. And that that puts philanthropy in kind of a crucial moment of potentially keeping us from going off that precipice.
EV: You know to be honest, I hadn’t thought about that from a positive perspective at all [laugh]. When Rachel in the beginning called out the Koch brothers, that’s the perspective that I’m used to hearing and swimming in, these mega-rich people that don’t have a lot of accountability, and David mentioned that as a strength and also weakness. I’m very used to hearing about that as a weakness, just pouring money into the system. You’re seeing that it’s having a negative effect, but you can’t trace it back. You know? And so seeing that in the reverse is actually very difficult for me. I took Rachel’s point that in autocratic societies they often shut down philanthropy, but on the other hand, I’m hard pressed to point out a philanthropic effort in the United States that I know of—that’s not to say that they don’t exist, but that people know of—that’s on the frontier of saving democracy. Actually, unless I’m thinking about some of our own TPN members, like Braver Angels, which I’m sure is funded in part by philanthropic efforts.
ZK: And the criminal justice reform. One of the only goals that was bipartisan to come out of the Trump era was a whole criminal justice bill at the end of 2018, partly funded by the Kochs, but partly funded by Soros, and was a strange meeting of multi-partisan perspectives around a societal issue that was perceived to be just destructive for… Doesn’t matter whether you were Republican, Democrat far right, or far left. There was more of a consensus of this is a major issue and it was in many ways sponsored philanthropically. So it’s hard to find these examples and they don’t get the attention of dark money. Again, back in our whole mantra of conspiracies and dark thoughts get more attention than collaboration and good news. The same thing is true in these areas. And it’s something to think about when we think about what these pools of money, not always accountable and not always evident and not always transparent, can actually lead us to. A conversation that maybe we should in fact revisit. Because it is so woven into many of the other issues we have been talking about.
EV: And you’re so right that people don’t talk about it very much.
ZK: And yet, here we are. Thanks for having the conversation as always, Emma.
EV: Yeah. Thank you, Zachary.
If you wanna find out more information about The Progress Network and What Could Go Right?, please visit our website at theprogressnetwork.org. And if you want something other than gloom and doom when you open your email in the morning, you can also sign up for our weekly newsletter. It’S a roundup of progress news from around the world, and that’s at theprogressnetwork.org/newsletter. And please, if you like the show, if you could tell a friend, share an episode, leave a rating or review on Apple Podcasts or wherever you listen to podcasts, that would help us out a ton. What Could Go Right? Is hosted by Zachary Karabell and Emma Varvaloucas. The show is produced by Andrew Steven and edited by Jordan Aaron. Executive produced by Jeff Umbro and the Podglomerate. Thank you so much for listening.
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