Liability of Not-for-Profit Organizations

American Foundations: An Investigative History

The International Journal
of Not-for-Profit Law

Volume 4, Issue 2-3, March 2002

by Mark Dowie 
Reviewed by Robert O. Bothwell*

There are over 50,000 foundations in the U.S. today.  With $448 billion in assets in 1999 (somewhat less now), foundations are an unbelievably huge philanthropic industry compared to almost 40 years ago, when the federal government launched its War on Poverty.  Foundations’ assets then were well under $30 billion.

Mark Dowie, author of American Foundations:  An Investigative History (MIT Press, 2001), does not blanche in analyzing this industry, despite its diversity and differences in grant making and style of operating. Dowie sets an ambitious agenda.  He reviews foundation funding of education, science, health, environment, food, energy, art, civil society, democracy and imagination!  He is an accomplished writer with16 journalist awards and five books to his credit.

There are excellent earlier reviews of foundation activity.  Academicians Robert H. Bremner, Stanley Katz, Barry Karl and Ellen Condliffe Lagemann have all offered such.  So has former Ford Foundation executive Waldemar A. Nielsen, several times over.

But perhaps consumer activist and Green Party presidential candidate Ralph Nader suggests best why this book should be read by those involved with the foundation world either as a staff member, trustee, grantseeker or academician.  In comments on the book jacket Nader says, Dowie “is a scholar and a muckraker,” who analyzes “foundations’ past achievements and failures and then critically [takes] the institutions to task for directing their grants so often away from ‘root causes.’ Dowie shakes up the complacency, myopia, and insulation of [the] giant foundations by naming names and places.”

Dowie clearly raises the most important questions about foundations’ performance, and offers thoughtful, usually balanced answers that certainly pull no punches.  As the longtime director of a national watchdog nonprofit organization charged with monitoring and redirecting foundations’ grantmaking toward the disadvantaged and disenfranchised in the USA, I believe this study is both highly readable and extremely informative.

Education receives the largest share of foundation grants. Dowie observes that “Foundation trustees…seem to favor the spawning of an elite intellectual force over the principle of equal educational opportunity…The great preponderance of educational grants…have found their way to institutions of higher education where scientists and other experts are educated” (p. 45).  Recently, however, more foundation money has been poured into reform of primary and secondary education, especially inner city schools.  This money was stimulated by Walter Annenberg’s $500 million challenge grant in 1993.  Dowie applauds this trend.  Nevertheless, he raises the question: Can such money ever change the entrenched public education monopoly to enable it to do significantly better educating poor and poorly prepared students?  Maybe the foundations should “also be funding community organizations that demand more of public schools…” (p. 40).

“American foundations’ second largest area of grantmaking is health.”  Dowie concludes that “foundations’ enthusiasm for high-tech diagnostic systems, pharmacology, and the disease model of medicine has not only inhibited the development of preventative and holistic approaches but has also retarded public health and fostered the evolution of an essentially unjust health care system…Until quite recently the public health effects of environmental pollution have been virtually ignored by the large foundations” (pp. xxix-xxx).

More generally, beyond specific subject areas, Dowie identifies proactive philanthropy for criticism:  “…when proactive philanthropy is pursued without the participation of the people most affected by it” serious problems result (p. xxx).

The 50-year Green Revolution is often touted as one of the foundation world’s greatest achievements.  Dowie acknowledges its success in significantly raising food production per acre in the developing world.  But he goes on to challenge its social, economic and environmental consequences for the peasant-farmers and the urban poor.  Unfettered scientific experimentalism in increasing crop yields, supported by the Rockefeller and Ford Foundations, with little heed to culture, economics and sustainability, meant the rich got richer and the poor poorer, with 800 million people still hungry in the world.

The Energy Foundation was created in 1991 by the Pew Charitable Trusts, MacArthur and the Rockefeller Foundations “to assist the nation’s transition to a sustainable energy future by promoting energy efficiency and renewable energy.”  This was a major proactive foundation initiative to do what the environmental movement was not perceived to be doing.  Dowie records the positive accomplishments of the Energy Foundation, but worries that “concentrating so much leverage in one funding body could create serious power problems, as well as an orthodoxy, that, if misguided, would be difficult to challenge.” (pp.142-3).  And, in the end, he identifies how the Energy Foundation gave its largest grants to environmental legal organizations which were “agents of capitulation…deferring to free market arguments,” while “throwing mere crumbs to energy visionaries, renewable activists, and consumer advocates” (p. 165).

Dowie’s investigation into American foundations is not all negative.  The author identifies several individual philanthropists as possible  harbingers of “a new and imaginative era of philanthropy.”  In fact, the author seems mesmerized by the big money and big ideas of these individuals.

He singles out Irene Diamond, Ted Turner, Walter Annenberg and George Soros as “venturesome”  philanthropists — because they “imagined, respectively, worlds without AIDS, without strife, without ignorance, and without tyrants, then made massive and immediate financial efforts to make those worlds real” (p. 224).  Diamond dedicated her foundation to spending out its principal (a verboten idea to American foundations) to eradicate AIDS.  Turner created the UN Foundation in 1998.  Annenberg made the largest single contribution in history to improve public education.  And Soros, says Dowie, has done more than any other philanthropist to advance democracy around the world.

The author acknowledges that it is an uphill battle for these individuals to be creators of “a new and imaginative era of philanthropy” (p. xxvii).  He observes, “If historical precedent were to hold, foundations would [take] courses [that] would be safe and uncontroversial” (p. xxiii).  And as former Ford Foundation executive Waldemar Nielsen has noted, “the profile of [foundations’] activity is largely conventional, not reformist.  [Foundations] are overwhelmingly institutions of social continuity, not change” (1972, quoted in Dowie, p. xxvii).

Dowie also labels Paul Brainerd, Marian Rockefeller Weber, and George Roberts as philanthropic pacesetters.  Brainerd is a high-tech multimillionaire who made his money developing a progenitor of desktop publishing.  He has been active in funding environmental activities, but Dowie likes Brainerd’s formation of the Social Venture Partners which has brought other high-tech millionaires together to do joint philanthropic investing.  Weber created the Flow Fund Circle, bringing in people with philanthropic vision she respected, to decide how to distribute her money.  Roberts created low-skilled, labor-intensive, nonprofit businesses as  organizations to help homeless people survive through employment and training and creating their own economic bases.

While individual philanthropists may be doing the right thing, the large twentieth-century foundations receive pointed criticism from Dowie.  He writes, as they “became more established, more professionalized, and more bureaucratic, they tended to become sclerotic….With some remarkable exceptions, older foundations became, and have for too long remained, drag anchors on American social, political, and scientific progress, choosing, it seems, to slow forward motion in order to avoid some perceived obstacle” (p. xxvi).

This is especially pertinent considering foundation funding of progressive political ideas.  “During the last twenty years of the twentieth century,” Dowie writes, “it was conservatives who prevailed in the war of political ideas, financed the Reagan revolution, and provisioned the Republican recapture of Congress.  A dozen or so medium-sized, uncharacteristically patient foundations can take a good deal of credit for the rise and endurance of America’s conservative revolution…More recently, following this bold twenty-five-year foray into public policy by right-wing foundations, the Left has stepped timidly into the fray with a few programs in economic and political justice.  Will mainstream foundations, too, learn from the conservative foundations’ triumph of leveraged influence?  Or will they continue their minimal, unimaginative funding of safe and soft institutions proposing weak, incremental solutions to urgent and undeniable crises?” (p. xxxiii)

“The traditional narrative of organized philanthropy – accepted as a matter of faith – is that foundations strengthen civil society.  The truth, however, is that some do and some don’t…Why does the United States have some of the most intractable social problems in the developed world?  And some of the worst statistics for murder, crime, infant mortality, single parenthood, prison population, and voter turnout?  And why is there so much injustice?” (p. 191)

“Brilliant and constructive as some of their work has been,” writes Dowie, “much of it has also been fruitless, uninspired, and designed to do little more than perpetuate the economic and social systems that allow foundations to exist” (p. xx).

He explicitly faults foundations for not doing enough for social movements which they have aided:  “With the single exception of civil rights, foundation interests in America’s signature social movements – for women’s rights, peace, environment, environmental justice, students, gay liberation, and particularly labor – [have] been parsimonious, hesitant, late, and at times counterproductive…In any case, all foundation support for social movements…remains small potatoes any way it’s measured” (pp. 199-200).

In summation, Dowie argues that “Those empowered to make grants should not assume that they have the wisdom to solve such serious problems simply because they control the money” (p.  xxxix).  As a student of philanthropy and seeker of foundation largesse for the past 30 years, I can only say, “Amen!”