Legitimacy of Philanthropic Foundations: United States and European Perspectives

Chapter 3 American Debates on the Legitimacy of Foundations

Chapter 3 American Debates on the Legitimacy of Foundations David C. Hammack Defined as large stocks of wealth controlled by independent, selfperpetuating boards of trustees and devoted to the support through grants of charitable purposes—or to no specific purpose except “the general good”—philanthropic foundations first attracted notice in the United States only at the beginning of the twentieth century. By the time of World War I, such foundations had won attention as distinctively American phenomena. Since then, though they have often attracted critical scrutiny, their diversity and their close integration with the American nonprofit sector as a whole—together with the commitment of America’s political culture to the rights of individuals and of private property—have enabled them to defend their legitimacy to this day. American foundations support a wide array of causes, religious as well as secular. They have sought to call attention to particular problems and to shape public opinion. They have worked to identify or devise and to popularize “best practices” for nonprofit and government agencies and to promote specific government policies. They have also sought to reorient and reorganize existing service providers and to create new ones, whether nonprofit or government. Most often, of course, American foundations have simply supported nonprofit organizations , or have purchased services from or subsidized the supply of services by nonprofit and governmental agencies that provide health care, social welfare, educational, cultural, or religious services. Many foundation subsidies are intended to make such services available to specified, often disadvantaged or specially defined populations.1 But very often, foundations support advanced intellectual work: scientific or scholarly research, creative work in literature and the arts, studies in public policy, reframing of public discussions, as well as religious study and reflection. Observers have held American foundations responsible for many things. Foundation advocates credit them with remarkable innovations . They have won most praise for their key roles in developing world-class scientific research universities and medical centers, and more generally in helping Americans respond to the challenges posed by industrialization and urbanization in the first half of the twentieth century. Foundations, it is said, have introduced vital qualities of flexibility , responsiveness, and diversity into American institutions, public as well as private. And American foundations have often “invested in people,” or even sought to support “genius” (Hollis 1938; Weaver 1967; Cuninggim 1972; Karl and Katz 1981; Ettling 1981; Lagemann 1983; 1999; Bulmer 1984; Lagemann 1989; Geiger 1986; Wheatley 1988; Kohler 1991). Yet American foundations have often attracted harsh criticism as being fundamentally undemocratic. Conservatives object that foundations promote collectivism (Wormser 1958; DiLorenzo, Oliver, and Winters 1990; Olasky 1992), secularism, or internationalism (Quigley 1981; Josephson 1952). Recently, conservatives have added that in pursuing such goals unelected foundation leaders who did not earn the money they spend have refused to honor—have in fact subverted— the charitable intent of the donors who did earn the money (Wooster 1994; Holcombe 2000). Some traditionalists have objected that foundations have promoted racial integration (Goulden 1971, chap. 8). Individualists complain that government-granted foundation status confers unfair competitive advantage on certain individuals, families (Lundberg 1937, 320–73; Wormser 1958; Lundberg 1969, chap. 10; Allen 1989), or business firms (Troyer 2000, 52–53; Goulden 1971; Lundberg 1969, chap. 10)—and on managers who gain control of foundation assets. Labor leaders and liberals have complained that foundations perpetuate economic (U.S. Senate 1916; Wormser 1958; Goulden 1971; Odendahl 1990; Colwell 1993) and racial inequality (Harlan 1958; Stanfield 1985; Anderson 1988; Anderson and Moss 1999) and the dominance of white Protestant men (Lindeman 1939). Critics on the left insist that foundations restrain or suppress movements for social reform (Arnove 1980; Roelofs 1987, 2003; Fisher 1993; Colwell 1993), exert reactionary influence on certain academic 50 The Legitimacy of Philanthropic Foundations disciplines and professions (Noble 1977; Brown 1979; Berliner 1985), or more generally exert “hegemonic” influence on academic disciplines or on public opinion (Arnove 1980; Fisher 1993; Roelofs 2003). More than one recent critic has insisted that certain foundations are currently attempting to dismantle the welfare state (Covington 1997; Stefancic and Delgado 1996; Diamond 1995). Liberal internationalists and others argue that certain foundations promote capitalist expansion (Ransom 1975; Arnove 1980; Berman 1983) in U.S. foreign policy and provide illegitimate cover for CIA and other U.S. interventions in the affairs of other nations (Andrews 1973; Arnove 1980; Weissman...