It truly is a terrible system. And I work in this dang industry. I help people make their philanthropic plans, deciding where and how much to give. And still, the whole structure of philanthropy sucks.
We are working within a broken system of enormous inequality. Most often, philanthropy is a band-aid solution for huge problems. But at its worst, philanthropy is a PR machine to make rich folks feel better about continuing the status quo.
I’m not the first to say it, and I certainly won’t be the last:
Philanthropy should be working itself out of business.
Philanthropy should be repairing the harm of decades of stolen wealth from extractive and exploitative practices. Philanthropy should be taking a long hard look at itself, and commit to doing things differently.
Here are some of the biggest problems with the industry:
Perpetuity is stupid.
Why on earth do we need foundations to exist FOREVER? They just become a vanity legacy project, and a PR move for the family and any related businesses. They exist to maintain power and control, while providing a PR shield of “doing good” in the world. (You can look to Anand Giridharadas’s “Winners Take All” for more on the PR machine of philanthropy.)
Today, foundations only need to payout 5% of their endowment annually, and that includes paying for staff and infrastructure. At the same time, they are often making at least that much on their investments, actually growing the size of the foundation’s net assets.
Chuck Collins and others are currently calling for a doubling of the payout, to 10% for the next three years to deal with the multiple crises we’re facing right now (pandemic, racial uprisings, electoral reform needs, etc.). This would certainly be a start.
I challenge you to give an example of a foundation that needs to exist forever. If every single one had to spend down 10 years after created, money would flow more quickly, with less restrictions, and our movements could hold their own endowments to ride the waves of future crises.
“But the jobs!” you say. What will foundation leaders and staff do after they close their doors??
Move on to other jobs that benefit society! Be in real community with those they’ve funded, more than just as a checkbook.
Atlantic Philanthropies have spent down their entire foundation, closing their doors earlier this year.
Chorus Foundation is winding down their giving over the next few years too, and has been very transparent in what worked and what didn’t along their journey.
The power dynamics between funders and non-profits are completely fucked up.
The patriarchal system of philanthropy is set up so that funders get to decide who and what gets funding, and what success (or failure) looks like.
This skewed power dynamic leads to funders channeling money towards things that benefit them and others in their isolated wealthy community. Things that benefit other rich people get much more funding than things that actually can lift folks out of poverty. Operas, ivy league schools, and museums have billion-dollar endowments while black-led community organizations struggle to keep the lights on and pay their staff adequately.
You have to ask, where are our priorities as a society? On perpetuating exclusive institutions, or on tackling the big systemic problems affecting millions of people?
And when funders do give to social justice causes, they often do so without finding out what these communities actually want and need. This is how we end up with Mark Zuckerberg pouring money into the Newark, NJ school system without talking to the people he was trying to “save.” Or Mike Bloomberg surprising New Yorkers with the plan to ban Big Gulps to counteract the obesity epidemic rather than asking local community leaders about what they needed to keep their neighborhoods healthy.
Funders, stop thinking you know best. Ask the community what they need, listen to what they say, and fund them in a way that hands them the power.
Self-Congratulations in philanthropy is wrong.
Transferring money into foundations and donor advised funds is simply a tax move, and the industry needs to stop congratulating people for it.
Chronicle of Philanthropy still has headlines like this:
BICCHHHH he didn’t do shit. He didn’t give any money away. He didn’t make anyone’s lives better, or provide any benefit to society. He made an internal money transfer, most likely motivated to shield said money from taxes. Why are we congratulating him??
Here’s the deal. If you have a stash of money stored under your mattress, and then move it into a suitcase, it is still yours. Yes, it theoretically looks like you intend to take it somewhere, but it hasn’t left your house yet. Until you bring that suitcase somewhere and hand it over, it’s just a symbol. Let’s save the applause until after people have actually done something.
A deeper dive into that Nike co-founder’s Knight Foundation found that in 2018, of the 5% payout they made (again, this number is the minimum!), one in five dollars went to the Miami Foundation for them to payout over time. Again, that’s not giving money away. It’s simply moving the suitcase around for a possible future gift — all the while getting tax breaks and pats on the back along the way.
In better news, Forbes has changed their Philanthropy Score to no longer include gifts to personal foundations or donor advised funds. Let’s keep that track going, and only congratulate people when they are actually GIVING UP or HANDING OVER power to others. And not giving to their friends — like Warren Buffet giving to the Gates foundation. Rich people funding other rich people foundations? Fuck no.
Instead, let’s glorify people who have spent down their resources, redistributing their wealth for the greater good. Show the example they are setting, and how they are answering the question of what a former philanthropist can do after giving it all away.
McKenzie Scott (formerly McKenzie Bezos) is aggressively moving money this year too, not by opening up her own foundation, but by simply granting out $1.7 billion to black-led organizations and institutions.
Let’s celebrate more things like that.
The conscious separation of a foundation’s mission and its investment strategy is bullshit.
Foundations are funding nonprofit organizations with the (ahem, minimum!) of 5% of their assets, while keeping the other 95% invested in questionable stocks and markets that are perpetuating systems of oppression. So, a foundation celebrates itself of the incredibly important work it’s doing with its giving, all the while, the lion’s share of its capital is doing something very different.
Nine times out of ten, the program staff don’t have any idea what the foundation is invested in, nor do they have any contact or influence over the folks managing that money. If your funding is focused on climate change resiliency, and yet invested in fossil fuels, you’re shooting yourself in the foot. If you’re concerned about the school-to-prison pipeline, but continue to have investments in private prisons, you’re doing more harm than good.
The Ford Foundation received a lot of praise for their commitment to mission-aligned investments a few years back. A billion dollar investment sounds like a lot, until you hear it is it was $1 billion of their $12 billion endowment … so less than 10%. What about the other 90%???
You gotta align ALL your money to match that mission, not just the minimal dollars going out the door. Only then can we be successful.
Divestment movements have had some success in moving money out of fossil fuels, but there’s a ton more work to do to move foundation investments into mission-aligned, community-centered investments.
Pay to Play is totally backwards and fucked up.
Much like how it works in politics, pay-to-play is inherently a problematic system.
If you run a nonprofit, and are looking for funding, typically here is what you do:
Cull your address book, and that of your board members for introductions to their rich friends and family. Don’t have connections to rich folks already? Pay hundreds of dollars to attend a gala or fancy event to mingle with them!
Then, attend a fundraising or funder conference like EDGE Funders, Confluence of Philanthropy, or Environmental Grantmakers Association. Each will cost you thousands of dollars, and you might meet some foundation staff who could give you access to submit an inquiry or proposal to them.
Why are we saddling the cost of this access with those who have less? Isn’t this a mutually beneficial opportunity for people to get to know each other?
What if we charged foundations (ya know, the folks with money) to create and host these events, and make them free or close-to-free for the non-profit organizations? It would give organizations the ability to build relationships with funders, and see where real connections are. And, it would put the responsibility on the funders to make them accessible, effective, and welcoming.
So what can we do about it?
”People made these rules, so people can change the rules.”
If you work in philanthropy, push for real changes. We need to stop thinking that things need to stay this way, just because that’s how “it’s always been.”
It hasn’t “always been” and it can change again, if we demand it.
So what is stopping you from doing more?
With so many things you could be giving to, so many systems we are complicit in, so many articles (like this one!) telling you to do more, it can be hard to figure out and take the next best step for you. Relax. Try one thing. Then try the next thing.
It doesn’t have to be super complicated. I promise.
You don’t need to do it alone.
You don’t need to do it all at once.
You don’t need to (and probably won’t!) do it perfectly.
Find inspiration from what is working with these additional resources:
- Social Justice Funds and community foundations have been leading the way in participatory grantmaking strategies for decades, putting the decision-making power in the hands of organizers, rather than donors.
- INCITE has been calling out the problems of the non-profit industrial complex for over 15 years, with their book The Revolution Will Not Be Funded.
- Resource Generation organizes young people (18–35) to think differently within a frame of resource redistribution and reparations, not as “white savior” charity work.
- HalfMyDAF put out a call to folks with large Donor Advised Funds to payout half of their principle this year, since there are currently no payout requirements for this type of gift fund. (that could be a whole other article!)
- Individual donors and families are finding support from coaches (like me!), working them through the structural, emotional, and relational pieces of wealth redistribution.
Want to keep the conversation going? Comments and questions welcome here or on instagram.