Money, Scholarship and Policy : Scholars Debate the Influences, Results of Philanthropy

By using-tax deductible gifts to create institutions, especially universities and think tanks, the rich wield enormous influence over which ideas rise to prominence and become public policy, according to scholars engaged in pioneering studies of wealthy philanthropists.

When these scholars gathered the other day to debate “The Impact of Foundation Philanthropy on Society Here and Abroad,” they met, fittingly, in the shadow of Wall Street. (Partly because of surging stock prices, the number of American millionaires may reach 1 million this year.)

Much of the discussion focused on the alliance formed early in this century between the first of the big foundations and what at the time were emerging social sciences, especially economics and sociology.

Money and Scholarship

This alliance of money and scholarship fostered new ideas about how to deal with social problems, the speakers agreed. They also said that the successes achieved by medical researchers who relied on foundations for money blunted criticism of monopolistic practices, which men like John D. Rockefeller Sr. used to amass their fortunes.

“The most telling characteristic of philanthropy when conjoined to wealth is its potential to actively create the public agenda by directly producing the institutions capable of achieving that public agenda,” according to Paul G. Schervish, Andrew Herman and Lynn Rhenisch of Boston College’s Study on Wealth and Philanthropy, which is interviewing 125 millionaires about their giving practices.

“Wealth affords individuals the means for moving from being simply consumers of the social agenda to being producers of it,” Schervish and his colleagues wrote.

Schervish said that when rich individuals create institutions--from elite schools such as Harvard and Stanford to museums--Americans of lesser means get solicited to donate to sustain these institutions. In addition, the network of close ties between these tax-exempt institutions and government brings taxpayer moneys through grants and contracts.

“The small per capita contributions by middle- and lower-income groups for religious, political and social purposes may be conceived of as consumption activities . . . consumer responses to pre-established needs and goals,” Schervish said.

‘Produce’ Movements

Just as entrepreneurs start businesses with pools of capital, he said, “the philanthropic efforts of the wealthy are able to ‘produce’ social movements, political candidates, grass-roots organizations, low-income housing, hospital wings, science reporting on public radio, libraries, research projects, religious doctrine and the easing of hunger.”

Schervish spoke at the fourth Spring Research Forum, sponsored by the United Way Institute, an arm of the $2 billion-per-year federated fund-raising movement, and by Independent Sector, a trade association for major charities and the corporations and foundations that give to them.

The forum, conceived by Virginia Hodgkinson, director of the National Center for Charitable Statistics in Washington, has become the major conference for scholars examining America’s $200-billion-per-year nonprofit sector.

This year for the first time, Marxist scholars such as Schervish and Edward H. Berman, a University of Louisville education professor, were invited to present their views alongside those of mainstream thinkers like Barry D. Karl, a noted University of Chicago historian.

Different Interpretations

The Marxists and the mainstream thinkers expressed considerable agreement about facts and they concurred that, through charitable giving, the rich exert enormous influence in shaping public policy and values. But their interpretations of what this means for society were as far apart as--well, as the incomes of the rich and the poor.

Do the big foundations open doors of opportunity for millions of people, as Karl suggested, advancing society’s knowledge and wealth by supporting higher education and encouraging scientific research?

Or do the big foundations use their grants, as the Marxists argue, only to open those doors of intellectual inquiry that the rich believe will help them maintain their money and power?

Since the huge American foundations were created near the turn of the century by men such as Rockefeller and Andrew Carnegie two contradictory themes have characterized American views of foundations, according to Karl.

“Foundations have been viewed as both conservative supports of reactionary capitalism and as Trojan horses carrying left-wing ideology into the center camp of American free enterprise,” according to Karl. “They have been accused of fomenting revolution and suppressing it.”

Karl said neither image is correct. “I believe American historians and writers on social policy have a great deal of difficulty dealing with elites and theories of elite behavior (because) the word elite in American society is ugly and suggests anti-democratic values,” Karl told an audience that filled the Wall Street Room of the Vista International Hotel and spilled into the hallway.

The philanthropic behavior of the rich has long been neglected by historians, economists and other scholars, Berman, Karl and others agreed.

Foundations, Berman noted, have financed armies of social scientists studying the poor, the middle class, ethnics and other definable segments of American society.

No Study of Elite

But, Berman said, the rich have displayed no similar interest in financing studies of the “composition, activities and influence of American elites.”

To illustrate what he characterized as hostility by the rich and powerful to scholarly examination, Berman told a story about C. Wright Mills, the late sociologist best known for “The Power Elite,” his classic study of the rich.

Soon after the book came out, Berman said, Mills asked the Ford Foundation for a small grant to study how the rich shape cultural values through museums and other arts organizations.

Berman said the grant was rejected, according to notes preserved in the foundation archives, by an official who decided that the Ford Foundation “had absolutely no intention of risking the support of work that might prove (to be) another ‘Power Elite.’ ”

But Karl said that now some foundations and rich families are beginning to give scholars access to private papers that are crucial to serious historical research about philanthropic behavior.

Guy Alchon, a University of Delaware historian, said that “the rise of managerial capitalism and modern bureaucratic society” grows out of the alliance forged early in this century between big foundations and the then-new social sciences.

Alchon, who used to teach at UC Santa Barbara, said studies financed by the big foundations “emphasized technical and administrative solutions to economic and social problems.”

Like Karl, Alchon believes this alliance resulted in the American system of relying on private nonprofit agencies for social welfare programs that in Europe are largely functions of the state. And, he said, this alliance helped legitimize the power of the wealthy in the eyes of most Americans.

The Center of Changes

Karl, the University of Chicago historian, believes that foundations are at the center of changes in the historic relationship between people born to money and people whose principal asset is brains. Karl and Stanley N. Katz, a professor of law, liberty and public affairs at Princeton University, are writing a multivolume history about the early days of the big foundations.

The rise of industrialization, according to Karl, required “a hierarchy of skill, intellect and training (that) went hand in glove with more traditional hierarchies of birth and wealth.”

American business, Karl believes, requires a managerial elite of such enormous size that the rich have had to draw a much broader range of Americans into the realm of decision makers.

“There is no question that . . . foundations have been essential to the expansion of the numbers and the demographic composition of the nation’s leadership in public and private affairs,” Karl wrote in a paper titled “The Moral Basis of Capitalist Philanthropy.”

Berman, who chairs the Foundations of Education Department at the University of Louisville, interprets quite differently the role of foundations in the modern relationship between money and brains.

Berman argues that the wealthy have used foundations to create an educational hierarchy, with a few “centers of excellence” such as Harvard and Stanford universities that help co-opt the best and the brightest by creating privileged positions for them.

Most Americans, he contends, get schooling designed to make them productive workers but that does not impart critical intellectual skills. Berman said that this system ensures that most Americans outside of the wealthy class and the managerial elite do not develop ideas that could expand their political power and threaten the rich.

Berman argues that wealthy donors have perpetuated class differences in the way they funded black colleges in the South and established educational systems in the Third World.