Another Incisive Critique of Venture Philanthropy

This post is about today’s venture philanthropy, a world so foreign to most of us that I think we need a frame to help us get our bearings.  Here with some familiar principles is the gifted preacher, and longtime pastor of New York City’s Riverside Church, the late Rev. William Sloane Coffin:

“The way we are cutting taxes for the wealthy and social programs for the poor, you’d think the greedy were needy and the needy were greedy.” (CREDO, p. 61)

“One of the attributes of power is that it gives those who have it the ability to define reality and the power to make others believe in their definition. Thus it is that private property in America has come to be considered all but sacred. Obviously this makes its redistribution difficult, even through taxation.” (CREDO, p. 60)

“Given human goodness, voluntary contributions are possible, but given human sinfulness, legislation is indispensable.  Charity, yes always; but never as a substitute for justice.” (CREDO, p. 56)

These statements speak to the operations of today’s mega-foundations, the recipients of the fortunes of the super-rich.  Donations to philanthropic foundations are tax-free, the counter-democratic idea being that the rich can define, with the assistance of the staff they employ, what’s good for the rest of us. These days mega-foundations are defining the “solutions” to some of the world’s greatest challenges—global agriculture, global health, and in our own country, public school reform—in ways that many of us do not understand.  Foundations are defined as charities, but increasingly they influence the legislation that shapes our primary institutions and they drive the policies of international agencies like the World Health Organization.  According to Lindsey McGoey’s new piece in the fall Jacobin magazine, The Philanthropy Hustle, they blur the lines between between charity and business.  McGoey’s subject is the Bill and Melinda Gates Foundation, the world’s biggest philanthropy, whose endowment is $42 billion, and which every year makes grants of $3 billion.

“(M)ore and more, corporate philanthropy is not about corporations giving money to charity,” explains McGoey. “Corporate philanthropy today is about private, tax-exempt donors such as the Gates Foundation giving their charity to corporations.”  McGoey continues: “(I)t’s not true that foundations must direct grants only to charitable entities.  They are free to offer donations to for-profits that fulfill the foundation’s charitable mission—an extremely permissive criterion that donors such as the Gateses are interpreting in novel and unprecedented ways.” Much of McGoey’s  discussion is unrelated to education—the Gates’s Foundation’s gift of $11 million in 2014 to Mastercard to create a wireless payment system in Kenya—gifts to international organizations that encourage the use of expensive hybridized seeds in the developing world, seeds that may be unaffordable for farmers.

Then there are the “gifts” to for-profits that have been shaping what has become understood in the United States as “corporate education reform.”  “In 2010, the Gates Foundation offered $1.5 million to ABC News and a little over $1.1 million to NBC in 2011 ‘to support the national education summit.’  The following year, the Gates Foundation gave another million to NBC, this time for the more vague purpose of ‘inform(ing) and engag(ing) communities.'”  McGoey reports that in 2011 the Gates Foundation granted Scholastic $4,463,541 to support “‘teachers’ implementation of the Common Core State standards in Mathematics.” Gates donated $817,468 in 2012 to, a large on-line tutoring company that charges school users for its services, “to create an ‘on-demand’ professional development system geared at math training for middle and high school teachers.” Gates has granted more than $3.5 million to BetterLesson Inc., which “circulates free online lesson plans to teachers but charges schools a service fee.” All of this is justified because these services are said to help teachers implement the Common Core Standards across the nation’s public schools, a Gates priority, but at the same time Gates is directly supporting the bottom line of these businesses.

McGoey wonders whether all this matters: “Obviously, a number of Gates Foundation’s grants have directly benefited private companies, their management teams, and their shareholders.  The question is, even if this contravenes IRS private benefit rules, does it really matter?  On the one hand, the money going to for-profits is a lot less than grants geared to non-profit organizations—the foundation has given away over $33 billion to date, and the vast majority has gone to non-profits.  On the other hand, it’s not just about the money—it’s the precedent.  If a grant to Scholastic or Mastercard can be justified as charity—then why not a tax-deductible donation to Goldman Sachs or News Corp or Monsanto?”

McGoey concludes her piece with a hundred-year-old warning from the Guilded Age about philanthropy’s limitations: “‘I can conceive of no greater mistake,’ commented William Jewett Tucker, a theologian who went on to to become president of Dartmouth College, ‘than that of trying to make charity do the work of justice.'”

I encourage you to read McGoey’s article.  Here are posts on this blog on the subject of the Bill and Melinda Gates Foundation.

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