Philanthropy and the Social Contract

Philanthropy and the Social Contract

In this last article on what nonprofits need from philanthropy, I want to address philanthropy and the social contract. It is a time for frank conversations about the limits of philanthropic wealth, power, privilege, and the need to focus on strengthening the fabric of our country. If philanthropists pretend that their obligation is only to do good, as they imagine good, and not connect the dots between government, nonprofits, and the people that make up our society, then they miss the biggest impact that they can make.

I am not a philosopher, historian or a political scholar so bear with my oversimplification. One could argue that the basis of our constitution is a social contract between “we the people,” and the government that was created.  The theory is that in a stable and orderly democracy, the people support each other and support the government through voting, paying taxes, serving our country, and obeying its laws. In return, the government maintains egalitarian public policies, support the commons, and provide the opportunity for all to pursue life, liberty, and happiness.  Through the social contract, we the people can be assured that the government works to support civil rights, strengthen the economy, infrastructure, environment, schools, healthcare, and arts and culture (to name but a few). 

This article is the last in a series on what nonprofits need from philanthropic grant-making organizations (see here).  I will be blunt.  Nonprofits need philanthropy to fight to preserve and strengthen the social contract between the people and the government.  As I wrote in my last article, social movements are about the people and the role of philanthropy is to bring the leverage (see here).  In this post, I want to unpack the leverage that is needed now.

When the economy nearly imploded in 2008 – 2009, the Darwinian impact on nonprofits was large and continues in some measure even today.  While our economy has largely recovered, there continues to be lingering insecurity across many parts of the social sector.  Then, early this year, the newly elected administration, supported by a bulletproof Congressional majority and a thin Senate majority began the process of rewiring public policy through laws, executive orders and restructuring and dismantling many Federal agencies charged with supporting our communities. 

Now those of us who have been around since time when Gil Scott Heron recorded Winter in America, we understand that seasons change and some of those changes are colder, harsher and longer than others. But there is something different in the air. It seems like we are entering into a perpetual winter, where there is an intentional attempt to dismantle the social contract that holds our democracy together.  Make no mistake about it, public policy and the gutting of federal agencies is not about right and left and how far one direction, or the other that are we going. Public policy is no longer simply about politics, but it is also about undermining the fourth estate of journalism, empowering the fringe movements on the right and left, exaggerating the growing wealth inequity, and it is about deepening the urban, rural, racial, and cultural divides. In short, it is about hollowing out the core of this nation. We can pretend that it is not happening and that the dots are not connected, that this is simply “a new normal,” but if we fail to address the preservation of the social contract straight on, then we will fail many who are counting on us. 

Nonprofits are doing their part. As I have written (here) nonprofits are acting courageously, absorbing new work (often unfunded), they are expanding already stretched service provision, and they are looking for new ways to collaborate.  They need help because the social contract is owned by all of us.  I believe that wealth driven philanthropy has an important role to play. In addition to what I have written about in the past few articles, wealth-driven philanthropy needs to go deep within and confront its privilege and act accordingly.  Here are four big starting place ideas.

Invest in Communities Not Initiatives: Wealth-driven philanthropy is good at starting initiatives bannered by catchy slogans.  But we don’t need another paternalistic initiative (see here).  We need to rebuild trust and community. Initiatives pit nonprofits against each other in artificially forced choices.  We fund racial equity or programs to help seniors age in place.  We fund poverty reduction or education.  We fund food systems work or we fund transition services for foster youth.  What we need are philanthropic strategists willing to invest in communities. The need is even greater in rustbelt and rural communities. Research groups like Lincoln Institute of Land Policy, the Aspen Institute, and the Project for Public Spaces are pioneering models of community change from urban to small cities, to rural communities.  While initiatives last until philanthropic ADHD sets in, building communities is a long-term investment. A focus on whole systems and communities builds social fabric, and that should be the target of “big” philanthropy.

Defend the Johnson Amendment and tax breaks for philanthropy. I know that these are two areas where many foundations are already working and that the Council on Foundations is leading the charge.  At one level preserving tax breaks for philanthropy might appear to be esoteric or self-serving. However, if the Johnson Amendment is shattered, and if the tax write-off for philanthropy is eroded, public and private capital blur. The social safety net frays and the integrity of many nonprofits will be undermined as “blurring capital” opens the door further to the privatization of the social sector –which for-profit prisons and for-profit schools remind us is not always a good idea.   If there are a politicization and privatization of the nonprofit sector, the safe space of community cohesion and mission that is represented by the nonprofit sector will be torn. It is the voice of power mobilizing to speak to power, where philanthropy can influence public policy and leverage community voice. Vernon Johns, Baptist preacher and civil rights leader is attributed as once saying, “If you see a good fight…get in it.”  Preserving the integrity of the social sector is a fight that philanthropy must take on and stay in until the end.

Plan your demise. At this moment in time, when wealth inequity is threatening the stability of our nation, wealth-driven and endowed philanthropy will find it less and less defensible to argue the benefits of sitting on billions of dollars of wealth in perpetuity. As noble and transformative the Ford Foundation appeared when they committed to dispersing $1 billion over ten years for mission-related investments, the echo is muted when one considers that the Foundation will still sit on top of $11 billion in assets that will continue to grow during that same decade. When wealth inequity is one of the largest wedges seeking to split the social contract of this country, endowed philanthropy must confront the issue of their privilege in ways that are both philosophical and practical. More money must be invested from endowed philanthropy and endowed foundations must commit to a lifespan.

We need wealth-driven philanthropy and endowed foundations to accelerate their demise. The Urban Institute laid out the motivations, experiences, and strategies for the concept of limited life foundations back in 2009 (see here). We also have the leadership of Atlantic Philanthropies who have been modeling the way since 2002 as they progress towards spending down their endowment by 2020.  The wealth that is locked up in endowed philanthropy and is trickled out as a 4 or 5% excess each year is not enough. While we hear this debate in the rarified environments, of hotel conference rooms at annual philanthropic gatherings, the message needs to hit the streets. This is not a debate about “funding more programs” but it is a discussion about deploying assets as a strategy to strengthen the social contract, promote wealth equity, and build community support.  Wealth equity must become the dominant strategic lens of philanthropic practice.

Fight for Bipartisanship – Being partisan or nonpartisan is no longer good enough in this environment.  There was a time when philanthropy could sit on the sidelines and the impartial centrists, neither right nor left.  Back in the day, while there would be policy swings based on which political party had the majority at any given time, philanthropists could trust that there were a set of core values that defined the social contract.  Philanthropy could depend on the fact that reducing poverty was a goal of the entire political spectrum. Ensuring that people had access to healthcare, safe drinking water, clean air, and high-quality public education were not social issues owned by just one party.  There was a time when there were bipartisan solutions were forged for environmental policy, welfare reform, and public education. Both parties had to give and take. Today, however, these fundamental agreements are being called into question.  Public policy has become a weapon, and the collateral damage in the very partisan war, are those most vulnerable in our communities. 

Wealth-driven philanthropy must engage aggressively in political debate.  It is no longer sufficient to be bystanders. Philanthropists must be mediators who demand a return to bipartisanship in support of our democracy’s social contract.  Back in the spring, philanthropists, here in the Pacific Northwest, took a bipartisan approach to Capitol Hill visits (see here).  We need to see this approach replicated, magnified and intensified. If we are going to return to what some politicians call “regular order” then philanthropy needs to push for bipartisanship, not nonpartisanship.

If these four ideas were embraced by philanthropy today, we would bend the arch of our nation back towards justice and social stability.  Individuals are activated and engaged. Nonprofits are working harder and smarter than ever before and many in the world of philanthropy are doing more as well.  But as I have been arguing for over a year, now is the time to dig deeper, be reflective and act courageously, strategically, and offensively because the stakes are getting higher.

As always, your thoughts are welcome.



Photo Credit: Shon Ejai

Mark Fulop
Mark founded Facilitation & Process in 2009 to help organizations and communities bridge the gap between where they are today and where they want to be tomorrow. He’s led dozens of Portland nonprofits, government agencies and philanthropic organizations through complex change initiatives including strategic planning, revenue planning, board development, collaboration, and facilitation.