As the following chapters of this book make clear, philanthropy in America and the wider civic sector that it generously supports and significantly empowers are thriving as never before in American history. In Part One, I have documented the many aspects in which philanthropy and the civic sector have significantly changed for the better since 1990, and my intention in doing so is to provide a solid context of credible specific examples that both chart the present course and suggest desirable continuing efforts to increase their present effectiveness.
I have deliberately chosen to provide that heartening context in order to help the reader view and assess my concerns—indeed my fears—about the possible consequences for America’s civic sector of the one major trend about whose wisdom I have serious doubts: the dramatic shift of donor preference away from accumulating wealth in presumably perpetual institutions—foundations that provide for America’s charitable and philanthropic needs both in the present and for the future—and instead toward spending such wealth primarily in the present. Part Three of this book focuses on those concerns in great detail.
To enable the reader to gain an understanding about how philosophers of philanthropy, government regulators of philanthropy, philanthropic practitioners, and knowledgeable observers have viewed the pros and cons of perpetual endowments, in Part Two I review the evolution of such thinking starting with 18th-and 19th-century Europe and England. I then move on to describe how this early thought manifested itself in philanthropic decision-making during 20th-century America.
This, too, provides a background for the decisions, starting in 1970s’ and 1980s’ America, that gave a strong and still growing impetus to the trend I just described: the rejection by philanthropists and foundations of employing presumably perpetual entities for deploying philanthropic wealth and the corresponding adoption of time-limited entities. This preference for time-limited philanthropy is most often referred to, in this book and elsewhere, as “giving while living” and “spending down.”
In the later sections of Part Two, I underscore how that change came to pass, what I think the dominant ideological and practical motivations were that brought it about, and why they very much concern me.
In summary, as described at much greater length later in the book, I think that a number of persons in philanthropy, animated by conservative leanings, seized on Henry Ford II’s resignation in 1976 from the Board of Trustees of the Ford Foundation and succeeded in making it an emblematic example of a major foundation’s departure from donor intent. Their focus on this story and, I would argue, their distortion of it have captured the attention of many prospective donors largely because of the prominence of the Ford Foundation. But the problem with this attempt to spin a morality tale out of a tangled bit of boardroom history is that the moral does not fit the tale, when accurately told. Put simply, it is logically impossible to have a departure from donor intent when, as in the case of the Ford Foundation, there was no concrete expression of donor intent in the first place.
Nonetheless, despite the shakiness of that example, those conservative-leaning individuals and groups proceeded to use Ford as an example of what is bound to happen to any perpetual foundation whenever a donor/founder passes from the scene. In my discussion of this sequence of events, I point out that, alongside several efforts to pin the “departure from donor intent” badge of shame on several perpetual foundations—attempts that, in my view, substantially failed in every case—those individuals and groups have also continued vigorously recommending to potential donors that they always include a clause in their foundation governing documents that permits their foundation to end its existence if the trustees decide to do so.
Why, one will ask, do these conservative-leaning individuals and groups have so strong an antipathy to perpetual foundations? Because their ideological inclinations have persuaded them that, irrespective of a founder-donor’s meticulous efforts to ensure the foundation’s fidelity to donor intent, any perpetual foundation is vulnerable to departure from that intent and, moreover, that any drift away from donor intent will be politically leftward.
The fact that many of America’s largest, most successful, most-admired foundations are not characterized by any such departures from donor intent has not seemed to deter such opponents of perpetual foundations from continuing to believe as they do nor deterred them from opposing the creation of perpetual foundations. Nor does the continuing record of important achievements by such American foundations over more than 100 years dissuade them from waging their war against philanthropic perpetuity.
To be sure, the creation of doubt about presumably perpetual vehicles for philanthropic giving, based on the claim that they are vulnerable to drift away from donor intent, is only part of the explanation for the growth in the number of donors who today are choosing to give all their wealth while they are alive or soon after their death. Many donors who choose “philanthropy today” rather than “investing in philanthropy for tomorrow” are undoubtedly doing so out of an overwhelming conviction that the urgent problems of today merit as many of the philanthropic dollars available today as possible. I believe, however, that the successful effort to discredit the presumably perpetual vehicles has operated to cause many donors to dismiss perpetuity entirely and opt instead for a default position of “philanthropy today.”
If the arguments by those who hold anti-perpetuity positions continue to dissuade prospective foundation-founders from endowing new perpetual institutions, as they appear increasingly to be doing, America will be at risk of losing its capacity to continue facilitating the birth and nurturing of the kinds of high-quality civic-sector organizations that have helped make this country the dynamic society that it has long been. It will have lost the source of financing for America’s “passing gear,” as the Ford Foundation’s pioneering urban grantmaker Paul Ylvisaker called it. That would be a terrible loss indeed—for America and for the world!