As this history has shown, philanthropy in the United States is not simply the consequence of a universal altruistic impulse; it is also a product of the large organizational revolution that American managerial and financial capitalism orchestrated in the last century and a half.1 Adam Smith made the case for universalism in the opening of his classic The Theory of Moral Sentiments by observing: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”2 For this Scottish founder of modern political economy, this altruistic vision encompasses “the greatest ruffian, the most hardened violator of the laws of society” as well as the ordinary citizen. That American giving on a large scale reflects altruism, there is no doubt. But Americans of different wealth and culture have turned a universal desire to do good into a distinct brand of philanthropy. They have learned to turn market profits and market methods into a philanthropic engine powerful enough to influence the course of their history.
One way to appreciate the novelty of philanthropy in America is by turning to those pioneer anthropologists who, a century ago, observed giving in small surviving nonmarket societies in order to gain a glimpse of an alternative to profit-making. They generated an influential discourse on giving. Columbia University anthropologist Franz Boas investigated the potlatch among American Indians of the North Pacific coast. Bronislaw Malinowski contributed his studies of free and reciprocal giving (or kula) in the Trobriand Islands. Marcel Mauss, in a landmark synthetic essay he wrote in 1923 entitled The Gift, portrayed the ritualistic and reciprocal exchange of gifts his colleagues had discovered as the “total social fact” of archaic societies. Mauss went on to contrast this archaic giving with selling in modern market societies. After positing the gift as the main form of economic, social, and cultural exchange in a world very different from ours, Mauss explained that the Greeks and the Romans were first to distinguish between a sale and a gift, and to insist on treating a sale as a contract subject to the rule of law and a gift as a moral obligation.3 This dichotomy was adopted by Christianity and remained dominant in Western civilization until such time as the Americans invented modern philanthropy.
Americans have come to think of philanthropy not as a gift only, but also as an investment. Late nineteenth-century Americans who made large fortunes were the first to openly combine the ideas of managing the market and giving in a single mechanism geared for social progress. That money needs to be available before it can be given is obvious; the innovation lay in bridging the gap between a transaction in which you act for profit and a gift, in effect merging in various proportions the two activities. Having inherited a critical distinction between profit-making and giving, inscribed in law and custom, they have made the two behaviors organically dependent rather than outcomes of opposite impulses, as Adam Smith implied.4
The innovation was not limited to rich philanthropists. Broad participation gave philanthropy its democratic imprint in America. While the wealthy have invested their fortunes in large foundations, Americans of modest means have financed their own institutions of philanthropy from surplus income, also the product of capitalism. These two kinds of institutions both oversee their endowments and manage their activities with techniques learned from for-profit corporations, a distinguishing mark of American philanthropy.
In other words, American philanthropy is not a matter of the rich helping people in need, but of people, rich or not, providing for their own future. American philanthropy contains a very important and motivating element of frank self-interest. Donors themselves gain when their contribution leads to a cure for a common disease or when it provides them access to better cultural amenities.
In attempting to characterize American philanthropy, Alexis de Tocqueville’s grasp of the relationship between interest and altruism remains an essential starting point. Tocqueville saw in American life the application of Smith’s humanity to market forces. Instead of merely concluding that all human beings have a generous impulse, he uncovered the means Americans have used time and again to turn generosity to their advantage. He labeled the mechanism “self-interest properly understood.”
It took Tocqueville some time to establish a positive connection between “self-interest” and collective betterment. In his travels, he at first saw people fending only for themselves everywhere he turned. “Private interest rears its head here constantly, reveals itself openly, and proclaims itself to be a social theory,” Tocqueville wrote disparagingly to his friend Ernest de Chabrol from New York in 1831.5 But he later changed his mind and posited instead an “enlightened love” of oneself that leads Americans to “sacrifice a portion of their time and wealth” to public affairs.6 Using language inherited from the political philosophy of the eighteenth century, Tocqueville speculated that in America, “interest” had replaced “virtue” as the motivation for working for the common good. Turning self-interest into a benefit for all, Tocqueville argued, was a positive development for civilization because as an impulse, it was in much greater supply than virtue. Tocqueville applied this concept to explain the development of associations in America. Here was a joint enterprise to which people could adhere freely, and help themselves while helping others.
Tocqueville’s formulation may be even more applicable to philanthropy, as we have described it in this history, than to associations. Tocqueville could not anticipate it, but mass philanthropy, with its army of volunteers raising money in American neighborhoods year after year to help solve some of the larger problems of the country, is a constant reenactment of self-interest properly understood. Individual Americans return to society some monetary gain with the motivation that it might benefit them in the long run. This same idea can also be applied to American philanthropy abroad. In participating in the vast expansion of American influence in the world, philanthropic institutions have been constrained by Realpolitik, especially in times of war, but they have explicitly invested in global welfare.
Although philanthropy operates on a much smaller scale than government, the resources available to foundations and broadly supported organizations are large enough that continual debate about the proper relationship of government to philanthropy has become a distinctive feature of American society. Generally speaking, the federal government wants to encourage philanthropy, but it also wants to control it, and this has repeatedly led to friction. The government feels most comfortable when philanthropy adheres to “charitable” purposes, an adjective still used in the tax code to characterize philanthropic and nonprofit institutions, not only because it is inherited from their early identification with the church but also because it reflects the lesser range of activities the state is willing to subsidize. The government is less at ease with philanthropy’s entry into the realm of policymaking, and has proven most hostile to its efforts at advocacy, seeing its own prerogatives challenged directly. Given the sweeping goals of American philanthropy, this conflict has been played out over and over again.
In accordance with the constitutional separation of church and state, American philanthropy has also largely been ecumenical if not secular. Many Christians have had no trouble supporting a broadly defined philanthropy with aims that may even be at odds with their religious tenets. After John D. Rockefeller III, a liberal Protestant, created the Population Council to promote birth control around the world, Henry Ford II, who had converted to Catholicism when getting married, surprised Ford Foundation officers by authorizing its support.7 Churches have generally looked to find common cause with secular goals, adapting their activities to the secular philanthropic model, if only to benefit from grants from the U.S. government. Catholic Relief Services and federated Protestant charities have acted not as missions but as humanitarian institutions combining taxpayer money with their own for carrying out modernizing projects in many theaters around the world. Conservative Christians, however, have resisted this trend; Howard Pew, a large donor to evangelical causes, participated in the politics of philanthropy at midcentury with the goal of stemming the secular tide. In his view and that of others since, proselytism and good works need to go hand in hand.
How much of a contribution to American democracy at home and abroad philanthropy is likely to make in the future is of course a matter of speculation. Before the 2008 collapse of financial markets, economists predicted a massive intergenerational transfer of wealth from the baby-boom generation in the coming years, much of it going to philanthropic causes.8 The amount of giving is now likely to be less. Economic setbacks always generate the fear that philanthropy may dry up or may be inadequate to the challenges faced. This was the case during the Great Depression when President Hoover unsuccessfully called philanthropy to the rescue, and it has been widely feared that the Great Recession might have the same result.
But philanthropy is deeply entrenched in the American political economy because it draws on values that Americans claim for themselves in otherwise compartmentalized parts of their lives: a commitment to profit-making but also to social justice; a respect for individual freedom and a strong sense of community. The routine of philanthropy depends on the exercise of skills in business, organization, law, and outreach, skills that many Americans train for and in which they excel.
Big-money philanthropy in America has found new leaders, who express little doubt about their ability to deliver. Spearheaded by Warren Buffett and Bill Gates, forty American billionaires publicly announced on August 2010 that they would give at a minimum half of their fortunes away during their lifetime or after their death.9 The list is growing. Had the announcement come in the days prior to Tilden and Carnegie, it would have been important for these super-wealthy Americans to make their donations while alive in order to avoid strictures limiting bequests to narrow goals inappropriate to such large sums. That this is no longer a concern is another sign that there are in fact few restrictions left on the magnitude of the tasks philanthropists may undertake. But unlike John D. Rockefeller III in the 1970s, who was active in organizing the nonprofit sector as a whole, Buffett and Gates are talking primarily to their peers.
Equally as important as the club of billionaires is to the future of philanthropy are the contributions Americans of modest means channel through mass appeals that have so often worked in sync with large donations in the prosecution of the American Century. In times of emergency, the generosity of Americans always makes the headlines. Witness the outpouring of money following 9-11 or Katrina or the Haiti earthquake. A more difficult question is whether the mass of Americans will recognize, in the consistent and regular giving they have practiced in a civilization of abundance, a trait that continues to define them as Americans. If there is a lesson from the history I have told, it is that philanthropy enlarges democracy when it is an activity in which the many participate.