Foundations Exist to Fuel Capitalism
So let's stop repeating the lie that they're about philanthropy
Lately, we’ve been talking about money — and especially about the ways that money interacts with us and our communities. And today, we’re going to focus on how money relates to institutional “philanthropy.”
Do hard-to-acknowledge truths make you clutch your pearls? Just beware that you may feel that urge, as this discussion unfolds….
For You: Today’s Main Course
I’m not trying to be controversial with today’s title.
I do know it might attract eyeballs.
But really, I’m just saying something honestly that doesn’t ever get said honestly: foundations today exist to fuel capitalism.
This may sound controversial.
But if you look at the facts, it’s just true:
Money placed into a foundation earns a tax break: this means that, right at the outset, money given to a foundation is starving the public sphere of a huge influx of resources that could be dedicated to the common good
Foundations then invest millions, to billions, in the stock market: the essence of a foundation is its corpus, which is nothing more than money invested in for-profit ventures — primarily the stock market — even though it’s billed as “philanthropic dollars”
The 5% law is treated as a ceiling, rather than a floor, by foundations: the Tax Reform Act of 1969 established that foundations needed to pay out a minimum of 5% of their investment corpus every year for “charitable” causes — a figure established as a floor, originally… but which, in practice, is now routinely and widely treated as a ceiling by foundations
A foundation’s 5% spend includes the operating expenses of the foundation: all the operational expenses of a foundation are deemed “charitable” by law, which means that those expenses (or overhead) are counted as part of the 5% charitable spending minimum (while, interestingly, they often demand minimal-to-poverty-level amounts of operational overhead for the organizations they fund)
SO: nearly 100% of the basis of a foundation’s existence is dedicated to fueling the stock market: given the above realities, a foundation is not even remotely about philanthropy (love of humanity), but instead about investing in, and fueling, a capitalism that extracts labor from humanity (for as little monetary and other compensation as possible); extracts resources from our shared Earth (while seeing any regulations aimed at protecting and sustaining those natural resources as speed bumps on their race to profit); and treats the accumulation of capital, monetary wealth as the ultimate good (rather than the well-being of the human and natural worlds that we all exist within, and that, frankly, enable any of it to exist at all)
Trickles to the community are an effective and paper-thin mask: an organization avoiding tax (contributions to the public common good); fueling enterprises that extract-value-from-and-never-return-value-to humanity and the natural world; and valuing money above all else would not engender much good will; so somehow, foundations have managed to put on the paper-thin mask of “philanthropy” (or less than 5% of what they actually do with the resources under their stewardship)… and convince the world that the mask is who they are
Isn’t it so clear, when you look at it this way?
Foundations exist to underwrite and fuel capitalism.
And capitalism has never pretended to prioritize communities.
Inside capitalism, people and the natural world are only “resources” to be “used” — and drained of value — in order to create a profit for a corporation and its investors. Profit (or accumulation of excess money) is the ultimate good, in this world.
And thus, fully invested in capitalism as they are, we have to assume the following about foundations: excess money, extracted from and held apart from human and natural communities, is the ultimate good for foundations.
Even Their “Philanthropy” Doesn’t Serve Communities
As we’ve discussed before, even when foundations are purportedly “doing philanthropy,” there’s not much that is truly philanthropic in their actions.
We’ve had the people of Minneapolis giving all they can for weeks now.
Giving all they can — perhaps from funds they used to use for going out to eat or other entertainment. Sacrificing some of their own needs to help their neighbors meet their needs. Emptying their savings to make sure their community can survive.
And it’s still not enough to meet the need.
Meanwhile, individuals and organizations sitting on literally billions worth of capital — people for whom meeting the actual monetary need in Minneapolis would probably seem like a drop in the bucket — are giving next-to-nothing.
Given that I’ve now spent nearly two decades working within the world of professionalized philanthropy, I’ve almost felt like I needed an interplanetary passport, to be embedded here in Minneapolis’ mutual aid networks.
The money just flowed — wherever it was needed.
From neighborhood to neighborhood, those of us in Minneapolis were living in deeply networked, interdependent, mutualistic, reciprocal, solidarity-driven, responsive community with each other.
An ask would come through via Signal. Sometimes it was directly from our own neighborhood, but even more often, it had been passed on from other neighborhoods.
✨I could almost see the asks flitting from phone to phone throughout the city, like glowing, magical fairies.✨
Those who received them usually either 1) contributed whatever funds they could, and/or 2) passed the requests on. And then, time after time after time, reports would work their way back through the networks: NEED MET! NEED MET! NEED MET! Again and again and again.
Do you see how the flow of attention and energy is completely flipped, in this model, from how foundations function?
Amidst Minneapolis’ mutual aid:
An individual or family in the community would have a need
That need would be communicated from them to those who could help
Those who could help would respond to the need
The need was met
In contrast, in the world of foundations:
A foundation determines what it will fund, often with extensive and (this is important to say) internally-focused strategic planning
The foundation then determines who will be eligible, and how they will prove their eligibility in order to even be considered for funding
Those seeking funding then have to spend many hours, and many dollars, jumping through the hoops the foundation has laid out
Those who are best at compliance with the foundation’s parameters will get funding (which, again, this is important to say, is usually whoever has the most ready resources of time and money to jump through said hoops)
Those best at compliance don’t necessarily have their needs met; they instead have some resources, with often massive amounts of red tape and limitations, that they need to try to manipulate somehow to at least partially meet their needs
Meanwhile, those who don’t excel at compliance are left in need
And the needs of the community are only marginally met, if at all
And having experienced both worlds, I can tell you this unequivocally:
Minneapolis’ mutual aid is philanthropy.
A foundation’s business is not.
Money Is Made to Move, Not Stagnate
As we’ve been discussing here, the whole purpose of money is to serve as an easier means of us trading value for value, in this world:
Money is just a tool we humans invented, at some point, so we didn’t have to carry around eggs or live animals or other large items, to trade with others to meet our needs. Money was supposed to make exchanges within our economies simpler.
Money is made to move.
In trade.
In exchange.
To help.
To compensate.
Money stands in for value, so that when we value something, we can trade money for that thing, and the person who we gave that money to now has something to trade for something else that they value.
Money in and of itself has no true value. Most money is compositions of relatively common papers or metals. And these days, money is more often simply a series of ones and zeroes on a screen.
And yet, somehow, we’ve managed to create a reality in which we think it’s normal to hoard that money in a corpus that is systematically stripping communities of all their most true and real value… and not actually returning any of that value to them.
The money just sits there — hoarded, stagnant.
But it’s not only just sitting there.
Even more, it’s primarily — and actually — fueling the machinery of capitalism that has been creating problems in communities for generations now…and has thus created the need for philanthropy in the first place.
So to recap, to make sure we’re all clear here: not only is institutional “philanthropy” not actually meeting community needs…
… but it is fueling the forces that continue to increase them.
Make it make sense.
If we want money to be the medicine that it has the potential to be, these foundations will need to stop hoarding it… and start moving it. Twenty-five percent of the corpus per year. Forty percent. Sixty percent. Even one hundred percent of the resources they’re stewarding should be divested from these investments… and re-deployed in ways that actually meet the needs of our communities.
This week, I met a foundation leader who is doing just that.
Glen Galaich of the Stupski Foundation, speaking at the We Give Summit brilliantly put on by Philanthropy Together, sounded like I’ve never heard a foundation leader sound.
He talked about breaking rules that were never real. He talked about completely re-deploying his foundation’s corpus into investments that were community-supporting. He talked about spending down the corpus. He talked about how much wealth insulates you from actually understanding community needs. He talked about how much CONTROL has been adopted as a primary tool of foundations’ “philanthropy.”
And his book by that name — CONTROL: Why Big Giving Falls Short — is on its way to me as we speak. I can’t wait to read it.
You can look forward to me discussing Glen’s writing and ideas more here, in the weeks and months to come.
And in the meantime…
… I’m asking you to reimagine your view of and relationship to money. Do you love it? Why? Do you hate it? Also why? Where do you want to hoard it? Where do you let it go maybe a bit too easily, for things that you don’t really value? How have you projected your own meaning onto money?
Consider these things.
Because we can’t change what we are not conscious of.
So.
Let’s get conscious.
Community-Weaving for Fundraisers
We kicked Community-Weaving for Fundraisers off this week… but it’s not too late. YOU should join us!
Your community is waiting for you!
Advice when you need it. Been-there, done-thats. Commiseration. Support. A place to vent. Guidance and mentoring.
All of this, and more, is what I anticipate happening at Community-Weaving for Fundraisers. Just community-based fundraisers. Gathering for (virtual) lunch together. Twice a month. Year-round. Chatting and supporting each other via WhatsApp in between lunches. Being there for each other.
All you need to do is show up, and be present… while I guide, facilitate, organize, and create the container.
Conversation: Your Response
Got more to say? Visit the comments section!
Check out these previously published episodes of the For the Love of Humanity Podcast!
I’m not saying but I’m just saying that, despite how much of a folk hero he is, Vu Le’s episode on the For the Love of Humanity Podcast has not been the number-one-downloaded since it aired.
That honor has belonged to The Nonprofit Industrial Complex Must Be Composted, since it first aired. That one obviously hit a nerve with y’all!
But…
Slowly but surely, Vu’s episode — Vu Le Enters His Elder Era: Wisdom Incoming! — has been gaining downloads… and it is now TIED for first.
Will Vu pull ahead??
Only time will tell.
Other good episodes to check out right now, before the next episode airs:
Philanthropy’s Final Frontier: Time to Go Deeper Together
Why Does Fundraising Feel So Bad?
Practice: Make It Yours
Let’s practice giving and receiving with FLOW, not control.
FIRST:
In the next week, pay extra-close attention to everyone around you. Be on the lookout for someone in need, in some way. As soon as you see a need, move to meet it. No second-guessing. No pause to reconsider. No “oh, someone else will help.” Just help. As soon as you know of the need. Then reflect on how that feels.
THEN:
This one is very likely the harder part. In this coming week, practice receiving help. And related to that, you may need to practice asking for help too. Actively nudge yourself out of the “I’m all good, no thanks” mode… and open yourself to the “Yes, that would be lovely” mode. Ask. Receive. And then reflect on how that feels.
If we all regularly practice both of these skills, we will be living in a whole different world together, mark my words.
Inspiration: Wisdom to Mull Over
The further up you go in the wealth spectrum, the further you get away from proximity to communities. And those folks dominate private foundation boards. So the question is: are they engaging in public stewardship… or private stewardship?
- Glen Galaich at the We Give Summit
For the Love of Humanity is an online community made up of, and generously supported by, its readers and listeners (like you).
Why become a Supporting Subscriber?
➡️ Receive a Loveletter like this or a podcast episode every Friday. ➡️ Participate in Asynchronous Content Club in the Substack Chat! ➡️ Listen to Morning Meditations every weekday in the Premium podcast feed. ➡️ Join monthly Fire Circles, via Zoom, to share stories and community. ➡️ Affirm and invest in the value of philanthropy in your life. ➡️ Provide the financial support needed to make this project possible!
Find For the Love of Humanity elsewhere and join us there too!
➡️ LinkedIn | Facebook | Instagram | Threads | BlueSky ⬅️
Such a powerful take. What would happen if every foundation committed to a 10% draw down for the next five years? If it feels scary, they could continue current ways for the first 5% and use the next 5% for true trust-based philanthropy. That’s world changing.
Wow. What a great contrast to communicate! I am still in awe thinking about what you all did in Minnesota! 5% is insane! They should always to looking at how to deploy their assets quickly and effectively and FULLY!