January 9, 2011 | Read Time: 4 minutes
Much of what is taken for granted in the nonprofit world today was still coalescing a century ago. The great industrialists of the post-Civil War era, including John D. Rockefeller and Andrew Carnegie, were in their philanthropic prime by 1911, and that helped spark a boom in giving.
American cities were growing rapidly, thanks to immigration from Europe and people relocating from rural areas to find work in factories. The changing demographics led to huge interest in fraternal and service organizations, as people looked for community amid all the flux. Rotary International, Kiwanis International, and Lions Clubs International were all founded between 1905 and 1917.
The power of the federal government was also growing, especially after 1913, when the income tax was created. Membership groups like the National Association for the Advancement of Colored People, the Anti-Defamation League, the Order Sons of Italy in America and the Association of the Sons of Poland were created between 1903 and 1913, in part so that their members could have a collective voice.
“People needed a way of influencing government,” says Peter Dobkin Hall, a historian at Baruch College. “They couldn’t do that unless there was growth in the number of national organizations.”
Churches began to create separate charities to assist the poor rather than providing social services themselves, amid a push for the professionalization of social work. Catholic Charities USA was founded in 1910.
“The priest who straightens out wayward boys is in the past by this point,” says Leslie Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University. “‘Scientific charity’ came along, with the idea that charitable activities are good, but they have to be done well. A kind heart is no longer enough.”
The very design of some of our largest nonprofit institutions today—art museums, research universities, medical centers—was being worked out a century ago.
“It was a creative period in defining institutions,” says David C. Hammack, a historian of the nonprofit sector at Case Western Reserve University, in Cleveland. “Now the question is no longer, ‘How should we define the art museum?’ but rather, ‘Can we get one for Phoenix?’ It’s more a story of development than invention since the 1920s.”
Early Innovations
Two innovations in giving took root in Cleveland, which was booming at the time thanks to its manufacturing industry. The first community foundation in the country, the Cleveland Foundation, was founded in 1913. From the very beginning, it took on a role for which many community foundations are known today—the foundation hired experts to conduct surveys about the city’s needs in areas such as welfare, education, and recreation.
Also in 1913, Cleveland created the first Community Chest, which collected donations from local businesses and distributed them to local charities and projects. The idea spread around the country and was eventually given a new name: United Way.
No ‘Knockout Punch’
The current vogue of the rich pressuring the rich to give away their fortunes also dates to this period. Both John D. Rockefeller and Andrew Carnegie encouraged other tycoons to follow their model and give most of their fortunes to charity rather than leaving it all to their heirs.
“The role that Rockefeller and Carnegie played back then Gates and Buffett seem to be playing now,” says Alan J. Abramson, a government professor at George Mason University, referring to Bill Gates and Warren Buffett’s “giving pledge.” “They spread the notion that the duty of the wealthy is to care beyond the corporate suite and to take a larger view of their roles in society.”
Rockefeller, Carnegie, and the Russell Sage Foundation, founded in 1907, also promoted the idea that science could be used to solve social problems. That innovation—the idea of getting at the “root cause” of problems—is one that William A. Schambra, director of the Bradley Center for Philanthropy and Civic Renewal, believes has led philanthropy astray.
The notion of finding root causes led Carnegie and Rockefeller to support eugenics, or the use of practices to improve the gene pool. Eugenics was popular at the time but became discredited after being associated with Nazi abuses, including human experimentation and forced sterilization.
The quest for root causes is one that Mr. Schambra believes captures philanthropists in every generation.
He points to the Bill & Melinda Gates Foundation’s efforts to improve high-school performance by helping to create smaller high schools as a more recent flawed investment in root-cause solutions.
In 2008 Bill Gates admitted the results of the effort had been disappointing, and the foundation began putting money into other approaches, such as improving teaching.
“We’ve had 100 years of going for root causes, the knockout punch, the grand multibillion-dollar solution,” Mr. Schambra says. “It hasn’t worked for government, and it hasn’t worked for philanthropy.”
