Attacks Challenge America’s Foundations to Stand Up to Corporate Opportunism

If foundations are concerned about promoting democracy and curbing the corrosive power of big corporations, as some of them profess, they will have to become more activist and risk-taking than they have ever been. This fall’s terrorist attacks have thrown them the gauntlet. How they respond will say a lot about their sense of responsibility, their values, and their capacity for change.

The terrorism of September 11 and, later, in our postal system should have shattered any illusions we may have had about many of our corporate institutions. Banks have campaigned against new laws to restrict overseas money-laundering activities, and airlines have tried to hold on to their customary role of providing airport security on the cheap — despite the deaths of thousands of Americans stemming from the terrorist hijackings.

But what is good for banks and airlines is not always good for the country. It should be clear by now that corporations, while crucial to our economy, have only one major goal: making money. To them, everything else — national security, public health, environmental protection — is secondary in importance.

The attacks also have demonstrated how important, indeed essential, government is to our national life and well-being. Much maligned as too big, bureaucratic, and inefficient, the federal government, along with state and local jurisdictions, has labored in recent years to maintain public confidence. The role played by government and political leaders since September 11, however, appears to have reversed the long slide in the public’s confidence in civic institutions, hopefully permanently.

Both those developments have profound implications for nonprofit organizations, as well as for foundations that support them. Their challenge will be to make certain, on the one hand, that corporate greed is held in check and, on the other hand, that government institutions not only regulate corporate excesses but are accountable and serve the public interest.

Nonprofit groups have, in the past, demonstrated that they are capable of accomplishing those tasks, if they have adequate resources and the courage to challenge established institutions.

More than 15 years ago a coalition of grass-roots organizations challenged the policies of banks that refused to grant home mortgages and business loans in neighborhoods with large numbers of low-income people and minority-group members.

With sound documentation and strong organizing pressure, the coalition, with a little foundation money, persuaded Congress to pass the Community Reinvestment Act, which affirms the obligation of banks to be fair in their lending policies.

Similarly, with the help of the Ford Foundation, environmental groups in the 1970s began their sustained research about and pressure on corporate polluters, efforts that have resulted in much higher standards of air quality, cleaner rivers, and the elimination of many toxic-waste dumps.

Our growing laissez-faire economy has given rise to a corporate world that, having amassed unprecedented political influence by bankrolling elections and politicians of both parties, has run roughshod over the needs, rights, and safeguards of American citizens. It is fair to ask what the business schools at Harvard, Stanford, and other universities have done to inculcate a sense of ethics among their graduates.

Even after the September 11 disasters, big corporations, abetted by the shameless politicians who support them, are continuing their relentless push for tax breaks and subsidies, thus depriving the nation of the income needed for assistance to those most affected by the depressed economy. As Robert S. McIntyre, director of Citizens for Tax Justice, recently said, “Who would have thought that a national emergency would set off such a feeding frenzy by corporations and the wealthy? And who could have imagined that so many of our nation’s elected officials would eagerly go along with this monstrous demonstration of greed?”

That is not to say that we should abandon our free-enterprise system, which has proved to be superior to any other economic system. But it does speak to the need to repair capitalism as currently practiced, to place limits on its ability to undermine national interests.

Now is the time for nonprofit organizations to reassert themselves and fulfill this crucial responsibility. But that will be difficult because so many federal agencies — the Federal Aviation Administration, for one — as well as state and local governments remain the champions or prisoners of the very industries they are supposed to regulate. Their task will be made all the more difficult by the possibility that foundations, in the face of recession and September 11 humanitarian concerns, may reduce their grant making for these activities.

Contrary to their claim as the cutting edge of the nonprofit world, foundations are deeply afraid of examining and challenging the performance of both government and corporations. Over the past 20 years, only a relative handful of grants have been earmarked for that purpose. Foundations are grossly undersupporting organizations like Common Cause, the Center for Public Integrity, Citizens for Tax Justice, and the National Campaign for Jobs and Income Support that are doing effective advocacy work.

Nonprofit organizations have shown how effectively they can conduct research and monitor the policies and activities of corporate and government institutions, as well as the nation’s electoral and political systems. They have the capacity to mobilize people and create powerful coalitions. And they have formidable lobbying skills.

All they lack is the money with which to carry out those tasks. That, in the post-September 11 world, will be the responsibility and challenge of foundations.

Pablo Eisenberg is senior fellow at the Georgetown University Public Policy Institute and a member of the executive committee of the National Committee for Responsive Philanthropy. He is a regular contributor to these pages. His e-mail address is pseisenberg@erols.com.