October 7, 1999 | Read Time: 5 minutes
Bill Gates’s creation of the nation’s largest foundation climaxes an evolutionary shift in American philanthropy, a turn that began three decades ago in California on a former plum farm. In the years since David Packard and William Hewlett made their first billions from microprocessors, a whole new generation of philanthropists has emerged outside New York City. Today three of the five largest foundations are west of the Mississippi, two of them on the Pacific coast. This is new money and it is young money. The potential for change, in philanthropy and civil society, is enormous.
While these young upstarts bear some unfortunate similarities to their historical brethren — most noticeably their tendency to name foundations after themselves — they seem bent upon changing the way philanthropy is practiced. As the Bill & Melinda Gates Foundation’s recent commitment of $1-billion to minority scholarships attests, the new breed of donors is unimpressed with the cautious and ponderous traditions of East Coast foundations. They are in fact almost as impetuous and venturesome as they were when they started their incredibly successful businesses.
Unconnected to the social and political establishments of the Northeast corridor, the Gateses, the Hewletts, and the Packard kids, who run the $13-billion foundation founded by their father, have no fear of offending power or old money. They seek real change and rapid results. They are in-your-face environmentalists, public agitators, leading-edge experimenters, and social entrepreneurs. They call themselves “venture philanthropists,” and Bill Gates, if not their role model, is today their most visible exemplar.
So far, so good. Before Mr. Gates and his fellow high-tech tycoons lies a historic opportunity to create models of imaginative philanthropy, use private wealth to fight injustice, strengthen civil society, and bring democratic processes to organized philanthropy, an institution not known for its sharing of power.
But there is a cautionary tale in the first century of large-scale American philanthropy: In their infancy almost all large foundations were more enterprising than they became two, three, or four generations later. The first creations of Andrew Carnegie and John D. Rockefeller and Olivia Sage were visionary and idealistic and took risks their trustees would rarely consider today. Somewhere along the way the foundations operating still under their names lost their vitality, their imagination, and, alas, their ability to foster timely and meaningful change.
So what are the lessons Bill Gates can learn from the fate of the Rockefeller, Carnegie, Ford, Sage, and other legendary endeavors of private philanthropy? There are many, but three stand out:
* Limit the family’s role. The temptation to involve children, spouses, and, in Mr. Gates’ case, a parent in the day-to-day activities of a new foundation is irresistible. But it rarely works out well, either for the foundation or the family. The elder Mr. Gates is a fine gentleman with a clear passion for humanity, and the younger Mr. Gates’ wife, Melinda, appears to care deeply for the dispossessed and disenfranchised. They should both be active in philanthropy; but someone else’s foundation would be a better place for them, a place where they were less interested in the stewardship of the donor’s legacy and more in the fate of grantees and the people they serve.
So here’s an idea: Trade Melinda and the elder Mr. Gates to the Ford Foundation for its president, Susan Beresford, and Lance Lindblom, one of its best program officers. Both foundations would be well served. The brilliant Ms. Berresford and the visionary Mr. Lindblom would be liberated from the asphyxiating trustees at Ford, which would be blessed in turn with the fresh ideas and idealism of newborn philanthropists.
* Eschew bureaucracy. Mr. Gates shouldn’t look to the offices of the Ford, Carnegie, or Rockefeller Foundations or to the Pew Charitable Trusts — as architecturally magnificent as they may be — as models of imaginative philanthropy. And he shouldn’t fly any more New York “philanthrocrats” out to school him in the alleged arts of foundation management. Some of them are doing interesting and exciting things, but most are bogged down in bureaucracies where the potential for imaginative philanthropy is stifled. Although they talk the talk and are expert at promoting their foundations’ efforts, they are operationally ineffective. They cannot, in Mr. Gates’ own words, do business “at the speed of thought.”
So Mr. Gates should heed the advice of professional “philanthropoids” with great skepticism. They may know a lot about the so-called independent sector, and speak fluent “philanthropese,” but they understand very little about how to turn money into progress.
* Foster democracy. Foundations are fundamentally “ademocratic,” to coin a word that avoids branding them “anti-democratic,” which is rarely the case, or “undemocratic,” as there are some exceptions. Despite the fact that almost half their assets would have ended up in state and federal treasuries had they not been formed, most foundations reject the notion that the public shares in their ownership. And their trustees summarily oppose public participation in just about everything the foundations do.
That needn’t be so, and there is a brief opportunity in the formation of every new foundation to democratize the institution of organized philanthropy. Mr. Gates wouldn’t be the first to create a board that is balanced in terms of race and gender and also includes ordinary citizens and advocates for unpopular causes. But whatever steps he took toward democratic processes would be noticed by the entire philanthropic world. Such a move would, I believe, insure more responsive, relevant, and effective grant making, no matter what Mr. Gates’s interests or passions. But if the original donor isn’t behind the idea, and leaves the foundation in the trust of a self-perpetuating board of family, friends, and company lawyers, the opportunity for democratic practice is lost.
Bill Gates may well be the first American billionaire to begin thinking seriously about philanthropy before contemplating his mortality. That fact alone should enhance his imagination and curb the risk aversion that seems to plague older donors obsessed with the record of their giving. But before he cranks up the Gates Foundation to $20-, $30-, or $40-billion, which he could do with ease, it might be prudent for him first to read some history and consider the fate of once-great foundations that wallowed gradually into impotence.
Mark Dowie is an investigative historian working for MIT Press on a book about American foundations.
