"The problem of our age," argued Andrew Carnegie in his 1889 essay Wealth (republished in England as The Gospel of Wealth, a name Carnegie subsequently adopted as his own), "is the administration of wealth."
For Carnegie, who emigrated to the United States from Scotland as a boy and amassed a fortune while still in his thirties, the problem wasn't the morality of capital accumulation — whether, as he put it, the "contrast between the palace of the millionaire and the cottage of the laborer...[is] to be deplored." An ardent proponent of the wide-open capitalism that developed in the United States after the Civil War, Carnegie viewed the concentration of wealth in "the hands of the few" as both temporary and "essential" for "the progress of civilization."
Instead, the crucial question, as he saw it, was how best to dispose of that wealth for the common good. Arguing that there were but three possibilities — passing it on to one's heirs, leaving it for public uses at one's death, or attending "to the administration of wealth during [one's] life" — Carnegie argued that the last was "by far the most fruitful" and, if widely adopted, would lead to "an ideal state, in which the surplus wealth of the few...can be made a much more potent force...than if it had been distributed in small sums to the people themselves."
Determined, as always, to prove his point, Carnegie labored diligently over the next thirty years to give away his fortune, endowing and/or supporting a long list of institutions and causes, among them the Carnegie Institute of Technology (now part of Carnegie Mellon University), the Carnegie Institution, the Carnegie Foundation for the Advancement of Teaching, the Carnegie Hero Fund, the Carnegie Endowment for International Peace, and, most famously, the creation of thousands of free public libraries around the country and abroad. As it became apparent, however, that plans to dispose of his fortune while alive were no match, as biographer David Nasaw puts it, for the "inexorable logic of compounding interest," Carnegie, in 1911, set up the Carnegie Corporation of New York to "promote the advancement and diffusion of knowledge and understanding."
In the eight-plus decades since, the Carnegie Corporation has distinguished itself as one of the most influential private foundations in the world. Its contributions to American society include efforts to expand higher education and adult education, the advancement of research on learning and cognitive development in early childhood, the promotion of educational and public interest broadcasting, the advancement of minorities and women in pre-college and higher education, the heightening of public understanding of the education and health needs of children and adolescents, and the investigation of risks of superpower confrontation, nuclear war, and ethnic and civil strife.
Earlier this fall, Philanthropy News Digest spoke with Vartan Gregorian, the Corporation's twelfth president, about the evolution of organized philanthropy in the United States, current perceptions — and misperceptions — of philanthropy, the emergence of new philanthropic vehicles, and the challenges confronting philanthropy in an increasingly globalized world.
Prior to joining Carnegie as president in 1997, Gregorian served for nine years as the sixteenth president of Brown University and, before that, for eight years (1981-1989) as president of the New York Public Library.
He has, in addition, taught European and Middle Eastern history at San Francisco State College (now University), the University of California at Los Angeles, and the University of Texas at Austin. In 1972, he joined the University of Pennsylvania faculty and was appointed Tarzian Professor of History and professor of South Asian history. He was also founding dean, in 1974, of the Faculty of Arts and Sciences at the University of Pennsylvania and four years later became its twenty-third provost, a position he held until 1981.
Dr. Gregorian is the author of The Road To Home: My Life and Times, Islam: A Mosaic, Not a Monolith, and The Emergence of Modern Afghanistan, 1880-1946. A Phi Beta Kappa and Ford Foundation Foreign Area Training Fellow, he is the recipient of fellowships from the John Simon Guggenheim Foundation, the American Council of Learned Societies, the Social Science Research Council, and the American Philosophical Society. He is also a Fellow of the American Academy of Arts of Sciences and the American Philosophical Society.
Gregorian was born in Tabriz, Iran, of Armenian parents and received his elementary education in Iran and his secondary education in Lebanon. In 1956 he entered Stanford University, where he majored in history and the humanities, graduating with honors in 1958. He was awarded a Ph.D. in history and humanities by Stanford in 1964 and received the Danforth Foundation's E.H. Harbison Distinguished Teaching Award in 1969. In 1998, he was awarded the National Humanities Medal by President Clinton, and in 2004 he was awarded the Presidential Medal of Freedom, the nation's highest civil award, by President Bush.
Philanthropy News Digest: Private foundations have dominated organized philanthropy for the better part of a century. In contrast, the last fifteen years have seen a rise in alternative grantmaking vehicles, many of them structured as public charities. To what degree are new forms of organized philanthropy simply pragmatic ways of circumventing the laws and regulations covering private foundations? Or do they represent the beginnings of a new type of organized philanthropy that has the potential to achieve better results in the decades to come than private foundations have achieved in the past?
Vartan Gregorian: Philanthropy has always been multifaceted; over the years, philanthropists have structured their giving in many different ways. What has changed is that state and federal regulations, along with case law developed over the last century, have provided more flexibility for individuals to give to charity and provide philanthropy in different ways. Since 1917, for example, individual federal taxpayers have been allowed to deduct gifts to charitable and certain other nonprofit organizations — although since 1986, this benefit has only been available to those who itemize their deductions. And the Internet, certainly, has revolutionized charitable giving, as the response to Hurricane Katrina demonstrates: of the $34 million raised by the Humane Society in connection with Katrina, for instance, 53.8 percent was donated online. The American Red Cross received 22.3 percent of its Katrina donations online, which amounted to $479 million. Even smaller groupslike Mercy Corps raised significant sums online; of the nearly $10.2 million in Katrina money donated to that group, 45.5 percent came in online.
Foundations, too, are now structured in multiple ways, each following the dictates of the individual or family that created them. For example, operating foundations generally are not grantmaking institutions but rather operate facilities or institutions devoted to a specific charitable activity spelled out in their charters. Some operating foundations may use their endowment to conduct research while others may have been created to provide such directservices as managing museums, historical sites, providing assistance to the handicapped, et cetera. Generally, operating foundations are focused on having a specific, and sometimes immediate, impact. Other foundations, such as the Aaron Diamond Foundation and the Vincent Astor Foundation, were created by their donors with the intent of spending their entire endowment in the service of particular ideas or causes and then to close their doors. Family foundations often have a twofold purpose: to make grants but also to maintain the foundation as a kind of laboratory to train future generations of the family and promote the art of giving as part of the family culture. Private grantmaking foundations, such as Carnegie Corporation of New York, the Rockefeller, Ford, MacArthur, Hewlett, and Mellon foundations, along with others, were created by their donors to carry out philanthropic efforts in perpetuity and focus on accomplishing their goals over the long-term by supporting research and scholarship or by investing in existing organizations rather than by replacing them or attempting to replicate their work.
[T]hat Americans continue to try to help their nation and their fellow citizens through both voluntary efforts and financial support is a lasting cause for pride and hope....
Thank goodness there are so many different ways of being both charitable and philanthropic, because the 1.4 million nonprofit organizations in the United States and the roughly 65,000 grantmaking foundations are addressing problems that, unfortunately, are likely to remain with us in the future. The fact that Americans continue to try to help their nation and their fellow citizens through both voluntary efforts and financial support is a lasting cause for pride and hope.
PND: What misperceptions about organized philanthropy — either in the media or among the public at large — persist and undermine its full potential to contribute to society?
VG: It has surprised me that philanthropy, which is such a major enterprise and has such a significant impact on American society, did not receive equally significant coverage in the media until the inception of publications like Philanthropy News Digest, the Chronicle of Philanthropy, and even the Chronicle of Higher Education, which often highlights philanthropic support of education. The public needs more information about both philanthropic and charitable activities — in fact, they also need help in understanding the difference between the two. Charity, which is derived from the Latin word caritas, meaning "dear," has a long religious history; for Christians, Jews, and Muslims, for example, it has meant giving immediate relief to human suffering without passing judgment on those who suffer. Philanthropy has a more secular history and comes from the Greek word philanthropos, meaning "love of mankind." The Greek meaning carried over to English, and, for the longest time, philanthropy referred only to a caring disposition toward one's fellow man. Now the word is used to describe generosity that promotes human progress in any field.
It's important to understand that, generally, philanthropy's role in our society is not to respond to immediate needs or to displace the role of the municipal, state, or federal government in providing the civic supports that impact our lives. But what foundations, in particular, can do is support efforts that offer innovative solutions to civic problems, or even develop model solutions to problems. Foundations can also fund projects that serve as incubators for progressive, even pioneering ideas, providing the public with program and policy alternatives they might otherwise never even know about or have the opportunity to consider. Perhaps one of the most important characteristics of foundations is that they have the capacity to be flexible, which is a valuable attribute in a complex society such as ours, with all its checks and balances. Other institutions and government agencies can be highly bureaucratized — in fact, one of the ways they protect themselves is by armoring themselves with an elaborate bureaucracy and complicated processes for getting things done. Because foundations are able to proceed more quickly, and with wider latitude, they can help put important issues on the nation's agenda; they can invest in innovative, experimental, and demonstration efforts; they can challenge orthodoxies; and they can support basic research that may not produce immediate results but produces knowledge that proves to be of lasting value in the long run.
PND: Citing developments such as the disposal of Warren Buffet's fortune, the creation of the loosely for-profit Google.org, and Richard Branson's recent announcement at the Clinton Global Initiative that he planned to "give" $3 billion of his company's profits for alternative fuel research, some observers have described what is happening in the field as the "deconstruction of philanthropy." Is that a useful characterization?
The more anybody and everybody gives, the better for all. Large gifts and large-scale philanthropy do not make smaller foundations irrelevant....
VG: This is hardly doomsday for other forms of philanthropy — the more anybody and everybody gives, the better for all. Large gifts and large-scale philanthropy do not make smaller foundations irrelevant. After all, some of the current "small" foundations were once "big," and that includes Carnegie Corporation of New York. In fact, a recent edition of the Foundation Center's Foundation Yearbook ranked Carnegie Corporation twenty-fourth by assets among U.S. foundations. It's not the amount of money that's important, it's the ideas and imagination behind it and the responsibility with which it is used and the real-world impact it has. In other words, it is not time to "deconstruct" philanthropy in the way that one might deconstruct literature. Small and medium-size foundations with clearly defined missions have no reason to develop an inferiority complex or lose direction. Indeed, smaller foundations may be able to move more swiftly, more effectively, and in a more focused manner than their larger counterparts, especially those with a cumbersome bureaucracy that tends to slow them down and may limit their effectiveness or stifle their creativity.
Of course, one also has to note that a new form of philanthropy may be emerging — the "for-profit" model, such as the one recently announced by Larry Page and Sergey Brin, the founders of Google. They plan to create a philanthropy, with a $1 billion endowment, that will be structured as a for-profit organization. Its mandate will include funding start-up companies and forming partnerships with venture capitalists, all with the aim of serving the public good. For example, one project they've suggested they want to tackle is developing an ultra-fuel-efficient hybrid car. I applaud that kind of thinking; it fits the times.
PND: What, if anything, does the emergence in the field of people like Bill Clinton, Bill Gates, Michael Bloomberg, and former Senator Tim Wirth say about the field of philanthropy?
VG: It's noteworthy that an idea conceptualized by Andrew Carnegie more than one hundred years ago is still influencing modern-day philanthropists. It was Carnegie, in his famous 1889 essay, "The Gospel of Wealth," who articulated the belief that all personal wealth beyond that required to meet the needs of one's family should be regarded as a trust fund to be administered for the benefit of the community. Many individuals and families have followed Carnegie's example, reflecting just how deeply the philanthropic spirit has taken root in our country. In that connection, it's interesting — and heartening — to note that contrary to conventional wisdom about who gives the most, Independent Sector reports that low-income people give disproportionately larger percentages of their income than do the wealthy. Fully 70 percent of American households make charitable contributions. In 2001, for instance, that amounted to $239 billion in giving.
In terms of today's major philanthropies, such as Gates' and Bloomberg's, or those who are creators or dispensers of philanthropy, such as Clinton, Wirth, and others, it's interesting to consider how many of them are politicians or former office holders. Clearly, those who have based their careers on public service and/or have amassed private wealth feel that it is important to continue to serve the public in new venues such as philanthropy.
PND: Another powerful force, globalization, is impacting philanthropy by, among other things, creating new philanthropic networks and driving more resources toward transnational issues such as health and the environment. Do you expect globalization to have a long-term impact on organized philanthropy? And what, if any, are the implications for democracy and civil society should that turn out to be the case?
VG: Unfortunately, while challenges such as the state of our environment and access to basic health care have a global impact, many foundations still shy away from addressing international issues. This will probably continue to be the case because finding solutions to the problems facing the United States is an increasingly urgent concern. Issues such as the hollowing out of the American workforce; meeting the needs of an entire new generation of immigrants; trying to cope with the collapse of pension funds; the deterioration of so many elements of the social safety net; the need to ramp up America's ability to be technologically and scientifically competitive; the need to increase levels of adult literacy; the many pressing improvements that need to be made throughout the K-12 educational system; and so many other needs that must be addressed will probably continue to attract most of the resources of American philanthropy. However, what this also means is that more money will probably be spent to address international issues that are likely to have an impact on our country — an example being the spread of infectious diseases.
PND: When talking about such large-scale challenges, it can be difficult to measure the impact of philanthropic dollars, which, after all, are relatively modest. Is philanthropic effectiveness a function of the amount of resources available to solve a problem, the quality of the ideas behind those resources, or both?
We need new ideas, new thinking, and imaginative solutions to problems; organizing the resources to address those problems is also critical, but ideas have to come first....
VG: Money has often been used as an excuse for a lack of ideas or imagination. If amounts of money spent on problems were an indicator of success, countless federal programs would already be successful many times over! We need new ideas, new thinking, and imaginative solutions to problems; organizing the resources to address those problems is also critical, but ideas have to come first. After all, ideas are what animate philanthropy; the ideas that a foundation has identified, supported, and nurtured will be its lasting legacy.
PND: Given the scope and magnitude of the changes and forces we're talking about, does the philanthropic sector have access to metrics that can adequately measure its effectiveness?
VG: During the past few decades, almost all of us in the philanthropic sector have been struggling to find the necessary mechanisms to measure the effectiveness of the work of our grantees. After all, if you cannot measure what you do, you cannot evaluate it. What is apparent is that we need solid data rather than anecdotal information or approximations to help us make informed decisions. In the absence of solid data, we often end up, instead, making decisions based on trends. Hence, one of the most critical challenges facing foundations is to determine what, in fact, constitutes solid and reliable data, how to collect that data, and how to use it wisely and effectively, in ways that will stand the test of time.
PND: Ford Foundation president Susan Berresford's recent announcement that she plans to retire in 2008 is a reminder that the vanguard of the baby-boomer cohort is approaching retirement age. Given the over-representation of boomers in the nonprofit and foundation worlds, is that a cause for concern for the nonprofit and philanthropic sectors?
VG: No, not at all. The philanthropic spirit and Americans' dedication to strengthening the nation, enriching its civic life, and improving conditions for their fellow citizens transcends generations.
PND: How long does it take to bring an idea from obscurity into the mainstream? And which of the "unfashionable" ideas currently championed by you and your colleagues are most likely to be mainstreamed over the next ten years?
VG: Ideas have not been hiding in obscurity. Ideas are formed, not discovered. However, what sometimes happens is that organizations and institutions in need of money try to implement new ideas that are presented to them — but which they do not have the ability or the resources to serve properly — because they need the grant funding that will come along with the idea. In such cases, some organizations may even accept grants even though they don't actually believe in or support the cause that the grant is intended to advance. Nonprofit organizations should be able to refuse conditions imposed by foundations on their grants if the conditions are likely to distort the organizations' mission or put an undue strain on their resources, because then the organizations may come out worse than they went in because of accepting the grant. So the right fit is necessary: the right idea, the right time, the right leaders, the right grantee.
In terms of important ideas that the Corporation is focused on, we are concerned about Americans' declining enthusiasm and support for our public institutions — particularly public education — and about the pernicious notion that excellence can be achieved only in the private sector. I am a firm believer that in a democracy equality and excellence are compatible. To strengthen and transform our common bonds, we must strengthen our public schools, not abandon them. That is one reason we have supported urban high school reform, as well as efforts to improve schools of education — after all, excellent education begins with excellent teachers, and the schools of education at our nation's universities need to do a better job of training those who will become the teachers of America's next generation of leaders. Incidentally, the need to improve the quality of K-12 education, even of higher education, is a problem not only for the United States but for Europe and the rest of the world, as well.
PND: The diversity of issues addressed by foundations — and the strategies employed in addressing those issues — would seem to offer more than a little hope of finding solutions to some of the world's most vexing problems. In terms of specific problems or issues, where do you see the best chance for breakthroughs over the next ten to twenty years?
In an age of specialists, we need to learn how to chart a course that does not duplicate outmoded approaches to problems but rather encourages different perspectives....
VG: "Problems" have been with us forever, though they do seem to be increasing in complexity nowadays. There are more people in the world, the issues we're dealing with seem to have tendrils that grow from many sources, both domestic and international, and there is a kind of fatigue about confronting what needs to done. We are overwhelmed by information, but all that information does not necessarily get translated into knowledge. And even if by chance some of it does, the knowledge does not often get translated into wisdom — and even less rarely does any of this turn into effective action. In an age of specialists, we need to learn how to chart a course that does not duplicate outmoded approaches to problems but rather encourages different perspectives, different approaches, and a lively competition of ideas. This is one of the great strengths of the structure of American society: the ability to support and promote independent thinking and innovative ideas.
How well this diversity has served the nation can be seen in the example of Vannevar Bush, science advisor to President Franklin D. Roosevelt, who argued that the nation's large network of universities were, by their very nature, best suited to take the lead in conducting basic research, which pioneers the frontiers of human knowledge to the benefit of society. Public funding, he said, would promote competition among researchers, and projects could be selected on their merit through a peer-review process. The National Science Foundation has been doing this job since 1950. Competition, experimentation, and creating models is critical because, when that process is applied to the problems we face, the entire nation does not have to undergo the stresses and strains of trying to implement a solution and then finding out it doesn't work. That's one of the most important ways that foundations can be of incalculable value: they can support different models, different ideas, different ways of addressing issues that can then be disseminated widely when, and if, they prove useful.
PND: A final question: What is the current era of philanthropy most likely to be remembered for?
VG: An important notion that has enriched philanthropy in recent years is the formation of partnerships. More foundations are now working together in order to decrease replication of their efforts and increase the impact of their grantmaking. The Corporation, for example, works collaboratively with a number of other foundations on both domestic and international issues. Building networks is good for foundations and good for grantees, because networks can continually expand their strength, add new resources, and bring in new participants — as the Internet, which may be the greatest network of all, has certainly shown. But perhaps most importantly, I think today's philanthropic sector will be remembered for its outreach to the rest of the world — it's happening slowly, but it is happening. We're trying to transcend borders, work with different governments, different nationalities and different ideologies in order to begin to address the common problems affecting humankind.
PND: Well, thank you, Dr. Gregorian, for sharing your thoughts with us.
VG: It was my pleasure.
Mitch Nauffts, PND's editorial director, interviewed Vartan Gregorian in October. For more information on the Newsmakers series, contact Mitch at email@example.com.