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December 22 2015

What Today’s Philanthropoids Could Learn from Andrew Carnegie

National Review
Naomi Schaefer Riley

There’s nothing like having a few billion unearned dollars at their disposal to give men and women a little bit of hubris.

Perhaps no one exemplifies this more than the leaders of the nation’s largest philanthropies. Charged with distributing the largesse of people like John D. Rockefeller, Henry Ford, and John MacArthur, the leaders of these foundations long ago determined that their founders’ wishes mattered not a whit. But now, it seems, they have reached a new low. Now they’re not sure whether philanthropy, at least as it was conceived by these great American industrialists, should even exist.

In a recent manifesto called “Toward a New Gospel of Wealth,” Darren Walker, the president of the Ford Foundation, writes, “We are crashing into the limits of what we can do with a 19th-century interpretation of philanthropy’s founding doctrine.” Walker and his colleagues have become convinced that they are much smarter than the people who made their lives of conference-going and navel-gazing possible. And so they have decided, in the words of the new president of the MacArthur Foundation, to make “big bets that strive toward transformative change in areas of profound concern.” Or as Rockefeller’s president puts it, “We’re trying to transform systems and create tipping points, not just make individual grants to individual organizations.”

Before, these foundations were simply concerned with small-bore programs: helping people learn to read, save money, live healthier lives. But that is not aiming high enough apparently. Now they want to think bigger. As University of California historian Alice O’Connor told Nonprofit Quarterly regarding the Ford Foundation’s new direction: “Notable to me is the foundation’s at least implicit acknowledgement that current-day capitalism — and the political power lines and cultural narratives that prop it up — is a big part of the problem.”

How foundations can give money to change “cultural narratives” and “create tipping points” is something of a mystery.

But that won’t stop our philanthropoids. As Walker writes, “We . . . know that inequality is built on antecedents — preexisting conditions ranging from ingrained prejudice and historical racial, gender, and ethnic biases to regressive tax policies that cumulatively define the systems and structures that enable inequality to fester. . . . We can grapple not just with what is happening but also with how and why.”

Andrew Carnegie, for his part, was not unaware of inequality or its causes. As he wrote in 1889, “Under the law of competition, the employer of thousands is forced into the strictest economies, among which the rates paid to labor figure prominently, and often there is friction between the employer and the employed, between capital and labor, between rich and poor. Human society loses homogeneity.”

Carnegie recognized that this loss of homogeneity — also known as inequality — was an inevitable feature of capitalism, but one that was worth accepting because no system could better lift up all members of society. He wrote:

“Today the world obtains commodities of excellent quality at prices which even the generation preceding this would have deemed incredible. . . . The poor enjoy what the rich could not before afford. What were the luxuries have become the necessaries of life. The laborer has now more comforts than the landlord had a few generations ago. The farmer has more luxuries than the landlord had, and is more richly clad and better housed. The landlord has books and pictures rarer, and appointments more artistic, than the King could then obtain.

In an era when every twelve-year-old walking around the South Bronx has a smart phone, it’s hard to argue that this observation is any less true today.

But even when the poor are able to live better, Carnegie argued, the rich still have a responsibility to improve society. “The problem of our age is the proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship.”

Carnegie suggested that the wealthy have a responsibility to improve the state of the human race. Like Darren Walker, he did not believe in the small-bore projects — the redistribution of a few dollars here and there. He argued for the creation of more public libraries and universities so that generations of people could benefit. Speaking of a bequest that created Cooper Union, Carnegie wrote, “Much of this sum if distributed in small quantities among the people, would have been wasted in the indulgence of appetite, some of it in excess, and it may be doubted whether even the part put to the best use, that of adding to the comforts of the home, would have yielded results for the race, as a race, at all comparable to those which are flowing and are to flow from the Cooper Institute from generation to generation.”

But giving to universities and museums and libraries these days is criticized as simply cementing the privilege of the few rather than improving humanity as a whole. Yet it is hard to think of something the Ford Foundation has done that rivals the New York Public Library or Cooper Union, let alone the institutions Carnegie himself endowed, such as Carnegie Hall or Carnegie Mellon University. Or those founded by the other philanthropists of his time, such as Stanford University, the University of Chicago, the Metropolitan Museum of Art, the American Museum of Natural History, etc.

Carnegie, for his part, thought the wealthy have a responsibility to live modestly. He did not believe that the rich should pass on much wealth to their children, partially because it sapped the children’s will to work. But also because he thought the wealthy should seriously engage with ways in which they can improve the lot of others during their lifetimes.

It may surprise some to find that Carnegie was a fan of the estate tax. Unlike today’s progressives, though, he did not believe that the government could more effectively distribute the wealth of individuals. Rather, he argued, “This policy would work powerfully to induce the rich man to attend to the administration of wealth during his life, which is the end that society should always have in view, as being that by far most fruitful for the people.”

It is ironic, that if only Carnegie and his fellow industrialists had taken such advice to heart, so much of their wealth would not be used today to undermine the free markets that allowed their success. At least the institutions they built during their lifetimes continue to improve mankind. Indeed, before we usher in the New Gospel of Wealth we might take a moment to appreciate the old.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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