Charitable Takeover: The Rise of Philanthrocapitalism

Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were all my business.

 –Jacob Marley

Of all the things that capitalism has consumed—our political system, the global financial system—it’s most ironic meal is perhaps philanthropy, which used to be about caring about people and helping them out. In the last decade or so, however, philanthropy has mixed with capitalism to advance, not the common good, but the common good as defined by contemporary capitalist ideology. Philanthrocapitalism, as it is called, is “a new way of doing philanthropy, which mirrors the way that business is done in the for-profit capitalist world.”

Once upon a time, Andrew Carnegie used his fortune to advance the causes of self-improvement and world peace. He endowed college departments and universities. He gave the Phillipines money to buy its independence from Spain. Locally, he provided money for libraries. His grant requirements for libraries were minimal: 1) grant applicants had to demonstrate the need for a public library, 2) provide a building site, 3) annually provide ten percent of the cost of the library’s construction to support its operation, and 4) provide free service to all. He didn’t insist that these libraries be run according to his management principles. They were, by definition, free. His requirements were simple.

As a businessman, Carnegie may have bought people in state and federal government for business purposes, but not for ideological reasons. As a philanthropist, he aimed his money at the common good, not the capitalist system. Carnegie espoused much of the ideology that drives today’s capitalists, but philanthropically, he was more interested in the general welfare of people. He might have funded projects that coincided with his interests—his love of music. for example, led to building of Carnegie Hall—but he didn’t use philanthropy to advance his political ideology. In spite of his abuses of power business, he still believed in democracy and self-determination. The same can’t be said for today’s philanthrocapitalists, particularly when it comes to education.

Bill and Melinda Gates, for example, give away millions for communities to carry out their educational agenda. Although Gates has no background in education or educational research, he has no problem offering observations like “It may surprise you–it was certainly surprising to us–but the field of education doesn’t know very much at all about effective teaching.” In fact, anyone familiar with educational research knows there are decades worth of scholarship about effective teaching. But money easily papers over ignorance. Gates waves grant money over the heads of cash-starved school systems that quickly embrace whatever program he’s heralding at the moment. If Gates’s programs are anti-labor, and based on ideology, rather than research, it doesn’t matter. Money talks. Democracy walks. Those who offer money, rather than elected officials or those with actual expertise, are increasingly driving education policy. Elected officials, desperate for money, are happy to do what it takes for the money. Instead of funding infrastructure or the general welfare of students, they are funding ideologically-based reforms that promote their version of capitalism.

Unlike Gates, whose programs and motives are generally very public, other organizations are more stealthy. Stand for Children, which has offices in Massachusetts, differs only in the fact that it hides under the aegis of grassroots organization. Beginning in Oregon as a relatively progressive organization that drew grassroots support, it has since morphed into a political action committee, that Carnegie would have used in business, though not his philanthropy.

Jonah Edelman, the Director of Stand for Children, is an intelligent, charismatic, Yale graduate. He founded the organization and has taken it from an alleged grassroots organization in Oregon to Machiavellian PAC in Illinois. It is his work in Illinois, and his cold-blooded account of it, for which he is most notable. The account was videotaped and went viral. The video itself is easily found, but the story hasn’t received much attention. Here’s how it goes:

Working with Advance Illinois, a state-level philanthrocapitalist organization funded by hedge fund executives, Edelman set forth to buy the power structure of the Illinois legislature. Mike Madigan, the powerful Speaker of the House, was at odds with the Illinois Teachers Union over cuts in teacher pensions. He was in danger of losing control of the legislature to the Republicans. Seeing this as their opportunity, Edelman and friends stepped into the breech.

[O]ur analysis was [Madigan] was still going to be in power, and as such the raw politics of it were that we should tilt toward him. And so we interviewed 36 candidates in targeted races and essentially, I’m being quite blunt here, the individual candidates were essentially a vehicle to execute a political objective, which was to tilt toward Madigan.

So the press never picked up on it. We endorsed nine individuals, and six of them were Democrats, three Republicans, and tilted our money to Madigan, who was expecting that because of Bruce Rauner’s leadership, and Bruce is a Republican, that all of our money was going to go to Republicans. That was really as show of, an indication to him, that we could be a new partner to take the place of Illinois Federation of Teachers-that was the point.

Thus Edelman and friends secured Madigan’s support. They also went on to corner the market on lobbyists:

We hired eleven lobbyists, including the four best insiders and seven the best minority lobbyists, preventing the unions from hiring them. We enlisted a statewide public affairs firm. We had tens of thousands of supporters. And with Jim’s, and many others stepping up, Paula and Steve, thank you, we raised $3 million for our political action committee between the election and the end of the year. That’s more money than either of the unions have in their political action committees.

After the election,

Advance Illinois and Stand had drafted a very bold proposal we called Performance Counts. It tied tenure and layoffs to performance. It let principals hire who they choose. It streamlined dismissal of ineffective tenured teachers substantially, from 2+ years and $200, 000 in legal fees, on average, to three to four months, with very little likelihood of legal recourse, and, most importantly, we called for the reform of collective bargaining throughout the state. Essentially, proposing that school boards would be able to decide any disputed issue at impasse. So a very, very bold proposal for Illinois, and one that six months earlier would have been unthinkable, undiscussable.

Money has always been a part of politics. That’s nothing new. Much of America is, at best, ambivalent about unions. It’s worse than it used to be, but it’s not new either. The news is that where capitalists once kept separate their work and charity, they are now merging them. Philanthropy is now serving their ideology and undermining democracy. Hiding behind appealing names, pretending to serve the general welfare, philanthrocapitalists are quietly undermining our communities and our country.