Stanley Katz, a Princeton professor, is an expert on philanthropy, and is one of the few scholars who has written a comprehensive history of philanthropic foundations. And what he sees in today’s billionaire-run megafoundations (the Bill Gates Foundation is one example) is not pretty.
“Foundations are setting out to set public policy,” he says. “The best example for me is K-12 policy, where there are five or six megafoundations working together to create a reform agenda for K-12, an agenda that the federal department of education has bought into. It’s a severely, not only dangerously undemocratic, but also antidemocratic thing, particularly in the field of elementary education.”
Katz will speak on “Private Wealth and the Public Interest” on Tuesday, January 20, from noon to 1 p.m. at the Princeton Public Library. The event is free. For more information, visit www.princetonlibrary.org.
Katz bases his criticisms on his extensive scholarship in the history of foundations. He is one of the few academics to write an entire book on the subject.
According to Katz, the modern charitable foundation began with the robber barons — industrialists like Andrew Carnegie and John Rockefeller. These men, about a dozen of them, retired with more money than any one person could hope to spend, so they established charitable foundations to use their fortunes for the betterment of humanity. But the public was skeptical of their motives.
“There was widespread fear of these organizations and of these men,” Katz says. “And the reason was that these people were called robber barons. They had made all this money through ruthless employment of the techniques of modern capitalism and they created a lot of harm along the way. Standard Oil and U.S. Steel were not gentle and nice institutions, and the people who ran them had trampled on quite a lot of people in order to get them to where they were, even if you’re not thinking about the impact on the working man who was involved in these industries.”
The philanthropists argued back that all they intended to do was public good. The institutions they established — like the Carnegie Corporation and the Rockefeller Foundation — funded the arts, culture, university research, and medical campaigns against diseases. “Over the next 50 to 75 years, those foundations made that claim look good,” Katz says. Although their founders were long dead, their foundations won over their critics by doing lasting good to society. “The vast majority of people considered that what they were doing was good and that they were being administered in a responsible sort of way,” he says.
In the early 21st century, there was an explosion of wealth unlike anything that had been seen since the days of the robber barons. The new class of billionaires — the Bill Gateses and Mark Zuckerbergs of the world — have created what Katz calls “megafoundations,” which are foundations of more than $1 billion. There were four or five of them 10 years ago, and Katz says the last time he looked there were 38, though there are probably more by now. The megafoundations do things very differently than their predecessors.
For one thing, the titans of industry of the previous century nearly all built their fortunes over lifetimes, and set up their foundations to be run by boards of trustees after they died. By contrast, the new billionaires like to direct the efforts of their charitable giving personally.
“The foundations are different not only because of size but because in every case they have a living donor, and Rockefeller and Carnegie are long dead,” Katz says. “That donor, almost by definition, considers himself the smartest person in the world. And they are pretty smart, but they are arrogant and they see no reason why they shouldn’t use philanthropic money the same way they use corporate money — in order to change things and make people do what they think is the right thing to do. The long-term aversion of foundations to interfering in public policy has been badly eroded.”
While the old foundations took time to study the root causes of problems, Katz says the new generation of meddling billionaires is more likely to spend large amounts of money at a time in an effort at “strategic philantrhopy.”
The “strategic philanthropy” approach, which has been adopted by some traditional foundations, means setting out specific, measurable goals, and trying to reach those goals in the relative near term.
The older foundations took a more long-term approach, and were more likely to invest in fundamental research that didn’t necessarily lead to practical results. The newer foundations are likely to fund researchers at think tanks and contract agencies, where the researchers will do exactly what they are told.
Katz had two pieces of advice for donors who want to use their wealth responsibly.
First, he says, think hard and take a lot of advice about the range of problems you want to address, and pick those for which there may in the foreseeable future be reasonable approaches that are not beyond the capacity of current resources and present conditions.
Second, be humble. “Take the advice of people who know a lot more than you do about whatever that problem is. Run possible approaches by a lot of people who don’t have an immediate stake in the problem, and try to establish what the most promising approaches would be.”
Katz holds up the Mellon Foundation and the Carnegie Corporation as examples of groups that are doing things the right way.
Katz grew up in Chicago, where his father was in business and his mother was a homemaker. He earned a bachelor’s degree in English history and literature at Harvard in 1955, and a doctorate in British and American History from Harvard in 1961. He also studied law after getting his doctorate. Katz’s academic career has brought him numerous honors, including the National Humanites Medal awarded by President Obama in 2011. A specialist in American legal and constitutional history, Katz is an author and editor of numerous books and articles.
He taught history at Harvard and Wisconsin, and taught law at the University of Chicago. He came to Princeton in the 1980s to teach legal history before resigning in 1986 to become the chair of the American Council of Learned Societies. He retired from ACLS in 1997 and returned to teach at Princeton.
Katz criticizes the strategic, data-driven approach for philanthropy, seemingly borrowed from the metrics-obsessed world of business.
“The downside is that not everything can be measured,” Katz says. “There are some really important things that are hard to measure. The metaphor for this is if you lose your keys on a dark street, and you only look for them under the lamppost, you are going to miss a lot. Nobody is arguing against effectiveness, but what you can measure most clearly may not be the most important thing to think about.”