The following is a conversation between Karl Zinsmeister, Vice President of Publications at Philanthropy Roundtable, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: If you stop and take a moment to think about endeavors that have been woefully underappreciated in terms of what they have meant in building and shaping America, philanthropy would most certainly be on that list. Karl Zinsmeister, who oversees publication at the Philanthropy Roundtable, has taken upon himself to address this with two recent books to help us better appreciate the pivotal role that private resources have played in solving public problems. Those books are The Almanac of American Philanthropy and What Comes Next? : How private giving can rescue America in an era of political frustration. And he is with us now. Good evening, Karl, and welcome to The Business of Giving!
Karl: It’s great to be on your show, Denver!
Denver: Before we delve into the history of philanthropy and some of the fascinating stories you tell of philanthropists, first provide us with some context about the nonprofit sector itself, its significance and breadth, and what it really means to the American economy.
Karl: Boy, it’s such a huge secret, Denver, as you implied in your intro. People don’t realize that we give away $373 billion every single year in voluntary cash donations, and the value of voluntary time and labor that we put in is about that much more; so you can roughly double that. And just to give you a little perspective, that’s about twice the size of the so-called military industrial complex that people use as a kind of a metaphor for a big serious part of the American economy– big industry. It’s such a huge part of our economy. And even more than that, Denver, it’s a huge part of our culture. Philanthropy ends up being kind of our risk capital… or our venture capital. It’s the thing that we pour into new problems, to sticky problems, to difficult problems because it’s much more flexible. It’s much more nimble. It’s much more inventive. It’s much more willing to make mistakes and to correct course and to redirect itself than almost any kind of funding available–either governmental or corporate. So philanthropy has historically played just a giant role in fixing some of our really dreadful national issues and lots of little things as well.
Denver: Well, I want to talk to you about some of those… and some of the people who made it happen. In your book, The Almanac of American Philanthropy, all 1,342 pages of it, you really do tell, Karl, some fascinating stories of American philanthropists. There was a fellow who made his fame and fortune through Tabasco sauce, which is still sold in stores today. Who was he? And where did his philanthropic interests lie?
Karl: That’s a great place to start. You know, people can’t imagine that a product like Tabasco sauce could actually accumulate enough money to change the world, but it did. And in this case, it’s a really delightful guy. I just kept finding these kinds of people the more I dug into philanthropy, Denver. There are thousands of them. This guy is named Ned McIlheny, and he’s a Southern boy, grew up in Louisiana bayous, and he’s just one of those kind of Forrest Gump-type personalities, had adventure after adventure after adventure. And at some point, he became very much of an outdoorsman and loved nature. And one of the stories I tell about him in the Almanac was that he realized that a bird he just loved– a fellow native of the bayous in Louisiana called the Snowy Egret– was disappearing. And what had happened, it was the egret’s feathers had become just a fashion craze for women’s hats. They were being hunted to death, and nobody was doing anything about it. And rather than dial 911, or call his congressman, or say somebody should do something about this, McIlheny went into direct action himself. The first thing he did was: he literally went out and beat the bushes on the island that his family owns down in Louisiana– still owns– and it took two full days for him to find two nests. That’s how rare these birds had become. And he finally found two nests, and he scooped up eight little baby fledglings from these nests and brought them back and raised them in a protected area on his own property. And over a period of about 10 years, he increased this flock to about 90,000 to 100,000 birds as a kind of seed capital. And at the same time, he was working on this microscale, he was also talking to his fellow philanthropist friends like Olivia Sage and John Rockefeller, and he was saying, “You know? A lot of these swampy lands along the Louisiana coast that people think is just wasteland? That’s really important to birds! We should preserve that. You should buy that up and just hang on to it as kind of conservation land.” And he convinced them to do that. And with this kind of double-pronged approach, and this combination of his money and his energy and his ideas and his enthusiasm, he was really instrumental in bringing the Snowy Egret back from extinction. This is the kind of personality we’re dealing with, Denver.
The American spiritual is just one of our original art forms, but it existed entirely in an oral form. It had never been written down. And you forget that those kinds of things can disappear. It only takes one broken link generation in the chain, and it’s gone. So when he figured this out, McIlheny again just decided: “I’m going to do something about it. I’m not going to wait for somebody else.”
And then I just love the fact that the second story I tell about McIlheny: that’s also about extinction, but it’s a totally different kind of extinction… So I mentioned he’s a Southern boy. He grew up in the South, and he just loved Negro spirituals. They were part of his life, and he adored them. And he noticed, when he was getting to be an older man in his 60s, he just wasn’t hearing them anymore. People didn’t sing them on the porches like they used to. People couldn’t remember the words when he asked them to join him, and he became worried about this.
Now, you have to remember, this music, which is obviously deep Americana…. The American spiritual is just one of our original art forms, but it existed entirely in an oral form. It had never been written down. And you forget that those kinds of things can disappear. It only takes one broken link generation in the chain, and it’s gone. So when he figured this out, McIlheny again just decided: “I’m going to do something about it. I’m not going to wait for somebody else.”
First, philanthropy, as you know well, tends to be personal. So the first thing he did, he ran around his neighborhood to figure out: who remembers any of these songs? And he found these two delightful elderly women, both in their 90s, in his neighborhood, who remembered hundreds of spirituals– both the songs and the lyrics. And he then hired a musicologist, and the two men sat down with these two ladies, and they just asked them to sing their hearts out. And while they did that, they scrupulously wrote as fast as they could, to record all the melodies and the harmonies and the lyrics; and they got these down. Anyway, McIlheny published these as a book. I’m trying to remember, I think there were like 125 spirituals in this book. And I went to some trouble when I was working on the Almanac to figure out how many of those spirituals had been recorded any other place and would’ve survived anyway. And it’s only like five or six that were written down anywhere else. And by the way, one of the spirituals that was saved by McIlheny in this way was the one that Martin Luther King Jr. quoted in his very famous address– when he talked about: “Free at last, free at last; Thank God Almighty, I’m free at last!” That was one of the McIlheny spirituals.
Denver: Thanks to Ned. Well, another great guy you talk about is Alfred Loomis. Actually, his great grandson is Reed Hastings, the CEO of Netflix, and he’s disrupted a couple of industries. But boy, what Alfred Loomis did was even more interesting and significant in many ways. Tell us about him.
Karl: Boy, it’s just criminal, Denver, that we don’t learn some of this stuff in school. I was just embarrassed when I figured out how important Alfred Loomis was in the course of World War II. To realize that I was in my 50s before I’d ever heard a word about the guy! So, Alfred Loomis was one of those guys that just loved science ever since he was knee-high to a grasshopper. Just couldn’t get enough of experimentation! He always knew that’s what he loved.
But his father died when he was in college, and he realized he was possibly going to have to support the whole family. He thought he better get serious about making money. So he went to law school, hated that, and wanted to get back to science, but realized that if you wanted to do science on a really big level… on a great level… he was going to need a pile of money to do it. So he got together with his brother-in-law and he said, “Let’s go to Wall Street and make some serious money.” And this was a highly talented man, obviously. And the two brothers-in-law formed a firm that basically financed most of the rural electrification of America. They wrote about 40% of the bonds that electrified America. That was kind of the internet craze of his day. Big deal! And they made a pile of money.
And then he just brilliantly anticipated the stock market meltdown, and he went to all cash as of the summer of 1929. Of course, the market collapsed in October. Why don’t you and I think of these things, Denver? Anyway, so when the market crashed, he bought, bought, bought, and to make a long story short, he became one of the richest men in America by the early ‘30s. And as he had suggested to everyone he was going to, he completely retired from finance at that point. Finance was just the utilitarian thing for him. He had the money he needed, and he went back to science.
And Alfred Loomis was not just a dabbler. He was a serious scientist. For instance, he was one of the early guys that discovered brain waves. Wave theory in general was something he was very good at. He was an expert in the precise measurement of time. Kind of wonky stuff! But here’s what happened– where it came in handy. In 1938, I believe it was, Alfred Loomis takes a trip to Berlin, and he’s stunned by two things. One is how popular Hitler is– just really surprised him. And second, how great the German scientists were and how far advanced they were in many areas!
Denver: And that worried him.
Karl: Boy, he came home just terrified and started just ringing the alarm bells to everybody he knew in government. He was very well-connected, and he started telling everybody “You have to get on nuclear weapons. You have to get on all these different things.” And they said, “Oh, that’s for tomorrow’s war.” And he said, “No, it’s not.” He said, “The Germans are making incredible progress. The Japanese presumably are doing the same thing. We have to be first.”
And he was enormously frustrated at how sluggish and bureaucratic the official government weapons research labs were. He actually had some first-hand experience. During World War I, he’d worked in…the one in New Jersey…one of the weapons labs, and he just couldn’t believe how slow-moving they were and bureaucratic. So he said, “I’m going to short circuit this whole process.” So he hired a bunch of folks, and he went to work on what he thought might be a promising technology that could help in the war effort– which was to use radio waves to measure the direction and speed of moving objects— which is, of course, what we now call radar. Didn’t exist at that point! And in very short order, in this private lab with his own money, Alfred Loomis became not only the theoretical leader in the country on how radar works, but he actually started leading production of working radar sets that went into ships and planes and shore installations. And FDR said that nobody other than Winston Churchill had more to do with winning World War II than Alfred Loomis.
And again, this is an area, Denver, where we think of this as the ultimate government responsibility– National Defense. I mean, what can philanthropy possibly contribute there? And when I realized this, I thought: well, there’s just no industry, there’s no sector of a society where philanthropy can’t potentially at least be important.
Denver: That’s an incredible statement. And I guess that lab was so successful, it became the model for the Manhattan project?
Karl: Yes. Not only the model! They literally stole about two-thirds of the scientists that Loomis had recruited– with this kind of incredible entrepreneurial method he came up with. They realized: those are the guys we need! And those scientists were transferred out of his radar lab over to Oakridge in Los Alamos for the Manhattan Project. And Loomis got directly involved, too.
To give you another quick example. So, this was war time. There are shortages of crucial materials, and they need to build a cyclotron to purify the uranium for those bombs– the first bombs. And this is a massive chunk of iron and copper and titanium and other stuff, and they couldn’t find it. So Loomis just got in there and started pulling strings and buying stuff with his own money and donating it to the Berkeley lab where the cyclotron was being put together. He was single-handedly very important and instrumental in getting that incredibly important tool built… which was able to refine the uranium… that basically won the war for us. And again, this is an area, Denver, where we think of this as the ultimate government responsibility– National Defense. I mean, what can philanthropy possibly contribute there? And when I realized this, I thought: well, there’s just no industry, there’s no sector of a society where philanthropy can’t potentially at least be important.
Denver: Absolutely! Well, let’s talk about another one. I can still remember, Karl, from my American history that Cyrus McCormick invented the reaper. Although I must admit, I never really understood how it worked, I do know that that became the start of the International Harvester Company. But it wasn’t until I read your book that I knew of the connection with his daughter-in-law– I think it was Catherine McCormick. Who is she? And what did she do?
Karl: Yes. The McCormick family were actually big philanthropists. McCormick’s widow, Neddy, did some pretty remarkable things through private donations. But as you said, Catherine was one of Cyrus’ son’s wife. She was, first of all, a very talented woman. She was one of the very earliest women in this country to get a serious science education. She went to MIT. And their marriage was very fraught, and she did not have a happy life, I would have to say. But she was someone who really wanted to make a difference. And she was an early women’s rights activist and decided that… just got a bee in her bonnet and said, “You know? The thing that I really want to do is to produce some way of allowing people to control their own fertility that is as easy as taking an aspirin every day.” That was literally her mission. That was her walking assignment.
And she went out… and she was a woman of means. She had this family income, and she knew some science. She just started talking to people and saying, “How could we do this?” She eventually found a very brilliant and a little bit shady biologist who had been thrown out of Harvard. And she set up a private lab for him, and they went to work. She was in the lab every day. I mean, this was not a hands-off philanthropist who wrote a check and walked away. She wrote big checks, but she also was very much involved in a lot of the decision making. And to make a long story short, the two of them, over a period of less than a decade, cooked up the birth control pill and got an FDA-approved product in, I think, 1956. And Denver, I don’t mean that she kind of helped… or she gave money to the university lab that did it. I mean, she did it. She found the biologist and single-handedly funded this product, which has had enormous cultural ramifications, as we all know.
Denver: Yes. You even said she got her prescription filled late in her life, right?
Karl: Such a funny story! So, philanthropy is very personal, as listeners to your show know, and people pursue it often for personal reasons. And as I say, this was a real quest for McCormick. And by the time she got this, she was just so proud of it. She was so thrilled to have invented this culture-changing product. So, yes, you’re right. She literally had a prescription written in her name. She walked into her local pharmacy and had it filled even though she was at that point a matron in her 80s– not really needing birth control.
Denver: Well, Karl, not all these philanthropists were saints by any stretch of the imagination, and perhaps nobody less so than J. Paul Getty. He was a pretty cheap guy, wasn’t he?
Karl: Oh, my gosh! And I try to be balanced about this. I don’t want to turn these people into saints, because they’re not. As I already mentioned, Catherine McCormick was a little bit of a loon, in addition to being brilliant. J. Paul Getty is a classic example. He was not a nice human being at all… to say the least. Some of our listeners may remember that at one point, his grandson was kidnapped for ransom. This cheapskate of a grandpa… he got involved and he said , “That ransom sounds a little high! Could we get that down a little bit?” Trying to negotiate it. And frustrated the kidnappers to the point where they eventually cut off the poor grandson’s ear and mailed it to grandpa. And at that point, he kind of capitulated, but even then, he wouldn’t put up the full ransom. He paid as much as was tax-deductible. Don’t ask me why any ransom is tax-deductible, but apparently it is. So he paid, I think, it was about
$2.2 million, which is tax deductible. And the rest, the other millions, he gave to his son– the boy’s father–as a loan with interest, at 4% interest.
Denver: What a great guy!
Karl: So that’s the kind of warm and fuzzy human being we’re talking about here. Not a nice person. But the reason I tell this story, Denver, is because I want people to understand: you don’t have to be a saint to be an effective philanthropist. Sometimes not-very-nice people do really, really wonderful things, and that is the magic of the mechanism. Sometimes it uses guilt; sometimes it uses pressure; sometimes it uses just good human values. But in a variety of techniques, it gets people to rise above themselves and do things that help other people rather than just help themselves.
And Getty is a classic example. He gave the world this unbelievable sublime collection— really the world’s best collection of Classical, Roman and Greek art. And it will be raising people’s spirits 300 years from now, Denver, when you and I are dust in the ground. And that’s a legacy that this not-so-wonderful man left behind that will really be doing good things for human beings. And there are lots of other people like this by the way. I tell a little bit of the story in the Almanac of Leland Stanford, who is another very unpleasant human being. But think about what has flown out of Stanford University! The computer…the introductions… the new technology in biology and in medicine, things that helped everybody, things that elevate the entire human race. And that’s why the philanthropic mechanism often becomes so powerful, no matter who is behind the gift.
Denver: I want to ask you one last story that really caught my eye, and that was the story of Michael Brown, whose act of philanthropy was directed more towards an individual, right?
Karl: Yes, very much. And I want people to not feel like this is a game for moguls. I mean, that’s one of the classic mistakes — to think that it’s all about rich guys. Literally 81% of the donations in this country come from individuals… and most of that from average, ordinary, middle-class American families who give at a rate of about $2,500 per year, per family. And that may not sound like much, but you multiply $2,500 by hundreds of millions of households, and you get big bucks. That’s the power of American philanthropy. It’s everyday people doing things. It’s not the Bill Gates of the world. For all the wonderful things that Bill Gates has done, his annual contributions are about 4% of our annual philanthropy flow. Just a drop in the bucket. So it’s not a rich man’s game. It’s an every person’s game.
And Michael Brown is a good example of that. He was a Broadway lyricist, and all of your New York listeners know that’s your classic “boom and bust” profession. You can go a lot of years without a paycheck. And then suddenly you get lucky, and you get a big paycheck. And that’s what happened. He had a hit musical. This was roughly the mid ‘50s.
But that’s the joy and the delight of this whole business, Denver, is that it’s so multi-faceted. There are so many ways you can get involved. If you don’t have money, you can get involved as a volunteer. You can get involved with big money or little money. You can get involved with personal gifts or institutional gifts. There are just so many ways to do it. It’s only limited by the inventiveness of the person whose heart is moved.
Denver: ’56, I think it was.
Karl: And so he had this income, and he felt blessed and lucky, and he wanted to help somebody. So he looked around. They had a family friend who is your classic starving artist in New York City. She had grown up in Alabama and decided she wanted to become a novelist. And what do people from Alabama who want to become novelists do? They move to Manhattan. And what do they do when they get there? They end up working in bookstores and restaurants, in most cases. And that’s exactly what happened to this family friend. And she was just languishing and not making any progress on her novel. And the Browns, Mr. and Mrs. Brown, were good friends. They noticed this. They saw the pain. They saw that she was not meeting her full human potential. And that’s for me, Denver, that’s the definition of philanthropy, is: you look at a fellow human being who’s not meeting their potential, and you say, “I can help. With a little boost from me, they can meet their potential.”
And the Browns made a very bold and brave decision. They invited her over for Christmas, and they said, at the end of their gift exchange with their two boys and their family, they said, “There’s a little thing on the tree for you.” And so this writer went over and picked up an envelope off the tree and opened it, and inside it was a simple note that just said, “You have 1 year off from your work.”… which is this bookstore job and an airline job that she had to make ends meet. “You have one year off to do nothing but write. Merry Christmas.” And the name of this artist was Harper Lee, and it was during that gift year—she agonized, first of all. She wasn’t sure if it was right for her to take her friends’ money in this way. She really agonized. But she decided in the end she would do her best, and she was going to take them up on the offer. So she did. She quit her job, and she went to work, and it was during that year that Harper Lee produced To Kill A Mockingbird, which, of course, won the Pulitzer and became one of the most really influential pieces of American literature ever.
So, you really can bend history sometimes. And it doesn’t have to be a big “saving dying children in Africa.” It can be somebody right next door who you just know and notice, and it doesn’t have to be giving them a year off from work. Sometimes it can be something much smaller than that. But that’s the joy and the delight of this whole business, Denver, is that it’s so multi-faceted. There are so many ways you can get involved. If you don’t have money, you can get involved as a volunteer. You can get involved with big money or little money. You can get involved with personal gifts or institutional gifts. There are just so many ways to do it. It’s only limited by the inventiveness of the person whose heart is moved.
Denver: Well, I love this and all the stories you tell in the Almanac. Let me turn the page here, Karl, to an altogether different topic, and that is some of the standard criticisms that are leveled against philanthropy. I want to ask you about a couple and get your take. One of them has gotten a little louder in recent years, and that is: Not enough philanthropy is going to the poor. We have this effective altruism movement out there which is now looking at metrics like: Lives saved per dollar. The outcry that exists now when a $400 million gift is going to a place like Harvard– that’s sitting on a $36 billion endowment. Well, that’s become far more strident in the last couple of years. What do you say to all of that?
Karl: You know, that really scares me. On the surface, I get it. I do understand that there are more desperate needs and less desperate needs, and that sort of thing. But I’m really skeptical about anybody playing God and saying: this is good philanthropy, and that’s bad philanthropy. Partly, Denver, just because you don’t know what’s going to happen. It’s so mysterious the way things work out. Now, giving money to Harvard or giving money to Stanford. Maybe that sounds foolish, and it may well be in some cases. But, guess what! The biggest standard of living changer right now in the third world is cell phones. People in the most rural, remote, bush villages in Africa and South America have cell phones. And they bank by cell phones, and they get news by cell phones, and they get doctors’ advice by cell phones. These are hugely important devices for them. They’re not trinkets. They’re not toys. That was produced by people giving hundreds of millions of dollars to Harvard and Stanford. That’s the kind of thing you can’t always anticipate.
Moreover, I understand you have to have bread in your stomach before you can worry too much about other niceties. But who’s to say that poor people don’t need to read To Kill A Mockingbird? Who’s to say that poor people don’t get elevated to hear Brahms? Poor people are human beings too, and things that lift the spirit– or that maybe don’t measure up for those effective altruists– these measures of how many lives you’re going to save with this dollar spent–I think that’s just a very crabbed and pinched way to look at human progress and humanity in general.
And here’s my last point, Denver, is that we can do both. This is not either /or. We already spend huge amounts of money on poor people, both domestically and abroad. The new report that measures how much money Americans give away for philanthropy for poor people overseas comes out once a year… just came out… and the last year’s number was, let’s see, $44 billion we gave so that people in Rwanda and Kenya and Paraguay can be cured of diseases, or get food, or whatever is necessary to improve their lives. So we’re doing a lot of that. And I don’t think it should ever be set up as a trade-off– that you can only do one or the other. We need museums, and we need technology, and we need bread for poor people. And we can do it all, but let’s not have anybody sort of dictating that from on high. Let’s let people decide, make those decisions at a grassroots level.
Denver: It’s the mosaic that makes philanthropy… philanthropy, and if you try to pigeonhole it in a certain place… plus the fact that I think you want to treat poor people with dignity, as you suggested. And they do appreciate art, and they do appreciate music, and it’s pretty arrogant to think that they don’t.
Karl: I agree.
Denver: Philanthropy is nice. It helps, but despite the $373 billion you just mentioned, that’s really just a drop in the bucket, Karl. And the problems we’re facing today are so big and so complex that philanthropy…all it can really do is nibble around the edges. How do you respond to that one?
Karl: My mom is of the World War II generation, and for her, when you got a big problem, you need a big solution. And that usually means the federal solution. And the metaphor I’m trying to use with Mom and with other people today to help them understand that that’s not necessarily accurate logic: it comes out of the computer revolution. When computers first arrived, Denver, we thought big mainframe IBM computers were the most powerful way to go. And pretty quickly, we learned actually, that’s a lousy way to solve a lot of problems. The more flexible, better way to solve a lot of problems is just put an everyday laptop on everybody’s desk and let them—a million people go to work in their basements and in their attics and in their boats. You might be surprised what happens.
And of course that’s how the internet was built. It wasn’t built by a big corporation or a big entity of any sort. It was built by lots of little people putting their drops in the bucket. And guess what! A lot of drops in a bucket eventually become a full bucket. And a lot of little streams flow together to make a giant river. This is classically the way philanthropy works. And it takes a little faith. You have to have some faith. Because you’re right. When you’re doing it yourself, I feel it myself. You think, “Oh. I’m writing this $500 check today in my neighborhood, and it feels good. But what difference does it really make in the long run?” Well, guess what! If everyone takes care of their backyard, everyone tends to their garden… then beautiful things happen in the collective.
The word you used a while ago – “mosaic” – is the perfect word for that. You just got to put your little tile up and have faith that the guy next to you is going to put up a piece of his tile. And then this really beautiful picture emerges. And this isn’t just pie in the sky. This is reality. This is actually the way philanthropy has proven to work over time. And as I say, there are these wonderful metaphors in the computer revolution, in biology. Think about anthills or beehives. This is really a powerful kind of natural metaphor that there are two ways to solve problems. Yes, there’s a time you want a kind of top-down, centralized solution, but there are many more times when you’d be more effective if you let everyone bring their shovel full of sand and build a damn that way. That’s just a really powerful way of addressing human problems.
The other thing I’ll say is that philanthropy is not like one-for-one interchangeable with government. It’s so nimble and so efficient in some cases that $1of philanthropy can replace $10 or $100 of government aid. I’ll give you an example of that. I wrote an article last summer where basically I called up the lab directors of the 10 or 12 best medical research labs in this country– really amazing places that are doing astonishing things. And I said to them pretty much what you just asked me, Denver. I said, “You know? You’ve got billions of dollars coming from the National Institute of Health, the federal government, and from the National Science Foundation– all this government money. Why do you even fuss with these tens of millions and hundreds of millions from philanthropists?” And they all lit up universally. And I write about this. They all said, “Oh my gosh, my philanthropy is so important.” And they said, “Let me tell you what the kind of constraints the NIH money comes with.” And they told me, “If you get a grant for this particular research, and you find out halfway through that’s a dead end, and you want to reorient that money to something else, you can’t. Or you got a grant to investigate this disease, and you find you need a machine in order to complete your investigation, you can’t buy the machine with that money. It’s just super tightly bound in red tape and rules.
Philanthropic money, on the other hand, is completely fluid. It’s open. Most of the donors are very interested in solving problems and leave it to the scientists and the directors to decide exactly how to do it.” So it’s “gold.” And that’s the word some of these directors use, really. It’s “gold.” And the power and the effectiveness of that philanthropic money is really powerful. And you see that not just in science and a lot sectors. This becomes kind of venture capital. In the same way that venture capital can be really important early on because they find the right business and the right leaders, and they put a few bucks on the right horse, and magical things happen. That’s the way philanthropy at its best is able to work as well. So it’s not about dollars necessarily; it’s about wisdom in application.
…if you just judge by the newspaper headlines, to think that philanthropy is a rich man’s game. And I already suggested earlier in the show, Denver, that that’s just not accurate. Again, these numbers come out of the University of Indiana and are published annually. In the last decade, it is basically steady that of all the money given away in this country: about 14% comes from foundations; and 5% comes from corporations. And so the foundations would be the Gates of the world… and the Rockefellers… and the “Bigfoots.” And then the other 81% comes from individuals. And as I said, most of that is from average donors.
Denver: Yes. And I think philanthropy is getting better at that. I think we have been too constrained in a lot of the gifts that we make to these institutions in terms of restricted funding. But it is so nice to see that more and more institutions– such as the Ford Foundation– are beginning to increase the amount of that unrestricted funding, and I think that’s the kind of trend that we’re going to see in the years ahead.
Let me give you another criticism, and I hear this one on the show quite a lot, Karl, and that is: Philanthropy, in some ways, is undemocratic. People with huge resources are really beginning to focus their giving in certain arenas and are beginning to carry too much sway in the field. And their theory of change in education, or in healthcare– whatever it might be– is becoming increasingly prevalent. And of course, all of this is in part underwritten by the taxpayers because these contributions are tax deductible. What do you say to that one?
Karl: That’s a big one. There’s a lot to that. Well, the first thing—I’ll return to a little bit of what I was saying before. It’s easy, if you just judge by the newspaper headlines, to think that philanthropy is a rich man’s game. And I already suggested earlier in the show, Denver, that that’s just not accurate. Again, these numbers come out of the University of Indiana and are published annually. In the last decade, it is basically steady that of all the money given away in this country: about 14% comes from foundations; and 5% comes from corporations. And so the foundations would be the Gates of the world… and the Rockefellers… and the “Bigfoots.” And then the other 81% comes from individuals. And as I said, most of that is from average donors. So that Gates figure I used a while ago– where the Gates’ portion of our cash philanthropy is only about 4%… It’s just simply not accurate to say that this is a big part of the philanthropic flow. Philanthropy is a radically decentralized industry on the whole.
Let me give you some examples of that. Let’s take charter schools. Charter schools are a classic philanthropic invention. They were more or less completely ginned up by philanthropy saying, “We’re at a dead end. We can’t figure out a way to get public schools to reform themselves. So let’s build a kind of parallel system within the public school systems that allows people to run their own show and not be limited by bureaucracy and rules.”
So charter schools, as I think most our listeners know, are still public schools. They still have to meet public rules. But they have a lot of flexibility in terms of how they hire, and how long the school day is, and what curriculum they use. And they’ve been massive successes. Not every charter school is wonderful, like anything else in life. There are good ones and mediocre ones and great ones. But on the whole, charter schools have been demonstrated by researchers from Stanford and a lot of other places to be really remarkably successful. You certainly see that in New York City where you have some of the better charter schools in the country. Anyway, charter schools are your classic philanthropic creation. And people say, “Well, they have too much power to choose. They’re too strong. They’re going to overwhelm.”
Well, the biggest of all the charter school chains right now is one called KIPP. I bet you and a lot of our listeners have heard of KIPP. Very well thought of. They really do some wonderful things for low-income kids. And KIPP is the “Bigfoot” in the charter world. That’s as big and as successful as they get. And there are 183 KIPP schools around the country, and that sounds like a lot until you find out that there 7,000 charter schools in total. And you realize, “All right. Well, if the market leader– the big boy that has the Gates’ money and all the billionaire boys clubs backing it– has…what is that percentage? 183 out of 7,000. It’s like 2% or 3% or 4% of the market.” There’s not much risk of a kind of democratic overconcentration of power there, Denver.
This is a classically competitive world, and philanthropy in general is that way. It’s super competitive. And the ones that don’t work… die. The experiments that don’t work disappear. The grants that don’t pan out are not repeated. So, I worry a lot less about that than I think some people do. It’s really just not factually accurate to say that we have this kind of oligarchy where rich guys are telling the rest of us what to do. And to the extent that we’re getting rich guys to throw their money into the public pot, I say, “Hallelujah!” Let’s have a competition. Let’s see how far we can push them to do that!
Again, let just give one more example. But Poor Gates! Because I mentioned them a lot today. But I admire a lot of what they do. So Bill Gates and his wife had said that they’re going to give each of their three kids $10 million. They were very public about this. And so $30 million is going to stay in the Gates family, the next generation. Well, you know and I know, Denver, that the Gates Family is worth about $80 billion. So the other $80 billion– minus $30 million that stays in the family– the rest of that is going to go to public purposes. I say: “God Bless Them!” And if somebody thinks that’s a problem, and that’s manipulative, and that’s dangerous for America, I say, “What’s your answer?” I just think it’s delightful that they’re giving this money for public purposes, and they ought to be encouraged rather than ganged up on.
Denver: Finally, Karl. I want to turn to your most recent book, which is called What Comes Next? How private givers can rescue America in an era of political dysfunction. And I know people often look at the political dysfunction of today… and the cultural divides that surround us currently. Sometimes I think they yearn for the “good old days.” But you maintain that, along with some other periods of our history, the first half of the 19th century would hardly qualify as “the good old days.” What was going on in America then?
Karl: You’re absolutely right, Denver. My head is swimming a little bit. Let’s be sympathetic. This is definitely an odd environment we’re in right now politically. And there is this temptation to say, “Oh, Woe is me! We’ve never had it worse. This is terrible.” And maybe I started off with some of that view myself when I went into my research. But boy, I quickly found that if you think we’re the first people to face cultural dysfunction or political dysfunction, think again. It was a lot worse in the past. And as you point out, the first half of the 1800s is the era where I really dug in. It kind of stunned me.
America was a very violent, very crude, very cruel place in many ways at that point in our life. Just to give you some examples. Let’s take violence. Violence was a huge problem. It was just endemic. I mean, you had people literally beating themselves into bloody pulps in Congress, for heaven’s sake. Never mind on the street.
There were games. I had some illustrations in my book about a famous—they call it a sporting house. It was in lower Manhattan, attended by people of all classes – wealthy gentlemen to everyday people right off the street. And every single day, they would stage these horrible spectacles where you’d have like a hundred starved rats fighting a terrier. Or you’d have men who would file their teeth down …fighting each other bare handed in a ring. Or you’d have dogs turned against bears. Just cruel violence.
Denver: Yes. Gouging, things like that.
Karl: Gouging, yes, which is this horrible thing. Men would literally grow their fingernails because there was this street fighting style where you try to pop the other guy’s eyeball out with your fingernail. You think this sounds like a horror film. This literally was some of the street behavior that was taking place in New York City and other places in this country.
Take drinking. The consumption of alcohol, I was startled to find out from the Census Bureau figures, the consumption of alcohol in this country was about three or four times current levels in the—
Denver: Yes, like 7 ½ gallons a year.
Karl: A year, yes, of pure alcohol. And today it’s around 2 gallons per year of pure alcohol. So that led—I don’t have to tell our listeners—that led to all kinds of family dysfunction. Tons of businesses and factories couldn’t open on Mondays because so much of their workforce was hung over. There was all kinds of brawling in the street… riots. We know about the draft riots in New York City. Well, there were lots of other riots where people got lynched and chased and beaten and burned, and a lot of these was alcohol fueled. So we had social problems, and we had political problems.
People know the word Tammany Hall. Well, guess what? Tammany Hall was a national metaphor—the whole idea that you get the right to stuff your buddies into government if you win. And you get the right to tap the federal till. So my point is: we are not the first to face challenges. And the encouraging part of this book– so it doesn’t just become a complete downer– is that I talk about how even though government wasn’t able to reform itself in that era, other reformers stepped in. And they did it primarily through private philanthropy and volunteering and giving and organizing and activism in a way that should be really inspiring to Americans today… because a lot of this could be replicated.
Denver: Well, I’m going to ask you about two brothers who appeared during this time to get us out of those tumultuous and difficult times– and I think two of your very, very favorite people– who helped restore some sanity and hope. They were Arthur and Lewis Tappan. Tell us about them.
Karl: Again, names that have just been lost to history and it’s kind criminal that they have. I am in the midst of a major bromance with these two guys, let me tell you. Just so admiring of what they were able to pull off! They were very successful entrepreneurs in lower Manhattan. They had basically a silk importing business near Hanover Square. I’ve actually been down there looking for their building. The building is not there anymore, but I was trying to just find ghosts of their homes and things because there’s a fascinating history down there.
They were classic kind of Puritan stock from New England and came to New York City and made a lot of money, but had very strong social consciences and were just appalled by, among other things– slavery, and by this drinking problem I just described. And by the fact that about half of the children in our country were not getting any education. They were working. They were farm kids going to work at age 8, or there were girls selling newspapers on the street. And so those were the kinds of problems that the Tappan brothers saw when they looked around them.
And again, they didn’t wait for somebody else to step in. They didn’t bemoan the fact that the federal government was so inert and unable to fix this. They just said, “Let’s go to work.” And they gave money, but more importantly, they gave time. They gave energy and they organized. And the Tappan brothers were just hugely important among other things in—they created the abolition movement as a popular movement. They sent out literature. They held meetings. They founded churches. They sponsored lecturers. They protected the spokesmen who were harassed and chased, and they did this at great risk, Denver. I mean if you’ve read the book, you know that these guys were just beaten down by varied bullying parts of the public.
One of the brothers, Lewis Tappan had his house burned, battered in… broken. They pulled all of his children’s toys and his wife’s clothing into the streets and burned it. There were multiple assassination attempts on them, but they never gave up.
Denver: And he was smart. He left all that stuff in the street as a reminder to everybody.
Karl: Yes. Isn’t that brilliant? This is the ultimate anti-slavery preacher. I think the way he put it, “Just leave my house there to show what these bullies are capable of.” So, this is the kind of human beings…and again, these were not by modern standards rich men. But they gave a large fraction of their income and a lot of energy and time, and they managed to produce culture change and social change which was hugely consequential.
And Denver, I think most of our listeners would agree what America really needs today —most of it is not deliverable by government. We need stronger families. We need to get the drug plague under control. We need better race relations. How much of that is going to get fixed by the federal government? Not much. I think what we really need is to work on our character, to work on our community strength, to work on the success of our private economy so that people aren’t left behind. Those are things that can be done by average citizens banding together in a way that they classically have done in America for generations… to improve their own world, step by step, in that mosaic fashion that you described.
And rather than waiting for people on white horses on the Potomac River to save us, it’s possible to follow the Tappan brother model and create really wonderful culture change by just acting.
Denver: Are you seeing that happening, Karl?
Karl: Well, it’s never gone away in this country. That’s the blessing. Some incredible things are happening. A lot of this is just like part of the background furniture so we don’t notice it. But I mentioned charter schools. Not only charter schools… almost all the great education reforms of the last 20 years have come out of philanthropy. There are some really wonderful—they call them STEM programs: Science, Technology, Engineering and Math. The best new ventures in science and mathematics education are all coming out of private philanthropy.
The best new methods for training teachers are coming out of philanthropy. The best new methods for assessing teachers and figuring out who should get the raise and who should be asked to move on. There are really wonderful things being done by the Gates Foundation and others in that area. Some of the new curriculum. Some of the incredible online learning that’s being done now is all basically produced with seed money from philanthropists. So that’s just one little sector, Denver, but it’s an area where we haven’t really made much progress in public school reform. But we have made progress through these philanthropically-funded things that eventually do trickle back and feed into the public schools. So, it’s a kind of an indirect message of improvement. And you see that in sector after sector after sector.
Denver: Finally, Karl. I mention at the very beginning that you oversee the publications for the Philanthropy Roundtable. Tell us a little bit about the Philanthropy Roundtable.
Karl: We have about 650 or so members, some of which are foundations, some of which are individual donors. It’s basically a group of people who want to be effective and efficient when they give away money. They want to do well, and they want help doing that. So that’s what we try to provide. And the Almanac of American Philanthropy– this product that you and I have been talking about– is our attempt to produce kind of a user’s guide, if you will. And the book has really three themes, as you know, Denver. It’s the great givers, the great achievements, and the great ideas behind philanthropy. And by presenting this in a compendium book: This is what successful looks like. And again, it’s not all moguls. A lot of these are little successes, too. But you put it together, and our hope is that it can be both an inspiration and also a map, a recipe book for other donors to find their own passion, and to find their own area of operation, and throw it on their buckets and go to work.
Denver: And what is that website? And if people do go to that website, can they get information on both of these books?
Karl: Yes. It’s philanthropyroundtable.org. And again, it’s the Almanac of American Philanthropy. It’s not too hard to find once you’re on the site. And the other book we’ve been discussing is called What Comes Next? And they’re both there free in PDF form, if you don’t mind reading online. We want people to read this stuff. We’re not trying to make money on it. It’s there free if you want to read it online, but if you’d rather have a real book, it’s also available at Amazon. The whole point is to get the message out there. This is just a really incredible part of America that is underappreciated, underexplored, underknown. And it’s really one of the things that makes us different from the Europeans and from the Asians and from other people. It’s really one of our comparative advantages.
Denver: Well, Karl Zinsmeister, thanks so much for being on the program and for a really fascinating conversation. It was a pleasure to have you here.
Karl: Likewise. I admire what you do there, Denver.
Denver: Thanks very much.
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