A tip for any aspiring tech networker or VC stalker looking to exchange business cards and make impressions at the next Silicon Valley mixer: Avoid mentioning the name Anand Giridharadas. That probably won’t go well.
The journalist and author has positioned himself right up there with Elizabeth Warren among names that can trigger dirty looks in the cafes of Mountain View and Palo Alto. In recent months, Giridharadas has received texts from friends in the Valley that describe fights breaking out at dinner parties at the mention of his 2018 book Winners Take All: The Elite Charade of Changing the World.
Winners is the result of a journey that began in 2015, when Giridharadasa former New York Times columnist who is now editor at large at Time magazinelanded a speaking gig at the Aspen Institute, the tony think tank that attracts tech billionaires, industry titans, media celebrities, power brokers and other elite “thought leaders.”
At the time, Giridharadas was a visiting fellow at Aspen. He opened his speech with a plea to his audience to forgive him for what he was about to say. He then unleashed the kind of critique that before had been taboo in places where the One Percent congregate. He not only talked about glaring economic inequality, he went a step beyond, suggesting that the philanthropic efforts of even the world’s most generous benefactors was only a fig leaf hiding the brutalities of an unjust system.
“Amid the $20 million second homes and $4,000 parkas of Aspen,” he told the crowd, “it is gauche to observe that giving back is also a Band-Aid that winners stick onto the system that has privileged them, in the conscious or subconscious hope that it will forestall major surgery to that systemsurgery that might threaten their privileges.”
Giridharadas told his captive audience of plutocrats that their generosity was a cover for injustice, that their philanthropy was merely flowery wallpaper on a rotting house.
Though it was delivered in Colorado, Giridharadas’s speech came in loud and clear in Silicon Valley.
Almost four years later, Giridharadas stands by his comments and adds that they apply especially to the messianic culture of Silicon Valley, where giving away money has become almost as consuming a preoccupation as making it. “No one is more wounded than the person who thinks they are making the world a better place every day and then told otherwise,” Giridharadas says in a phone interview.
His book expands and amplifies the themes that he first broached in Aspen. It takes on the prevailing “win-win” mentality behind philanthro-capitalism, as well as the idea that the super-wealthy are able to bring about any kind of meaningful social change in a world that has rewarded them so spectacularly.
“It would have been hard to end slavery using a method that put plantation owners in charge of the initiative,” he says. “It would have been hard to get children out of the factories in the early 20th century if factory owners were responsible for ending child labor. And it’s going to be very hard for the plutocrats of our time to unwind the system that has allowed them to enjoy almost all the fruits of progress of the last generation.”
Though he levels his criticisms at the assumptions that underlie the billionaire class generally, Giridharadas takes particular aim at Silicon Valley. Wall Street people, he says, tend to be rather upfront in their desire to make a buck. On the other hand, “Silicon Valley is full of little Maos who have this huge idea to liberate humanity and won’t let anything get in their way.” Tech, he said, is especially vulnerable to the “win-win” mentality that insists philanthropy can change the world without changing the underlying structure of capitalism.
“I’m not sure what’s more dangerous,” he says, “the investment banks in New York who cynically use a little bit of giving to lubricate the engines of continued taking, or the messianic Silicon Valley boy-men who think being left alone by journalists and regulators without scrutiny or pushback is the secret to emancipating mankind.”
Since Winners Take All was published in the summer of 2018, debate has shifted dramatically in the themes that Giridharadas brings up in his book. Last fall’s midterm elections revived talk of 70-percent marginal tax rates, and wealth taxes on billionaires. Bill and Melinda Gates, who have been nearly universally praised for the long-ranging and life-saving effects of their charity, found themselves defending the existence of billionaires on Stephen Colbert’s couch.
Even more significantly, Giridharadas is not a voice in the wilderness. His is one several books published in the last year that question the fundamental engine by which the wealthy seek to exert their influence on society: philanthropy.
THE THIRD FORCE
Americans tend to think of the forces that shape public life as a strict binary: government and the free market. But look closely enough and you’ll see a third leg on that stool. Philanthropycorporate or foundation giving mostly to tax-exempt charitable organizationsis a powerful, extra-governmental force that is engaged in exactly the same kind of big-picture efforts as government and the market, which is solving social problems and otherwise cultivating a better life for everyone.
So why don’t we give more attention to philanthropy (from the Greek for “love of humanity”)? Why isn’t it subject to the same kind of diligence that we give the market and the government? Why does it exist in a rosy fog of facile public approval?
In the last decade, big-money philanthropy has been at the center of a public-relations masterstroke, largely engineered by Bill and Melinda Gates and Warren Buffett. In 2010, the Gateses and Buffett formally took their places atop the list of benevolent philanthropists when they began to collect signatures for an initiative called the Giving Pledge. The invitation to sign the pledge was extended only to billionaires, and it committed them to give away at least half of their wealth to charity (The pledge is not legally binding, which may account for its popularity).
Silicon Valley is well represented on the Giving Pledge roster, which has now reached 190 pledgers. Among the tech-industry signatories are Reed Hastings of Netflix, Elon Musk of Tesla, eBay founder Pierre Omidyar, Jeff Skoll of eBay, Larry Ellison of Oracle, Breakthrough Prize founder Yuri Milner, LinkedIn founder Reid Hoffman, Facebook COO Sheryl Sandberg and venture capitalist Nick Hanauer, who famously called for his fellow billionaires to do something to mitigate inequality or “the pitchforks are going to come for us.”
Large-scale philanthropy had been going on in Silicon Valley long before the Giving Pledge. In the 1990s, tech philanthropy experienced its first big wave, spearheaded by now legendary figures such as Bill Hewlett and David Packard of HP, John Morgridge of Cisco and Gordon Moore of Intel.
But post-Pledge, Valley philanthropy has become turbo-charged, reflecting the famously reckless move-fast-and-break-things ethic of Facebook. Mark Zuckerberg and his wife Priscilla Chan donated $100 million to improve the schools of Newark, New Jersey (an effort that’s gotten mixed, often negative reviews). Five years later, Zuckerberg and Chan turned their attention closer to home, funding the Primary School, which opened in 2016 as a “free private” elementary school in East Palo Alto. Facebook co-founder Dustin Moskovitz and his wife Cari Tuna established a high-profile foundation called Good Ventures, as well as the Open Philanthropy Project, an LLC grantmaking organization. And Sean Parker, the co-founder of Napster who later became Facebook’s first president, announced in 2015 that he would donate $600 million to “hack” cancer research. Parker, by the way, did not sign on to the Giving Pledge because he said it wasn’t aggressive enough.
Only the most cynical would claim that the billions poured into charity by Big Tech has not produced real value in making the world a better place for potentially millions of people. But the Giving Pledge era in philanthropy has coincided with precious little scrutiny of not only where the money comes from and where it ends up, but also whether it distorts faith in democracy itself.
That hasn’t always been the case. As Stanford’s Rob Reich outlines in his new book Just Giving: Why Philanthropy is Failing Democracy and How it Can Do Better, the very first philanthropic foundation established by oil tycoon John D. Rockefeller in 1909 was greeted with widespread skepticism. President Taft called on Congress to oppose the foundation, and former President Theodore Roosevelt remarked, “No amount of charities in spending such fortunes can compensate in any way for the misconduct in acquiring them.”
Reich (no relation to the former labor secretary and Berkeley professor) is the faculty co-director at Stanford’s Center on Philanthropy and Civil Society. He says that when it comes to philanthropists, the public should cool it with the hugs and the bouquets. “Philanthropy,” he says, “especially big philanthropy, is an exercise in power. And in a democratic setting, whenever power is exercised, it deserves our scrutiny rather than our gratitude.”
Yes, there are the egregious examples of what Reich calls “reputation laundering.” Teddy Roosevelt would probably suffer an aneurysm if he knew of the billionaire Sackler family, whose members have given lavishly to museums and universities, often getting their names on buildings in the bargain. The Sacklers, who own Purdue Pharma, made a fortune by aggressively marketing and selling OxyContin, the enormously successful narcotic painkiller that is largely blamed for the ballooning opioid crisis. (For the record, the Sacklers have vehemently denied responsibility for bringing heroin back into vogue, though they recently agreed to pay $270 million in a settlement reached with the State of Oklahoma).
If any company could use a bit of reputation laundering these days, it’s Facebook, which has weathered a storm of bad press stemming from the role its platform played in spreading disinformation during the 2016 presidential election and permitting the harvesting of personal data by Cambridge Analytica and other firms. Restoring some balance to the company’s public relations ledger is the ambitious and well-funded Chan Zuckerberg Initiative (CZI), Facebook’s philanthropic push that seeks to eradicate or severely curtail diseases such as cancer, heart disease, stroke and infectious and neurodegenerative diseases.
The initiative was announced in the most benign way imaginable, in an open letter by Zuckerberg and Chan to their newborn daughter Max, posted on Facebook in December 2015. In the letter, Zuckerberg and Chan vowed to give away 99 percent of their shares in Facebook (valued at about $45 billion at the time) to support the mission. But CZI is not a 501(c)(3) foundation but an LLCa private, for-profit company. That designation allows them to avoid the oversight and transparency of what becomes of that giant reservoir of money, and still affords them the freedom to invest in the market, donate to political causes and lobby Congress. ProPublica journalist Jesse Eisinger (not to be confused with Jesse Eisenberg who played Zuckerberg in The Social Network) likened the creation of CZI to Zuckerberg moving “money from one pocket to another.”
But such Roosevelt-ian criticisms are beside the point in the larger critique of contemporary philanthropy, says Reich. Even if the massive piles of money accrued by philanthropists were acquired completely legally and do not tickle the moral gag reflexsome would claim such wholesome fortunes do not even existphilanthropic gift horses should still be looked squarely in the mouth. “We should know whether the power these givers are wielding is on behalf of democratic values or is undermining them,” he says.
This matters because, of course, philanthropy is largely underwritten by the US taxpayer in the form of charitable deductions. And the costs of those charitable deductions are not distributed evenly. About 90 percent of all American households give something to charity every year. But the deduction is higher if your tax bracket is higher. That means the real cost for every dollar given to charity to a middle-income giver is closer to a full dollar; but for someone making half a million or more per year, that cost is closer to 60 cents.
Maybe such a system can be justified as an incentive for wealthy people to give their money to worthy causes. But tax subsidies puts skin in the game for every taxpayer. And philanthropy is as vulnerable to gaming as any system that involves large sums of money.
DONOR’S ORDERS
In recent years, an instrument known as a “donor-advised fund” has cropped up, allowing those interested in giving to charity to do so without the bother of forming a foundation. But these DAFs, which are so popular that Reich calls them the “kudzu of American philanthropy,” are not subject to the same rules. Traditional foundations, for example, are required by law to allocate at least 5 percent of their endowment every year. DAFs are not. That makes it possible to use one of these funds as a way to park money to spend in some indefinite future for some unspecific charity and yet still get the tax deduction right away, a huge plus when it comes to a windfall like an IPO.
Big philanthropy is also as subject to the corruption that plagues all large, complex institutions. Close to home is a prime example, the Mountain View-based Silicon Valley Community Foundation, the country’s largest community foundation, which manages a staggering $13 billion endowment, including contributions from Facebook’s Zuckerberg, Google’s Sergey Brin and Twitter’s Jack Dorsey, among others. The SVCF is only now emerging from a toxic-workplace scandal that resulted in the ouster of its CEO Emmett Carson.
Even without the bullying and harassment issues at the heart of the scandal, SVCF is facing more scrutiny because of the explosion of donor-advised funds under its management. DAFs were the engine to the foundation’s 800-percent growth rate since 2010 (and, no, that’s not a typo).
DAFs also face little in the way of transparency requirements and the identity of their donors and grant recipients are often shrouded in shadow. David Callahanthe founder and editor of Inside Philanthropy, a kind of watchdog website on the philanthropy industrysaid that among the 90,000-plus private foundations in the U.S., the “vast majority” of them have no way for those seeking grants to contact them.
But you don’t have to get down in the weeds to feel uneasy about philanthropy’s effect on the contemporary world. It already poses several philosophical dilemmas that Americans should take seriously. In a democratic system built on the principle of one person, one vote, big money provides an end-around. The Gates Foundation, for example, has saved lives with its philanthropy, probably many millions of lives. For some, that bottom line trumps any queasiness about democracy. But others stand with Anand Giridharadas:
“The amount of power individuals like Bill and Melinda Gates have over, for example, public education as private citizens in a democracy is untenable,” he says. “It’s simply too much power. Why have people died in this country to enshrine one person, one votenobody has zero votes, nobody has twoif we’re opening up this extra door into the nightclub of democracy where only billionaires can walk in, and once they do, we give them a million extra votes?”
SUPER CITIZENS
David Callahan of Inside Philanthropy has also added his voice to the emerging debate with his recent book The Givers: Wealth, Power, and Philanthropy in a New Gilded Age (Knopf).
Callahan takes a big-picture view of the philanthropy ecosystem and how it ideally should interact with government and the market for society’s greater benefit. While acknowledging that philanthropy often “is really beneficial and makes the world a better place,” he also says that the current system has created an elite group of “super citizens,” wealthy benefactors whose influence and intentions have distorted public consensus on a wide array of social issues. In Callahan’s view, philanthropy too often gives license to wealthy donors to pretend to have expertise in a realm where they have little to no experience.
“Some people are super-smart, quite humble and proceed very carefully,” says Callahan, “and some people are lazy, sloppy and arrogant. The generalization that these people are all driven by hubris is wrong, but there are enough of them who behave this way that it has created a stereotype. Education is one area where you see a lot of pushback to these hedge-fund billionaires who back charter schools and teacher accountability systems with the attitude that ‘All we need to do is bring market competition to K-12 education and we’ll get the same results we’ve gotten everywhere else.’ That kind of parachuting in with a bunch of assumptions generates a lot of resentment from people who have been working on the ground in communities for years trying to solve these problems.”
The tech industry has been particularly prone to misapplying lessons from one realm to another. What works in Silicon Valley doesn’t necessarily work when facing intractable social problems. “Many philanthropists,” says Callahan, “approach social problems with the mindset that reflects how they made their money in the first place. For many tech people, there is an appreciation of the power of technology to bring transformative change very quickly and with a lot of disruption. Some of these donors get quite impatient and frustrated when they see that (philanthropy) is much more of a long game than they realized.”
A PARTNERSHIP
But here’s the thing about philanthropy: It has an important and specific role to play in a healthy society. It can be done in a way that doesn’t necessarily aggrandize the wealthy or distort democracy.
No matter how big the fortunes are, in terms of scale, philanthropy cannot compete with governments. That means that philanthropy works best when it shows governments what works and what doesn’t. And that’s the way it’s always been.
Stanford’s Rob Reich calls government “the ultimate scaling mechanism.” To sell the point, he evokes perhaps the most famous name in American philanthropy: 19th-century industrialist Andrew Carnegie, whose giving almost single-handedly created the still-thriving public library system in the US.
“What Carnegie did not do,” says Reich, “is say, ‘Here’s a bunch of money for every town and city in America to create a public library, buy a bunch of books, hire a bunch of people, and I will pay for it all in perpetuity.’ It was money designed as a social experiment to see whether the circulation of knowledge and access to information was good for democracy. If citizens liked it, they would then turn to their local representatives to fund libraries. And that’s exactly what happened.”
In this model, philanthropy is best when it is creating pilot programs for experiments that can then be adopted, or not, on a larger scale by government and through the process of democratic legitimacy. What undermines this model is cynicism about government, which is the default attitude of many philanthropists. They are exerting their influence to do good in the world exactly because, the belief goes, government cannot act in that capacity. Such beliefs ultimately undermine the goals of giving, says Reich.
“Effective philanthropy requires a kind of humility about what role philanthropists can play,” he says. “They are serving a democratic interest, and badmouthing the dysfunctional democratically elected government is the same as badmouthing the final piece of the process of government as the take-up mechanism to provide the philanthropic benefit for all people.”
So, we’re back down to that old faith-in-government debate, the argument that undergirds so much of the dysfunction and distrust in our broken political systemthose who believe that representative government, however imperfect, is the only chance for people to build a better future vs. those who believe that government has proven again and again that it is not up to the task and only stands in the way of the only effective agent of positive social change, the free market.
Despite the new consciousness of philanthropy’s role in society, Rob Reich, for one, is not optimistic that things are going to change much. “In my picture of the future, philanthropists have more and more power and the government gets weaker and weaker. But we also have the option of reversing the decline of government so that the power of philanthropists is not so outsized relative to the power of the rest of us. The decline of government is not a fait accompli.”
