Governance

The literature on philanthropy and governance focuses on philanthropic actors—both givers and recipients—and questions of good government, such as transparency and the age-old question of “who gets what.” These topics have become more salient as the philanthropic environment has shifted to be more businesslike in nature (see Eikenberry and Mirabella, this issue; Nickel, this issue). The givers mentioned previously bring new actors into the governance process. In doing so, questions are raised about the types of actors and their relationship to one another, as well as who has a say in answering political questions.

From the political science perspective, Ball (2008, 748) argued that the “new policy communities bring new kinds of actors into the policy process, validate new policy discourses and enable new forms of policy influence and enactment,” which results in a “new form of state.” These include elites working to change policy at global and regional levels (Stone Reference Stone2010), as well as corporations, individuals, and new types of philanthropic givers. Much as Nickel (this issue) notes, these practices raise questions about good governance, even if the gift meets it purpose. For example, Delfin and Tang (Reference Delfin and Tang2006) found that the Packard Foundation’s support of land conservation in California was effective in leveraging foundation funds for additional gifts and meeting the objective of conserving land. However, it also raised questions about governance, including transparency, agenda-setting, and power dynamics among actors within the network.

Thus, philanthropy is being used to do more than support other advocates; philanthropists are engaging in both governing and public policy making. Conceiving of major donors as policy plutocrats, Goss (Reference Goss2016) studied several major donors and observed that large gifts are used to engage both publicly and privately in the governance process in ways that move beyond giving to political campaigns. The engagement of philanthropists has real consequences for which policies are selected.

Yet, it is not clear that the donor choices are democratic or promote policies based on any type of consensus on the public interest. For example, Reckhow (Reference Reckhow2016) found that foundations have built a network of support for education reform based on performance; however, major stakeholders (e.g., teacher unions) reject these ideas, suggesting that there is no broad consensus on reforms being put in place. Comparing advocacy groups, Hertel-Fernandez (Reference Hertel-Fernandez2016) argued that because conservative donors have built stronger networks, they have achieved greater success than liberals in changing policies. Relatedly, by ensuring their favored recipients face fewer organizational challenges, funders can strengthen the competitiveness of their policy network (Teles Reference Teles2016). These findings raise questions about the democratic nature of philanthropy.

Reich (Reference Reich2016) argued that although there is merit in the antidemocratic view of foundations, these entities can support democracy through social experimentation in the long term. If this happens is a matter of debate, however. Through a discourse analysis, Jensen (2013, 119) found that although some foundations may state an interest in solving problems related to racial inequality, in practice, their actions are aimed at “preserving and promoting philanthropy’s role in society” rather than promoting experimentation that acknowledges the difficulties of the issue. Therefore, although experimentation and problem definition can be advantageous for giving to solve social ills, it is not clear that promoting broad discourse among all policy actors is prioritized above attaining the givers’ own notion of the public good or promoting their own self-interest.

Discourse, however, is important for solving social problems and determining public interest. One area in which this has been questioned is corporate-giving programs. Opponents argue that consumption philanthropy devalues the relationship between giver and recipient to one of simply buying to do good, thereby prohibiting discourse that might challenge the underlying social conditions that traditional philanthropy explicitly seeks to address (Nickel and Eikenberry Reference Nickel and Eikenberry2009; Wirgau, Farley, and Jensen Reference Wirgau, Webb Farley and Jensen2010). Cho and Kelly (Reference Cho and Kelly2014), however, argued that the relationships between corporations and nonprofit recipients are based on “mutual benefits” whereby there is care, concern, and communication of needs between the partners, which suggests that there is discourse. However, this view fails to recognize that those who are buying do not have a relationship with those who are suffering from the ills that the company’s giving is aimed at relieving. Therefore, this affects the ability to deliberate about the root causes of these problems (Nickel and Eikenberry Reference Nickel and Eikenberry2009).

Proponents argue that management tools could ensure that philanthropic donations enhance governance and improve social condition; however, support for these claims is lacking (Eikenberry and Mirabella, this issue). For example, although we might hope performance metrics would ensure that social ills are being resolved through corporate-giving programs, it is unclear whether corporations evaluate their giving in terms of social or economic criteria (Marx Reference Marx1999). These findings raise more questions about the ability of philanthropy to contribute to good governance.

Therefore, although the United States has a strong giving history, there are questions about the ability of philanthropy to address complex problems. For example, Eikenberry (Reference Eikenberry2007) noted that without coordinated action among multiple giving circles, there are questions about their ability to maintain their grassroots organizing mechanisms—which foster democratic behaviors—while also deploying enough resources to adequately address social ills. Ostrander (Reference Ostrander2007) raised further concerns about the lack of relationships between donor and recipient in these giving circles, noting the lack of knowledge transfer that occurs when donors and recipients (specifically, those who are suffering) do not interact. According to Ostrander (Reference Ostrander2007), new forms of philanthropy (e.g., donor-advised funds and giving circles) can distance donors from recipients, whereas venture-philanthropy models enable donors to oversee the recipient—both of which result in donor control. The former does so by not allowing for discourse between those who give and those who receive, which would allow for more informed decisions about giving; the latter could result in relationships but that lack of research prohibits that conclusion. Therefore, it is unclear whether recipients and donors share knowledge that would allow for informed decisions about giving to the betterment of society.

All of this research is related to one of the most basic political questions of who gets what and how, which is becoming more explicitly prevalent in the scholarship. One emerging area of research is regional differences in giving. Broadly, Brecher and Wise (2008) noted that philanthropy that supports public services may not be equitably distributed, and it may replace bureaucratic decisions for donor interests that are based on subgroup interests. Wealth varies geographically (Irvin Reference Irvin2007), as do regional cultures (Schneider Reference Schneider1996); therefore, so might philanthropic activity (Irvin Reference Irvin2007). Ashley (Reference Ashley2014) noted that although there is concern that rural communities and organizations suffer from these differences, the evidence shows that rural communities receive a proportion of grants as equitable as their urban counterparts.

Another emerging area suggests that race and ethnicity affect how people participate in governance through giving. For example, through a mixture of qualitative-interview and quantitative-giving data, Khan (Reference Khan2016) found that Arab-American Muslims are focusing more on creating results, which suggests that philanthropy creates community rather than community being the draw for philanthropy. Relatedly, there is concern about the ethics of philanthropy—for example, that funding may go toward unethical causes (e.g., hate groups) (Goldfarb Reference Goldfarb2011). The findings in these emerging bodies of research suggest that more inquiry is needed to understand how philanthropy may contribute to disadvantaging or disenfranchising certain groups based on demographic characteristics.

Policy

Related to governance is the issue of policy. Policy and philanthropy are intertwined at multiple levels. Policy can promote philanthropy, structure the institutional environment for philanthropy, and affect the efficacy of donations. Given the reliance on both the traditional and the emerging forms of philanthropy, more research on the interaction of policy with giving is needed.

Policy has been shown to both encourage and discourage philanthropic giving. Comparing giving in the United States and the United Kingdom, Wright (2001) noted that political structures and policy affects how much is given. For example, laws help to determine giving by setting forth the requirements for organizations that can receive funding, encouraging giving through tax treatments, and ensuring that organizations uphold donor intent (Reich Reference Reich2016). However, many studies suggest that government funding dampens or crowds out philanthropic giving (for examples, see the online appendix). Other research suggests that if state disapproval delegitimizes a particular policy direction, foundations may give less (Aksartova Reference Aksartova2003).

To encourage giving, several scholars note the importance of the institutional environment, which may promote certain types of giving (Mosley and Galaskiewicz Reference Mosley and Galaskiewicz2015) and grant legitimacy, particularly among foundations (Teles Reference Teles2016; Toepler Reference Toepler1998; Woods Reference Woods1999). Using a longitudinal analysis of grant making following welfare reform, Mosley and Galaskiewicz (Reference Mosley and Galaskiewicz2015) found that institutional giving is similarly influenced by government policy, at least at the state level, where policy changes spur large and independent foundations to give grants for social innovations within their own states, whereas corporate or independent foundations supported social needs across state lines. Furthermore, Toepler (1998, 167) argued that a “policy environment that provided windows of opportunity for emerging actors to yield substantial influence” allowed foundations to change social conditions. Conversely, Knott and McCarthy (2007) found that as a risk-mitigation strategy, most foundations support emerging government policy rather than act as policy entrepreneurs. However, ensuring that government sets policies that will spur “good” giving is important.

Frumkin (Reference Frumkin1998) used the tax reforms of 1969 to show that government regulation does affect the efficacy of institutional philanthropy, suggesting that incremental policy changes are necessary to encourage giving. Promoting efficacy is of utmost importance because philanthropy is engaged in governance. Suggestions for doing so include setting policies to encourage the engagement of beneficiaries so that they coproduce the social enterprise supported by the giving (Kerlin Reference Kerlin2006). This model could address regulation of the giving needs to ensure equity (Brecher and Wise Reference Brecher and Wise2008). These authors argued that earmarked private support should be capped in terms of amount and purposes and that there should be broad representation from the public on nonprofit boards that support these services. Some scholarship suggests that to encourage social innovation, policy should support social entrepreneurship by improving the institutional environment, contracting with entrepreneurial ventures, evaluating performance, and developing appropriate legal frameworks. Berry (2016, 441), however, questioned the efficacy of philanthropic policies aimed at “R[eturn] O[n] I[nvestment], capacity building, and program measurement” because it could impede advocacy. Thus, there is much that must be done to understand how policy can encourage giving that helps to resolve social ills, particularly if market-like mechanisms are used to drive philanthropy.