It’s an unfamiliar perspective. These days, wealthy philanthropists are more likely to be lauded, their names emblazoned on buildings, their pictures on magazine covers. And Reich delivered it in an unusual setting, speaking Tuesday at the Aspen Ideas Festival, which is co-hosted by the Aspen Institute and The Atlantic, to an audience that included more than a few philanthropists and foundation executives.
But he’s not alone. Judge Richard Posner, the idiosyncratic jurist and leading legal theorist, has complained that “a perpetual charitable foundation ... is a completely irresponsible institution, answerable to nobody. It competes neither in capital markets nor in product markets ... and, unlike a hereditary monarch whom such a foundation otherwise resembles, it is subject to no political controls either.”
It’s a genuine dilemma. At its worst, big philanthropy represents less an exercise of individual freedom, Reich said, than a tax-subsidized means of taking private profit and converting it into public power. And he argued that big foundations possess the leverage to bend policy in their favored direction in a coercive manner, pointing to the example of the Gates Foundation’s funding of educational reform.
Not all his listeners were convinced. Steven Seleznow, who had worked for the Gates Foundation to fund public-education reform and now leads the Arizona Community Foundation, argued that there is already abundant accountability built into the system. He pointed out that educational grants had to be negotiated with public officials, and then approved by an elected school board, mayor, city council, or governor. Reich, though, believes that this elides the disparities in power between a foundation offering funds, and the government entity requesting them.
If large foundations are a threat to democracy, then, is there a way to reform them short of abolishing them altogether? Reich said yes, arguing for turning “the apparent vice of unaccountability” into a virtue. Philanthropies operate over longer time horizons than either government or private business. At their best, Reich said, they can serve as “an extra-governmental form of democratic experimentalism,” piloting risky or unproven policies, testing them, then presenting them to the public “for a stamp of democratic legitimacy.”
It’s only this sort of bold experimentation, Reich argued, that can ultimately justify the array of benefits and protections big philanthropy enjoys. “Foundations are free, unlike commercial entities, to fund public goods because they need not compete with other firms or exclude people from consuming the goods they fund,” he wrote in The Boston Review. “And they are free, unlike politicians who face future elections, to fund minority, experimental, or controversial public goods that are not favored by majorities or at levels above the median voter.”