Philanthropy has a long history in America. Rosano (Reference Rosano2003) argued that Alexander Hamilton’s attention to philanthropy in Federalist I is key to understanding his thoughts on patriotism, liberty, and—ultimately—government. Today, political science and public administration scholars question the relationship between philanthropy and democracy, noting the dominance held by philanthropists in the relationship between donors and recipients (Eikenberry Reference Eikenberry2006; Reference Eikenberry2007; Roelofs Reference Roelofs2009; Sievers Reference Sievers2010). This scholarship argues that although philanthropy has a significant role in determining public policy and provision of services, academics have neglected to critically and systematically examine giving. The need for such studies is particularly salient because twenty-first century philanthropy focuses on strategic giving that targets narrow policy arenas (Eikenberry and Mirabella, this issue; Sievers Reference Sievers2010), through both traditional and new forms of philanthropy.
The role of philanthropy in governance and policy is particularly significant in the United States, where contributions totaled more than $358 billion in 2014 (Giving USA 2015). Of this total, individuals give the overwhelming amount (80%), donating more than $286.6 billion, including bequests. Foundation giving represents 15%, approximately $54 billion, and corporations comprise about 5%, with $17.8 billion in donations. Moreover, some philanthropists are creating new mechanisms of giving that explicitly focus on creating profit while providing some type of social good (Salamon Reference Salamon2014; Smith Reference Smith2014).
The changes in philanthropy, which often conflate business and nonprofit logics (Smith Reference Smith2014), will result in “distributional consequences” (Salamon Reference Salamon2014, 93) and may prohibit democratic discourse and the ability to create substantive change (Nickel and Eikenberry Reference Nickel and Eikenberry2009). Smith (2014, 1505) found that “substantial funding is being directed to different types of hybrid organizations, including social enterprises and new structural innovation” and noted a need for “examining the sustainability” of governance and accountability of these organizations. In this environment, foundation and individual donations maintain importance, but new mechanisms and logics of giving also warrant further investigation.
For example, the 1990s witnessed a focus on venture philanthropy, wherein donors—particularly wealthy entrepreneurs—became interested in direct, long-term involvement and results-oriented philanthropic investments (Frumkin Reference Frumkin2003). Today, new philanthropic mechanisms use innovative structures to create both social and economic gains. Although the notion that the market can solve social ills is old, the explicitly stated profit motive for giving is new (McGoey Reference McGoey2012).
The conflation of market principles and philanthropy is significant for scholars interested in governance. Harrow (2010, 121) observed that “in a period of global downturn…priority-driven questions arise, regarding where and how philanthropy might best act and what philanthropy should now do.” Salamon (Reference Salamon2014) claimed that these new frontiers are already being explored through new organizational structures and methods of giving, some of which allow donors to support political endeavors along with traditional charitable organizations. Moreover, many of these resources are directed toward changing policy in areas including education and health care.
This article reviews the literature on changes that have occurred in philanthropic form and function, particularly since the 1990s. Footnote 1 Because it is meant to generate discussion and spur research in particular fields, I give special attention to the contributions of political scientists and public administration scholars within prominent publication venues for the two fields, as well as the interdisciplinary field of nonprofit administration. Whereas some publications in fields such as business, history, and sociology may be excluded, this overview defines the current research in these fields and the shifts in practice that have particular relevance to questions about government and governance.
First, I provide definitions of philanthropy. Next, I examine issues raised in the literature, particularly the relationship of philanthropy to governance and policy—both of which are major themes in the literature. Finally, I offer suggestions for future research.
DEFINITIONS
Philanthropy is a contested term (Daly Reference Daly2012). Through his reading of texts, Sulek (Reference Sulek2010a; Reference Sulek2010b) found that definitions evolved over the centuries from focusing on civilization, politics, nature, and love for mankind to more modern notions of advancing well-being, volunteerism, giving, and social relations. Based on Josiah Royce’s work, Goldfarb (Reference Goldfarb2011) conceptualized philanthropy as loyalty. Contemporary definitions focus on giving some type of resource (Sulek Reference Sulek2010a). What seems to be shared among all definitions is that philanthropy is about private action to alleviate a social ill or meet a public good (Goldfarb Reference Goldfarb2011). This is particularly appealing in the United States, where distrust of government is linked to the Founders (Rosano Reference Rosano2003; Wright Reference Wright2001).
In practice, the definition of philanthropy has shifted to encompass a focus on “giving to gain.” Philanthropy is now about more than giving a resource, whether money, time, or something else. It currently includes a focus on leveraging a donation for some type of return that will compound the impact of the gift. Donors and recipient organizations leverage assets including money, expertise, and networks to create returns on investment in the form of performance, funding from other partners, or financial return (Agafnow 2015; Berry Reference Berry2016; Eikenberry and Kluver Reference Eikenberry and Kluver2004; Moody Reference Moody2007; Nickel and Eikenberry Reference Nickel and Eikenberry2009; Sandfort Reference Sandfort2007; Squazzoni Reference Squazzoni2009). This has been dubbed many things, including venture-, marketized-, celebrity-, and strategic-philanthropy. Moreover, whereas philanthropy traditionally supported nonprofits—which do not distribute income among shareholders—there currently is a shift to focus on generating profit while also generating some type of social or environmental impact (Salamon Reference Salamon2014). Salamon called this social-impact investing and noted that it is occurring through a number of new—and understudied—organizational forms.
These shifts in definition and practice are particularly salient for political science and public administration because, as Frumkin (Reference Frumkin1998) noted, philanthropy funds public needs with the devolution of government responsibility. Eikenberry (2006, 587) argued that philanthropy is gaining attention because of the neoliberal agenda, in which government cuts spending, income gaps are increasing, and there is a celebrity of very large givers; she argued that academics—particularly public administration and policy scholars—must “recognize the politics of philanthropy.” Moreover, Sandfort (2007, 550) noted that “[a]lthough government is charged with carrying out the public will—with all of the complexity and inefficiencies that are to be expected in democracy—philanthropy has the unique ability to direct flexible resources in targeted ways to bring about social change.” Thus, the relationship between government and philanthropy is complex, substantive, and important.
Philanthropy is now more explicitly focused on shaping society through market-like mechanisms that generate policy changes.
THE ROLE OF PHILANTHROPY IN GOVERNANCE AND POLICY
Philanthropy is now more explicitly focused on shaping society through market-like mechanisms that generate policy changes. Along with institutional, individual, and corporate donors, new philanthropists donate through several emerging organizational forms (e.g., see Vaughan and Arseneault, this issue) and focus on return on investment and long-term involvement with a cause (Moody Reference Moody2007; Squazzoni Reference Squazzoni2009). For example, Mark Zuckerberg and Priscilla Chan announced that they will donate 99% of their Facebook shares to charity by creating a limited-liability corporation, a form that allows them to make for-profit investments—presumably to reinvest earnings in the initiative—and to lobby for preferred legislation (Goel and Wingfield Reference Goel and Wingfield2015).
Although the Zuckerberg/Chan gift is indeed extraordinary, it points to the more explicit focus on the shifting notion of using philanthropy as an investment to create both social and policy change while making money. As Smith (Reference Smith2014) noted, the new forms of using for-profit structures to solve social issues is a hybrid type of giving that stems from competing institutional logics, which may raise issues of legitimacy. These new forms of giving require more attention on both the actors and policy tools necessary to ensure that they result in desired social change (Salamon Reference Salamon2014).
Based on the political science and public administration literatures, there are two major and related themes relevant to these inquiries. First, because philanthropy is aimed at solving social ills and government has devolved some of its responsibility to nonprofits, questions about governance are raised. Second, questions about policy include both the influence of policy on giving and the need for policy to encourage giving in a way that solves social ills. These themes exist within a larger shift in philanthropic communities to be more businesslike. Taken together, these themes expand the debate about the role of the state, its relationship to philanthropy, and the dominant discourses used to answer inherently political questions.
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.
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.
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.
More research on the form and function could help us to understand the opportunities as well as the challenges that philanthropy represents in an era of networked governance.
CONCLUSIONS
The research clearly shows a shift in forms of philanthropy, but the goal among all forms seems to be the same: give to alleviate some type of social ill. Proponents argue that philanthropy is well positioned to do this. Critics cite donor control, undue elite influence on policy, and the inability to have a sufficient impact as reasons to be skeptical about philanthropy. More research on the form and function could help us to understand the opportunities as well as the challenges that philanthropy represents in an era of networked governance.
First, more research on giving and its influence on policy is needed. There is more research in public administration venues than in political science but, given the role of philanthropy in governance, both fields should establish a strong agenda in this area. Moving beyond giving to nonprofits, philanthropy also supports hybrid forms of organization that are both public and private. It is now clear that government entities rely on philanthropy and that philanthropists are no longer only patrons but rather that their giving habits and choices are used to drive policy (Goss Reference Goss2016; Skocpol Reference Skocpol2016).
Second, more research is needed about individual givers. Individual donors currently represent 80% of giving in the United States. Combined with income inequality and experiments in giving through new forms, it is clear that the influence of individual donors should be more prevalent in the research. The research suggests that some forms of giving may be less democratic, resulting in donor control or elite influence of policy. Less is understood about what may be the more democratic forms of giving. Much of this research is conceptual, and the field could benefit from empirical research that helps us to understand the influence of individual donors and how to incentivize more democratic giving.
Third, potential policy solutions must be researched to assess what could encourage new forms of giving (and traditional donors) to practice more effective and equitable philanthropy. By effective, I mean giving that results in discourse, which can promote agreed-on policy solutions among a multitude of network actors. By equitable, I mean giving that does not disadvantage the most vulnerable populations—a fear expressed by some students of impact investing and those who study the demographics of giving.
Given their influence on policy and public institutions, these questions should be of interest to both the political science and public administration fields. Working together, they could promote research that uses new methods to study these challenges. Scholars could address these issues from both political and management perspectives, which are equally important to questions of good government in an era of networked governance.
SUPPLEMENTARY MATERIAL
To view supplementary material for this article, please visit https://doi.org/10.1017/S104909651700138X
