Cracks in the Foundation
The first in a series of articles about uprooting philanthropy
The word “philanthropy” derives from Greek and roughly means “for the love of humankind.” Unfortunately, this couldn’t be a more unsuitable misnomer for philanthropy as an industry. We’re calling this series Cracks in the Foundation because we are going to explore how the structure of philanthropy, beyond any good intentions by individuals, ensures that its actions will contradict its namesake meaning. In fact, despite the dominant worldview that tells us that philanthropy is good for society, philanthropy has, from its inception in the early 20th century, served as a trillion-dollar Trojan Horse for our movements.
Philanthropy, as we know it today, is less an expression of love for humanity than a scant balm to soften the sting of capitalism. Scratch just below the surface, and you’ll find that it is also an incredibly generous welfare system for the rich, providing tax breaks with little to no accountability for results. And if you dig a little deeper with us, you’ll find that, even worse, it is a strategic effort by the ultra-wealthy to pacify and distract from grassroots efforts to challenge and dismantle existing racial, gender, political, and class hierarchies within society.
We have three goals with this series: (1) to break down common misconceptions about philanthropy that protect the industry from appropriate and necessary scrutiny, (2) provide evidence for our argument that the philanthropic sector, as constructed, will always do more to protect capital interests than to promote social change, and (3) point towards structural changes we (and many others) believe are necessary for philanthropic actors to break free from these limitations so they can actually contribute to the movement for land justice.
You might ask yourself why an organization like Minnow, whose purpose is to secure land tenure for farmers of color and Indigenous communities, might dedicate itself to challenging the philanthropic industry. As an organization funded primarily by foundations, we see it as our obligation to transparently and directly speak to the contradictions within philanthropy. We operate in a philanthropy-driven sector that simultaneously makes our work possible by paying our salaries while severely undermining that work by investing in and profiting massively more from the very economy we are working to replace. And more importantly from a historical perspective, there is also a completion of a cycle that needs to happen. Philanthropy exists because of excess wealth. This wealth was extracted originally by White settlers who enslaved Africans and colonized the lands and Peoples of what we call the United States of America. Many others since then have continued to extract surplus value from the land or people within the capitalist economy that we operate under today. Philanthropy must dedicate itself to fully realizing and reckoning with this truth to restore balance to our ecosystems and repair generational harms within our communities.
Currently, philanthropy is not only falling far short of completing this cycle, it is perpetuating a system of control driven by the same forces that extracted the excess wealth it now manages: white supremacy, paternalism, and capitalism. For example, 91 percent of foundation board members, 86 percent of foundation CEOs, and 70 percent of program officers are white. The high level of homogeneity in the sector means that the vast majority of people who control the sector’s $1,000,000,000 (that’s 1 trillion dollars) operate in a racial echo chamber – a difficult place from which to root out white supremacy and paternalism, even for those who are well equipped.
Philanthropy, at its core, also inherently strengthens and profits from capitalism. The laws governing foundations require them to distribute at least five percent of their asset value each year. In reality, this floor has become a ceiling, with most foundations only distributing the bare minimum required each year. Why five percent? We’ll get to this later in the series, but the short answer is because most foundations want to live forever. If they invest all their money in Wall Street, which most do, they can make, on average, a 5% return on that money, so by the end of the year, they end up in the same position as they were before they gave out any money that year to nonprofits. The bottom line is this: philanthropy advances capitalism because it profits more from investing in the capitalist economy responsible for the housing crisis, racial wealth inequality, war profiteering, mass incarceration, water and land pollution, and so much more–than it does from investing in the organizations that are working to repair the harms caused by this economic system.
Unfortunately, these are key features of the structure of philanthropy, and they guide how the vast majority of foundations operate. The 11th Hour Project, which is Minnow’s largest single foundation contributor, offers an illustration of the deep contradictions inherent to philanthropy and how they connect to our work. The 11th Hour Project is one of many philanthropic projects of the Schmidt Family Foundation, which was created and is governed by Eric and Wendy Schmidt, who are billionaires primarily from the stock options Eric received through his role as Executive Chairman of Google. As of 2022, the Schmidt Family Foundation held $1.5B in assets. That year, the foundation distributed about $112M in grants (of which Minnow received $220,000), which is about 7 percent of the foundation’s total assets. At the same time, the foundation’s investments for the year netted them $140M.
The 11th Hour Project’s Food and Agriculture program, from which our donation comes, has a mission to “support efforts to build resilient agricultural systems that improve soil, air, water, and animal and human health.” And many of the organizations that receive grants within this program, like us, are hard at work doing just that. Yet when we look at a sampling of just a few of the 1,778 foundation’s stock investments, we are immediately reminded that despite the millions given in grants to build a resilient food system, the foundation profits even more from investments in the very companies that anchor and perpetuate the industrial agricultural system: Amazon, Coca Cola, John Deere, Eli Lilly, McDonald's, Nestle, PepsiCo, Tyson Foods, Walmart. The contradiction is as clear as it is frustrating to us – what is the real impact of distributing $112M in grants to support changing the food system when the foundation is making more than that in profit from thwarting change?
The 11th Hour Project isn’t alone in embodying these irreconcilable contradictions in the relationship between philanthropy and social change. Foundation tax returns, publicly available documents from where we pulled this data, simply tell a different story than their websites. And if we want philanthropists, including Eric and Wendy Schmidt, to really live up to the visions that populate their foundation’s websites, we all should start paying more attention to the structural and cultural deficiencies that are getting in the way.
That’s what we plan to offer in this series. We know there’s a lot of numbers and details to unpack from this introduction, and we promise we’ll do that in future posts. And if you’ve read this far, then we also know you might be curious to learn about some ideas for how all of this might shift. We’ll get to that too. For now, we just want to invite you to notice these cracks in the foundation of philanthropy and join us in imagining all the possibilities of what else might grow between them to anchor a more just future.
