The purpose of exploring the shadow of philanthropy is to help us do better philanthropy. Carl Jung helped us understand that only by the exploration and integration of the shadow dimensions of our psyche can we make our strongest and most vital contribution.

True philanthropy is one of the most fundamental human virtues. The word philanthropy in English was originally borrowed from the Greek to express authentic love of humanity. Christ was considered in early English usage of the term ‘the Great Philanthropist’. Philanthropy in its original sense had no necessary relationship with money.

Maimonides and the gradations of giving

Where money was considered a part of true philanthropy, the great traditions scrutinized what was required to make a financial gift spiritually aligned. In general, true philanthropy involved making the right gift to the right person at the right time and in the right way. It was considered a high spiritual skill. Maimonides, the great 12th century Jewish philosopher, proposed in the Mishne Torah that there were eight levels of giving. The highest was to assist someone by setting him up in a business by which he can make a living. Next was to give to the needy in such a way that the recipient does not know the source and the donor does not know the recipient. Below that is a gift where the giver knows to whom he is giving but the recipient does not know who the donor is. Below that is the gift where both donor and recipient know their roles. Below that is the case where the giver bestows the gift with his own hand. Below that is the case where the giver gives only after being asked. Below that is the case where the giver gives less than is fitting. The lowest kind of gift is the gift that is given morosely.

These original meanings of philanthropy are worth considering because, in their light, most organized philanthropy is covered with spiritual shadow. Rare is the foundation that makes grants anonymously. Foundations rarely rise above Maimonides’ fourth level of philanthropy. In fact, charity – which is what concerned Maimonides – is considered the lowest, rather than the highest, form of giving in organized philanthropy.

Systems-change philanthropy

Paul Ylvisaker, one of the most eminent thinkers in American philanthropy, once acutely suggested that there were three types of philanthropy: charity, patronage, and systems-change philanthropy. Most sophisticated funders eschew charity completely. They accept as reasonable, to varying degrees, patronage of the arts and education and awards of various kinds. But their metier is systems-change philanthropy – philanthropy designed to change the way social systems work.

There are good reasons why systems-change philanthropy rose to ascendancy in organized philanthropy while charity declined. In a world in which warring bureaucracies largely determine the human condition, engaging in these bureaucratic battles is essential to winning better conditions for life. But to be praiseworthy, systems-change philanthropy must be successful often enough – otherwise the money would have been better expended on touching the lives of real people. How are we to evaluate vast resources spent on systems-change philanthropy that never goes anywhere, when the same resources, skilfully spent on patronage (scholarships for poor children, for example), would have had enormous human and social impact? Dysfunctional systems-change philanthropy represents an egregious waste of resources and should rightly be regarded as part of philanthropy’s shadow.

As we look at the political face of systems-change philanthropy, we come up against one of the most fundamental questions about what we mean by the shadow side of philanthropy. For example, the Reagan Revolution, which brought conservatives back to power in the US, was to a very significant degree invented and sustained by a handful of conservative foundations. From a value-neutral technical perspective, the conservative revolution is unquestionably the greatest achievement of systems-change philanthropy in modern history. Is this a dark shadow side of American philanthropy, or a shining light of systems-change philanthropic achievement? The answer to that question depends, clearly, on our values.

The philanthropic arms race

We must also acknowledge that systems-change philanthropy does not take place in a social vacuum. Competing systems-change initiatives in the US are locked in an arms race in which progressive and conservative funders expend ever-greater resources extending the political arms race onto philanthropic grounds. To paraphrase Clausewitz, this kind of systems-change philanthropy is often the extension of politics by other means. This, too, constitutes a shadow dimension of philanthropy.

Other funders with systems-change orientations manage to reduce the scale of this kind of arms race by focusing on civil society issues that are less directly in the line of political fire. A great deal of good systems-change foundation work has been done on environmental health and justice, human rights, women’s rights, education, the environment, and a wide range of other issues.

Here also, the shadow side of philanthropy emerges. Large foundations with ambitious programme directors sometimes damage entire fields of work by misdirected foundation-led initiatives. A foundation can always find NGO mercenaries to do its donor-driven bidding, even at the expense of the often delicate ecosystem of good work being done in the field. A more common result of foundation-directed systems-change philanthropy is that it accomplishes little. This waste of scarce resources is also a dark shadow on philanthropy.

The darkest face of philanthropy is the degree to which laws enabling and governing foundations are abused for personal or political gain. This abuse is real and sufficiently common that continuous government oversight and improvement of both laws and enforcement are surely needed. We will not dwell on this here.

Surviving spiritually as a funder

What about the personal experiences of recipients and practitioners? If you ask a dedicated non-profit leader what bothers her most about foundations, the list often starts with the arrogance of grantmakers. Grantmakers often seem to see themselves as an elite with a status unearned by wisdom or experience.

The poisonous vine of arrogance is not the only toxicant that threatens the souls of funders. There is a profound difference between the authentic philanthropic act of giving of one’s own substance to others with wisdom and skill and, on the other hand, being hired to give away someone else’s money in ways that do not always seem caring or skilful. Many thoughtful funders regard their work as fundamentally spiritually corrosive. The question of how to survive spiritually a prolonged spell in the velvet environs of philanthropy is one that many thoughtful funders struggle with.

There are some lucky people who genuinely love their foundation jobs. What you hear from them is that they feel privileged to be paid to support wonderful people doing good work. They are grateful for the opportunity to know such interesting people. They care about their grantees. They are fortunate to have this perspective. Not incidentally, they are glad to have come in out of the cold of non-profit work and to have a job with a good salary and many other benefits. This is actually one of the most psychologically healthy adaptations to the conundrum of how to survive in philanthropy – to recognize, with all humility, that as jobs go this is a good job.

Seeing oneself as a master strategist for a field of philanthropic work is another sometimes successful adaptation to the strains of foundation work. But this adaptation often has a serious shadow side as well. It is the rare self-appointed foundation strategist who deserves the position of a field general in charge of the deployment of non-profit resources to address a great social problem. Philanthropy is rife with tales of self-appointed strategists whose strategies not only failed but sometimes did active harm to a field as well.

Philanthropy tends to be hardest for some of the people who are best at it – people who spent years in the non-profit trenches as activists, were recognized as real leaders in their work, and came into philanthropy to help move resources where they would do the most good. But these people are often burdened over time by the separation from their colleagues that comes with power and the separation from the direct work that comes with being a funder.

Looking at the whole foundation food chain

Up to this point, our focus has been on the shadow side of working for a foundation as a paid ‘philanthropoid’. In fact, the psychological dark side of philanthropy can be traced up and down the whole foundation food chain.

The founders of foundations are often in the most psychologically healthy position in the food chain – if they have given of themselves with the right intentions and with real wisdom in how they set their foundation up. But they face their own challenges, usually connected to the psychological price they paid for being so financially successful.

Family board members are often in a more difficult position. They have grown up with the toxicity of inherited wealth, notoriously difficult to survive in itself. Joining the board of the family foundation brings them face to face with issues of their own self-esteem and sense of competence, with family dynamics related to money, and with the presence of paid staff who are often perceived by the family as more competent at making funding decisions than the family board members are.

The foundation president faces acute psychological perils, beginning with psychic inflation. She is surrounded by the aura of power and influence. People dance attendance upon her. Within the foundation, the difficulties of managing the board are notorious. Then the president has to deal with programme officers with issues about the president that resemble the president’s issues with the board. The president’s role is often a lonely one, isolated between staff dynamics and board dynamics.

The programme officer can feel grateful to the president for protecting her from the board dynamics, and grateful if the president knows how to delegate authority for programme work. By contrast, a president who intervenes continuously in the programme officer’s domain is very difficult to deal with. The greatest psychological challenge for programme officers usually comes from dealing with grant applicants and grantees. The programme officer is the one who has to say no, who has to disappoint nine applicants out of ten. More than that, no potential grantee can be fully honest with her because livelihoods and programmes depend on currying her favour and good opinion.

The grant applicant or grantee is in the most difficult situation of all. For most people in the non-profit world, grant-seeking is a deeply anxious process. In the winner-take-most non-profit economy, there are a small number of grantees who, due to real or perceived track records of accomplishment, get past some of the anxiety. But even the most successful grantseekers live on one to three year grant contracts.

We have dealt in a schematic way with the psychological challenges of working in the philanthropic food chain. The shadow side of each of these roles is real. But let us return in closing to the larger dimensions of shadow in philanthropy.

The greatest shadow of all

The greatest shadow in organized philanthropy lies in the reality that the country with the largest philanthropic establishment has the worst records among the industrial countries with respect to health care, education, and other basic services to its citizens. The US famously leads the industrial world in criminal violence, incarceration levels, and other indices of social malaise. Rising inequality in income distribution is at the heart of the problem. ‘Over 35 years, the rise in wages and salaries in the broad middle of the income distribution was 11 per cent,’ writes Clive Crook. ‘The rise in wages and salaries at the top of the income distribution was 617 per cent.’[1]

Historically, most American philanthropy has supported causes that serve the power elite. Even in the social service sector, recent analyses indicate there is no net transfer of income from the wealthy to the less fortunate. This is true in terms of international as well as national grantmaking. In short, if we look at the sum total of the impact of the philanthropic establishment on American civil society, the evidence that ordinary Americans benefit from the substantial tax advantages provided to the wealthy to set up foundations is, at very best, controversial.

If philanthropy writ large is best seen, as leading sociologists have proposed, as a ‘buffer for capitalism’, it can be argued that its negative effects extend beyond the recycling of wealth to serve the interests of the power elite. One could also suggest that philanthropy lures the best and the brightest of those with ambitions to serve humanity away from careers in public service and towards this patchwork quilt of non-profit enterprises that rarely achieve critical mass in terms of real social reforms. Those who might otherwise work together to forge a broad social consensus that democracy should serve the best interests of the whole community spend their lives, instead, on diffuse causes where many battles may be won but the war, in general, is being lost.

Outside the US

What of philanthropy in Europe and the rest of the world? As an American practitioner, my expertise is limited. Rien van Gendt has written beautifully about the strengths and weaknesses of European philanthropy, which, as he reports, is smaller in scale, less professionalized, and more regional in focus than US philanthropy.[2] The other side of the coin is that European grantmakers work in a milieu where a stronger social contract between governments and their citizens has existed for decades. In Europe, the predations of globalization in the race to the bottom are resisted far more strenuously than in the US. Likewise, Europeans are far more dedicated to strengthening global institutions to address issues of health, environment, peace and justice than are Americans. Stanley Katz, one of the best analysts of US philanthropy, memorably said of promoting philanthropy in Eastern Europe that it was difficult to recommend these institutions for another part of the world when we are not certain that they have been of benefit at home.

A US without philanthropic institutions?

But we cannot exclude the possibility that if the institutions of philanthropy in the US were suddenly wiped out or decisively weakened, American society might actually be worse off than it is with them. Recent attacks on the independence of foundations from the political right have apparently been based on the analysis that these institutions represent one of the last troublesome sources of independent power in the country. A regime that has controlled the executive, legislative and judiciary branches of government for some time has shown eagerness to rein in philanthropy as well.

This is ironic, considering, as we pointed out at the start, that the only truly major foundation-sponsored social reform of the last half century in the US was the Reagan Revolution, which was to a large extent planned and executed by a relatively small and very skilful group of conservative foundations.

Importance of the light

This exploration of the shadow side of philanthropy should end, where we began, with a reassertion of the fundamental importance of the light in philanthropy. The past half century has witnessed a virtual explosion of civil society organizations in countries around the world. Civil society organizations have emerged as an essential counterpart to government, the private sector, religious organizations and the media. At a time when corporations increasingly rule the world, disparities of income are on the rise, the global environment is in free fall, and liberty is threatened by fanaticisms on all sides, the growth of civil society organizations is one of humanity’s best hopes.

To the extent that philanthropy overcomes its historic bias towards the interests of the class from which it derives and serves the endangered causes of dignity, justice, freedom, and a healthy world, it represents an altruistic beacon of hope for humanity. Shadow, Jung said, will never disappear. But by acknowledging and working with shadow, we can better integrate the dark side of philanthropic work, and be of greater service to all life.

1 Clive Crook, ‘The Height of Inequality’, The Atlantic, September 2006.

2 See Alliance Vol 7, No 1, March 2002.

Guest editors for the special Alliance feature, The shadow side of philanthropy

Michael Lerner is president and founder of Commonweal, a health and environmental research institute in Bolinas, California. He is also President of the Jenifer Altman Foundation and the Barbara Smith Fund and author of A Gift Observed: Reflections on philanthropy and civilization. Email mlerner108@gmail.com

Nilda Bullain is Executive Director of the European Center for Not-for-Profit Law. Before that she was Executive Director and is currently a Board Member of the Civil Society Development Foundation Hungary. Email nilda@ecnl.org.hu