Issue #27, Winter 2013

Curing Philanthropy’s Blind Spot: One Percent for Democracy

To read the other essays in the “Everyone's Fight” symposium, click here.

We can no longer afford to spend only $45 million fighting Big Money. We need more than a few hundred full-time employees spread among 25 organizations focusing on money in politics. What these groups share is an expectation that they’ll do very much with very little. As the head of one organization told us, “We struggle all the time with the psychology of scarcity, which is inherently an aversive way of thinking. It limits collaboration and your sense of what’s possible.” The philanthropists who for years have been footing the bill for reform understand the scarcity problem all too well. They continue to hope others will join the fight, but little changes. A report conducted in 2011 for the Funders’ Committee for Civic Participation, a consortium made up primarily of foundation executives, notes, “There are several funders poised to enter (or re-enter) the field. Whether or not this new money actually enters the field is still up in the air—but the opportunity is there.”

Not only is the opportunity there—the necessity is there. Regardless of how active the existing organizations are, or how right their policies may be—and not all are—they simply can’t be expected to take on such a huge battle with such a small army.

Escalating reform funding from the current 0.01 percent of annual giving to 1 percent would, over time, create a new ecosystem in this country that would help level the playing fields, not just in Washington, but also in the state capitals and city halls, which are often like the Wild West when it comes to money in politics—featuring few restrictions and virtually no watchdogs.

Because of the high long-term return on investment that reform would provide, strategic foundations and individuals should consider an initial investment of at least 10 percent of their total giving. And democracy reform needs to become the primary focus of more philanthropies, undergirded by the theory that a highly functioning democracy results in a highly functional society.

Imagine, for example, what even a modest 5 percent shift in the federal budget would amount to—not an unlikely proposition after, let’s say, ten years of $3 billion annual investments in reform. Five percent would result in over $175 billion annually allocated to priorities that have demonstrated the strongest evidence of benefit to the public good, like early childhood education, public-health protections, and scientific research.

The money for such an investment in reform is out there. According to Giving USA, in 2011 charitable giving totaled $298 billion. Public-health groups received $25 billion; education received $39 billion; arts, culture, and humanities received $13 billion; and animal welfare and the environment received $8 billion.

There are 76,000 grant-making foundations in the United States that, collectively, gave an estimated $42 billion in 2011 and had total assets of more than $600 billion. Although foundations constitute only around 14 percent of annual giving—the bulk of giving, more than 70 percent, comes from individuals—they wield tremendous power in setting the public agenda and are uniquely positioned to tackle sprawling, complicated, long-term structural problems like the role of money in politics.

Of course, not every foundation or philanthropist in America has the ability to contribute to democracy reform. Those focused on supporting philharmonics or local animal shelters might not dare fund a cause that is perceived as too political. But those whose missions could benefit from more meritocratic public policies should now seriously consider joining the fight.

We recently spoke to the executive director of an environmental foundation, for instance, who suggested that such foundations, because they have so much to gain from a de-rigged system, should tithe 10 percent of their annual grant-making for reform. If they all did, it would amount to $300 million annually. If just one of the top environmental foundations announced such a tithing plan, it would be a galvanizing gesture for other funders.

Big Funding vs. Big Money

What if such a gesture, and dozens of others like it, started happening? What if substantial amounts of money began flowing into the fight for reform? What would investing in an annual $3 billion “democracy imperative” entail? We see eight ways in which new resources could make a huge difference.

First: Scale up. Existing reform groups need to be brought up to scale so they are more capable of getting reform laws passed, and defending and watchdogging the enforcement of the laws once they are on the books. Additionally, some new groups will eventually need to be formed. Of the total $45 million spent on reform, only three of the primary two-dozen national reform groups have budgets that exceed $3 million, and none exceed $10 million. Most groups hover in the $1.5 million range. The largest reform organizations should instead be deploying $50-75 million annually. That’s what it takes to achieve brand-name national nonprofit group status in this country, and the resulting clout and power to get things done. The ACLU spends around $100 million annually, the Sierra Club spends $50 million, and the National Rifle Association spends $300 million. Also, there is little reform infrastructure at the state level, despite the fact that many states are larger than many countries. Each state needs its own ecosystem of reform and watchdog organizations that connect to the national scene but are intensely focused on state capitals and city halls.

Second: Scale out. Larger existing reform groups alone won’t be enough. The coalition for reform needs to broaden out beyond the existing—mostly progressive—organizations. There are more than one million nonprofit groups in America, and the thousands of them whose work is either directly or indirectly influenced by the Big Money blockages in Washington and the state capitals need to join the 25 groups that are currently working on the cause and see reform as part of what it will take for them to achieve their goals. Some national organizations, like the NAACP and the Sierra Club, are recognizing the imperative of democracy reform and are starting to get involved. A strategic paper commissioned by the Piper Fund, which has been investing in reform efforts for years, lays out an impressive vision of what it would take to engage a broader swath of social-justice and environmental groups in the fight to clean up Washington. Reform will not replace their agendas; but they should realize it must be part of their agendas. Pro-reform CEOs need to bring new energy into the fight, so that reform isn’t seen as anti-business but, rather, anti-cronyism. Republicans and Tea Party members need to join the phalanx, too, whether out of their desire to reduce corruption or to end wasteful spending.

Third: Reward collaboration. Philanthropists and foundations can encourage the single-cause organizations they support to collaborate on reform. Foundations can develop this more interdependent theory of change: Leveling the playing field for democracy will create a fairer hearing for evidence-based arguments for improvements in public education, health, environment, and economic development. Furthermore, funders should host dialogues with their grantees on how to strategically engage on the issue (without being partisan).

Fourth: Teach democracy. As former Republican Representative Jim Leach said in a speech last October while reflecting on the pernicious effects of Citizens United: “In America, process is our most important product. Our founders recognized human frailty and thus went to great lengths to attempt to erect a system that would be democratic rather than aristocratic or oligarchic. Individuals could be expected to make mistakes but the political system was to be above reproach, capable of evolving in ever-fairer, more equalitarian ways.” Law schools and public-policy schools could begin incorporating units about how to take care of that “product” and include anti-corruption work in their curricula, so that improving the functioning of the republic becomes a core focus for future lawyers and government officials.

Fifth: Strengthen the right to reform. The nascent legal sector that exists to protect and defend current campaign-finance reform laws needs to rapidly expand, and needs to be given the resources to seed creative pro-reform legal theories that can, down the road, provide alternative legal precedents to Citizens United. Reform’s foes have spent millions of dollars and decades supporting legal strategies that undermine existing laws and regulations. Currently, pro-reform legal centers—like the Brennan Center at New York University or the Campaign Legal Center—barely have enough money to play defense, let alone offense.

Sixth: Champion good behavior. Politicians of both parties need to begin to run successfully as reformers—as next-generation Teddy Roosevelts—and receive financial support from donors inside and outside of their parties to do so. Foundations cannot and should not fund politicians’ campaigns. But they can commission innovative research that will help leaders more effectively make the case for reform. They can educate the public with that research. And they can, when appropriate, reward retired politicians who are dedicated to strengthening democracy with university fellowships and prestigious posts at think tanks to help inspire the next generation and educate the public about the challenges of governing. Individual philanthropists should directly support politicians and groups that organize for legislative reforms, and help develop the political power necessary to pass new money-in-politics laws.

Seventh: Advance provocative research. There should be a vibrant debate about the negative economic consequences of legalized corruption in the United States, broken down by sector—public health, education, the environment, the economy. We should develop a clearer sense of how reducing corruption will most likely benefit us and our families.

And finally: More thinking like this, about the role of philanthropy in tackling the problem of money in politics, needs to be done. This is an initial sketch, but much more work is required to develop a truly robust and detailed vision of an expanded fight for reform. The groups that work on reform every day hardly have the time or energy to step back and do such thinking. But it’s the kind of 30,000-foot analysis that needs to be done.

Taken together, these recommendations would help create a better immune system for democracy—one that would have the potential to allow reformers both to enact much tougher campaign-finance and lobbying laws and to defend and enforce those laws once they’re enacted. Doing so would, in the long run, make it harder for the banks and other well-financed special interests to, as Senator Durbin said, “own the place.”

Democracy At Stake

At the heart of such work are not just concrete public-policy outcomes like cleaner air and saner financial regulations. At the heart is a basic idea of freedom, perhaps best articulated by Teddy Roosevelt in 1910 in his famous “New Nationalism” speech:

At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will.

Free men and women. Free government. Popular will.

Just as it was 100 years ago, fighting tooth and nail for reform is, once again, the central condition of our progress. We need to make it crystal clear who owns the place.


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Issue #27, Winter 2013

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