A conversation with Inside Philanthropy editor David Callahan (Part 2 of 2)

Apr 23, 2020

The Demos founder and author of The Givers talks to Michael E. Hartmann about covering foundations and donors, the changing nature of the wealthy as a class, and the role of philanthropy in a democracy.

David Callahan is the founder and editor of Inside Philanthropy, an online publication covering how foundations and major donors are giving away their money, and why. He has written widely on trends in philanthropy, as well as American culture, public policy, and business.

Callahan’s most-recent book is The Givers: Wealth, Power, and Philanthropy in a New Gilded Age. Among his previous books are Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America, The Moral Center: How Progressives Can Unite America Around Our Shared Values, and The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead.

Before founding Inside Philanthropy, Callahan helped start Demos, a liberal think tank—prior to which he was a fellow at what became The Century Foundation and managing editor of The American Prospect.

Below is the second of two parts of an edited transcript of a discussion that Callahan was kind enough to have with me last month. The first part—in which he talks about his background, his study of what works in policy-oriented philanthropy, and his founding of Demos and Inside Philanthropy—is here.


Hartmann: Overall, do you think all reporting on, commentary about, and analysis of philanthropy could improve and if so, how?

Callahan: A couple of thoughts on that. It’s a hard sector to cover because foundations and donors are not all that transparent and some are really very opaque. It’s hard to get reliable information on certain donors.

Also, nobody wants to say anything on the record remotely critical of any of these people or foundations, because they want to protect their future funding. People are very circumspect about telling the truth.

In addition, the issues are quite complex. It’s not like you can just hire some veteran reporter off the street or even off The New York Times or anyplace like that. Even very-smart people who are experienced journalists do not know much at all about philanthropy. There is a long and steep learning curve to just get up to speed and get your arms around what this is and how it works. It’s hard to find skilled writers who can get their head around this stuff.

Then, there’s just the sheer size and scope of the sector. We cover giving across 30 different issue areas. We cover giving in 12 different geographic places. Places have their own unique funding ecosystems. There are thousands of foundations and major donors that we’re tracking. That’s just a lot.

In general, the philanthropy-media world doesn’t have nearly the resources, or access, or information to do a good job of covering the sector. There’s not a lot of investigative-reporting capacity. We don’t have much. The Chronicle of Philanthropy doesn’t have much. Mainstream media doesn’t care about this stuff, except occasionally parachuting into write about Bill Gates.

A political thriller, and the changing nature of the wealthy as a class

Hartmann: How many books have you written total?

Callahan: I’ve written nine books, including one novel.

Hartmann: What was the novel about?

Callahan: State of the Union was a political thriller about a populist billionaire president who tries to seize absolute power by staging a terrorist attack by Islamic terrorists by flying explosive-packed planes into buildings.

Hartmann: Oh my gosh. What year was that?

Callahan: 1997.

Hartmann: Do you have another novel in you?

Callahan: No. I tried writing a couple other novels, but they didn’t sell. One of them was about a future dystopia, where facial recognition technology tracks everybody’s every move. I guess that was too ahead of its time.

Hartmann: That could be a nonfiction book now, of course.

When did you start working on The Givers? Did any of your previous books conceptually precede The Givers, or did that just arise from your Inside Philanthropy work?

Callahan: I actually published a book in 2010 called Fortunes of Change, which was about the rise of the new rich and the remaking of American life. The argument of that book was that the wealthy as a class were changing politically and culturally—that as a result of the rise of the knowledge economy, you had many more wealthy people who were highly educated, who worked in knowledge industries, who had spent their lives in deep blue-state America, who went to major universities getting their degrees, who  went to work for hedge funds, and tech companies, and biotech companies.

This new wealthy class was very different from the old-economy rich people. More generally, the super-affluent class had tacked pretty far to the liberal side on social issues and environmental issues. Basically, the old Marxian analysis that the upper class is inevitably an ally of the conservative reactionary right no longer really applied as it had once. One of the ways this was manifesting was in the rise of a new progressive donor class, and some of that was playing out in the world of philanthropy.

That was 2010. That book kind of sank without any trace, because it was published right as the Koch brothers were helping retake Congress. There was suddenly a lot of attention on the Kochs and conservative money, and the liberal wealthy were less in the news. Nobody really got the thesis.

Hartmann: Well, The Givers ended up being well-timed, I think, no? How has it been received, including  among givers themselves?

Callahan: It’s hard to say, but I think that in general, the class of people who give out money—either at foundations or as donors—have been pretty open to The Givers. The book is quite critical, but also tries to explain clearly what they’re doing and fully understand their motives.

It fully airs the rationales for this peculiar, unaccountable power of philanthropy. It doesn’t have straw-man arguments. It’s a pretty-nuanced wrestling with the challenges around philanthropy.  I think people appreciated that. It’s honest and thoughtful.

Certainly, I have a strong point of view that big philanthropy is problematic.

Hartmann: The book’s in large part about The Giving Pledge, a commitment by the world’s wealthiest people to dedicate the majority of their wealth to giving it away. How’s The Giving Pledge doing?

Callahan: It’s now been 10 years since The Giving Pledge was rolled out by the Gates and by Bill Buffett.  I think it’s exceeded much more than they ever imagined. It’s attracted over 200 members at this point, and they’ve built a pretty-substantial internal infrastructure of meetings and networks among these members, where they educate each other about issues and try to help each other give more effectively.

That said, the actual record of giving by Giving Pledgers has been really mixed. Most of the Giving Pledge members have gotten richer and richer and richer, at least until the recent downturn in the stock market. Everything’s different now.

You sign The Giving Pledge and seven years later, you’re twice as rich, while there’s all sorts of unaddressed problems in the world that you say you care about—that just seems a little curious to me.

In particular, some members of The Giving Pledge are very worried about climate change and have focused their giving on climate change. Here we have a time-urgent issue where the clock is ticking, and yet many of those donors have not substantially increased their giving for climate change even as they’ve gotten have gotten richer and richer and richer. That has just been kind of mystifying.

In that sense, I’d say The Giving Pledge has been a mixed success. Lots of new members, but not as wide or deep a stream of giving as there might have been.

Wealth and democracy

Hartmann: Sean Parnell’s critique of The Givers was along the lines of, Well, what do you mean by democracy? How do you define democracy for this discussion?

Callahan: It’s definitely not defined in the book, but it’s the notion that all citizens have equal voice in setting the agenda of society and shaping public policy—that there’s a real equality of civic opportunity to be heard.

My critique of big philanthropy is it just allows some people to be heard far more loudly and ubiquitously than others simply because they happen to be good at shorting stock or developing software. That seems problematic to me. It’s basically an extension of the critique of money in politics, but applied more broadly.

Hartmann: Is it your mere preference, then, that those who have those pots of money in philanthropy address inequality, or would want them to have to address inequality? If I’m a philanthropist, should I be concerned about inequality, or are you for proposals that will somehow make me be concerned with inequality? Can I pick among other things, whatever they might be—oh, I don’t know, say diabetes research or something?

Callahan: A couple of different points. First, as a wealthy philanthropist, one should be mindful of their own outside power in the process of shaping policy, of shaping civic life, and try to exercise that power in a way that is responsible and is not overly dictating their preferences. There’s a lot of attention to shifting the norms within philanthropy, since shifting the policy, the laws, and the regulations is so difficult. Wealthy philanthropists need to be mindful of the power they possess and exercise that power responsibly.

In terms of inequality, I don’t want to preference an issue like inequality over issues like diabetes research, because they’re both important. Obviously, just to stick with the diabetes example for a second, this is an incredibly huge expensive threat to our health-care system in the future if you look at the projections, along with neurodegenerative diseases. That’s important.

But a lot of philanthropists, including those who’ve really benefited from our unequal economic system, are coming to see how dangerous and unfair these growing levels of inequality are. I’m thinking of somebody like Ray Dalio—the hedge-fund billionaire who’s given a lot of attention to this recently and written a lot about how this is an unsustainable economy, given the high levels of inequality.

It’s politically destabilizing, as we can see with the rise of populism from all the losers in globalization across the advanced world gravitating toward populist and demagogic politicians. You can see the problems with what happens when there’s something like this pandemic, when you have a society where workers generally don’t have a lot of benefits and there are very porous and fragile safety nets.

I think many philanthropist have woken up in recent years to the problems of inequality, and that’s been a great thing—a couple like Steve and Connie Ballmer, for example. Steve Ballmer, the former Microsoft CEO and his wife, have been very-inspiring new philanthropists on the scene who have set out to really address the lack of economic mobility in this society. They’ve done a lot of things really well, in terms of giving general-operating support to anti-poverty groups around the country, focusing in on highly stratified cities like Los Angeles and Detroit. That’s a great example of billionaire mega-givers paying attention to inequality.

The problem or the shortcoming of some of this new giving by these living donors who are coming from the business world is that they tend to be reluctant to challenge the economic status quo more aggressively—in particular, the lopsided power between capital and labor and fact that working people have so little leverage and so much wealth is up going to the top of the economic system. Your billionaire businessman turned philanthropist doesn’t want to give money to new labor groups or organizing efforts to take on employers and owners. I think this reflects where these people come from. This new concern about inequality only goes so far.

Hartmann: Now, in your answer there and in the critiques of philanthropy by some others on the left, there’s a little populism to a certain extent. Do you think there might be some allies you could look for on the right?

Callahan: If you look at opinion polling, the concern about how much power the wealthy and corporations have in the society is shared by the vast majority of Americans across political lines. It’s not surprising to me that Trump got traction campaigning, and as president, beating up on globalization and often specific companies like Amazon and banks. There is for sure a view on the populist right that the disproportionate power of the of the wealthy and the professional-managerial elite that is employed by the wealthy and powered by the wealthy—certainly people on the right see that as problematic.

I don’t know how far that gets with an alliance, because once you get down to what to do about it, things fall apart over the role of government, and questions of redistribution and how much, and moral arguments about who gets what for what. Formulating a policy agenda is more difficult. I do think that the concern about inequality has really become a bipartisan one in many ways, and that that’s good. But it’s hard to sort of parlay that into bipartisan policy agenda.

Critiques of philanthropy, and its reaction

Hartmann: Where does your book, your thinking, fit within some of the recent harsh critiques of philanthropy from the left? I’m thinking of Anand Giridharadas’, Rob Reich’s, and Edgar Villanueva’s, among others, I guess.

Callahan: Their books are all different, so I don’t want to generalize. I will say this, though. I come to philanthropy as a critic of philanthropy, but as somebody who has spent my life and career being supported by philanthropy, and within a progressive policy infrastructure supported by philanthropy.

I think I have understood the role of philanthropy in bankrolling alternative voices in society that can challenge the status quo, serving as the counterweight to corporate power, giving voice to oppressed minority groups like LGBTQ people. I have an appreciation of the extent to which philanthropy can really power progressive change in society. That tempers my reflex to be really critical, because I understand the contributions of philanthropy firsthand. That’s one thing.

Another thing is, as the editor of Inside Philanthropy, I’ve drilled so deeply into the way this giving works, and who these donors are, and how these foundations operate. I have found that most people really do have the best intentions, including those philanthropists I don’t agree with. I am aware that this is voluntary on the part of these billionaire donors, and they could just not give any money at all and thus not be criticized at all—except for not giving.

As I’ve said to people within the philanthropy establishment, I’m the friendly critic here. The philanthropy establishment—and here I’m talking about philanthropy trade associations, whether it’s the Council on Foundations, or the Philanthropy Roundtable, or the New York Association of Grantmakers—has criticized my various proposals quite strongly. My response to them is, Hey, you should listen to me, because I’m the friendly critic. Get ahead of the curve here, because the pitchforks are going to show up at your door. I said that in 2015, 2016, and 2017, and sure enough, by 2018 and 2019, the debate has shifted quite sharply, to a much more-blanket criticism of philanthropy by some critics who don’t really know much about philanthropy and don’t take the time to teach themselves about it in any kind of granular, nuanced way.

They’re coming at it with a more populist critique—which, by the way, I think can be useful, because that kind of starker and harsher message can break through in a way that my more-nuanced message doesn’t. I see some value in that.

We do live in a populist moment. We live in an anti-elitist moment. We live in a moment with record economic inequality. We live in a moment, as well, where almost every sector of society, every industry has come under scrutiny for its low levels of accountability or transparency.

It was only a matter of time before that accountability juggernaut showed up at philanthropy’s door, and it’s there now, and it’s going to try walking in. That the leaders of the sector didn’t see that coming still strikes me as pretty astonishing and speaks to the insularity of the sector. It somehow thinks it’s unique, and exceptional, and is exempt from the rules that other sectors have learned that they have to play by—whether it’s the NFL that’s been heavily criticized for things like the concussions or higher education that’s come under intense fire for its return on investment.

I can go down the list. Every sector of society has growing critiques of its power and influence. It was only a matter of time before that critique extended to philanthropy.