Opinion

The nonprofit threat

Feb 6, 2023

And what it may do to us, as well as the elites who created it.

Part of The Giving Review’s online symposium, “Conservatism and the Future of Tax-Incentivized Big Philanthropy.” 

Throughout history, excess wealth has been used to salve society’s problems, funding hospitals, food banks, and building libraries to develop minds and cathedrals to lift the spirits. But increasingly, the charitable urge has shifted away from such worthy causes and, increasingly, reflects a distinct progressive agenda that seeks, ultimately, to transform lives through the expansion of state power.

This reflects, in part, the shift in the nature of wealth in America. In the past, rich people tended to be employers of middle- and working-class people and frequently identified primarily with their local regions. But in an increasingly nationalized and globalized era, the charitable impulses are increasingly wide and diffused, less focused on personal improvement but in service to a distinct ideology, usually far to the left, but also on the libertarian right.

The predilections of the ultra-rich will likely loom over politics and policy debates for decades to come. In the U.S., nonprofits’ assets have grown nine-fold since 1980. In 2020, nonprofits brought in $2.62 trillion in revenues, constituting more than 5.6% of the U.S. economy. And this process is just beginning, as the boomers begin to leave behind their riches. The consulting firm Accenture projects that the Silent Generation and baby boomers will gift their heirs up to $30 trillion by 2030, and up to $75 trillion by 2060.

Yet this bounty will be highly limited due to the rapid concentration of assets in ever fewer hands, with the top 1% in the U.S. increasing their share by roughly 50% since 2002. The class implications of this process are profound. The winners clearly will be the small pool of big inheritors, as we already see in Jeff Bezos’ ex-wife, MacKenzie Scott; Bill Gates’ now-discarded wife, Melinda French Gates; and Laurene Powell Jobs, the left-leaning publisher of The Atlantic and the widow of Apple’s founder.

New and old money

The new money is strikingly different and much younger in contrast to more-conservative funders like Charles Koch, Oracle founder Larry Ellison, Rupert Murdoch, and the Irvine Company chairman Don Bren, all well into their 70s or 80s. They are increasingly outdone by the more-youthful “enlightened” rich, who have consistently outraised and outspent the political “right” in recent years by a margin of nearly 2 to 1.

The progressive elite are for the most part connected with firms with oligopolistic market control. Controlling 90% of markets like search engines (Google) and operating-system software (Microsoft), and dominating the cloud and online retail (Amazon) or 90% of phones (Google and Apple) does not turn executives into risk-takers, but acquirers. As well, three tech firms now account for two-thirds of all online-advertising revenues, which now represent the vast majority of all ad sales.

Finance, the other pillar of progressive philanthropy, has also become markedly more concentrated, with the number of banks down a full third since 2000 in the U.S., while Europe experienced a slower, but similar consolidation. The five largest banks control over 45% of all assets in the U.S., up from under 30% about 20 years ago. The five largest investment banks control roughly one third of investment funds; the top 10 control an absolute majority. These firms have tended to embrace progressive dogma as well, most notably in the adoption of ESG (Environmental, Social, and Governance) rules.

The new psychology of money

As Heather Mac Donald demonstrated in 1996, the big-money foundations in the U.S. have been bankrolling progressive and even far-left politics for several generations. But the rise of the tech oligarchy has accelerated this trend. Many of these billionaires are still in their 30s and 40s, but have accumulated more cash than anyone since the Gilded Age. In 2020, five of the top eight donors to Joe Biden came from tech firms.

This process was further speeded up by the rise of Donald Trump, a toxic presence who also threatened the left oligarch’s quasi-monopolies. One effective example was the Chan Zuckerberg Initiative, which poured over $300 million into state and local election administration to stoke turnout. Conservatives claim, with some justification, that these efforts were concentrated in highly Democratic areas of swing states, and therefore may have tilted the outcome. This effort has been described by Time—owned by yet another progressive oligarch, Marc Benioff, co-founder of Salesforce.com—as “a conspiracy unfolding behind the scenes.”

In coming decades, we can expect this trend to continue. Not only do we have to deal with the predictably left orientation of the oligarchs, but also from their forsaken wives, and their offspring. Bezos’ former spouse MacKenzie Scott, worth an estimated $60 billion, has already given $130 million to a group pushing progressive education, as well as gender fluidity and other progressive causes. Melinda Gates, the former wife of the Microsoft founder, worth at least $6.4 billion, is also backing liberal causes like gender equity and the Clinton Foundation.

The ultra-rich have been particularly attracted to draconian climate positions. Leading  billionaires like Tom Steyer—and powerful foundations like Rockefeller, Doris Duke, Walton, MacArthur, Hewlett, and George Soros’ Open Society—have sent  hundreds of millions to leading environmental  groups. The Rockefellers, heirs to the Standard Oil fortune, have become some of the stiffest advocates of radical climate policies, centered around austerity, so damaging to the Western working class and those in the developing countries. They even favor punishing corporations that remotely follow the road to riches of their founders.

The coffers of environmental groups, including the Sierra Club, received huge donations, often as high as $100 million, from wealthy moguls like Ted Turner, Michael Bloomberg and Richard Branson. In comparison, the right-wing policy organizations are no match. The largest right-wing think tank, The Heritage Foundation, is small by comparison. Jeff Bezos in 2020 alone announced $10 billion in gifts, mostly to green non-profits. The oligarchs’ philanthropy also provides a cushy home for climate bureaucrats, with the inheritor of the Jobs fortune now welcoming California’s chief regulator to head up her climate-focused $3 billion Waverly Street Foundation. To control information, some of these nonprofits are now paying the salaries of a reporter at Associated Press and National Public Radio to mimic the party line.

Are the elites financing their own ultimate destruction?

The next generation of tech and finance heirs, such as the socialist offspring of the founders of Qualcomm, could prove even more radical. They have founded nonprofits that, notes The New York Times, financed by “rich kids who want to tear down capitalism.” Born into the oligarchy, these young trust-funders do not have to worry if their activities bother customers or even undermine the business that created their fortunes.

To some extent, the tech oligarchs see themselves and are seen by some progressives as what progressive writer David Callahan describes as a kind of “benign plutocracy,” in contrast to those who built their fortunes on resource extraction, manufacturing, and material consumption.(1) But the more-radical policies supported by the left-dominated nonprofits could ultimately also undermine even their own privileges. Like French aristocrats before the Revolution, they may be financing causes that threaten “their own rights and even their existence,” as Tocqueville noted.(2)

Even as the Democratic Party has benefited from the largesse of progressive donors and nonprofits, the party has moved in a distinctly socialist direction. Indeed, more Democrats support socialism than capitalism, particularly among the young. On the environmental front, oligarchic money finances apocalyptic scenarios and economy-crushing solutions that could backfire on the oligarchy.

In the future, it’s likely that agitated young activists won’t long tolerate billionaires who lament climate change, but fly their private jets to discuss the “crisis” in places like Davos. After all, if the world is on the verge of a global apocalypse, how can the luxurious lifestyles of so many of the world’s most-public green advocates be acceptable? Ironically, much of this wealth was generated by a carbon-based economy that they are now trying to destroy as rapidly as possible.

Like their aristocratic forebears, our elites even have created their own set of convenient “indulgences,” such as using offsets to make up for their often-large carbon footprint. These groups, notes one British journalist, tend to embrace a “pre-existing culture of misanthropic dread” that also enhances their power. Worried about the apocalypse, they want the next generation to cut back, while they fight the good fight in genteel style; as The Guardian noted, the oligarchs of Wall Street, Hollywood, and Silicon Valley travel to Davos in an estimated 1,500 GHG-spewing private jets.

This hypocrisy will eventually result in growing pressure against capitalism, which many of the progressive greens see as the major contributor to climate change. The red-green contingent generally agrees with the view of Barry Commoner, a founding father of modern environmentalism, that “Capitalism is the earth’s number one enemy.” Others favor “net-zero” and “de-growth” policies that would hurt working- and middle-class Americans, who would then need ever more support from the state. This money could only come from the ultra-rich.

Expropriation, at least in part, seems inevitable if the progressive dominance grows. Political leaders like Bernie Sanders, after all, do not distinguish between good billionaires and bad ones, but believe that billionaires should not exist at all. The Green New Deal proposed by the most-influential millennial politician, Alexandria Ocasio-Cortez, represents a direct assault on the boomer-elites’-funded environmentalism. Her plan, rather than enriching the oligarchs, would be financed in large part by expropriating their wealth.

Of course, the current oligarchy could find a secure place in a regime of state-oriented corporatism, much as some companies are able to do in China or even France. Monopolies like Google or Microsoft may still exist, but as quasi-government utilities that collect fees and squash innovative upstarts. Such a corporate state may please the inheritors, particularly if married to race, gender, and climate orthodoxy, but only by robbing capitalism of the dynamism that marked its ascendancy.

The current oligarchs may deserve opprobrium, but the ultimate danger posed by the nonprofit tsunami lies in their feckless embrace of a policy agenda that undermines the very essence of competitive capitalism. Like feudal lords, this new elite, emboldened by a common ideology, may continue to thrive in a world of frozen social relations, but only by destroying the very system that brought them their own good fortune—and that could someday threaten even their own privileged position.

Notes

  1. David Callahan, Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America (New York: Wiley, 2010), 67, 269.
  2. Alexis de Tocqueville, The Ancien Regime and the Revolution (London: Penguin, 2008), 144.