May 28, 2009

Where Were the Foundations?

The Philanthropies and the Economic Crisis

By JOAN ROELOFS, Counterpunch

We in the United States have been endowed with enormous philanthropic foundations, which have been fixing up the world for the last 100 years. One might wonder how their activities relate to the current economic crisis. News on this subject is not found in the headlines, or even on page 23. There is more exposure of foundation garments than of the opulent structures overpinning our system.

We should remember that these institutions, taking to heart the “robber baron” accusation, were not intended to dispense charity, but to apply resources and “social engineering” to forestall the “evils of capitalism.” Thus the Sage Foundation created the field of professional social work. The Rockefeller Foundation, directly and through its subsidiary, the Social Science Research Council, helped to shape New Deal programs, including social security. Its massive manual, Recent Social Trends, was a blueprint for the reform of laissez-faire capitalism. The Ford Foundation created prototypes for the “War on Poverty” programs, and more recently was the designer of Individual Development Accounts to provide funding for worthy low income people.

In addition to the billions donated to non-profit organizations, economic development, and policy-oriented think tanks, foundations have been prime creators of international organizations designed to promote and defend capitalism against any and all threats. After World War I, Rockefeller and Carnegie foundations originated the Council on Foreign Relations. Coordinating with its foreign affiliates, it is still going strong. Post World War II, the Bilderberg group was formed (named after the hotel in the Netherlands where the first meeting was held in 1954), an informal palaver that meets in secret (no press and don’t tell) at a different high-security location each year. It gathers the elite of North America and Western Europe; its originators included David Rockefeller, Dean Rusk (then head of the Rockefeller Foundation), Joseph Johnson (head of the Carnegie Endowment), and John J. McCloy (Chairman of the Board of the Ford Foundation), along with European notables. While this encounter does not conclude with any formal plan of action, the idea is that these powerful people have the means to implement the sense of the meeting. The list of attendees provided by aggressive investigative journalists at www.bilderberg.com will give an idea of the clout involved. As with similar gatherings, Bilderberg is an arena where rookies are fielded for selection to the big leagues; Tony Blair, Bill Clinton, and Mary Robinson were invited when aspiring politicians.

Bilderberg was too narrow a selection, as “non-Western” nations are becoming economic “giants.” Primarily initiated by Rockefeller institutions, the Trilateral Commission (Europe, North America, Japan) was convened in 1973 to deal with political threats and economic instabilities in the capitalist world. An even more inclusive gathering became necessary, and foundations and corporations created the World Economic Forum in 1974. In addition to the prime ministers and corporate and foundation executives, it includes rock stars, “emerging young leaders,” and representatives of non-governmental organizations such as Greenpeace, Amnesty International, and Third World Network. While some of its sessions are in secret, it has a vast public component, welcoming the press, webcasting the panel discussions, and so forth. Its consistent theme is that globalization and economic growth will promote wealth and happiness for all, although participants are divided among advocates of the “free market” and government regulation.

Foundations are concerned about the dysfunctions of globalization, and consequently fund many groups active at alternative summits such as the World Social Forum, initiated as a radical response to the World Economic Forum. The protesting organizations at the WSF receive grants from pro-globalization foundations and corporations, which also provide general support for the Forum and its regional affiliates. There is now a Funders Network on Trade and Globalization created primarily for the WSF that includes the Ford, Rockefeller, Mott, Tides, and Levi Strauss Foundations, along with progressive funders such as the Funding Exchange and the Unitarian Universalist Veatch Program. The group of 160 funders sends a special delegation to the WSF. A major purpose: “The participation of funders and donors has allowed them to build a common analysis, in partnership with their grantees, of the underlying structural causes of community problems: the institutions involved, the flow of money, the constraints on democracy and other factors.”

While promoting/saving/improving capitalism over the long term, foundations are also deeply entrenched in the corporate sector, including the military-industrial complex and finance capitalism, through their trustees and investments. In 1971, the Ford Foundation established the Commonfund for managing the investments of private universities, schools, and foundations. Its charge was to break away from the traditional conservative investment policies of these entities in order to produce more robust returns.

As a consequence, the largest foundations became “powerhouses” in investing, seeking to increase their yields through hedge funds, distressed debt, venture capital, buyouts, real estate, and international resource and energy ventures. The investment committee of the Ford Foundation’s board is headed by Afsaneh Beschloss, who was recruited from the Carlyle Group where she was a specialist in hedge funds. According to Commonfund’s report, about 40% of foundations screen their investments; however, the major evil avoided is tobacco.

While critical scrutiny of foundations is rare, it is almost entirely absent from major media. A notable exception was Charles Piller’s 2007 investigation of Gates Foundation investments (published in The Los Angeles Times) that concluded: “The Gates Foundation reaps vast profits every year from companies whose actions contradict its mission of improving society in the United States and around the world, particularly the lot of people afflicted by poverty and disease.”

Foundations are quick to publicize their “cause-related” investments, but for the bulk of their portfolios they go along with the crowd, and that has made all the sameness.

Joan Roelofs is Professor Emerita of Political Science, Keene State College, New Hampshire. She is the translator of Victor Considerant’s Principles of Socialism (Maisonneuve Press, 2006), and author of Foundations and Public Policy: The Mask of Pluralism (SUNY Press, 2003) and Greening Cities (Apex-Bootstrap Press, 1996).