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Money for Nothing

How foundations waste their legacy.

7:33 AM, Nov 4, 2010 • By PHILIP TERZIAN
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Under the auspices of the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal, Martin Morse Wooster has revised and expanded his 2006 study of where and why foundations go wrong. A frequent contributor to THE WEEKLY STANDARD, and maestro of the rarefied art of philanthropic study, no one is better equipped than Wooster to cast a cold eye on the world of foundations, define their mistakes, and point the way—more in sorrow than anger—toward philanthropy that actually accomplishes something.

Money for Nothing

John D. Rockefeller

As this unexpectedly fascinating study suggests, the basic problem of the great charitable foundations—Ford, Rockefeller, Pew, Carnegie, MacArthur, etc.—is that they were founded by entrepreneurs but are administered by bureaucrats. The founders were (almost invariably) men who had made great fortunes in the American system and wished to preserve and promote that system to afford others the same opportunities from which they had benefited. But the second, third, and successive generations of founding families tended to look upon their ancestors in light of their own comfortable upbringing and elite education. And coupled with the natural tendency of institutions to expand, they handed their inheritance to managers and trustees, who presided over relentless growth and distortion of donor intent. It is interesting to speculate what Henry Ford would make of the Ford Foundation, or J. Howard Pew of the Pew Charitable Trust.

They would, of course, be appalled. Of course, it is one thing to lament the fact that these great foundations have strayed, in dramatic fashion, away from the intent of the philanthropists who founded them. It is another to ask whether, in the long run, it has made much difference. For the truth is, as Wooster points out, that the salient fact about American foundations is the degree to which they fail in their objects. John D. Rockefeller might be rolling in his grave at the political character of the Rockefeller Foundation, but he might also be intrigued to note that the wrong-headed expenditure of billions has yielded decidedly modest returns.

It is Martin Morse Wooster’s contention that, politics aside, the great failing of philanthropy is arrogance, not principle. In setting out to transform American society with vast quantities of money—spent in accordance with top-down prescriptions for success—the foundations have failed just as decisively as the federal government in discerning some tangible cause and effect between cash and human progress. In Wooster’s analysis, successful foundations are those that take the trouble to remain faithful to their founders’ wishes, and measure progress in modest, incremental terms.

Instead of sending down well-financed directives from the upper floors of foundation headquarters, today’s bureaucratic philanthropists would do well, first, to listen to the people they are trying to help, and then take direction from those whose knowledge is based on experience, not ideology. And as always, Wooster makes his case, and illuminates the problem, in succinct, well-versed, eminently readable form.

Great Philanthropic Mistakes by Martin Morse Wooster, Hudson Institute, 232pp., $19.95

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