Freedom’s Champion

A Gift of Freedom: How the John M. Olin Foundation Changed America
by John J. Miller
Encounter Books, 2006
207 pp., $25.95 

It’s surprising how few major foundations have been the object of institutional histories. To that list we can now add John J. Miller’s A Gift of Freedom, the authorized history of the John M. Olin Foundation. Miller, a national political reporter for National Review, had previously written about the Olin Foundation in a Philanthropy Roundtable guidebook Strategic Investment in Ideas: How Two Foundations Reshaped America, which also covered the Lynde and Harry Bradley Foundation.
 
For this official history, the Olin Foundation gave Miller access to all its files and paid him to write its story, while giving him complete independence on what to write. The result is a very readable and interesting book. Anyone interested in the history of foundations—or the history of conservatism—will enjoy A Gift of Freedom. For even the foundation’s critics freely confess that Olin has altered the political and intellectual landscape of America as few foundations ever have.

John M. Olin (1892-1982) transformed a small family business into a giant corporation. His father, Franklin Olin, created Western Cartridge to make ammunition. John Olin, Miller writes, “was at heart a scientist who loved to tinker with products; 24 patents bear his name.” But Olin was also a canny businessman, who ensured that the family company (which became the Olin Corporation) grew to become one of America’s largest suppliers of guns, ammunition, and chemicals.

The Olin family had a tradition of philanthropy. Franklin Olin created a foundation devoted to education. The John M. Olin Foundation, created in 1953, stayed very small for the first two decades of its life. Most of John Olin’s giving was personal, including donations totaling $5 million to his alma mater, Cornell.

Olin’s giving changed dramatically after armed members of the Afro-American Society seized control of Cornell’s student union in 1969. After a 36-hour stand-off, the university administration capitulated on every point.

But the radicals’ triumph was pyrrhic. Several renowned scholars, including Thomas Sowell, Allan Bloom, and Walter Berns, quit the Cornell faculty in disgust, and the campus takeover was a catalyst that led John M. Olin to transform his giving. “Instead of giving the bulk of his money to hospitals and museums,” Miller writes, Olin channeled it “primarily toward scholars and activists who understood the principles of market capitalism and were capable of influencing opinions and debate.”

In 1974, Frank O’Connell became the John M. Olin Foundation’s first executive director. He began by talking to potential grantees about how the foundation’s money should be spent. In early 1975, O’Connell then wrote a 30-page memo to Olin (known as the “Fat Memo”) in which O’Connell urged his patron to give grants “to support such individuals and institutions that are effectively engaged in quality scholarship—teaching, research, writing, and related activities—in Market Economics and the Political Philosophy of Freedom.” O’Connell’s advice—that think tanks, scholars, and intellectual journals be generously supported—was faithfully followed for the remaining 30 years of the Olin Foundation’s life.

Another important early decision Olin made was that the foundation should be term-limited. The Fat Memo stated that “this program should not aim at perpetuity, but either at liquidation within a given period (perhaps 25 years)—or sooner, in the decision of the Trustees, should events indicate that to be a worthy or desirable course, in order to avoid frustration of the basic purpose.”

Olin worried, Miller writes, that if he created a perpetual foundation, eventually “the enemies of free enterprise might seize control of the foundation’s assets and turn them against their original objective.” He was strongly influenced by Henry Ford II’s decision in 1977 to resign from the Ford Foundation board because of the foundation’s leftward tilt. When Ford Foundation president McGeorge Bundy curtly dismissed Ford’s anguished letter of resignation by saying, “I don’t think one letter from anybody is going to change the foundation’s course,” Olin’s desire to term limit his foundation intensified. As part of his anti-perpetuity attitude, Olin also made it clear the foundation would not make grants to college endowments.

The decision of the foundation to spend down remains controversial (2005 was its final year), but Miller notes that term limits ensured the board would always have members who knew John M. Olin and understood his wishes. In addition, term limits allowed the foundation to increase its grantmaking so that the relatively small foundation had the clout of a far larger organization.

At its peak in 1996, the Olin Foundation corpus was $118 million, and the foundation made $18.7 million in grants, or about 16 percent of its assets. By 2001, Olin’s assets had diminished to $71.4 million—but its grants had increased to $20.5 million, or nearly 30 percent of its assets. Had the Olin Foundation limited itself to the 5 percent payout typical of perpetual foundations, its clout would have been greatly diminished.

Of course, it’s not the amount of grants that made the Olin Foundation a great foundation; it’s how the foundation spent its money. Miller highlights seven key accomplishments:

• Law and economics. The foundation funded much of the work examining the effect of laws on economic behavior by establishing law and economics programs at such law schools as Harvard, Yale, Chicago, Stanford, and Virginia.
   
• The Federalist Society. In 1982, the Olin Foundation supported a conference of law professors and students that grew into a large and highly influential network of conservative legal minds.
   
• The Collegiate Network. The Institute for Educational Affairs, supported by the Olin Foundation, gave a small grant to a conservative student publication at the University of Chicago in 1980, which led to the development of a consortium of conservative collegiate newspapers at schools across the country.
   
• Welfare policy. The 1996 welfare reform bill might still be wishful thinking if not for scholar Charles Murray, whose groundbreaking book Losing Ground was made possible in part by a small grant from the Olin Foundation.
   
• School choice. The Olin Foundation also funded a seminal book in K-12 education reform: Politics, Markets, and American Schools, by John E. Chubb and Terry M. Moe.
   
• “The End of History” vs. “The Clash of Civilizations.” The University of Chicago’s John M. Olin Center hosted Francis Fukuyama’s famous “End of History” lecture, subsequently published in the Olin Foundation-funded National Interest. Samuel P. Huntington, head of the John M. Olin Institute for Strategic Studies at Harvard, was Fukuyama’s most conspicuous critic. Thus was born one of the most intriguing post-Cold War foreign policy debates.
   
• Intellectual opinion makers. The Olin Foundation funded a who’s who of conservative intellectuals and institutions, including Nobel laureate Milton Friedman, George Stigler, Michael Novak, Richard John Neuhaus, and Linda Chavez, along with the Hoover Institution, the Heritage Foundation, the American Enterprise Institute, the Manhattan Institute, the National Association of Scholars, The New Criterion, and more.

In his conclusion, Miller offers several principles practiced by Olin that any foundation can learn from:

• Long-term commitments to grantees. Too many foundations suffer from “projectitis”—staying with grantees for a few years and then dumping them when foundation management comes up with new ideas. The Olin Foundation practiced the opposite approach, ensuring its grantees didn’t constantly have to scramble for funding. For example, Olin started funding the law and economics movement in 1974 and kept funding law and economics for the remaining 31 years of its life. As a result of this steady, patient funding, law and economics has become a major movement in law schools.
   
• A strong commitment to donor intent. “John M. Olin gave his foundation a clear mandate to defend America’s system of free enterprise,” Miller writes. “There could be no misunderstanding his intentions.”
   
• A united board. Olin knew every trustee of his foundation. All of them were chosen on the basis of their good judgment, shared philosophical principles, and willingness to follow donor intent; only one had any familial connection. Their total number was kept small to avoid factions forming.
   
• Term limits. By term-limiting his foundation, Olin ensured there would always be people on the staff and board who knew him and knew what he wanted to accomplish.
   
• Excellent staff. The foundation’s three executive directors—Frank O’Connell, Michael Joyce, and James Piereson—came from diverse backgrounds. O’Connell was a lawyer, Piereson a political scientist, and Joyce had run a small family foundation. But all three men were wise and energetic generalists, capable of spotting rising economists, lawyers, and foreign policy experts. The foundation’s program officers also were excellent talent spotters.

      
A Gift of Freedom shows us that even a relatively small foundation can, with a term limit and a strong-willed donor, achieve greatness.

Martin Morse Wooster is a contributing editor of Philanthropy and author of The Great Philanthropists and the Problem of Donor Intent.