In 1980, the distinguished social critic Irving Kristol (who first convened The Philanthropy Roundtable) delivered to the annual conference of the Council on Foundations a challenging address entitled “Foundations and the Sin of Pride.” It can be read in full on our website.
The extract that follows presents Kristol’s explanation that philanthropic work is emphatically part of the private sector and his insistence that if philanthropy is to remain effective it must resist being displaced or centralized into bland uniformity by the government.
It is now generally said and widely thought that the foundation world constitutes a “third sector” in American society. There is, it is said, the private sector, consisting of business enterprise; the public sector, consisting of government; and then we have the third, not-for-profit sector, of which the foundations are the animating core. I would like to suggest to you that there is no third sector. Foundations are part and parcel of the private sector. They are flesh of the flesh, bone of the bone, blood of the blood of the private sector. The notion that foundations in some way constitute a sector of their own, different from, above, and superior to the other two sectors is an act of pride which will only go before a fall. That fall may consist in the fact that foundations will end up depriving themselves of their sustenance, which comes from the various parts of the private sector. Foundations are creations of the private sector.
In fact, there are only two sectors in our society: the private sector and the governmental sector. The voluntary associations in our nation do not make up a third sector; they are part of the private sector. Churches are part of the private sector. Fraternal organizations are part of the private sector. Even political parties are part of the private sector. There is no high ground which foundations can occupy and from which they can look down upon the other sectors and then try to think up policies, methods of improving the world, which are somehow disinterested in a way that those of the other two sectors are not....
If society becomes more centralized, and the government more intrusive, foundations are going to end up wards of the state.
Foundations came into existence originally to do all the things that needed to be done that the government did not do in the nineteenth and early twentieth centuries. That was the right thing for foundations to do at that time. However, the situation has changed today. We have had a reversal. There is almost nothing you can suggest which government is not eager to do. And it seems to me that foundations, therefore, have a special responsibility to be wary of government and to be a lot more solicitous of their own sector, which, I repeat, is the private sector....
To the degree that our society becomes more centralized, to the degree that government becomes more intrusive in all the affairs of our lives, to that degree, foundations are going to end up in fact being adjuncts of government or being assimilated into government.
Even now it is said—and I have heard foundation executives say it, and I think most people here would probably say it—that the money you people spend is public money, and therefore you have a public responsibility. Now, in what sense is the money you spend public? Under the tax laws, the contributions made to foundations are deductible from income. If you say that that money is public money, you are saying: “Well, the government has the right to all our money, but it doesn’t exercise this right at all times or in all respects. It leaves some of that governmental money for us to spend, and therefore we have a public responsibility attached to that money.” I think that is socializing money in rhetoric prior to socializing it in fact.
The money you people spend is private money. It is not public money. Money that the government does not take is ours. You can have whatever public responsibilities you wish to assume with that private money. But it is private money. It is the lifeblood of your organizations, and I think it is time foundations gave a little more thought to the source of that life blood and to what might be done to making that life blood a little more abundant.