April 2017

From Moral to Political Economy: The Origins of Modern Philanthropy’s Charitable Feedback Loop

Today, philanthropy and inequality exist in a feedback loop of sorts in the United States. Philanthropic organizations such as the United Way and the Red Cross transform donations, or labor, into research or humanitarian activities intended to benefit humankind in general, but not to alleviate individual hardships.

by Tom Barber

Today, philanthropy and inequality exist in a feedback loop of sorts in the United States. Philanthropic organizations such as the United Way and the Red Cross transform donations, or labor, into research or humanitarian activities intended to benefit humankind in general, but not to alleviate individual hardships. In fact, careful reporting has revealed that the Red Cross misused assets and misled the public while going to extraordinary lengths to maintain their image as serving those in need.[1] Meanwhile, experts continue to note rising poverty and inequality throughout the globe. While it’s easy to blame stagnant wages and undemocratic political policies for these shortcomings, it’s clear that there’s a significant disconnect between how we imagine our systems of wealth and relief and their actual impact.[2] This essay, however, locates philanthropy’s shortcomings to an interrelated cluster of religious and economic ideas. By the eighteenth century, Protestant theologians understood good works as visible evidence of individual salvation, a formulation that many benefactors thought legitimized their temporal wealth and status. At the same time, economic theorists from Benjamin Franklin to Adam Smith emphasized how philanthropy empowered the state while it enriched benefactors. Together these ideas replaced charity’s traditional emphasis on almsgiving, which benefited the poor, with an emphasis on institutional aid (education, rehabilitation, and imprisonment) meant to strengthen the nation’s economy while promoting indifference to the beneficiary. Confidence in these theories resulted in a new charitable paradigm whose intellectual foundations are responsible for today’s charitable feedback loop, which perpetuates poverty while claiming to alleviate it.

Change Comes to Philanthropy

Before the sixteenth century, Europeans considered philanthropy an entirely religious act. After England left the Catholic Church in 1534, however, the country’s theologians worked to distinguish their charitable assumptions and actions from their Catholic counterparts. Dissident Protestant clergy and officials reinterpreted charity along strict theological lines defined by notions of stewardship and austerity. Their faith in religious predestination led many of England’s Protestants to accept that God made the rich and the poor. As a consequence of this divine distribution of wealth, theologians advised the wealthy to act as stewards of God’s temporal wealth, a duty that involved caring for the unfortunate. These strict Calvinists also derided Catholic philanthropists for a patronage of the arts instead of charity to the poor. As biblical literalists, early Protestants committed themselves to radical altruism that emphasized individual poor relief by giving alms, or goods, rather than institutional care committed to abstract causes such as education and rehabilitation.

Our current, neoliberal fetishization of economic growth continues to influence thinking about inequality and, more importantly, our response to these inequalities and philanthropic efforts often remain largely indifferent to the needs of the poorest American.

Protestantism’s growth among Great Britain’s gentry and aristocracy undermined its commitments to individualized care, cultural austerity, and religious character. Wealthy Protestant philanthropists donated liberally as a way to promote the Protestant cause, express personal piety, and seize divine rewards. Commitments to these objectives put wealthy philanthropists at odds with ministers who insisted that no good works, regardless of magnitude, could influence individual salvation. The stalemate broke after the influential, but moderate minister William Perkins (1558-1602) offered a centrist position. Perkins insisted that good works were evidence of an individual’s salvation, not the means to obtain salvation. Perkins’ formulation helped decouple religion from philanthropy and undermined the benefactor’s relationship to the beneficiary. Perkin’s formulation made charity into a separate, virtuous action, regardless of the benefactor’s ideology. His stance led one writer to conclude, “Charity thinketh no evil.”[3] By the late seventeenth century, the combination of charity as an unquestionable good and the charity-for-reward mentality had unintentionally promoted indifference to the poor. Simply fulfilling God’s command to give mattered more than what actually happened to charity’s beneficiaries. Sir Thomas Browne (b.1605-d.1682), a seventeenth century philanthropist quipped “I give no almes to satisfie the hunger of my brother, but to fulfill and accomplish the Will and command of my God.”[4] A century after the English Reformation, notions of reward and personal salvation, not austerity, encouraged Protestant indifference to the poor.

Philanthropy on the Fringe of Empire: Charity in British North America

Britain’s North American colonies, many of which would eventually form the U.S., partially mirrored these changes in the metropolis. Waves of Protestant settlers, including both Boston’s Puritans and Philadelphia’s Quakers, for example, valued charitable acts as evidence of salvation, not steps toward it. Even highly conservative Puritan ministers like Cotton Mather (1663-1728) argued that charitable acts brought material rewards. In Bonifacius: An Essay upon the Good (1710), Mather promised his readers that any who dedicated themselves to charity could expect “surprising prosperity of their affairs.” For Mather, the benefits of charity explained how “small mechanics, or husbandmen, have risen to estates, which once they never durst have dreamed of.”[5] Though Mather accepted that good works might bring material wealth, he remained a committed advocate of the poor unlike many London philanthropists at the turn of the eighteenth century. Mather admonished audiences to “Remember the Poor” by distributing poor relief in money or goods, not merely access to education, employment, and medical services in times of financial need.

Barber Image 1
Portrait of Benjamin Franklin by David Martin, 1767. Courtesy of Wikipedia.

Benjamin Franklin’s (1706-1790) philanthropic efforts in Philadelphia brought the colony and metropolis into alignment by liberally borrowing London’s charitable assumptions about material rewards and indifference to the poor. Franklin was not only a voracious reader of the European thought, but travelled far and often. As a major consumer of British print culture, Franklin encountered writings like Daniel Defoe’s (1660-1731) Essay on Projects (1697), which suggested that well-organized, private philanthropic projects might generate positive economic returns to the larger community. As a colonial diplomat stationed in London, Franklin also encountered leading authorities who sought to reform the nation’s prisons, schools, asylums, and hospitals. These thinkers expected that marshalling the nation’s labor through educational ventures and public works would serve the common good and alleviate the suffering of the poor and working folk.

Franklin’s role in the creation of Philadelphia’s first hospital underscores his connection to, and appreciation of, charitable principles that imagined an expanded economic role for philanthropic action. The hospital’s promotional pamphlets argued that both material and spiritual benefits would follow the hospital’s construction. Franklin’s account of the institution’s founding drew upon what had by then become familiar expectations of Protestant charity. In his initial petition to the state legislature, Franklin promised that the hospital “will be a good Work, acceptable to GOD” because “Relief of the Sick Poor is not only an Act of Humanity, but a religious Duty.”[6] Likewise, his newspaper’s campaign for the hospital drew heavily on the parable of the Good Samaritan. Franklin advised his readers that they should “hear the Voice of this Samaritan,” who extolled the material benefits of charity, “as if it were the Voice of GOD sounding in our Ear.”[7] The hospital’s design also promoted widespread donations to exhibit public piety. Small donations of £10 bought a voice in Britain’s growing benevolent empire by giving these patrons a chance to “elect by Ballot.” Donors, according to Franklin, would also be able to gain public recognition as benevolent and involved members of the community.

Twentieth-century philanthropy, and the ideology that organized it, established the research institutions necessary to improve public health and educate working people. These victories, however, should not be allowed to obscure the fact that the long-standing commitment to charitable principles organized by economic thought by today’s philanthropists denies more effective means to fight inequality.

Franklin argued that the hospital served as a “work of Publick Service.”[8] He viewed this service not only as an act of charity, but as a path toward sustained economic growth that rested on marshalling a nation’s productive powers. Franklin was a frequent public advocate, even before the hospital campaign, for harnessing the Empire’s changing demographics to cement its strength. In The Nature and Necessity of a Paper Currency (1729), he equated Britain’s national power with its productive capacity. Paper currency, he then argued, unlocked these productive energies because it would enable farmers to buy land and artisans to secure small loans. Almost twenty-five years later he characterized the hospital as an efficient means to harness the state’s productive power. By curing the sick, Franklin hoped the hospital would restore “the useful and laborious Members to a community.”[9] Effective management of labor, Franklin claimed, would bring a variety of financial rewards that included elevating Philadelphia’s status, increasing its trade, and educating its doctors.

Barber Image 2
eHaitians waiting for medical care outside a Red Cross facility in 2010, following a magnitude 7.0 earthquake eleven months earlier. Courtesy of NPR.

Franklin’s dual appeal to rewards, both religious and secular, helped secure the campaign’s success. The Pennsylvania Assembly and the governor approved the hospital’s charter in 1756 in no small part thanks to Franklin’s philanthropic efforts. In fusing philanthropy and economic principles, mainstream philanthropy became synonymous with economic growth. It was under an ideology that was equal parts humanitarian and economic that an important segment of the early republic’s reformers shaped their efforts. Prisons and workhouses disciplined their wards not only to punish the guilty or idle, but to also protect formal commerce carried on by merchants from the type of petty retailing poor and working class folk that political leaders considered detrimental to national wealth.

Enduring Creeds, Modern Continuities

Our current, neoliberal fetishization of economic growth continues to influence thinking about inequality and, more importantly, our response to these inequalities. Philanthropic efforts often remain largely indifferent to the needs of the poorest Americans and, as a consequence, prefer to confront inequality with institutions or programs aimed at training basic job skills and building our future workforce.

The needs of our country’s poor and working folk demand better than a philanthropy of self-interest to escape today’s charitable feedback loop. They deserve our respect and the meaningful, systematic aid that accompanies it.

For example, in a 2005 speech at the National Education Summit on High Schools, Bill Gates attributed his interest in public education to fears that the nation’s workforce would lose its competitive edge in world markets.[10] The Baltimore protests over the police shooting death of Freddie Gray sparked prolonged national discussion not only about police force, but its connections to inequality. Presidential candidate Jeb Bush pointed to a failed public education system that was unable to give students the skills needed to traverse the occupational ladder an underlying cause for the inequality that fueled the 2015 protests.[11] While ostensibly hoping to end inequality through institutionally organized economic growth, Gates’ and Bush’s opinions harken directly back to Franklin’s efforts to employ philanthropy as means to secure the state’s wealth and create public order.

Conclusion—Trusting the Beneficiary, Ending the Feedback Loop

The philanthropic paradigm created by Protestant dissenters, remade by Benjamin Franklin, and recently channeled by policy makers and philanthropists today, is not wrong for its emphasis on economic growth or the tangible rewards brought by charitable action. In fact, twentieth-century philanthropy, and the ideology that organized it, established the research institutions necessary to improve public health and educate working people. These victories, however, should not be allowed to obscure the fact that the long-standing commitment to charitable principles organized by economic thought by today’s philanthropists denies more effective means to fight inequality.

Brazil’s recent efforts against poverty demonstrate the kind of reforms needed to make philanthropy aid more effective. Mired by political instability and hyperinflation that trapped a third of its population in below the international poverty line (surviving on $2 a day), Brazillian President Luiz Inácio Lula da Silva decided to radically change how the country fought inequality. Lula started the Family Grant initiative which—instead of offering the poor only institutional solutions like education, rehabilitation, incarceration—provided needy folk with cash. As Foreign Affairs writer Jonathan Tepperman notes, the plan made officials throughout the country nervous. However, the program’s success soon showed these fears to be grossly misplaced. What Lula understood, and what more academic studies suggest, is that the “the people who best understood what the poor really needed were the poor themselves,” according to Tepperman.[12]

The needs of our country’s poor and working folk demand better than a philanthropy of self-interest to escape today’s charitable feedback loop. They deserve our respect and the meaningful, systematic aid that accompanies it. They deserve true Samaritans. It is ultimately our intellectual commitment to the eighteenth and early nineteenth century’s charitable values that condemns the country’s efforts to a charitable feedback that perpetuates inequality.

Barber PhotoTom Barber is a PhD candidate at Louisiana State University researching the relationship between economic theory, philanthropy, and the state in the U.S. before the Civil War. His dissertation, “The Value of Benevolence: Patronage, Philanthropy, and Policy Power before the Civil War,” examines how economic theory influenced how the U.S. confronted poverty and juvenile delinquency before 1860. He is also the editor of the Civil War Book Review, a free, on-line quarterly journal that reviews scholarship and fiction related to the Civil War era.

Notes

[1] See also Laura Sullivan, “Report: Red Cross Spent 25 Percent of Haiti Donations on Internal Expenses,” NPR 06/16/2016,http://www.npr.org/2016/06/16/482020436/senators-report-finds-fundamental-concerns-about-red-cross-finances (accessed 04/14/2017).

[2] Gideon Rose, “Inequality” in Foreign Affairs, January/February 2016, https://www.foreignaffairs.com/articles/world/2015-12-08/inequality (accessed 4/13/2017).

[3] Thomas Fuller, History of the Worthies of England, quoted in Mordechai Feingold, “Philanthropy, Pomp, and Patronage: Historical Reflections upon the Endowment of Culture,” in Daedalus, vol. 116, no.1 (Winter 1987), 162.

[4] Thomas Browne, quoted in Feingold, “Philanthropy, Pomp, and Patronage,” 163.

[5] Cotton Mather, Bonifacius: An Essay upon the Good (1710); reprint: Cambridge: Harvard University Press, 1966, 111.

[6] Benjamin Franklin, “To the Honourable House of Representative of the Province of Pennsylvania: The Petition of Sundry Inhabitants of the Said Province,” (January 1750-1) in Some Account of the Pennsylvania Hospital (1754); reprint: Baltimore: Johns Hopkins Press, 1954, 4.

[7] Benjamin Franklin, Pennsylvania Gazette, (8-15-1751) in Some Account of the Pennsylvania Hospital (1754); reprint: Baltimore: Johns Hopkins Press, 1954, 22.

[8] Benjamin Franklin, “An Act to encourage the Establishing of an Hospital for the Relief of the Sick Poor of this Province, and for the Reception and Cure of Lunaticks” in Some Account of the Pennsylvania Hospital (1754); reprint: Baltimore: Johns Hopkins Press, 1954,5.

[9] Benjamin Franklin, “Paper Currency” in The Papers of Benjamin Franklin, vol. 1, http://franklinpapers.org/franklin//framedVolumes.jsp (accessed 4/13/2017).

[10] Bill Gates, “Remarks at National Education Summit on High Schools,” http://www.gatesfoundation.org/media-center/speeches/2005/02/bill-gates-2005-national-education-summit (accessed 4/13/2017).

[11] Jeb Bush, “Commentary: Jeb Bush’s War on Poverty revamp,” in Chicago Tribune, http://www.chicagotribune.com/news/opinion/commentary/ct-jeb-bush-war-poverty-poor-educaton-reform-opportunity-perspec-0506-jm-20150506-story.html (accessed 4/13/2017).

[12]  Jonathan Tepperman, “Inequality” in Foreign Affairs January/February 2016, https://www.foreignaffairs.com/articles/brazil/2015-12-14/brazils-antipoverty-breakthrough (accessed 4/13/2017).

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