(Roughly) Daily

It’s all about leverage… perhaps nowhere more painfully than in the philanthropic sector: so many problems; so little bandwidth!

Dick Tofel (a media advisor who was founding general manager and first employee of ProPublica, and its president from 2013 until 2021) weighs in with a “modest proposal.” It’s largely aimed at his field (public media, writ large), an altogether worthy focus; but the general principal is surely much broadly applicable…

I read a fascinating history over the recent holidays and it made me wonder about whether we ought to be fundamentally rethinking institutional philanthropy in this challenging moment. Because that philanthropy provides critical support to so much of nonprofit journalism, I think the question is worth exploring here this week.

The book is The Radical Fund: How a Band of Visionaries and a Million Dollars Upended America [here] by John Fabian Witt [here], a professor at Yale Law School. It charts the history of the American Fund for Public Service, a progressive foundation (to use our contemporary lingo) that operated in the 1920s and ‘30s, and produced some remarkable results with fairly limited resources (roughly $36 million over its entire run in current dollars).

The American Fund was rocked by conflicts between what we would now call progressives and literal Communists, and it made a few foolish grants, including some funding for Stalin-era Soviet agriculture, but it also accomplished an astonishing number of big things. It provided critical support for the NAACP, from its early anti-lynching campaign to launching the litigation program that culminated in Brown v. Board of Education, and including the earlier first moves toward salary equalization for public school teachers and desegregation of public graduate schools in the South; funded lifelines for Sidney Hillman’s industrial unionization drive that eventually produced the CIO, and for A. Philip Randolph’s pathbreaking Black union, the Brotherhood of Sleeping Car Porters; and supported the defenses of Sacco and Vanzetti, the Scopes “monkey trial” and the Scottsboro Boys.

In all, as Witt concludes, “People and movements touched by the American Fund did more for twentieth-century American liberalism than all the money of the era’s much larger and more famous foundations.”

Here’s what got me to thinking: Over well more than a decade, the American Fund spent only $67,000 (about $1.25 million today), or 3.5% of its total spending, on its own operations—the rest went to gifts and grants. This was possible because the Fund hired essentially no staff, with its work being done by its many impressive directors, including Roger Baldwin, founder of the ACLU, James Weldon Johnson, leader of the NAACP, Norman Thomas, the perennial Socialist Party presidential candidate (he got almost 900,000 votes in 1932), Freda Kirchwey of The Nation and attorney Morris Ernst. Among the giants they consulted were W.E.B. du Bois, Felix Frankfurter and Reinhold Niebuhr.

And here’s what it made me wonder: Especially in this moment of overwhelming needs across the social sector, as the federal government withdraws from so many crucial activities it had undertaken and supported for a half century, should institutional foundations recast themselves in the model of the American Fund, dispensing with their large staffs and instead restocking their boards with leaders who could directly disperse their largess?

Before you object that that’s simply impractical, you need to reckon with the fact that this is actually the operating model of most of what we call “major donors,” wealthy individuals, occasionally with family foundations, some of them making very large grants. Mackenzie Scott is the overwhelmingly largest funder of this sort, but in our own field such funders have included those who sparked Voice of San Diego, ProPublica, the Texas Tribune, the Marshall Project, CalMatters, Mississippi Today, the Flatwater Free Press, Baltimore Banner, Tulsa Flyer and others. The track record for initiatives spurred by institutional foundation funding is, well, a bit less stellar.

The costs of the current model are also much larger than you may imagine. The Ford Foundation, in 2024 alone, spent more than $212 million on its own operations, while making $840 million in grants and gifts (about 20% of the total). Nor is Ford an outlier in this respect: the MacArthur Foundation spent almost $68 million on itself, while paying out $356 million (16%) and the Knight Foundation incurred $32 million in expenses to grant and gift $148 million (18%).

I’m not complaining about these “overhead” rates as such—they are not at all unreasonable by contemporary foundation standards. (The 2024 rate for the Rockefeller Foundation, where I once worked, was 38%!) But for just these three major news funders, the aggregate cost comes to more than $300 million in one year alone. (Of course, news is just one of many things these giants fund.) That total spent on running three foundations is more than half of the rescinded federal support of public broadcasting. The difference between the American Fund’s 3.5% and the 18% median rate for Ford, MacArthur and Knight would be $250 million available for additional grants each year from these three funders alone.

I headlined this column a “modest proposal” because I do not expect it to be adopted, nor perhaps to be taken entirely literally. But I do hope it is directionally provocative. As I have said more than once with respect to public broadcasting, revolutionary changes require an extraordinary response. Essentially every objective of the major institutional foundations is under unprecedented pressure. In that setting, doing business in the usual way may no longer make sense. Looking to the American Fund suggests another path might be possible…

Repurposing overhead: “A Modest Proposal for Big Philanthropy in a Tale from the Past,” from @dicktofel.bsky.social.

For a broad history of philanthropy from the 16th century, see here.

[Image above from “Philanthropy on the Defensive,” also worth a read for a conservative take that inches toward some of the same conclusions…]

* Archimedes (brandishing his lever)

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Lest we even imagine that philanthropy can do it all, we might recall that it was on this date in 1940 that the first Social Security check– for $22.54– was issued to Ida May Fuller.

The Social Security Program had been created in 1935, with qualification for eligibility (covered earnings) beginning in 1937. So Ms. Fuller, a teacher-turned legal-secretary, had been accumulating credit for three years. She lived to 100 years old and collected a total of $22,888.

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