It’s tempting to think about philanthropy as a sector that’s, well, rich. By most standards, grantmakers in the collective sense have a lot of money, and they deploy a lot of money trying to make people’s lives better. However, in the fight against poverty and economic inequality, philanthropy isn’t doing so well. Despite many praiseworthy efforts to make on-the-ground improvements for low-income people, philanthropy has failed to slow, much less reverse, a decades-long trend toward a less-equal U.S. economy.
A big part of the problem is that there’s only so much philanthropy and the nonprofit sector can do to rebalance a $19 trillion economy and secure the livelihoods of 330 million people. Even if grantmakers were giving away far more than they are, philanthropy just isn’t big enough for direct giving alone to suffice.
That’s where the topic of one of our latest State of American Philanthropy reports comes in. “Giving for Economic Justice Policy and Advocacy” is a wide-angle look at how grantmakers are approaching the oft-neglected realm of political economy — the public policies and power arrangements that govern economic life.
The primary advantage of such funding is the way it can leverage expansive public resources and governmental powers to make a greater impact than philanthropic dollars could on their own. It encompasses several strands of support, including backing for policy analysis, movement-building and research. Its aims include promoting public policies that shrink the gap between rich and poor, building power in communities left behind, and developing new ways of understanding the economy that look beyond decades of neoliberal assumptions.
These strategies are far more politics-adjacent than more traditional forms of direct anti-poverty giving. Only a relative handful of grantmakers operate in this space. Even so, it can be a challenge to accurately gauge the scale of resources that are flowing, and from whom. Research tools we typically use to gather data for these reports don’t delineate this category of giving as clearly as some others. And to add to the difficulty, influencing policy outcomes also happens to be a favorite cause for opaque giving through donor-advised funds.
Still, developments in this arena are worth keeping track of, not least because this is one of the most potent ways funders can leverage limited dollars for exponentially larger effect. Here are some key themes and takeaways from the report.
Still an exception to the rule
We often critique philanthropy for its failure to zero in on crucial levers in the fight against inequality, like fiscal policy and financial sector regulation. For the most part, even liberal funders tend to shy away from such work, or simply don’t consider it. As with philanthropic support for worker power — another key lever in the inequality fight — those that do are often well-established, private legacy foundations with liberal or progressive goals.
Many of the key names here will be familiar to those following progressive foundation giving. The Ford Foundation has long backed economic policy grantees and movement-building in its bid to address inequality “in all its forms.” Other legacy foundations like Annie E. Casey and Robert Wood Johnson also fund policy advocacy relevant to their own anti-poverty goals, including around high-impact fiscal strategies like child tax credits. The William & Flora Hewlett Foundation is another name to note — its approach centers the development of new economic ideas to challenge neoliberal thinking, including via academic research.
Despite support from funders like these, however, the revenue of progressive policy shops like the Center on Budget and Policy Priorities still doesn’t measure up to analogous think tanks on the right — say, the Heritage Foundation. And the resource scarcity for state-level progressive policy is even more acute.
The chief reason for that is liberal foundations’ continuing discomfort at the borders of “political” activity that many believe might be legally prohibited. There are, of course, many avenues for private foundations and other funders to deploy resources to great effect in this space, and to do so fully within the law. But that hasn’t allayed funders’ hesitancy.
Class traitors
It’ll probably come as little surprise that very few major living donors fund in this space, and practically no corporate philanthropies. There are, however, a few interested major donors willing to buck the tendency among the ultra-wealthy to bypass these strategies.
A few of these notable exceptions include George Soros (through the Open Society Foundations), Barbara Picower (through the JPB Foundation) and Hansjörg Wyss. MacKenzie Scott, Jack Dorsey and Pierre Omidyar are also noteworthy newcomers to this space.
Much, but not all, of what the older three fund syncs up pretty well with the typical foundation strategy in this arena — lots of support for policy shops alongside some movement funding. Meanwhile, the younger three have added some novel ingredients into the mix. Scott’s large-scale, unrestricted support for organizations building power among low-income communities of color is well-known. Dorsey is one of the nation’s foremost backers of guaranteed income experiments. And Omidyar, who founded eBay, has emerged as an unlikely backer of worker power and Wall Street regulation.
These figures, and a handful of others, are extreme outliers among the broader ranks of big donors, most of whom never question the idea that some jobs and some people’s labor should be rewarded with exponentially more resources than that of others.
An ongoing, if modest influx of new faces into this small club is an encouraging sign. But the cynics may also be right: As beneficiaries of the system as it stands, the donor class may never be truly interested in systemic approaches to poverty alleviation that cut into their own wealth and power.
Less siloing, more intersectionality
Now for some better news. Even though economic justice advocates remain the underdogs in a U.S. economy tilted toward the rich, this small corner of the philanthropic world is getting a boost from some of the positive trends permeating the sector at large these days.
For the longest time, economic policy funding (“class”) was siloed off from social justice funding (race, gender, immigration, LGBTQ and disability rights) in the programmatic work of many foundations. An ongoing push for intersectionality in philanthropy is breaking down that barrier, connecting economic justice with racial justice and other social justice priorities in a new way.
As a result, progressive funders with anti-poverty agendas are leaning into movement-building even more these days, often combining research and think-tank-style advocacy with a greater emphasis on grassroots power-building. One long-term result is an economic justice advocacy community that’s less white, less well-off, and less D.C.-based than was the case previously.
Intermediaries and associations are also playing a role in this transition. For instance, there’s Funders for a Just Economy, hosted at the Neighborhood Funders Group. FJE brings together philanthropic funders around an unapologetically progressive vision of workers’ rights and anti-poverty advocacy. And Liberated Capital, a collaborative funding vehicle and part of author Edgar Villanueva’s Decolonizing Wealth Project, aims to move “untethered” resources to Black people, Indigenous people and other people of color.
Uncertain prospects
On the cusp of a midterm election that may prove punishing for the incumbent president’s party, another key point from the report is worth keeping in mind — where this funding is concerned, the path to results isn’t always quick or straightforward.
This paper came together against the backdrop of the Biden administration’s attempts to move an expansive “Build Back Better” plan through Congress, one that initially promised a return to New Deal-esque levels of public sector anti-poverty spending. Despite nominal Democratic control of the legislature, Build Back Better moved through Congress haltingly, with only a few of its economic justice elements resurfacing in legislation like the Inflation Reduction Act.
At the same time, a sizable chunk of lower- and middle-class Americans (on either side of the political aisle, or none) have lost faith in this country’s ability to deliver acceptable economic prospects for themselves and their families. One result has been an increasing torrent of bad-faith attempts by anti-democratic politicians to capitalize on those insecurities, putting our very system of government in peril.
To make a difference in this arena, philanthropic funders must get comfortable with politics-adjacent funding. But they also need to be willing to back a long game, sticking with their policy and movement support even when the environment in Washington, D.C., turns sour. As we detail in this report, there are funders out there walking that path. But their ranks must grow substantially if U.S. philanthropy really plans to make a dent in poverty in the 21st century.