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January 18, 2007


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Lucy Bernholz

Wrong. Every act a foundation makes is value laden. The beauty of foundations is they can set their own values. So, your hypothetical foundation could invest in every one of the companies you name and connect it to their (and this presidential administration's) definitions of freedom and democracy. Which are decidely different from, say, my definitions of those things. And thus I would chose different grantees and different companies to invest in.

There need not be a universal (and vastly oversimplified) definition of good and evil company. There is no such definition of a good or evil grant. But the definitions that a foundation chooses for the latter shouldn't be counteracted by the definitions they choose for the former. Especially not when you remember where 95% of the action is.


Lucy, didn't you recently comment on regulation of philanthropy? Foundations are already highly regulated, and th directionality of that regulation is significant. The current law is that the investment of foundation capital for its preservation as an endowment is considered to be value neutral.

Generally, philanthropic regulation does not recognize participation in conflict or even politics (war by other means?) as a tax deductible purpose, so why isn't it reasonable to discriminate on this basis with respect to investments? Why couldn't the law privilege some investments over others?

I do agree that there need not be a universal in this, but I don't think this means you can't make distinctions and express preference, even as a matter of policy. As I suggest, the policy can be to privilege of discriminate against some classes of investment, but the class criteria have to be beyond ideology. We all agree (hopefully) that we are a nation of laws and therefore conflict beyond the give and take of debate in the Public Square is beyond the pale. Most of the companies Phil lists can be excluded on a basis like this, but as I said investments are value neutral and no such discrimination is allowed in current law.


In fact, investment managers are held to a prudent investor rule or prudent man rule, depending on the state. Screening out investments might run counter to that rule if it limited the investment advisors ability to get a get competitive total risk adjusted return, with low costs. The screening would reduce the universe of possible investments and might add a layer of cost.


Everything a foundation, company, or person does is value laden, of course. But from that we can't leap to saying that we should totalize our lives around a single mission or ideology. "Happy Holidays," I say. "Merry Christmas," my grocer in Dallas says back as a rebuke. Morality and capitalism make very strange bed fellows. Moralists and capitalists make for an interesting conversation. Take the guy Roberts who is behind so much of Jed Emerson's work on double bottom lines. He was the buyout king whose fortune was made in buying out a cigarette company. Now, Roberts is famous for Juno Bakery, employing convicts to make bread. The Nobel Peace Prize comes from money made in dynamite. Philanthropy is the point of intersection of capitalism and social good, and that intersection is "contradictorily consistent," an almost compensatory unity. When you begin to use philanthropy, or foundations, to mess with the capitalist engine itself, you are breaking the social contract with the capitalist, you are pulling aside the veil, and revealing the ugly truth, that foundation monies often come from firms who profits are made in ways that may not make us proud. Likewise the board is drawn from figures whose public lives may be renowned but whose hands may be stained with the tears of the innocent, if not their blood. "Slack" in this system is what holds it together. Force the issues and you are no longer a middle of the road, liberal intellectual, welcome in all circles, but a menace to the system by which you are supported. What I am trying to signal, in part, is how much like a children's crusade this seems. Clean hands are hard to find in philanthropy. Certainly, Gates himself is not a model for Christian Charity, nor progressive ideals, in his business practices. Be grateful for whatever mixed blessings and don't ask too many questions, unless you want to join the Happy Tutor in his Dumpster as persona non grata.


I sometimes wonder how self-conscious this resistance is. The Sleepwalkers don't really examine their concepts and processes. It is as it is because that's how it is.

What if you could demonstrate that changing the system in certain ways would make it more efficient, more productive as well as more sustainable? If that also distributed the wealth more evenly, would it still be apposed? I assume that it would.

I conclude that the only way to change things is to finally attract investments to organizations that embody progressive values, and outperform them in the marketplace. It will be necessary to invest some resources in promoting healthy legislative frameworks, lest the powers of evil continue to dominate there.


Make a bundle ruthlessly; give it away strategically. That is the spirit of Gates philanthropy. Start criticizing winner take all capitalism, and see how many philanthropists part company with you.

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