Thinking Historically

About “Big Bets” in Philanthropy

Micah McElroy looks back at the bets which paid off.

By the time Andrew Carnegie died in 1919, he had given away, in today’s dollars, more than US$ 300bn. Carnegie remains an inspiration for many donors – notably Bill Gates – but modern philanthropists also tend to desire novelty. They venerate innovation and ambition in their giving, they want to experiment, disrupt, and take risks – to solve complex problems in ways that prior generations did not.

Yet history is replete with donors such as Carnegie, who pioneered innovative approaches to giving and dedicated considerable wealth to solving some of the world’s most challenging problems. The two examples explored here are more than a century old, but they still have much to teach – both their successes and their shortcomings. In particular, they suggest that the most successful social investments support structural changes – no matter how challenging or uncomfortable they might be – rather than funding “duct-tape” solutions. These may alleviate the symptoms caused by unequal structures, but leave the inequality itself untouched.

The Carnegie Libraries: A Grand Commitment to Open Knowledge and Self Help

Born in 1835, Andrew Carnegie gave away about 90% of his wealth before his death. The dollar sum of Carnegie’s philanthropy is staggering – equivalent to 2.1% of GDP of the US economy, the world’s largest – and the steel baron was a forerunner of later donors in his conviction that philanthropy should be run on business lines. For Carnegie, a rags-to-riches story, that meant ensuring that hardworking people had the opportunity to improve their own lives.

Perhaps no example of Carnegie’s philanthropy demonstrates his commitment to fostering self-empowerment more than his expansion of the world’s libraries. He donated over US$ 50m – more than US$ 1.3bn when adjusted for inflation – to build an infrastructure of literacy, creating 1,689 libraries in the United States alone and nearly a further 1,000 abroad. Libraries encapsulated Carnegie’s unwavering belief in self-reliance, as they yielded their knowledge only to those dedicated enough to study their collections. By stipulating that each library be free to the public, moreover, he ensured that no one be denied the chance of self-improvement on the basis of income. Built in rural and urban areas alike, the Carnegie libraries represented an unparalleled commitment to fostering open access to knowledge, initiating what has been called the “golden age of American libraries.”

The Carnegie libraries demonstrate that giving need not be disruptive or novel to be successful. Libraries were neither provocative objects of philanthropy in the 20th century, nor did local governments have to be convinced of their merit; state interest in public libraries coincided with Carnegie’s desire to fund them. Indeed, Carnegie’s aversion to funding private alternatives to public institutions also sets him apart from modern donors. He demanded – to the frustration of some – that town governments assume the long-term responsibility of funding and running each library he helped to create. His stipulation was born out of a desire to encourage self-reliance, but it also underlined his optimism that the public could be better stewards of philanthropic projects than the donors themselves.

The Seward Park Library.
One of 65 New York Public Library branches funded by a donation from Andrew Carnegie, New York, 1911.

The Carnegie libraries demonstrate that giving need not be disruptive or novel to be successful.

While the Carnegie libraries deserve praise, they were also constrained by the grand vision that inspired them. In particular, Carnegie’s notion that philanthropy’s main goal was to foster self-reliance evaded serious consideration of the obstacles that people confront in upward social mobility. Encouraging African-Americans to read in segregated Carnegie libraries, for example, was at best an indirect, if weak, solution to the inequality enforced by the Jim Crow laws. Others saw the libraries as a distraction from the more contentious history of how Carnegie had acquired the wealth that made him a such a generous donor. Trade unionists in Pennsylvania, for example, reminded the public that Carnegie owed his fortune not to self-reliance alone, but to acts of violent strikebreaking and political power. They wanted higher wages, not more books.

While the Carnegie libraries have left a lasting legacy around the world, they also represent an avoidance of the structural reforms that might have addressed the root problems that Carnegie hoped self-empowerment alone could accomplish.

The Rockefeller Sanitary Commission: Simple Solutions to a Dire Problem

The Rockefeller Sanitary Commission for the Eradication of Hookworm Disease, launched with US$ 1m from John D. Rockefeller in 1909, pledged to eradicate hookworm from the American South. The parasite had long plagued the region, thriving where inadequate sewage treatment, non-existent public health services, and poverty commingled. In 1911, the Sanitary Commission estimated that 40% of school-age children suffered from hookworm infections and 7.8 million Southerners harbored the parasite. Yet by 1915, the Commission had made significant reversals in the rates of hookworm infections, improving quality of life for hundreds of thousands.

The way in which the Sanitary Commission achieved its goals proves that big bets in philanthropy need not be complicated to succeed. Southerners contracted hookworm disease by walking barefoot on soil contaminated by feces, so the Commission established clinics to administer purgatives and instructed residents to wear shoes and dig privies. Such simple actions achieved immense results.

A hookworm treatment dispensary in Robertson County, Tennessee, 1914.

Like the Carnegie libraries, the Sanitary Commission also stands as an example of using philanthropy to bolster state capacity. In order to improve its legitimacy among Southerners wary of a Northern-based philanthropy, the Commission ran its educational programs through state and county boards of health. It also funded and staffed the boards, building the South’s feeble public infrastructure. By supplementing the government’s capacity to respond to future health crises, the Commission improved the odds that its initial investment would yield long-term results.

The Cocke County dispensary in Tennessee educating local people through demonstration and lecture, 1913.

But the same public partnerships that allowed the Sanitary Commission to succeed in the short term, also led to diminished returns – and in some cases, negative returns – in the long term. In order to accomplish its aim, the Commission made concessions with southern elites who were resistant to any change that might jeopardize their wealth or weaken the structures upholding white supremacy. The Commission framed their intervention as one that would increase worker productivity, soft-pedaled the negative health effects of Southern mills, and evaded the issue of racism altogether. As Benjamin Soskis, co-editor of the HistPhil blog, notes, when the Commission dissolved in 1915, ceding its mission to the state, it left the inequities underlying the South’s public health crisis unchallenged. Those inequities have festered into the modern day, instigating a resurgence of hookworm and extreme poverty in the same region that the Sanitary Commission once served. In places like Lowndes County, Alabama, many residents are so poor that they cannot afford a septic tank, suffering the indignity – and health risk – of having human sewage flush back into their homes.

Don’t be afraid to give up the good to go for the great.
John D. Rockefeller

What are the Best Investments in Philanthropy Today?

These early examples of ambitious, large-scale giving produced tremendous results, but they were also constrained by what they failed to address. Carnegie never intended to take on the structural impediments to upward mobility, encouraging individuals to lift themselves up. The Sanitary Commission backed away from addressing the uneven relations of power in the South that had worsened the health of the region’s poor. In the case of the Commission, that overlooked problem would come back to undo much of its work.

Among the many lessons that modern philanthropists could learn: Tackle the structures of inequality that Carnegie, Rockefeller, and many others could not. Making inequality an object of philanthropy entails risk, of course, because it may mean undoing the conditions that make large acts of philanthropy possible – a task akin to lifting the rock one stands upon. Jeff Bezos’s recent pledge to dedicate some of his wealth to philanthropy has provoked such calls, imploring Bezos to remedy the unequal distribution of wealth that allowed him to become the world’s wealthiest individual. Foundations such as Ford and James Irvine have already begun to address structural inequality as one of their central focuses. They do not believe, as Carnegie once did, that inequality is a natural, unavoidable fact of life – and their initiatives acknowledge as much.

Position yourself with something that captures your curiosity.
Jeff Bezos

The history of Carnegie and Rockefeller also helps clarify what a significant investment means in philanthropy today. It cannot be measured by dollar size alone, but also must account for the social change it generates, and its ability to fix the structural issues – such as inequality – that caused the need for philanthropic interventions in the first place. That is a far more lasting, and meaningful, return on investment.

Micah McElroy

Micah McElroy is a doctoral student at Columbia University. His dissertation, tentatively titled The Reinventions of Philanthropy, studies the history of organized giving in the San Francisco Bay Area from World War II to the present. A large part of his research examines Silicon Valley’s influence on Bay Area philanthropy and its consequence for beneficiaries and local governments. He previously worked as the Assistant Managing Editor of the Emma Goldman Papers.