I think a lot about the ‘bootstraps’ narrative. You know the one – someone who assumes personal responsibility, works hard, and has strong core values can accomplish anything. We’ve had some version of that story ripple through the American experience since our founding. And I believe two profound shifts happening in important sectors of our society right now are, at their core, a recognition that you can’t have a ‘bootstraps’ narrative on a tilted playing field.
The two sectors I’ve spent my career in – business and philanthropy – are undergoing a period of self-examination and taking steps toward change that I find deeply encouraging. In philanthropy, the shift is best exemplified by Ford Foundation President Darren Walker’s new book From Generosity to Justice: A New Gospel of Wealth. In it, Walker takes what was once the foundational document of our sector – The Gospel of Wealth written by Andrew Carnegie in 1899 and turns it on its head. The original Gospel was written pre-women’s suffrage, post-Civil War, mid-Jim Crow and toward the end of the Gilded Age – a time of extreme wealth inequality not unlike what we’re seeing in the United States today.
Reading Carnegie’s words through a modern lens is shocking in places. He is mostly untroubled by the chasm between rich and poor, and actually views it as a sign of the worth of those who have managed to ‘make it’. Despite advocating for charity, he deems its recipients unworthy. “Those worthy of assistance, except in rare cases, seldom require assistance. The really valuable men of the race never do, except in cases of accident or sudden change” he writes. He repeatedly refers to “the race” as in “the human race,” but never grapples with the subject of race in a country only thirty years removed from the abolition of slavery and in the midst of a nakedly separate and unequal society.
What Walker calls for is advancing justice – economic, racial, social, and political justice. And in doing so, calling on the philanthropic sector – and others too – to examine our privilege, transform how we operate, and use our various forms of power to dismantle the systems that allowed such injustices to fester for so long. What Carnegie advocated for in terms of philanthropic acts of generosity – funding a bed in a shelter for example – though valuable and good – isn’t enough, Walker argues. Justice is about changing inequitable systems, and the attitudes and beliefs that perpetuate them and keep the ‘bootstraps’ narrative from becoming a reality. And the path Walker prescribes is one many philanthropists are now on. Many of us are early in our journeys, joining with others much further along, but the shift is real, and it will make philanthropy – both the sector and those are impacted by it – stronger.
But even if Walker’s vision is fully realized, the levers that philanthropy has to pull are not enough. Not even close. The combined financial endowments of even the most major philanthropy foundations in the world are not enough. If we are going to begin to reverse the startling 40-year negative trends in both inequity and inequality in this country, capitalism must also evolve. The recent announcement by the Business Roundtable (BRT), setting forth a new purpose for corporations, one where one where all stakeholders – customers, employees, suppliers, communities, and not just shareholders – are essential, represents an important shift.
Like Walker’s call back to philanthropy’s history, the BRT’s move is a break from an important point in the history of business, when the idea of “shareholder democracy” first began to take shape. Andrew Ross Sorkin has written about and discussed this history in detail, but in short, it was a movement sparked in the 1970s and fueled by the economist Milton Friedman promoting the idea that corporations were too bloated, not efficient, and overly generous to customers, suppliers, employees and to their communities. Over time, that led to a dramatic shift, making a company’s stock price the CEO’s top priority. Among other negative effects, the trend pushed companies toward overvaluing short-term performance metrics like quarterly earnings at the expense of long-term planning and other factors like social impact. It led to the era of the leveraged buyout where corporate raiders forced companies to strip down by firing employees, eliminating perks, and cutting back on charitable giving, among other measures, to raise profits and the company’s stock price.
The problems with this formula are easy to see – especially in hindsight. These newly-trimmed companies lost much of their overall value – by that I mean value to customers, to employees, and to the communities in which they work. The raiders made out like bandits. The employees, customers, suppliers, and communities did not. It’s not hard to see how this trend dramatically exacerbated inequality in this country.
That’s why rejecting the idea of fealty to shareholders above all else – deeply embedded in corporate culture – is a critical shift. What we must do now is ensure that the CEOs who signed the BRT pledge both grow their ranks and put specific plans into action to make this shift real. Many were cynical when the BRT made its announcement, with good reason. The onus is on the CEOs who signed that statement to show us they mean it and role model for the broader business community how to deliver on it.
And that goes for us in philanthropy, too. We who have profited from inequity – CEOs and philanthropic leaders, among them – must listen to the communities who have been most damaged by it, solicit their ideas and give them our support, as well as our humble gratitude for leading a fight we should have joined long ago. Then, together, let’s build a country where equity is an animating force and prosperity is widely shared.
