Large philanthropic foundations exercise significant governance influence over public policy, research, and service delivery. They do so without the accountability mechanisms that governance at their scale should require.
The Scale of Foundation Influence
The large philanthropic foundations — the Gates Foundation, the Bloomberg Philanthropies, the Walton Family Foundation, and dozens of others with assets measured in billions — exercise influence over public policy, education, health, and other domains that is qualitatively different from the civic participation that small-scale philanthropy represents. Their scale allows them to fund research agendas that shape the evidence base for policy decisions, to support advocacy organisations that advance specific policy positions, to provide the funding that makes specific programme models visible as policy alternatives, and to directly fund the governments — through grants to public agencies — whose policy decisions they seek to influence. This influence is exercised without the accountability mechanisms that equivalent influence exercised through formal political channels would require.
The accountability gap in foundation governance reflects the legal framework that governs private foundations: the requirement to distribute a minimum percentage of assets annually, the prohibition on partisan political activity, and the IRS oversight of private foundation compliance with the rules governing their tax-exempt status. These requirements do not address the governance of the policy influence that large foundations exercise through their grantmaking — the specific choices about what research to fund, which policy alternatives to promote, and which advocacy organisations to support that determine the foundation's effect on the policy landscape.
Foundation power is the conversion of private wealth, through the mechanism of philanthropic tax exemption, into public policy influence that is not subject to the accountability mechanisms that democratic governance requires of equivalent influence exercised through formal political channels. The governance challenge is not that foundations should not exist — it is that the influence they exercise at their scale should be accompanied by the accountability that scale requires.
Discussion