How Foundations Exercise Power

Joan Roelofs
Thursday, December 1, 2016

There are many reasons why the wealthy have dominant political power in all capitalist countries, whether or not they are called democracies.[1] There is the political system, where money sponsors candidates, funds campaigns and political propaganda, and lobbies all political institutions.  In the US, corporations and other elite institutions also supply many of the top officials in government bureaucracies and advisory boards.

There is the ownership and control of economic resources, so that people are dependent on the wealthy for jobs; cities and states do not act against the interests and desires of the corporations that sustain local economies. Weapons manufacturers do not have to bribe Congresspeople; they all know where their bread is buttered.

Another channel of influence is philanthropy—sometimes called the “third sector.” As a political scientist, I have studied the power of this sector, especially the large liberal foundations and their grantees. These foundations define much of our political culture, at the same time channeling social change movements to protect corporate wealth and power. The major “liberal” foundations and progressive organizations (like the earlier and related Progressive movement) are not only silent about militarism and imperialism, they are often complicit with it and benefit from the profits of military contractors and global resource extraction.

You don’t hear much about this because most studies of philanthropy are generously funded by the philanthropists. Mine were funded by my salary and sabbaticals at a state college.

One reason why foundations have so much influence is that the US political system doesn’t have institutions for planning and reform, as for example, programmatic political parties that exist in some other countries. Foundations have become the “planning arm” of our system.[2]

Almost all progressive organizations look to corporations and foundations for funding. Small donations or dues are rarely adequate for any major undertaking, and require much energy to collect. Even the NAACP Legal Defense and Education Fund was crucially dependent on foundation money for the litigation leading to Brown v. Board of Education in 1954.

The nonprofit sector itself has a conservative and undemocratic influence on our society. The United States is unique in its size and scope. Its tax-free wealth is not subject to popular control. I am referring to the land, the buildings, their contents, and the investments of churches, private universities and schools, museums, zoos, teaching hospitals, conservation trusts, opera houses and others. Unprofitable, but necessary, activities could be carried out by government, as they are in many countries. However, privatization of charity, culture, education, and reform has many advantages. If philanthropic capital were taxed, its disposition would be subject to political debate. In addition, staff members have no civil service status or security. Unionization is weak in this sector.

The multipurpose foundations began in the early 20th century, in the spirit of the Progressive movement and the goal of cleaning up capitalism. The robber barons saw that foundations could serve several purposes. They would provide a systematic way to dispose of vast fortunes. In addition, they would enable the wealthy to control the reform process so that their power would not be diminished. By power, I mean the ability to make or prevent change, to influence new policies or retain the old ones.

John D. Rockefeller created a foundation that “would be a single central holding company which would finance any and all of the other benevolent organizations, and thus necessarily subject them to its general supervision.” [3] Furthermore, foundations could improve public relations; many believed that the Rockefeller Foundation was created to erase the scandal of the 1914 Ludlow Massacre.[4]

There are several kinds of foundations. The conservative ones have had increasing power since the Heritage Foundation in 1980 distributed Mandate for Leadership, a blueprint for the Reagan administration. However, what the conservative foundations are after is obvious, and the liberal press shines some light on them and criticizes them. On the other hand, the “liberal” or “progressive” foundations are rarely examined in a critical way.

The earliest ones, Rockefeller, Carnegie, and Sage, have a record of almost a century; the Ford Foundation reorganized in the early 1940s with a similar mission. More recently formed ones, such as the Soros Open Society Institutes, and the largest one, the Gates Foundation, are especially notable for directing change on a worldwide basis.

These liberal foundations are closely tied to political and economic elites. Their original founders were wealthy capitalists, and their current trustees and senior staff have close ties to the corporate world. Furthermore, their investments are in the usual high earning corporations: energy, military, chemicals, pharmaceuticals, international real estate, hedge funds, and so on.[5]

Foundations are not “all powerful,” but their power is enormous, and it is rarely revealed by scholars, journalists, or activists.

Foundations do many good things, but they also narrow the solutions to social problems. Only those policies that preserve the power and wealth of capitalism are acceptable.

I find it strange that in the land of so much philanthropy, so many billions spent on improvement, there are levels of poverty, injustice, incarceration, ignorance, violence, disease, mental illness, wars, and environmental destruction that are rare in the civilized world, rare in other rich countries, middling countries, and even some poor countries. In

Their influence over our political culture has been great.

The foundations have funded or created nearly all of the organizations that provide policy proposals, even the one “think tank” associated with organized labor, the Economic Policy Institute. Among the most important is the Council on Foreign Relations, created by Carnegie and Rockefeller in 1923.[6]

In 1933, the Social Science Research Council, an offshoot of the Rockefeller Foundation, produced a document, Recent Social Trends, which proposed solutions for problems facing the nation.[7] One of these was to create a “managerial presidency,” like the city manager, and eventually the executive office of the president gave the president his own bureaucracy; another was public corporations, meaning government corporations, one of these appeared as the TVA; and public-private partnerships, now we see them as economic development corporations.

Foundations also sponsor academic researchers and others who write about policy. Some of the books that have influenced our politics are: Gunnar Myrdal, An American Dilemma (1944) Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (1932); Michael Harrington, The Other America (1962); Samuel Stouffer, Communism, Conformity, and Civil Liberties (1955); and Robert Putnam, Bowling Alone (2000).

The foundations’ own staffs have also developed influential policy proposals. For example, the Carnegie Corporation on school reform, the Ford Foundation on New York City schools and the war on poverty, and the Sage Foundation on the creation of the social work profession. Even the formation of the European Union was influenced by foundations: Washington’s main tool for shaping the European agenda was the American Committee for a United Europe, created in 1948 and funded by Ford & Rockefeller.

The Carnegie Endowment doctrine of “humanitarian intervention” was proclaimed just in time for Clinton’s destruction of Yugoslavia.

Foundations have been even more influential in the political culture of state and local government. The Rockefeller, Sage, and Carnegie Foundations were the prime movers of the municipal reform movement. Organizations such as the National Municipal League, the National Planning Association, the American Municipal Association, the American Public Welfare Association, the National Association of Housing Officials, the Council of State Governments, the Municipal Finance Officers Association, and the Conferences of Mayors, Governors, and City Planners were initiated and continue to be funded by foundations. These are “think tanks” and associations of elected officials and public administrators.

The “council-manager” form of local government is one of these guided reforms. The “city manager” is based on the idea that local government should be run like a business; a manager hired by the city council is supposed to carry out the council’s instructions and manage the staff.

Another way that foundations shape the political culture is by starting new programs in colleges and universities, such as area studies, women’s studies, and clinical legal education. Public interest law was a way of influencing the Supreme Court. Beginning around 1957, the Ford Foundation began funding clinics for law students that worked for reform in civil rights and liberties; poverty, environment, women’s rights, consumer and school finance law; and criminal justice. Foundations also funded specialized law reviews, such as the Columbia Journal of Environmental Law and the Harvard Civil Rights Civil Liberties Law Review. Law review articles are cited in Court opinions. The SC law clerks, who do a lot of drafting of opinions, have often been trained in these specialized clinics and write for the law reviews.

The Rockefeller Foundation has been particularly active in creating and funding science programs, notably in agronomy (the “Green Revolution” was its project), and population control. It also supported research into nuclear physics in Germany during the 1930s.

They are gatekeepers for academics in all fields. Getting grants for one’s research confers legitimacy.

Foundations are an important presence in media, especially educational TV and public broadcasting, and are the funders of “independent” Internet news sources. They fund all kinds of art, except that challenging capitalism.

Foundations channel social change by co-opting activists and their organizations. The radical activism of the 1960s and 1970s was often transformed, by grants and technical assistance into fragmented and local organizations subject to elite control. Energies were channeled into safe, legalistic, bureaucratic, and, occasionally, profit-making activities.

Legally, foundations can’t fund political parties, or groups that are too active politically. They prefer single issue groups working on unique problems, which discourages coalitions or collective action.

McGeorge Bundy, President of the Ford Foundation, testified at a congressional hearing on foundations.[8] He was asked why Ford supported radical organizations and said:

For institutions and organizations which are young and which are not fully shaped as to their direction, it can make a great deal of difference as to the degree and way in which they develop if, when they have a responsible and constructive proposal, they can find support for it. If they cannot find such support, those within the organization who may be tempted to move in paths of disruption, discord and even violence, may be confirmed in their view that American society doesn’t care about their needs. On the other hand, if they do have a good project constructively put forward, and they run it responsibly and they get help for it and it works, then those who feel that that kind of activity makes sense may be encouraged.

At a time when activists were demanding systemic change, moderate organizations were generously funded by foundations. Foundation trustees often became board members of funded organizations where they could keep a close eye on activities.

Foundations also created organizations that appear to be “grassroots.” For example, the Ford Foundation started the Puerto Rican Legal Defense and Education Fund, Women’s Law Fund, Environmental Defense Fund, Natural Resources Defense Council, and many others. Sometimes, these “paralleled” radical groups, such as Central American solidarity or nuclear disarmament organizations.

During the 1960s foundations created many leadership programs. Their purpose was to identify militants from various ghettos and to persuade them that responsible leadership means giving up the idea that the power structure should be changed. They were taught how to testify at congressional hearings, to apply for grants, and to use videotape to publicize their cause. Most of the radicals were tamed, and after leaving the program, they found well paid jobs. They did help people with their problems, but the system of power and wealth for a few did not change.

Foundations were active supporters of the civil rights movement. The Ford and Rockefeller Foundations created the National Urban Coalition in 1967 to transform “black power” into black capitalism. At that time the corporate foundations, those attached to business corporations, joined in funding “social change” and the Coalition supported moderate black organizations, mainly the National Urban League, NAACP, NAACP/LDEF, and Southern Regional Council.

After M. L. King, Jr.’s assassination, elites set about to sanitize his memory. In 1968, the Martin Luther King, Jr. Center for Non-Violent Social Change (MLKCenter) was established in Atlanta. The Center was financed by the liberal foundations as well as the corporate foundations of Ford Motor Co. (which contributed $1 million for its establishment), Atlantic Richfield, Levi Strauss, Xerox, Amoco, GM, John Deere, Heublein, Corning, Mobil, Western Electric, Proctor and Gamble, US Steel, Monsanto, Johnson & Johnson, Morgan Guaranty Trust, Union Pacific, and Johnson’s Wax. One program at the KingCenter was a lecture Series entitled, “The Free Enterprise System: An Agent for Nonviolent Social Change.”

The large environmental groups are funded through the Environmental Grantmakers Association, a group of liberal foundations and industrial corporations, including ExxonMobil, Dow Chemical, and Monsanto, and by some small radical funders.

In addition to selective funding, the very structure and process of grant seeking tends to transform a group or movement’s mission.[9]

The private foundations as well as the corporate ones are especially careful to target poor and minority leaders and organizations, from which radical activists might otherwise emerge. The Aspen Institute joins anti-poverty grassroots leaders with national security personnel. Military contractor foundations are prominent funders of organizations to encourage girls to enter science careers.[10]

Foundations and their NGOs also provide employment for sons and daughters of the rich who might otherwise be unemployed and disaffected, along with those of any class who are dissident and troublesome. Here is an arena where the angry poor can comfortably interact with t-shirted sons and daughters of millionaires who are environmental or human rights activists. Joseph Schumpeter thought that capitalism would eventually be overthrown because the children of the rich would reject it, and become revolutionaries.[11] Now they become staff at the Sierra Club or Amnesty International. On the local level also, community foundations mute criticism of the corporate world. Volunteers or staff do not want to jeopardize their grants, or those for their neighbor’s charity.

Foundations play an important, often dominant, role in foreign policy. They are members of coalitions and collaborations that can include overt and covert government departments, U.N. agencies, E.U. committees, NATO grant activities, universities, billion- aires, celebrities, and nongovernmental organizations (NGOs).

John J. McCloy, for many years Chairman of the Ford Foundation’s trustees, “thought of the Foundation as a quasi-extension of the U.S. government. It was his habit, for instance, to drop by the National Security Council in Washington every couple of months and casually ask whether there were any overseas projects the NSC would like to see funded.”[12]

The Central Intelligence Agency originally used foundations and NGOs as “pass throughs” for their international operations. An initial operation focused on Western Europe in an effort to lure intellectuals and activists from Marxism. The cultural Cold War initiated concerted action by foundations and the CIA; a major objective was to persuade European intellectuals that the United States was not only a “free” society, but also a worthy, culturally rich one that did not repress its artists as did the proponents of “socialist realism.”

The Ford Foundation was heavily involved covert actions in Europe, working with Marshall Plan and CIA officials.[13]

A notable project was the Congress for Cultural Freedom (CCF), which sponsored writers, journals, and conferences throughout Europe, including the magazine Encounter.

The CCF launched a traveling exhibit of abstract expressionist art, including works of Jackson Pollock and Mark Rothko. The idea was to show the European intellectuals that the United States was rich in avant-garde culture.[14]

Congress created a new institution in 1983, the National Endowment for Democracy, modeled on the private foundation. NED operates throughout the world, creating and supporting “overthrow” movements and “free market” projects.

In Eastern Europe foundations created civil society organizations, supporting dissidents who later led the overthrow movements.  They also financed university departments and translations of “free market” advocates, such as Hayek and von Mises. By 1989, George Soros was funding a totally revised edition of the Great Soviet Encyclopedia.

After the Eastern European socialist governments were overthrown and destroyed, those countries had no resources of their own for social services, the arts, universities, and research, so the Western foundations stepped in. Political parties are also funded by foreign foundations and governments.

Foundations served U.S. foreign policy in South Africa. Apartheid had to go, but the African National Congress Freedom Charter of 1955 had the goal of creating a multiracial socialist South Africa, with land and resources reverting to the people. The challenge for the Western elite was to disconnect the socialist and anti-apartheid goals. Foundations, along with other actors, aided in this process.[15] Among their activities was the creation of NGOs as alternatives to the liberation movement approach of the ANC. The Ford Foundation promoted public interest law firms concerned with civil rights, which helped people to whom the apartheid laws were unfairly applied, and assisted black trade unions, especially those in the mining industry.

When the apartheid system finally collapsed, there were many human rights organizations in place to draft the new constitution in 1996, which has a “state-of-the-art” Bill of Rights. However, South Africa’s resource distribution has hardly been altered, socialism evaporated from the ANC leadership, and the new black governments are content to participate in the world market and its leadership institutions such as the World Economic Forum.[16] In Indonesia, the Ford Foundation-sponsored organizations worked to undermine the neutralist Sukarno government that challenged U.S. hegemony.

The creation and funding of civil society institutions worldwide by private foundations, now with additional billions from governments and international governmental institutions, supports U.S. hegemony: military, political, and economic. This process is not a peaceful alternative to violent intervention; it works along with it.

In any case, wealthy American institutions destroy democracy when they create political parties, movements to overthrow governments, NGOs, or cultural projects in other countries. The civil society organizations often aim to replace or to penetrate all national institutions, and with its velvet glove, direct all processes of change.

As governments shrink because of neoliberal ideology, required by the International Monetary Fund, or just low budgets incurred through debt or oil prices, foundations and their NGOs move in to fill the gap. In Latin America, neoliberal reforms and privatization led to the dismissal from government jobs of many academics and public servants. Some eventually found jobs in U.S. foundations’ “human rights” organizations. Many had originally been leftists, but gradually came around and became pragmatic.

Increasing globalization, which means that policies are crafted at higher levels, has amplified the power of foundations, for many of the global institutions were largely created by foundations, and continue to be fostered by them. This is the case not only of the nongovernmental associations, such as World Federalists, Bilderberg, the Trilateral Commission, and the World Economic Forum, but also the intergovernmental bodies: the United Nations itself, and its specialized agencies.

During World War II, committee in the Council on Foreign Relations, a project of the Rockefeller and Carnegie foundations, met to plan the postwar world. The United Nations, the International Monetary Fund, and the World Bank were proposed.[17]

The U.N. headquarters in New York was established with a gift from Rockefeller institutions. The UN agency, the World Health Organization was practically a continuation of the Rockefeller Foundation’s International Health Division. and, in its formative years, was dominated by the Rockefeller Foundation.[18] Now the Gates Foundation (the richest one, assets of $40 billion) has taken over the leading role, which has led to strong protests from the professional staff of WHO for both its domination and its approach to health issues.[19]

Ford, Rockefeller, and now the Gates Foundation (considered the major controller of world agriculture) have set about remaking the agriculture of the world with the promise of ending hunger. Yet the basic premise of the Green Revolution is now being questioned.[20]

Conclusion My purpose has been to reveal the power and influence of the liberal foundations, a subject rarely addressed by social scientists. There are very few comprehensive studies that are not subsidized by the foundations. These are rarely reviewed in mainstream newspapers or even in scholarly journals. Yet, the foundations have accomplished a lot, according to their own objectives. We cannot know what would have happened had foundations not intervened in the political process. Perhaps things would have been worse. Movements for more radical change might never have been sustained or been successful. Nevertheless, foundations have had a significant role in creating the world of today, and that world does not appear to have a democratic, peaceful, or sustainable future.

Joan Roelofs is Prof. Emerita of Political Science. Author of Foundations and Public Policy: The Mask of Pluralism (State University of New York Press, 2003) and later articles in Counterpunch.org and scholarly journals.


[1] For a political science study of US power distribution, see Gilens, Martin and Benjamin  Page.  2014.  “Testing Theories  of  American Politics: Elites, Interest Groups, and Average Citizens.” Perspectives on Politics. Fall.

[2] Barry Karl and Stanley Katz. 1981. “The American Private Philanthropic Foundation and the Public Sphere: 1890–1930.” Minerva 19 (Summer), p. 238.

[3] Howe, Barbara.  1980.  “The Emergence  of  Scientific  Philanthropy  1900–1920.” In Philanthropy and Cultural Imperialism. Ed. Robert Arnove. Boston:  G.K. Hall. p. 29.

[4] “John D. Rockefeller, Sr., who originally bought Colorado Fuel and Iron in 1902, resisted unionization of workers by hiring company guards who used brutal tactics. In 1911, he turned controlling interest of several mines in Colorado over to his son, John D. Rockefeller, Jr., who followed his father’s ruthless tactics in controlling labor unrest. In 1914, during a prolonged strike, around 20 people were killed (the exact number remains uncertain) by the Colorado National Guard in the process of destroying the tent city in Ludlow, Colorado where 1,200 striking miners were living with their families. Testifying before the Walsh Commission, Rockefeller Sr. indicated that he ‘would have taken no action’ to stop his guards from attacking the workers.” Gage, Beverly. 2009. The Day Wall Street Exploded. New York: Oxford University Press, p. 94.

[5] Roelofs, Joan “The Philanthropies and the Economic Crisis.” Counterpunch.org. May 28, 2009.

[6] Roelofs, Joan. “Manufacturing Neoliberalism: How the Council of Foreign Relations Marketed Global Capitalism.” Counterpunch.org, September 22, 2015

[7] President’s Research Committee on Social Trends. 1933. Recent Social Trends in the United States. New York: McGraw Hill.

[8] U.S. Congress, House Committee on Ways and Means. 1969. Hearings on Tax Reform, 91st Congress, 1st Session (February). P. 371.

[9] It must be a 501 (c3) organization, which requires officers, accounting, and businesslike form. Applying for grants takes time and a business format. Obtaining a grant is facilitated if a group has a unique project, which discourages alliances for systemic change.

[10]Joan Roelofs. “Military Contractor Philanthropy: Why Some Stay Silent.” Counterpunch (January 25, 2006). http://www.counterpunch.org/roelofs01252006.html

[11] The capitalist process, . . . eventually decreases the importance of the function by which the capitalist class lives. We have also seen that it tends to wear away protective strata, to break down its own defenses, to disperse the garrisons of its entrenchments. And we have finally seen that capitalism creates a critical frame of mind which, after having destroyed the moral authority of so many other institutions, in the ends turns against its own; the bourgeois finds to his amazement that the rationalist attitude does not stop at the credentials of kings and popes but goes on to attack private property and the whole scheme of bourgeois values.  Schumpeter, Joseph. 1950. Capitalism, Socialism, and Democracy.  New York: Harper and Brothers, p.143

[12]Bird, Kai. 1992. John J. McCloy and the Making of the American Establishment. New York: Simon & Schuster, p. 519.

[13] Saunders, Frances S. 1999. Who Paid the Piper. London: Granta, p. 139.

[14] In 1967, there was a brief period of indignancy in the United States when the covert projects became public. The major criticism was that the CIA was using respectable U.S. organizations, whose members, except for a few top officials, were unaware of the funding source. These included the American Federation of State, County, and Municipal Employees; the National Education Association; the National Student Association; and the American Newspaper Guild. There was little concern that the politics and culture of other nations were being sub- verted with CIA propaganda, in contrast to the fear that “one drop of Moscow gold” would taint any American organizations.

[15] In 1978 the Rockefeller Foundation convened an 11-person Study Commission on U.S. Policy Toward Southern Africa, chaired by Franklin Thomas, President of the Ford Foundation, and including Alan Pifer, President of the Carnegie Corporation of New York. Its mission “was to determine how the United States can best respond to the problems posed by South Africa and its dismaying system of racial separation and discrimination” At the same time, it had to take into account the “full range of U.S. interests.” Study  Commission on  U.S. Policy Toward Southern Africa.  1981.  South Africa: Time Running Out. Berkeley: University of California Press, p. xi.

[16] Roelofs, Joan. “How Western Elites Seeded Neoliberalism in the Post-Apartheid Regime: Foundations and the South African Transition,” Counterpunch (December 19, 2013) http://www.counterpunch.org/2013/12/19/foundations-and-the-south-aftrica...

[17] They also decided that a Communist government in Vietnam must be prevented no matter what measures this required. Domhoff, G. William. 1998. Who Rules America? : Power and Politics in the Year 2000. Mountain View: Mayfield, p. 148.

[18] Birn, A. E. 2014. “WHO: Past, Present and Future.” Public Health 128:129– 140.

[19] Global Health Watch. 2008. Global  Health  Watch  2:  An  Alternative World Health Report, p. 250. http://www.ghwatch.org/sites/www.ghwatch.org/files/ ghw2.pdf.

In a 2008 memo leaked to the press, Arata Kochi, chief of the malaria program at the World Health Organization, charged that “the growing dominance of malaria research by the Bill and Melinda Gates Foundation risks stifling a diversity of views among scientists and wiping out the health agency’s policy- making function.” McNeil Jr., Donald G. 2008. “WHO Official Complains About Gates Foundation’s Dominance in Malaria Fight.” New York Times Nov. 7. http://www. nytimes.com/2008/02/17/world/americas/17iht-gates.4.10120087.html

[20] The International Assessment of Agricultural Science and Technology for Development  report, Executive Summary, stated: “[A]ssessment of modern biotechnology is lagging behind development; information can be anecdotal and contradictory, and uncertainty on benefits and harms is unavoidable. There is a wide range of perspectives on the environmental, human health and economic risks and benefits of modern biotechnology; many of these risks are as yet unknown. . . . The application of modern biotechnology outside containment, such as the  use of genetically modified (GM) crops is much more contentious. For example, data based on some years and some GM crops indicate highly variable 10–33% yield gains in some places and yield declines in others.” IAASTD.  2009.  “Executive  Summary.”  Synthesis  Report. Washington, DC: Island Press. http://www.unep.org/dewa/agassessment/docs/IAASTD_EXEC_SUMMARY_JAN_2008.pdf