How nonprofits became tools of extremist ideologies
For years, the growing power and influence of local nonprofits has troubled local politicians, legal experts, and everyday citizens. Recent revelations that local nonprofits act just like lobbyists (but retain their tax exempt status) and brazenly invite conflict of interest concerns (SJ's Housing Dept head also sits on the board of a huge local housing nonprofit that receives millions in city funds) have further raised eyebrows. Joel Kotkin provides the backstory (growing 1% wealth and a 9x-increase in NP funds since 1980) in Philanthropy Daily.
Throughout history, excess wealth has been used to salve society’s problems, funding hospitals, food banks, and building libraries to develop minds and cathedrals to lift the spirits. But increasingly, the charitable urge has shifted away from such worthy causes and, increasingly, reflects a distinct progressive agenda that seeks, ultimately, to transform lives through the expansion of state power.
This reflects, in part, the shift in the nature of wealth in America. In the past, rich people tended to be employers of middle- and working-class people and frequently identified primarily with their local regions. But in an increasingly nationalized and globalized era, the charitable impulses are increasingly wide and diffused, less focused on personal improvement but in service to a distinct ideology, usually far to the left, but also on the libertarian right.
The predilections of the ultra-rich will likely loom over politics and policy debates for decades to come. In the U.S., nonprofits’ assets have grown nine-fold since 1980. In 2020, nonprofits brought in $2.62 trillion in revenues, constituting more than 5.6% of the U.S. economy.
Yet this bounty will be highly limited due to the rapid concentration of assets in ever fewer hands, with the top 1% in the U.S. increasing their share by roughly 50% since 2002. The class implications of this process are profound.
The new money is strikingly different and much younger in contrast to more-conservative funders like Charles Koch, Oracle founder Larry Ellison, Rupert Murdoch, and the Irvine Company chairman Don Bren, all well into their 70s or 80s. They are increasingly outdone by the more-youthful “enlightened” rich, who have consistently outraised and outspent the political “right” in recent years by a margin of nearly 2 to 1.
The progressive elite are for the most part connected with firms with oligopolistic market control. Controlling 90% of markets like search engines (Google) and operating-system software (Microsoft), and dominating the cloud and online retail (Amazon) or 90% of phones (Google and Apple) does not turn executives into risk-takers, but acquirers. As well, three tech firms now account for two-thirds of all online-advertising revenues, which now represent the vast majority of all ad sales.
As Heather Mac Donald demonstrated in 1996, the big-money foundations in the U.S. have been bankrolling progressive and even far-left politics for several generations. But the rise of the tech oligarchy has accelerated this trend. Many of these billionaires are still in their 30s and 40s, but have accumulated more cash than anyone since the Gilded Age. In 2020, five of the top eight donors to Joe Biden came from tech firms.
In coming decades, we can expect this trend to continue. Not only do we have to deal with the predictably left orientation of the oligarchs, but also from their forsaken wives, and their offspring. Bezos’ former spouse MacKenzie Scott, worth an estimated $60 billion, has already given $130 million to a group pushing progressive education, as well as gender fluidity and other progressive causes. Melinda Gates, the former wife of the Microsoft founder, worth at least $6.4 billion, is also backing liberal causes like gender equity and the Clinton Foundation.
The ultra-rich have been particularly attracted to draconian climate positions. Leading billionaires like Tom Steyer—and powerful foundations like Rockefeller, Doris Duke, Walton, MacArthur, Hewlett, and George Soros’ Open Society—have sent hundreds of millions to leading environmental groups. The Rockefellers, heirs to the Standard Oil fortune, have become some of the stiffest advocates of radical climate policies, centered around austerity, so damaging to the Western working class and those in the developing countries. They even favor punishing corporations that remotely follow the road to riches of their founders.
The next generation of tech and finance heirs, such as the socialist offspring of the founders of Qualcomm, could prove even more radical. They have founded nonprofits that, notes The New York Times, financed by “rich kids who want to tear down capitalism.” Born into the oligarchy, these young trust-funders do not have to worry if their activities bother customers or even undermine the business that created their fortunes.
To some extent, the tech oligarchs see themselves and are seen by some progressives as what progressive writer David Callahan describes as a kind of “benign plutocracy,” in contrast to those who built their fortunes on resource extraction, manufacturing, and material consumption.(1) But the more-radical policies supported by the left-dominated nonprofits could ultimately also undermine even their own privileges. Like French aristocrats before the Revolution, they may be financing causes that threaten “their own rights and even their existence,” as Tocqueville noted.(2)
Even as the Democratic Party has benefited from the largesse of progressive donors and nonprofits, the party has moved in a distinctly socialist direction. Indeed, more Democrats support socialism than capitalism, particularly among the young. On the environmental front, oligarchic money finances apocalyptic scenarios and economy-crushing solutions that could backfire on the oligarchy.
In the future, it’s likely that agitated young activists won’t long tolerate billionaires who lament climate change, but fly their private jets to discuss the “crisis” in places like Davos. After all, if the world is on the verge of a global apocalypse, how can the luxurious lifestyles of so many of the world’s most-public green advocates be acceptable? Ironically, much of this wealth was generated by a carbon-based economy that they are now trying to destroy as rapidly as possible.
Expropriation, at least in part, seems inevitable if the progressive dominance grows. Political leaders like Bernie Sanders, after all, do not distinguish between good billionaires and bad ones, but believe that billionaires should not exist at all. The Green New Deal proposed by the most-influential millennial politician, Alexandria Ocasio-Cortez, represents a direct assault on the boomer-elites’-funded environmentalism. Her plan, rather than enriching the oligarchs, would be financed in large part by expropriating their wealth.
Of course, the current oligarchy could find a secure place in a regime of state-oriented corporatism, much as some companies are able to do in China or even France. Monopolies like Google or Microsoft may still exist, but as quasi-government utilities that collect fees and squash innovative upstarts. Such a corporate state may please the inheritors, particularly if married to race, gender, and climate orthodoxy, but only by robbing capitalism of the dynamism that marked its ascendancy.
The current oligarchs may deserve opprobrium, but the ultimate danger posed by the nonprofit tsunami lies in their feckless embrace of a policy agenda that undermines the very essence of competitive capitalism. Like feudal lords, this new elite, emboldened by a common ideology, may continue to thrive in a world of frozen social relations, but only by destroying the very system that brought them their own good fortune—and that could someday threaten even their own privileged position.
This article originally appeared in Philanthropy Daily. Read the whole thing here.
This article is part of an exclusive Opp Now series on hazy, shady, and all-out criminal relationships between local nonprofits/gov't:
Jonathan Fleming, founder and director of SVPAF, speaks to what's going on with SJ's nonprofit community.
Joel Kotin at Philanthropy Daily analyzes the worrisome dynamic of local left-wing nonprofits advocating for extremist policies while at the same time benefiting from taxpayer and ultra-rich funder largesse.
Nonprofit attorney Scott Hartley of Hartley Law clarifies the parameters that apply to nonprofits when it comes to political activity.
SFStandard.com reports on how nonprofits in San Francisco can leverage huge sums of taxpayer dollars for political activity while neglecting their core mission.
Planning Commissioner chair Pierluigi Oliverio offers a compromise in the ongoing dispute over whether local progressive nonprofits break regulations with their aggressive lobbying of City staff /politicians: treat all advocacy activity the same.
Josh Koehn explains in the SF Standard that many residents are urging for transparency in how NP partners address objectives and use taxpayer funds. However, local nonprofit lobbyists strongly request no additional stipulations be enforced—lest the paperwork adds up.
The HJTA's Susan Shelley untangles LA's recently-passed Measure ULA. Residents making high-value real estate transactions must fork over some big coin, but none of it will go to emergency shelters or transitional housing—just unaccountable nonprofits peddling the discredited Housing First mantra.
David Eisbach points out the consequences of COPA's underlying idea: that unhoused people must rely on larger entities to advance in life. Putting nonprofit orgs in a tremendous position of power over lower-income SJ residents/officials will compound conflict-of-interest problems.
Gov't misconduct expert Josh Koehn reports on a new lawsuit against SF nonprofit org the United Council of Human Services, which alleges that CEO Gwendolyn Westbrook has inappropriately used funds for personal benefit.
Local nonprofits act just like lobbyists (but retain their tax exempt status) and brazenly invite conflict of interest concerns. Joel Kotkin provides the backstory in Philanthropy Daily.
Local neighborhood coalition Families & Homes SJ wonders how it's okay that the city's Housing Director can sit on the board of a local housing nonprofit.
SF org Clean City Coalition is alleged to have engaged in highly illegal, dangerous money laundering behaviors.
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