Time for the Rich to Spend It All: A Hurricane Katrina Lesson

Dear Readers,

As those of you who follow my postings know, I love New Orleans. So, I found the post-Hurricane Katrina man-made destruction (the breakdown of the levees), and everything that followed heartbreaking.

I expressed my views about what philanthropists could do about this disaster in a piece for the Chronicle of Philanthropy, published a couple months after Hurricane Katrina, in October 2005.

I’ver re-read the piece, and think its recommendations as timely today as they were then. Here it is:

“We have a duty to confront this poverty with bold action.”

George Bush
Jackson Square, New Orleans
October 2005

When President Bush spoke to the nation from New Orleans to present
his ideas for rebuilding the Gulf Coast after Hurricane Katrina, he said:
‘We have a duty to confront this poverty with bold action.’

Here’s a bold action for philanthropy: The wealthiest American foundations should pour all their resources into the recovery over the next few decades, and then go out of business.

In so doing, grant makers could go a long way to helping the country get past the centuries-old American tragedy laid bare by Hurricane Katrina and its aftermath: We live in a country that permits poverty and profound racial discrimination to occur, even while we claim that all are entitled to: “life, liberty, and the pursuit of happiness.”

Perhaps no other incident in U.S. history–since the founders of this nation wrote those immortal words in the Declaration of Independence–has exposed so vividly, to so many, America’s willful and systematic neglect of the poor, or its inability to offer the needy a way to escape poverty.

Close to a century after some of the nation’s largest foundations were created to right what was wrong with America, the world watched a city of African-American poor people drown and starve to death, watched while not one voice of institutional philanthropy was heard to say: This is wrong, what caused it is wrong, and we as philanthropists must do everything in our power to end it.

The outpouring of charitable donations by corporations and individuals after Hurricane Katrina speaks volumes about the willingness of Americans to help feed the hungry and house the homeless.

Yet, most of these donations have gone for short-term relief. These contributions will not cure the systemic ills that created the horrors made so visible by the man-made disaster in New Orleans. But the contributions of our big, endowed foundations could.

If the premise of American philanthropy is to do good and to solve big problems, then America’s big foundations should spend all their money to solve our biggest, longest-standing problem: Poverty.

The modest sums foundations spend each year on social justice causes aren’t enough to eliminate poverty and racism: Big money and the clout of wealthy foundations are needed to rebuild our flawed American home.

America’s 66,000 foundations now have more than $435-billion in assets. That is the kind of money that can make a big difference, if grant makers spend it quickly and strategically.

The inability of the poor to escape neglect and abuse does not exist only in New Orleans, and the unwillingness of America to eliminate poverty causes suffering of nationwide proportions and huge costs.

Indeed, as I write, The Brookings Institution issued a report,entitled: Katrina’s Window: Confronting Concentrated Poverty Across
The report’s authors write: “‘The choice for policymakers,
then, is this: fail to act and consign another generation to these distressed neighborhoods, or take bold steps to prevent the next ‘social Katrina.’”

America’s big foundations do not have to spend all their money today. They could set a goal of spending all their assets by 2076, 300 years after ‘life, liberty, and the pursuit of happiness’ was written. Then, the grandchildren who escaped Katrina, the Superdome, and the Convention Center could tell their grandchildren: Yes, America has met its promise.

What could the major foundations, working alongside a generous American public, its governments and corporations, create over the next seven decades? Here’s a short list:

Affordable and decent homes for the poorest Americans.

Environmental protections that do everything possible to protect people from illness and death, whether it is on the Gulf Coast,
or in California’s earthquake zone, or anywhere else in the United States.

Employment policies that require all jobs to pay enough for people to live above the poverty line.

Schools that educate all children to take advantage of the opportunities available.

Universal health care.

Creating this America is the job foundations should take on, instead of saving most of their resources for future catastrophes that may never occur.

Here’s the argument I would make, if I were sitting in one of those foundation boardrooms today:

Curing the disease is cheaper than treating the symptoms. Forty-three years after Michael Harrington wrote his landmark book about “the other America,” and 41 years after President Johnson said we needed a ‘war on poverty,’ poverty is as great as it has ever been in America; the people who have historically suffered the most still do; and the regions of the country where poverty was the greatest then are still the worst-off now.

Wealthy American entrepreneurs are creating new foundations practically every day. For example, as I write, Google announced a $265 million giving program. There will be new money for new problems.

Furthermore, by 2076, the Fords, Rockefellers, and Waltons of that day will have started their own big foundations. These new philanthropists will want to commit their resources to the problems of their day. Certainly, they should be able to do that, not have to heal centuries-old
sores still festering.

Government cannot cure the problem. The greatest federal debt in our nation’s history means that the federal government, even if it wanted to, would be unable to sustain either its current level of spending (which is already inadequate), or increase its spending to cure either the immediate, post-Katrina problems, or the longer-term problems that will occur. Those problems include, for example, chronic homelessness, illiteracy, the low wages that keep so many working Americans in poverty, mental-health crises, and inadequate job training.

Ending poverty cannot be done incrementally. Making the decision not to operate in perpetuity will require foundations to undertake the strategic thinking and bold actions that incremental investing doesn’t require–just the kind of thinking that is needed in the face of the monumental problems caused by Katrina.

Eliminating racism is vital to the nation’s successful future. The failure to take bold action will exacerbate the deepest division among Americans–race. The divisions among Americans of different races has impelled disorder, violence, and even wars. No one wants that again.

Foundations receive a tax subsidy because they are intended to provide value to society. If major institutions don’t solve major problems, or, looked at another way, don’t create valuable goods, what is their value? In the corporate world, when they don’t, they wither and die. Why should American taxpayers continuously subsidize a failure to create good for the most vulnerable among us—generation after generation?

The great American foundations should take a lesson from the Aaron Diamond Foundation,which pledged at the outset of the HIV/AIDS epidemic to distribute all of its assets in a decade, so it could do all it could to fight the deadly disease. The result: Research financed by the foundation led to the discovery of the drugs that today mean AIDS does not have to be fatal.

Dealing with the intertwined problems of race and poverty in theUnited States, once and for all–and in its myriad manifestations–is too difficult a challenge for any single grant maker to take on, but working
together, and putting all their resources into the effort, the nation’s wealthiest foundations now have the greatest opportunity they have ever had to right what is wrong in America.


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