Money at Work

IN 2002, THE LAST year covered by a recent Foundation Center study, the Ford Foundation devoted nearly $300 million to “social-justice grantmaking,” aimed at making “structural change in order to increase the opportunity of those who are the least well off politically, economically, and socially.” Since turning its attention to promoting conservative and libertarian ideas about public policy in the middle of the 1970s, the John M. Olin Foundation spent not much more than that on all its grants. But regardless of their political views, few would deny that, dollar-for-dollar, Olin’s influence has been more profound.

With it about to close its checkbook for good, John J. Miller’s discerning account of the John M. Olin Foundation’s grantmaking record could not be timelier. A Gift of Freedom examines not only what the foundation did, but also how it operated. Miller shows that affecting important areas of public policy–if not quite changing America–requires neither a lot of money nor extraordinary genius, but just the kind of convictions and experience that many of those with the wealth to establish foundations possess.

Before the 1970s, no one would have expected John M. Olin to devote his giving to changing much of anything. A chemist and the head of a successful manufacturing company, Olin adopted an approach to philanthropy that looked like that of most wealthy businessmen: large contributions for hospitals, museums, university endowments, research on diseases, conservation, and other conventional causes. He even bred dogs and horses, including a Kentucky Derby winner.

But the 1960s changed that. A graduate and later a trustee of Cornell, Olin was a loyal benefactor until a group of students, armed with rifles, took over the student union, demanding the creation of a black studies program and other changes. Afterwards, he wrote that “it is unfortunate that Cornell is suffering with the impact of such ill-advised demonstrations,” and called on the school to raise its admissions requirements. More turmoil followed, including Watergate, which forced out of office a president to whose reelection Olin had contributed $100,000.

These events led Olin to rethink his philanthropy. In the spring of 1973, he told Frank O’Connell, the executive vice president of his company, that he wanted to use his fortune to preserve the political and economic system that had made its accumulation possible. This was not a novel idea. Nearly a century earlier, Andrew Carnegie had urged his fellow Gilded Age industrialists to do likewise. But instead of supporting libraries and other institutions that might help the poor or other potentially disaffected groups reap the benefits of the American dream, as Carnegie had done, Olin recognized that the principles underpinning American life itself were now under attack and required a strategy for defending them.

At the time, business leaders such as David Packard and future Supreme Court Justice Lewis Powell were voicing similar views. Resigning from the board of the Ford Foundation in 1977, Henry Ford II chastised its management for not being sufficiently supportive of wealth-creating measures. Other grantmakers, most notably the Smith Richardson and Sarah Scaife foundations, were also developing programs to do something similar to what Olin had in mind.

But what distinguished the John M. Olin Foundation was its single-minded devotion to the purpose its founder set out for it. As Miller explains, this was partly because its trustees and leaders shared Olin’s view–particularly the man Olin selected as the foundation’s president, former treasury secretary William Simon, whose experience in the Ford administration had convinced him that the nation’s core principles were indeed endangered. (After Olin’s death in 1982, Simon became the main architect of the foundation’s activities.) The foundation’s program staff was led initially by O’Connell, and then by Michael Joyce and, eventually, James Piereson, brought to their jobs intellectual substance as well as administrative ability. Finally, a small network of like-minded advisers helped the staff identify projects in line with its objectives.

Most important of all was the foundation’s decision to pursue its goals by funding scholars, writers, small-circulation journals, think tanks, student societies, and other kinds of organizations that might at first have seemed unlikely to be agents of far-reaching political change. Previously, business-funded efforts to promote “free enterprise” had mostly involved economics education for schoolchildren, advertising campaigns, and various types of public relations efforts on the theory that changing popular opinion was critical for success. Backing for magazines and academics was sparse, since few donors believed that the views of a relatively small number of intellectuals would make much difference in a country as big and democratic as the United States.

The record of the Olin Foundation proves otherwise. Its support for law-school centers applying economics to legal studies influenced regulatory decisions, court cases, and economic policies, while helping develop a generation of lawyers (and now judges) well versed in traditional notions of federalism and limited government. Foundation-funded books and studies shaped the policy debate over welfare and education, among other issues. Grants to Allan Bloom, Dinesh D’Souza, and a network of conservative student newspapers called attention to the growth of political correctness on campus; underwriting for the New Criterion and other cultural projects illuminated the politicization of the arts and humanities. Though mostly focused on domestic problems, Olin money also helped foster debate over the American “national interest” in a post-Cold War world, most notably through magazines and graduate fellowships that prepared some of today’s leading foreign policy analysts.

All this–and much more–was accomplished by grants that amounted to, at most, $400 million over a 30-year period. How the Olin Foundation made such an impact has already elicited several assessments from the left, eager to see the grantmakers on its side do more and better. When not exaggerating the amount of funds deployed, these accounts usually emphasize the conservative foundations’ steadfast focus, ability to collaborate, and willingness to provide long-term organizational support (as opposed to short-term assistance for particular projects).

Miller’s book underscores these conclusions, and adds another important reason: John M. Olin’s desire that his foundation not long outlive his hand-picked president, William Simon, who died five years ago. As Sears cofounder Julius Rosenwald observed in the 1920s, philanthropies designed to exist forever often wind up becoming stale and bureaucratic, while those set up to spend all their assets over a fixed period of time are more likely to take risks and leave a mark when they succeed. Though a rarity among today’s foundations, which are usually created to go on making grants indefinitely, the Olin Foundation, in Miller’s judgment, would not have had as much influence as it did without deciding to “sunset.”

But its departure also leaves a lot of unfinished business. While conservative and libertarian ideas are more ascendant today than they were in the mid-1970s, one doubts that John M. Olin (let alone William Simon) would have been satisfied, especially with the state of affairs on college and university campuses, which remain largely captivated by the enthusiasms of the 1960s. Moreover, along with the Olin Foundation going out of business, changes in leadership and priorities have led some of its principal philanthropic allies (and even some grantees) to pursue other kinds of projects, or even to close up shop altogether. At the same time, according to the Foundation Center’s study, the Ford Foundation and other “social-justice” grant makers are stepping up their grant making, which now approaches $2 billion annually, with some sympathetic businessmen promising even more to overcome conservative groups’ supposed spending advantage.

To be sure, if money alone could buy success in advancing ideas for political and economic change, the United States would be listing far to the left. No small part of the problems faced by “social-justice” grant makers is that their views of what should be done are still rooted in the 1960s, and lack contemporary appeal. In any case, the right has always been able to look to other sources of support, such as contributions from middle-class households, corporations, and religious groups, to make up for its limited access to foundation grants. Yet, even if ample in amount, such funding cannot always replace foundation-sponsored initiatives that are especially innovative, risky, or unlikely to appeal to ordinary donors.

That is why it is of no little consequence where the philanthropists emerging from the high-tech fortunes of the 1990s may want to use the Olin Foundation as a model, some of them seem more inclined to focus on possibly important, but less controversial efforts–such as subsidizing vaccine research and health clinics, or creating model schools and management training programs rather than engaging in the intellectual and policy debates that rage today. While there’s much talk of “venture philanthropy” among those creating the grant-making foundations of the future, there’s not yet been evidence of much willingness to venture, at least not by comparison with what John M. Olin and his associates did when they set out to alter the political and economic landscape.

Whatever the reasons for such reticence, the loss not just to the nation’s intellectual life, but also to philanthropy, could be substantial. If those considering what to do with their fortunes want to explore a different route, however, a good place to start is with John J. Miller’s inspiring account of the small but mighty John M. Olin Foundation.

Leslie Lenkowsky is professor of philanthropic studies and public affairs at Indiana University.