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How Liberal Movements can Influence

Politics and What Brazil can Learn from


the USA
Dr. Wolf von Laer1

How Liberal movements can influence politics and what Brazil can learn from the USA 1
From the Hayekian Triangle of Production to the Production of Ideas 3
The Liberty Movement in the U.S​. 5
501C3 and C4 6
The Liberty Movement in Brazil 7
Assessment of the Brazilian Liberty Movement 8
Some Necessary Conditions for a Flourishing Liberty Movement 11
Philanthropy 12
Movement-Centric Action 13
Conclusion 15

1
Dr. Wolf von Laer is the Chief Executive Officer of Students For Liberty (SFL). SFL is a nonprofit
organization that trains and supports pro-liberty students in the United States and around the world. In the
2017-2018 school year, SFL’s volunteers organized events for over 65,000 people. Wolf received his
Ph.D. in Political Economy at King's College London in March 2017. Wolf lived and studied in the US,
Turkey, Spain, Germany, the UK, Sweden, and Argentina. He has published several book chapters, a
book about central-banking, and a peer-reviewed journal article about regime uncertainty during the Great
Recession. Wolf is a member of the Mont Pelerin Society. His website is www.wolfvonlaer.com.

I want to thank Helio Beltrao, Richard Fink, Marcel van Hatten, Magno Karl, Frayda Levy, Fernando
Miranda, Stacy Ndlovu, Fabio Ostermann, and Kyle Walker for their feedback on this article. All opinion
expressed in this article and remaining errors are mine.
How should we affect positive change in the world? This is an age-old question and many
thinkers have provided different answers. Stalin’s theory of social change differs from Trotzky’s,
which differs from Hayek’s or Burke’s. So how do we know what works?

I think it is less a question of who is right, and more of which theory of social change provides
useful strategic insights on how to bring about social change. In this introduction, I will invite the
reader to think through Hayek’s Theory of Social Change that has been developed significantly
since it was first laid out in Hayek’s “The Intellectuals and Socialism.” With this background, the
reader is equipped to analyze the institutional framework of the pro-liberty movement in the
United States. The United States is the most sophisticated country when it comes to
professional politics and movement building. This is due to the exceptionally strong
philanthropic sector that influences politics and policy and a history of federalism that makes
politics complex on the local or municipal, state, and federal level. Discussion of the United
States pro-liberty infrastructure is a useful point of comparison for the liberty movement in Brazil.
I compare the movements of the respective countries through a map that depicts nonprofits and
their foci. The comparison of these maps enables me to identify several institutional or structural
gaps that Brazilian liberals2 ought to address if they want to be politically and ideologically
competitive for decades to come. I will then close this article with a discussion of useful
concepts that have strengthened the liberty movement throughout its history.

The maps that depict the liberal movements in the U.S. and Brazil are at the heart of this article.
At the center of these maps are the donors, donor networks, and foundations. This article is
aimed at the funders of the movement as well as the movement leaders. It is important that
donors have a firm understanding of how social change comes about and what kind of
organizations are needed for a sustainable liberty movement. Donors might disagree with the
theory of social change that is presented here, and that is fine. However, it is crucial that donors
think strategically about their giving and think about how it connects with the liberal project in
general. Informed donors are crucial in bringing the Brazilian liberty movement to the next level,
and it is my hope that my article contributes to conversations in donor circles about how to build
the liberty movement. Donors are the lifeblood of our ideas since few if any government
program or universities will advocate for them. You will, and I salute you for all of your efforts!

From the Hayekian Triangle of Production to the Production of


Ideas
Hayek spent his early career working on issues related to capital structure. It is a topic that took
years of his life, and he became frustrated with his progress on it. One of the ideas derived from
his work on capital structures is the so called Hayekian triangle. That triangle depicts the
production stages from raw materials like iron ore to immediate goods like steel and ultimately to

2
For the reader from the United States, liberal means classical liberal (or libertarian) in Brazil and almost
everywhere else.
consumer goods like a car and the consumption of that car by consumers. Hayek showed that
the value of goods throughout this process derives from the end of consumption. The further a
good is away from being in a consumable state (by consumers, not producers), the less
valuable it is to consumers and the longer it takes for it to achieve its full potential. Thus, as an
economy grows, investments need to be made at different stages of this triangle in order to
ensure continuity in the production process.

Now, this idea of the Hayekian triangle which you can see left in graph 1 can be merged with a
completely different work from Hayek, “The Intellectuals and Socialism,” which is an important
work analyzing why socialist ideas have become so popular. He describes the “production” of
ideas as having different stages. These stages start with the raw material, the original ideas,
which are produced by academics or scholars. These are the high-level theories that shape
people’s thinking like our belief in markets, civil society, and the inefficiency of government.
These ideas are shaped by public choice, Chicago school economics, Austrian economics,
empirical data, history, etc.

But scholars are rarely good at disseminating those ideas themselves. They need to be
popularized by journalists, public intellectuals like Hazlitt (who also was a scholar but one
individual can play different roles), teachers, film-makers, etc. If ideas take hold, and more
people take on a specific interpretation of the state of the world, there is some demand for policy
change in line with these ideas.

But intellectuals are rarely good at organizing for the implementation of these changes
themselves. This task needs to be done by grassroots activists and lobbyists who amplify the
social and political pressure to change the status quo towards these ideas. Pressure is
generated by activists like YouTube stars talking about ideas, protestors, grassroots
movements, public affairs organizations, special interest groups, etc.

The consumption stage of ideas is where politicians and bureaucrats engage in the political
process. Change first comes everywhere else in society before it reaches politics. Politicians
only change their ideas once they see that they need to. However, policymakers are the ones
who implement social and political change. For policymakers to be informed and effective, they
need aid from organizations and individuals throughout this structure to transform the high-level
ideas into consumable policy. If all of these stages work successfully together, change can be
implemented with reforms congruent with the high level of ideas - in our case, the ideas of
liberty.

Graph 1 depicts the analysis above and shows the structure of production and the structure of
the production of ideas. This is the Theory of Social Change that I use to analyze both the U.S.
and Brazilian movement below.
Graph 1: From the Hayekian Triangle of Production to the Production of Ideas3

The Liberty Movement in the U.S.


The Liberty movement in the U.S. is vast, complex, and fairly coordinated. A lot of this
coordination comes from the movement’s donors and their networks. Philanthropy within the
movement is a mixture of individual relationships with organizations and networks of donors that
act together. Individual donors have relationships with the heads of nonprofits and other
fundraisers. There is a shared vision of what the organization ought to accomplish and the
donors invest in that. Network-based donor organizations bring donors together with similar
goals to invest together in nonprofit ventures. They share knowledge and mobilize funds for
specific projects including influencing voters and public opinion.

The most well-known and well-organized network of donors is the Seminar Network. It was
founded by the industry leaders and philanthropists Charles and David Koch. They give away
millions to cancer research, art, music, and also significant sums to the Libertarian movement.
They have built the movement and some of its key institutions to a large extent. They helped
found Cato, Americans for Prosperity, the Charles Koch Institute and Foundation as well as the
Mercatus Center and many other organizations focusing on particular issues or demographics.
All of these institutions fit in the already introduced Theory of Social Change, which is shared by
many organizations within the movement including Students For Liberty.

Link to US map

3
Friedrich Hayek’s work on capital structure “Prices and Production” never really took off in academia.
Roger Garisson is the most famous disciple who builds tremendously on Hayek in his work “Time and
Money: The Macroeconomics of Capital Structure”. However, Hayek’s capital structure has been adapted
to outline a theory of social change towards a free society. The above graphics is based on Richard Fink’s
“From Ideas to Action: The Roles of Universities, Think Tanks, and Activist Groups” and further developed
by my colleague Kyle Walker.
Graph 2 is an overview, but not a complete picture, of the pro-liberty landscape in the United
States. Furthermore, the map should also be taken with a grain of salt. Not all organizations will
defend liberty 100% of the time. Especially, organization that work with business’ interests face
a lot of pressure to produce legislation that sometimes is good for incumbent businesses but
bad for startups. The incentive for businesses to use legislation to their advantage but against
the free market is perennial and one needs to evaluate the effectiveness of certain organization
in the light of the question who are they serving: the business’ interest or the interest of all
consumers and producers in the free market? It is entirely possible to work with businesses to
produce welfare for consumers but one needs to be aware that business’ interest not always
serve the free market.

The map leaves out many organizations, and it might categorize organizations differently from
the way the reader would, especially since many organizations have several functions. Take for
instance Students For Liberty: we do educate at our conferences about pro-liberty ideas. In
2017-2018, we had over 65,000 people at our events. That’s a lot of education but it is not our
primary function. We also train our students to be agents of change in their communities, and
they receive both online and in-person training about leadership, organizational, and
communicational skills. Training is an important aspect of our work but we do not focus on
capacity building alone. Our main focus is creating leaders who will bring about change
throughout the structure of production of ideas discussed above. Thus, Students For Liberty is
part of different stages of the Hayekian Triangle and our ultimate goal is to strengthen the
structure overall with the supply of pro-liberty talent coming out of our programs. Similarly,
Reason Foundation has both a policy analysis team and Reason Magazine. The policy team
focuses on policy analysis while the magazine focuses on idea dissemination in online and print
media. It’s important to take these complexities into account.

The theory of comparative advantage also applies to nonprofits, so it is important that nonprofits
specialize and not try to do too much at the same time. Trial and error is important, but it
remains unlikely that a media-focused organization producing documentaries is also effective in
advocating for legislation in state capitals.

As you can see, there are organizations reflecting all parts of the Hayekian triangle. The
network has produced a lot of university centers and educational think tanks that focus on
scholarship. Admittedly, the liberal body of thought is developed and we do have all the
arguments to make the case for why a free society would be more just, prosperous, fair, and
happy. However, those arguments need to be defended perennially and those ideas need to be
inserted into the academic discourse which is all too often, in the U.S. and everywhere else,
focused on ideas favoring big government solutions. Thus, there is a place for investing in
higher level ideas and the “raw material” of liberalism. Then there is a diverse range of
organizations focusing on the analysis and dissemination of ideas along different target groups
and with different means ranging from movies to journalism and the training of teachers.
Grassroots organizations exist focusing on students, political activists, internet activists, etc. The
last stage is a vast network of politicians, think tanks working on legislation, and organizations
training politicians and future politicians. Capacity building is a focus of many organizations who
aim to make organizations and their stakeholders more effective, from media training to political
campaigning.

One aspect of the movement that I want to stress, and which is stronger for the liberal
movement compared to the left is the vast think tank network. Every one of the 50​ ​states has
one or several think tanks. Those organizations work on influencing local politics year after year.
Their efforts are not duplicated and they are fairly coordinated due to the help of organizations
like the State Policy Network (SPN) and the American Legislative Exchange Council (ALEC).
SPN brings all of these think tanks to the table and legislation that has yielded great results in
one state can be shared with other think tanks and state representatives. ALEC is a grassroots
organization that connects hundreds of lawmakers throughout the country. Behind closed and
sometimes open doors legislation is proposed, discussed, and efforts coordinated. The
usefulness of networks like SPN and ALEC is obvious but they do not have the sexiest product
to sell to donors because their impact is hard to measure. Still, the liberal movement has been
able to make the case to donors successfully, and that’s the reason why networks like SPN and
other capacity building institutions exist. Since donors were able to curtail their need for quick
wins and adopt a long-term focus, the vast network of state think tanks was able to grow and
prosper. More importantly, the movement continues to achieve countless, and sometimes silent
wins in enacting liberal policies or shutting bad policies down.

501(c)(3) and 501(c)(4) Organizations

501(c)(3) and 501(c)(4) organizations are legal entities in the United States. Both are nonprofits,
but one key difference between 501(c)(3) and 501(c)(4) organizations is their ability to freely
conduct political activity. These efforts are defined as activities for or against a candidate for
public office or piece of legislation. 501(c)(3) organizations are very limited in their ability to
engage in political activity whereas 501(c)(4)s are able to engage in unlimited promotion of
candidates and legislation. This distinction is important to keep in mind since a successful
movement needs both organizations that do policy analyses, coalition building, training (all
(c)(3) activities) and organizations that engage in grassroots activism to get free market
candidates elected and pro-liberty legislation drafted and passed.

501(c)(3) and 501(c)(4) nonprofits also differ when it comes to tax deductions available to
individuals and businesses that donate to the organization. Donations to a 501(c)(3) are entirely
tax deductible. In contrast, donations made to a 501(c)(4) are generally not deductible. This
means that there is greater incentive for donors to give to 501(c)(3) nonprofits. Nevertheless,
many organizations have both a 501(c)(3) and a 501(c)(4) legal entity. With both legal entities,
educational and policy work can easily go hand in hand with the political advocacy of said
policies. Another particular vehicle within the U.S. context are super PACs (Political Action
Committees). PACs focus on pooling resources from donors for particular campaigns towards
passing legislation or electing candidates. This background information is helpful in thinking
about the different aspects of creating a successful movement: funding, education, policy, and
advocacy.

The Liberty Movement in Brazil


The goal with this article is to combine my knowledge of U.S. nonprofits, my political economy
background, and the resources of SFL’s network to produce an outsider’s perspective on the
Brazilian movement. Student For Liberty’s alumni are intertwined with the movement and alumni
like Fabio Ostermann, Giuseppe Riesgo, and Marcel van Hatten have been elected to political
office. Furthermore, our alumni or staff founded several of the organization that are part of the
liberty movement in Brazil. Those connections allow me to derive some insights about the state
of the liberty movement in Brazil.

Below you can find the map of the institutional network of the Brazilian liberty movement.

Graph 2: ​Link to Brazilian map

As is the case with the U.S., at the heart of every liberty movement are the donors. Contrary to
the U.S. network, there are no donor networks or donor-advised funds in Brazil (more on this in
the section on philanthropy). Thus, I just depict donors in the center of the map (graph 2).

Historically, the Brazilian movement was to a large extent started by just a handful of
businessmen. There were not many professional organizations focusing on the ideas of liberty
prior to these businessmen coming together. Those individuals shared a passion for the ideas of
liberty and started conversations about how to bring about change in Brazil toward these ideas.
Over several years those conversations led to the formation of organizations that focus on
spreading the ideas. The Brazilian Movement has been successful because they started with
the raw material. The businessmen realized that ideas were needed so they started to translate
books and hold larger events for an influential audience on these ideas.4 Most of these events
are held by organizations whose mission (as of now) is to focus on business people and their
families. These bigger events reach a broader audience and that is important. However, from
the outside it looks like Brazil (over)invests in the education of the business elite. While the
Brazilian movement’s success thus far speaks for itself it seems peculiar, especially when
compared to the U.S. movement, that so many organizations focus on the education of
entrepreneurs.

4
​Of course, the Internet also helped so that Brazilians could learn about Hayek, Friedman,
McCloskey, et al. without having to leave the comfort of their home. However, ideas always
need to be tied back to the particular circumstance of time and place. They need to come from
the inside and connect back to culture, politics, and history. While there were always classical
liberals in the country, it does not mean that the ideas had widespread proliferation before more
Brazilian businessmen coordinated their efforts to spread the ideas in Portuguese in a Brazilian
context.
The Brazilian movement organically followed the structure of production (graph 1). Right now,
most Brazilian organizations are still heavily focused on ideas. Since the founding of many
idea-producing institutes, the Brazilian businessmen also worked on other channels of
distribution for the ideas of liberty. Now, there exist massive conference that bring together
people with diverse background to learn more about the ideas like the Forum da Liberdade and
similar events.

Out of these events and ideas, activists evolved like Ordem Livre, Students For Liberty Brazil,
Free Brazil Movement (MBL), and others who have had widespread success in bringing these
ideas to the forefront of public discourse. Now, Brazil is for the first time in decades in the
position to have a liberty friendly government and Congress. The opportunities are large but the
triangle depicting the production of ideas is not robust enough. In the next section, I will outline
what I think are some opportunities for growth for the liberty movement. My hope is that again
this time entrepreneurs (and many of their friends and business partners) recognize what is
needed and help strengthen the Hayekian triangle so that the ideas of liberty can be
successfully translated into sustainable, real-world policy change.

Assessment of the Brazilian Liberty Movement


Brazil’s strength is the commitment of its people to the ideas. The liberty movement runs on little
funding. Thousands of volunteers work day and night to spread the ideas of liberty. The
Brazilian movement has been incredibly effective while only relying on the donations of a few
Brazilian donors and international networks like the Atlas Network. Now it is time to invest in the
country and build new institutions. In the following section, I will outline the need for different
institutions. Those institutions can hardly be run or maintained in the long run on the back of
some volunteers alone. I do not want to eschew the hard work that has been done.
Nevertheless, I am not convinced that the liberty movement can be successful based on
volunteers alone. Building out the movement and developing the Hayekian triangle requires
money. I will address the mindset of donors and the attitude of the movement to fundraising
more broadly further below in the section on “Necessary Conditions for a Flourishing Liberty
Movement”.

For now, let me discuss some of the needs derived from the comparison of graph 2 and graph 3
in the light of the Hayekian triangle (graph 1). The Brazilian movement has the capacity to
produce high-level ideas and has a lot of activists. The movement lacks think tanks and public
intellectuals defending the idea. There are some but not far enough. Let me make a concrete
case: One of the most important reforms in Brazil will be pension reform. Pension reform is
notoriously difficult due to the fact that all the socialist governments promised way too much and
funds are running low quickly. It is difficult because some voters will receive fewer benefits than
they were promised by former administrations. However, waiting is not an option since the newly
elected government could fall quickly if government debt rises to levels that governing becomes
impossible. Pension reform is a necessity. However, many of the politicians elected to office are
young and inexperienced. Conservatives and liberals have been only in the opposition and don’t
have much experience in governing. There is also not much experience in the country regarding
how to execute pension reform. There might be high-level ideas on how Friedman would do it
but concrete implementation of a policy plan is something completely different. However, Brazil
does not need to despair. Many countries have enacted pension reform like Chile or states like
Utah in the United States. The experience is out there. Now, think tanks and policymakers have
to facilitate a knowledge exchange so that Brazilian legislators don’t have to reinvent the wheel.

Another major issue for legislators will be tax reform. Again many countries have done this
successfully. Foreign experts can help with advice and strategy. However, Brazilian law is
intricate, complicated, and every country is different. Thus, tax reform needs to come from
Brazilian policymakers who know what is needed (while taking in the expertise from outside
experts). There are also easier, more cultural moves possible like introducing a Brazilian Tax
pledge similar to the one introduced by Americans for Tax Reform (ATR), a the single-issue
think tank. I bring ATR up because they have great success with their tax pledge. Through ATR,
hundreds of legislators signed a pledge that they won’t vote positively on any bill that will
increase taxes. It’s a simple pledge with a vast effect. Legislators are now accountable and the
effect of their votes can be easily analyzed through the lens of the pledge (this is the reason
why the pledge needs to be simple and not entail dozens of other issues like deregulation, etc.
which are hard to define).

Americans for Tax Reform also focuses on strengthening the movement by organizing
structured and time-limited Wednesday meetings that bring the center-right movement together.
Those meetings are important to share knowledge, build bonds, and find synergies of different
organizational initiatives. This sort of knowledge sharing is pivotal and Brazil already has started
knowledge exchange with Rede Liberdade.

Reforms are needed and the time is now. The incumbent government will have some time to get
reforms passed. However, they neither can be too hasty nor can they wait too long. Many of the
new, especially libertarian, legislators don’t have much experience in governing either. There is
a lot of energy in Congress right now and pro-liberty politicians need to form coalitions quickly. If
the government cannot achieve some early wins, the public resistance to reform and the
opposition will gain strength.

Adherence to principle needs to be more important than towing party lines. A productive way of
forming coalitions across different parties are caucuses. A caucus is a group of politicians that
share a conviction to an ideology or to a movement. In the United States, there is for instance
the Congressional Black Caucus, the Hispanic Caucus and the Liberty Caucus. The latter was
originally founded by Ron Paul and was an unofficial gathering of folks with similar beliefs in
libertarian or conservative-libertarian beliefs. Now, the caucus is run by Congressman Justin
Amash and meets on a bi-monthly basis. The Caucus actually had success getting their
positions out there and pushing back against the more populistic and big government aspects of
the Republican Party. There are even bicameral caucuses. Since there are so many different
parties and many newly elected politicians in the Brazilian Congress, forming a well-run caucus
will have several benefits: a) better flow of communication on key economic issues b) faster
learning for newly elected politicians c) a better defense of pro-liberty positions due to
coordinated efforts across party lines and d) a better position for the media since there is more
power behind a caucus compared to an individual. At the time of this writing the good news
reached me that the Free Market Caucus was just formed in Brazil and I hope they can be as
impactful as their U.S. counterpart.

Another important institution in the context of the USA that could prove vital in strengthening the
Brazilian movement is the American Legislative Exchange Council (ALEC). The United States
has 50 states and Brazil has 26 plus 1 (distrito federal) states. There are many reforms needed
across different states and organizations like ALEC provide a framework for sharing successful
reforms across other states. Something like ALEC will be useful for the movement sooner rather
than later. It is, of course, important to think about how a Brazilian ALEC could be developed. A
possible avenue could be corporate donations. While corporate donations come often with
strings attached, they can be useful. Movement leaders need to understand that corporate
donations are volatile since they are dependent on the economy. Nevertheless, a Brazilian
ALEC could benefit from them as long as the leader of the organization remains principled and
does not give in to corporatist demands that will eventually curtail the free market. A warning
that is important to always keep in mind.

In a similar vein, there do not seem to be organizations focused on lobbying. The liberal
movement needs to be sure that there are principled organizations out there that can advocate
for policies which will be good for business and good for the consumer (the market). It is one
thing to write policy papers that make the case for reform and that outline what is needed. It is a
different skill set to actually get it done: to form coalitions, to write legislation which is congruent
with present laws and regulation, and to implement reform which minimizes unintended
consequences, and which won’t be captured by rent-seekers. Thus, principled lobbyists are
needed who can use resources from industry to bring about free market reform. Many of the
think tanks in the U.S., especially the ones with a 501(c)(4) arm, have industry contacts and
lobby for legislation and get (unfortunately, not always) pro-liberty individuals elected. Right
now, there does not seem to be any capacity for either policy white paper and lobbying in the
country. This will make the job of legislators very difficult since they won’t neither have the
bandwidth, expertise, nor even the political willpower to push this through by themselves.

Something like a Brazilian SPN is currently not needed since Rede Liberdade already exist and
since there are not too many think tanks that work on policy issues across Brazilian states.
However in the medium to long-run, coordination, training, and programs for the whole
movement (all of those things SPN does) become ever more important when the movement
grows. Part of this growth will becoming from student groups Clube Farroupilha who have
developed considerable political capital and influence like. Thus, Rede Liberdade would do well
to add more programs to their work.
While the Brazilian grassroot movement has yielded impressive results with bringing several
hundreds of thousands of people to the street something important is missing: Political
mobilization. Social and public pressure through protest is good but can go away quickly.
Especially, when a government partially friendly to the ideas is in power. However, voter
mobilization is always needed. Thus, the Brazilian liberty movement ought to replicate the
success of organizations like Americans for Prosperity (AFP). During election years, AFP raises
significant sums of money to mobilize voters. They train activists, knock on doors, and use all
kinds of channels of communication to get voters to vote for the liberal side. There are AFP
offices across the country and in different states. It’s a complex operation which includes online
and in-person training and a complicated geographically-adjusted strategy as to where voters
need to be mobilized. Right now, there does not seem to be any coordinated efforts in Brazil to
knock on doors and to talk to voters directly in-person or via the phone. Mass media is important
but convincing a voter to choose a pro-liberty candidate is something tangible and effective.
Doing this in a country when that was never done before promises to yield huge results.

The last thing that I want to mention is the need for capacity building in the movement.
Legislators need to be trained on all different levels of government. They need training on
fundraising, campaigning, media, etc. Similarly to many of the other aforementioned issues,
Brazilian organizations could learn from the U.S. on this. Training is not only needed for people
who are now in positions of power but also for candidates who want to run for office.
Organizations like AFP and the Leadership Institute do a lot of work on these issues for many
years.

Focusing on building out these institutions will develop the Hayekian triangle and it will enhance
the chances of a sustainable and impactful liberty movement for years to come. I understand
that this requires years of work and many millions of dollars. Nevertheless, knowing where the
shortcomings are, and knowing what organized movements like the one in the U.S. do right, is
important. Before I conclude, I do need to address both donors and the heads of liberal
organizations on some important conditions for a flourishing liberty movement.

Some Necessary Conditions for a Flourishing Liberty Movement

Building institutions is easier said than done. Many of the capacities that I am advocating for are
unlikely to be provided by the free market. They require donations and a collaborative nonprofit
network. In order to establish an efficient and collaborative nonprofit environment several things
are needed from donors and movement leaders. I discuss those aspects in the following two
segments on philanthropy and movement-centric thinking.

Philanthropy
Philanthropy comes from Greek and means the “love of man,” the love of people. Historically
and statistically the United States is the most philanthropic country. This is due to a variety of
reasons. To name only two 1. The U.S. is, compared to most Western countries, religious and
religion advocates for charity and for helping thy neighbor. 2. The United States is a nation that
was built by immigrants that had no government to turn to for help. They had to build
themselves up, as well as their families, and their communities. Philanthropy is something that
thrives if government does not promise to take care of all our needs as most modern
supposedly welfare systems do.

Self-reliance and the trust of your fellow man and woman is at the heart of philanthropy. This is
taken away if government becomes more and more like the “great fiction that everyone can live
at the expense of everyone else” as the French classical liberal Frederic Bastiat said so
eloquently. Brazil experienced a dictatorship that controlled people’s lives and now it has
experienced decades of socialist and corrupt policies. In an environment like this trust gets
undermined.

However, we as advocates of liberty and responsibility need to get out there and set an
example. We need to show that philanthropy is possible. The nonprofit leaders need to work
hard, be transparent, exhibit movement-centric thinking, and live up to their mistakes. However,
the affluent businessman and women of Brazil need to step up, too. They need to think
strategically about their giving and trust others. Yes, it will not always work and some nonprofits
ventures will fail. However, failure is a good thing as it is in the marketplace. The movement will
learn and so will the philanthropists. They need to trust that nonprofits can change the world and
see it as a worthwhile investment. I am not advocating that you change your lifestyle or suffer.
Nevertheless, the movement can only be built if you consider giving stretch gifts to nonprofits
that you have evaluated and trust that they will make a difference for Brazil and its people.

Philanthropists need to be focused on the long-run with their giving. The U.S. movement has
suffered considerably because philanthropist did not set up foundations wisely. Their offspring
or board members of their foundations have turned several massive organizations around from
focusing on liberal causes to socialistic ones. That has happened multiple times and with billions
of dollars. This happens because the philanthropist has not governed his legacy wisely. This
can happen in Brazil too. Donor’s kids might be able to continue the legacy but what about their
kids? How sure can we be about their commitment to the liberal project? We cannot and we
should not. Therefore, Brazilian donors need to be thinking about setting up their giving wisely.
One opportunity could be donor-advised funds. These are something like banks for donors who
have the mission to only give to the movement. The donor still has some say over the money
while they live. Once they pass, all the resources the donor committed to the donor-advised
funds remain with the fund and the fund will continue to invest in their mission since they are a
third-party organization whose mission cannot be easily undermined. If the reader wants to
learn more about this please check out Donors Trust or Philanthropy Roundtable to learn more
about donor-advised funds as giving vehicles.

Philanthropists need to trust movement leaders. Yes, donors need to do their due diligence and
donors need to be convinced that an organization is worthwhile. However, if donors believe in
the leadership and the strategy of an organization, they ought not to force a personal project
down the organization’s throat. Nonprofits (just as for-profits) need to be able to change
strategies, adjust, and adapt. General donations allow for this. Project-based fundraising might
be sometimes warranted, but it can undermine the integrity of an organization since the
organization becomes focused on pleasing the donor to make the project a success while the
opportunity costs of said project might be huge. Of course, nonprofits should deliver results,
have key performance indicators, have ethical numbers, have professional audits, and a sound
board. All of these things are the very basics. However, focusing on too many projects in too
many areas is undermining the very thing that makes nonprofits and for-profits effective: their
comparative advantage.

The movement needs investments from philanthropists. Brazil can only strive if donors trust
other people and invest in them. We need to live our own philosophy of self-reliance and the
respect for our fellow man. This makes us different from socialists who believe that people need
to be governed by an elite and taken care of like cattle. We can take care of ourselves but we
need a division of labor. Some of us are good in business and some of us are good in building
nonprofit institutions. Rarely one can do both and almost never one can do both at the same
time. It is time to trust people and donate money wisely to the movement so that nonprofit
leaders build the institutions that make more people prosperous and independent from
government.

Movement-Centric Action
Liberals are competitive and individualistic. However, we need to overcome naive individualism
that just focuses on “me, me, me”. Human beings are social creatures and we can only survive
in groups. Society enables the division of labor and brings us prosperity. Prosperity comes
about through a combination of competition and collaboration. The price system shows which
plans are working and which ones are not. However, cut-throat competition is seldom a
long-term solution for businesses. Businesses often cooperate and compete with their
competitors. We need to do the same thing within the liberty movement. I argue that it is
important that the leaders within the movement put the needs of the movement first and not
engage in envy-based politicking and zero-sum-game based thinking.

Philanthropy is not a zero-sum game. This is a hard concept to grasp. Getting a grant for your
organization does not automatically mean that another organization cannot get a grant too.
Donors want to see change in the world. So does the nonprofit leader. Our own organizational
needs have to be evaluated within the needs of the larger movement. Sharing donors and
making introductions are important to grow the movement. Let me give you an example: Let’s
say you are running the Liberty Think Tank with a wide range of policy areas. One area that you
are not currently good at is educational reform. Now, donor Ms. X who gives to you every year
wants to see educational reform and wants to donate to that. Now, you are receiving a lot of
money from Ms. X already. It would take you a good year to build up your capabilities to make a
difference in educational reform. You as the think tank leader know about the great work of the
Education Reform Think Tank. You are networking with all think tank leaders and you
understand which ones are good and which ones are struggling. Would it not make much more
sense if you helped Ms. X to fulfill her desire to bring about educational reform by introducing
her to the leader of the Education Reform Think Tank? What’s the loss? Yes, you might not get
a check that would make you need to focus on a lot of new things like building up a new
department, hiring people, etc. while doing all of the old work too. However, you do become a
good steward to the relationship of Ms. X because you help her fulfill her goals. You also benefit
the movement by strengthening an organization that has a comparative advantage in education.
Additionally, you show goodwill to the leader of the education reform think tank and he is likely
to return to the favor and talk about the great leadership of you as the head of the Liberty Think
Tank.

Brazilian movement leaders are practicing movement-centric thinking already in a different way,
even though there is widespread disagreement on the right theory of social change. Despite
disagreements over candidates, politics, and policies, the movement appears coherent to the
external world. Those disagreements are being talked about but they don’t end up (thus far) in
the media with public attacks. Infighting seems to be kept at a minimum and people come and
work together. That certainly is very impressive and productive. However, the bigger the
movement grows the less likely it is that it remains cohesive and that personal ties between
leaders can be maintained. However, if this generation of movement leaders instills this lesson
in the next generation, the Brazilian liberty movement will benefit tremendously.

Movement-centric thinking makes a difference! The Cato Institute is to a large extent to thank
for the flourishing of Students For Liberty. At the very beginning, Cato’s former president Ed
Crane gave Alexander McCobin, the founder of Students For Liberty, access to his donor lists.
He allowed us to send several mailers to donors to ask for solicitations. This is how we got
some of our first big donors. Ed also allowed Alexander and some other students to be part of
his donor events. During those meetings, many relationships were formed that led to millions of
dollars in gifts and partnerships that brought joy to the donor and liberty to the world. Did Cato
suffer because of this? No. Cato has been growing throughout these years and the donors have
been grateful that Cato introduced them to Students For Liberty. I tell this story to many donors
of Cato and they are always proud that they helped a successful organization like ours.

This lesson was important for us and we try to do the same. We have given birth to dozens of
organizations and we have helped many through mentorship, advice, and introductions.
However, we probably have helped Young Voices the most. Young Voices helps pro-liberty
writers get published in far-reaching outlets like the Wall Street Journal and other media. We
incubated the organization, paid for the salary of the staffer for over a year, and allowed them to
mail our donor list (thousands of people) three times. Young Voices now has a budget over
$200,000 and helps over 50 young writers to get pro-liberty messages in the media every single
day.
Does movement-centric thinking mean that you share everything? No. It does not, but it does
shift away from the focus on our own niche and enables more improvements for the overall
movement. Liberty is what we want.

Conclusion
In this article, I introduced the liberty movement of the United States and compared it to the
liberty institutions in Brazil. I argue that Brazil needs to focus on building several organizations
now in order to tackle the tough reform ahead. The following institutions are necessary:
caucuses, policy think tanks, voter grass roots organizations, single-issue think tanks for tax
reform, pension reform initiatives, movement capacity building and legislator training, and
legislative exchange initiatives.

Would the existence of these organizations guarantee success? No, I would not dare to claim
such a thing. Nevertheless, the liberty movement has needs and certain institutions would
increase the likelihood of successful reform as well as cultivate the conditions for a sustainable
liberty movement. I certainly hope that my elaborations in this article are of interest to the reader
and that it motivates action and discussion.5

Brazil was run badly by its corrupt elites and politicians for too long. Something new was
needed and pro-liberty ideas rose up. However, now the long hard road of reform is in front of
the country. Those reforms will take time and results will not be immediately visible. What will be
visible is certain groups of people losing privileges. Especially when it comes to pension reform
and other parts of the redistributive state. Liberal change requires time, patience, and empathy.
We need to be empathic to the people who will lose status or lose their jobs because reform will
not favor government-supported industries anymore. These people will be hurting and it will take
time for them to find new occupations. If one becomes unempathetic to these folks, it will
backfire in elections or worse with protests and violence. A well-developed liberty movement
with trained legislators who have access to great research to back their well-crafted policy
proposals will make reform likely. To sustain this, think tanks and grassroots activists are
needed. Brazil has a bright future and a lot of opportunity to implement reforms. I certainly hope
that the movement can rise up to the task to make Brazil the richest country in Latin America
and maybe even the world. I certainly believe it has that potential.

5
​I am eager to help the movement and want to offer my network to Brazilians donors and heads
of organizations. Thus, if you think that I can make an introduction to people that could be useful
for the Brazilian Liberty Movement feel free to reach out to me at wolf@studentsforliberty.org.