How Foundations Exercise Power

By JOAN ROELOFS*

ABSTRACT. Foundations (and philanthropy in general) have great

political power in the United States and worldwide, yet this is hardly
noted by political analysts or journalists. Their power is exerted in
many ways, such as by funding progressive organizations and
movements; sponsoring policy “think tanks” and organizations of
public officials; influencing the political culture through media,
academic researchers, and university programs (including public
interest law in law schools); and co-opting activists and potential rebels
among the rich and poor. Because of their resources and prestige, they
are powerful members of coalitions and collaborations with overt and
covert government departments, U.N. agencies, universities, and
nongovernmental organizations. Foundations have been major actors
in the “Cold War,” which continues as the attempt to deflect any
movement towards socialism here or abroad. Globalization has
amplified the power of foundations, for many of the global institutions
were created by foundations and continue to be fostered by them. The
sponsorship 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. We cannot know what the world
would have been like absent foundation activities, but the current one
does not appear to have a democratic, peaceful, or sustainable future.

***

*Joan Roelofs is Professor Emerita of Political Science, Keene State College, New
Hampshire. She is the translator of Victor Considerant’s Principles of Socialism
(Maisonneuve Press, 2006), and author of Foundations and Public Policy: The Mask
of Pluralism (SUNY Press, 2003) and Greening Cities (Rowman and Littlefield, 1996).
She has translated, with Shawn Wilbur, Charles Fourier’s World War of Small Pastries
(Autonomedia, 2015 [in press]). Roelofs is an anti-war and red-green activist, and an
editor of Capitalism, Nature, Socialism. Website: www.joanroelofs.wordpress.com
Contact: joan.roelofs@myfairpoint.net
American Journal of Economics and Sociology, Vol. 74, No. 4 (September, 2015).
DOI: 10.1111/ajes.12112
C 2015 American Journal of Economics and Sociology, Inc.
V
 How Foundations Exercise Power 655

In recent years we have again been reminded that our political sys-
tem is overwhelmingly responsive to the interests of the wealthy
(Gilens and Page 2014). It was designed to be that way, and the evolu-
tion of political parties into conglomerates of interest groups and clien-
tele relationships has not fostered much change in responsiveness
(Roelofs 2008).
In addition to the visible and somewhat measurable political institu-
tions and politicians’ activities, our unequal and destructive system is
sustained by philanthropy. This is especially true of the large founda-
tions and their grantees. They define much of our political culture,
while channeling social change 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 mil-
itarism and imperialism, they are often complicit with it and benefit
from the profits of military contractors and global resource extraction.
Yet philanthropic capital, its investment, and its distribution are gen-
erally neglected by the critics of capitalism. Most studies of philan-
thropy are generously funded by the nonprofit sector itself; few
researchers have followed up on the observation of Marx and Engels in
The Communist Manifesto:

A part of the bourgeoisie is desirous of redressing social grievances, in

order to secure the continued existence of bourgeois society . . . To this
section belong the economists, philanthropists, humanitarians, improvers
of the condition of the working class, organizers of charity, members of
societies for the prevention of cruelty to animals, temperance fanatics,
hole-and-corner reformers of every imaginable kind.

The foundations’ elegant reports describe their extensive charitable

activities, but they do not illuminate their relationships with the national
security state or the scope of their investment portfolios (Roelofs 2009).
Lacking any political institutions that can propose and carry out poli-
cies for needed reforms, for example, programmatic political parties,
foundations have become the “planning arm” of our system, according
to historians Barry Karl and Stanley Katz (1981: 238). They and their
grantees exert a dominant influence on our political culture.
Almost all progressive organizations look to corporations and foun-
dations for funding. Small donations or dues are rarely adequate for
656 The American Journal of Economics and Sociology

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 Edu-
cation in 1954. While a large part of the nonprofit sector is funded by
individual donations to churches; contributions, fees, and sales at muse-
ums, schools, and universities; and through government contracts for
social service organizations,the groups that are crucial for policy, social
change, and innovation are funded by foundations.
The nonprofit sector itself has a conservative and undemocratic influ-
ence on our society. The United States is unique in its size and scope.
Its tax-free wealth is largely unaccountable; just imagine the land, the
buildings, their contents, and the investments of churches, private uni-
versities and schools, museums, zoos, teaching hospitals, conservation
trusts, and opera houses. 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 advan-
tages. If philanthropic capital were taxed, its disposition would be sub-
ject to political debate. Nonprofit organizations, on the other hand, are
directed by self-perpetuating boards, and there is no democratic control
over their private policy making. Staff members have no civil service
status or security; they are dependent on philanthropy and its visible,
hugging arms.
The great multipurpose foundations first arose in the early 20th cen-
tury, closely connected in spirit and practice with Progressivism and the
rise of the social sciences. The new millionaires of robber baron infamy
saw foundations as devices to serve several purposes. First, they would
provide a systematic way to dispose of vast fortunes. Second, they
would permit considerable social control through philanthropy. John
D. Rockefeller decided “to establish one great foundation. This founda-
tion 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” (Howe 1980: 29). Third, foun-
dations could improve public relations; many believed that the Rockef-
eller Foundation was created to erase the scandal of the 1914 Ludlow
Massacre.1
There are several kinds of foundations. The conservative ones have
had increasing power since the Heritage Foundation in 1980 distributed
 How Foundations Exercise Power 657

Mandate for Leadership, a blueprint for the Reagan administration.

However, the missions of the right-wing ones are obvious; the liberal
press frequently critiques them. They receive far more publicity than
the supposedly “neutral” ones. This article will focus mainly on the
large private multipurpose “liberal” or “progressive” foundations, which
manage to hide well their power in our society. 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.
Among the many liberal foundations since created, the Soros Open
Society Institutes are especially notable for their worldwide scope in
directing change. Currently, the Gates Foundation is the largest, and it
continues in the tradition.
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. Further-
more, their investments are in the usual high earning corporations:
energy, military, chemicals, pharmaceuticals, international real estate,
hedge funds, and so on (Roelofs 2009).
We are not arguing that foundations are “all powerful,” but rather
that their power is enormous, and rarely revealed by scholars, journal-
ists, or activists. As political scientists, our interest is in the analysis of
power: who or what makes things happen or prevents things from hap-
pening. To determine the exact extent of foundation influence on any
policy outcome would require more than the small handful who inves-
tigate the subject from a critical perspective. However, we can show
evidence of foundation initiatives, and perhaps provoke the reader into
estimating or studying their significance.
To attribute power to an individual or institution is not a moral con-
demnation. Nothing would happen if power were not exercised. Evalu-
ating the outcome depends on a person’s values. By my standards,
foundations do many good things, but also foreclose or delegitimate
other possible interpretations and solutions to social problems. It is
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 coun-
tries, middling countries, and even some poor countries. In any case,
658 The American Journal of Economics and Sociology

describing the power of foundations is an empirical, not an evaluative,

process.
The critical study of the large, early-20th-century foundations began
in 1912 with a U.S. congressional investigation, popularly called the
Walsh Commission (U.S. Commission on Industrial Relations 1915).
Frank Walsh, the primary investigator, stated: “Mr. Rockefeller could
find no better insurance for his hundreds of millions than to invest one
of them in subsidizing all agencies that make for social change and pro-
gress” (cited in Weinstein 1989). This is a major tool of their power.
Foundations are not opposed to social change, but regard it as neces-
sary and do not see it forthcoming from the political process. We can
agree that our political institutions do not promote innovation and are
hardly able to cope with imminent disasters or progressive deteriora-
tion. However, the liberal foundations seek to direct change in a way
that will not disturb the wealth and power of corporate elites and the
hegemony of the United States.
Their influence over our political culture has been great. Now joined
by conservative foundations, there is an appearance of diversity, but
neither variety tolerates challenges to capitalism, militarism, or imperial-
ism. The conservative foundations also fund think tanks, but this is
more transparent. They are not claiming to be acting on the basis of
social or economic justice, but to promote efficiency or aid free
markets.
Current legal restrictions prohibit foundations from spending for lob-
bying, electioneering (including for referenda), or “grassroots” cam-
paigns (inducing the public to lobby). On the other hand, the
“examination of broad social, economic and similar problems” and
“making available the results of nonpartisan analysis, study or research”
is specifically permitted (U.S. Treasury 1972a, 1972b). Thus conferen-
ces, publications, institutes, advocacy organizations, and websites—
major channels of foundation influence—are specifically legitimated.
They are also allowed to testify before legislatures on matters affecting
the status of foundations, and all litigation remains permissible.
If we examine the impact of foundations since the early 20th century,
we see that they 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
 How Foundations Exercise Power 659

important is the Council on Foreign Relations, created by Carnegie and

Rockefeller in 1923. In 1933, the Social Science Research Council, an
offshoot of the Rockefeller Foundation, produced a document, Recent
Social Trends, which noted problems and proposed solutions for many
areas of politics and administration (President’s Research Committee
1933). It had been commissioned by President Hoover. Among the sug-
gestions were the “managerial presidency,” later embodied in the exec-
utive office of the president; public corporations, to be realized in the
TVA; and public-private partnerships, which we find flourishing in eco-
nomic development corporations.
Foundations also sponsor academic researchers and others who
write about policy. Some of the projects that have shaped our political
understanding are the books: 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’ in-house policy proposals have also been influential,

for example, Carnegie on school reform, Ford on New York City schools
and the war on poverty, and Sage on social work. Even the creation 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. The chairman was William Donovan
[former head of OSS] . . . the Vice Chairman was Allen Dulles [future CIA
director] . . . The documents show that ACUE financed the European
Movement. . . . In 1958 it provided 53.5 per cent of the movement’s
funds. . . . ACUE’s funding came from the Ford and Rockefeller founda-
tions as well as business groups with close ties to the US government.
(Evans-Pritchard 2000)

The head of the Ford Foundation, ex-OSS officer Paul Hoffman,

doubled as head of the ACUE in the late 1950s (Evans-Pritchard 2000).
The Carnegie Endowment doctrine of “humanitarian intervention” was
proffered 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 created during the heyday of Progressivism, and
became prime movers of the municipal reform movement. Existing
660 The American Journal of Economics and Sociology

organizations, such as the National Municipal League (1894) were

increasingly supported and guided by foundations. Carnegie and Rock-
efeller financed the Bureau of Municipal Research of New York City,
founded in 1907. Organizations such as the National Planning Associa-
tion, 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
also associations of elected officials and public administrators. The aca-
demic field of public administration itself was largely created during the
1920s and 1930s by the Rockefeller Foundation and its affiliates (the
Laura Spelman Rockefeller Memorial 1918–1928, and the Spelman
Fund, 1928–1949).
Among the institutional innovations promoted by foundations, the
“council-manager” form of local government is noteworthy. The “city
manager” reflects the idea that local government should be run like a
business; a manager hired by the city council would presumably carry
out its instructions and manage the staff, insulating city workers from
council politics. The concept was endorsed by the National Municipal
League as its “Model City Charter” beginning in 1915 and received rave
reviews in a 1940 Social Science Research Council report on its pro-
gress. Today, the manager form is promoted by the International City
Management Association, which receives major support from the Rock-
efeller Foundation. “[I]t became the orthodox ideal of the municipal
reformers” (Childs 1952: 151).
The notion of a hired chief executive for a municipality is rarely chal-
lenged in public administration textbooks or by those who have been
socialized into the field of public administration. The leading role of
“expertise” and the benefits of “depoliticization” appear to be common
sense. In practice, there is little effective policy making or oversight
exercised by city councils, especially since this system is frequently
combined with nonpartisan elections (Wheeland 1988). Amateur, part-
time, atomized councilors revert to the role of ombudsmen; they are no
match for the organized bureaucracy of the manager.
Other ways that foundations shape the political culture is through
their initiation and support of new programs in colleges and
 How Foundations Exercise Power 661

universities, such as area studies, women’s studies, and clinical legal

education. Public interest law, institutionalized in law schools as well as
new institutes, became a channel for influence on the Supreme Court, a
rare opportunity to “lobby” that body. Erwin Griswold attributed nearly
all innovations in legal education since World War II to the foundations
(Griswold 1967: 291). The most significant development has been that
of clinical legal education, with its network of institutes and policy-
oriented law reviews. In 1957, the Ford Foundation began funding

a national series of experiments exposing law students to “social

practice” through internships with welfare agencies, police departments,
prosecutors’ offices, lower courts, and civil rights groups. The program
was institutionalized in 1959 in the National Council on Legal Clinics,
assisted with Ford grants totaling $1,750,000. (Magat 1979: 110)

This later became the Council on Legal Education for Professional

Responsibility, for which Ford had granted $10.9 million by 1979.

By the 1970–1971 school year, 100 law schools were administering 204
clinical programs in fourteen different fields of law. In the next five years
the clinical movement swelled so that by 1975–1976, CLEPR could con-
servatively estimate that slightly more than 90% of the American Bar
Association-approved law schools provided some form of credit-granting
clinical education. (Seligman 1978: 162)

Law school institutes taught and researched advocacy and law

reform in civil rights and liberties; poverty, environment, women’s
rights, consumer, and school finance law; and criminal justice. Some
examples are the Center on Social Welfare Policy and Law at Columbia
Law School, the Institute for Criminal Law and Procedure at George-
town, and Center for Studies in Criminal Justice at the University of
Chicago. Among the law reviews founded and funded were Law and
Society at Northwestern (grant from Sage Foundation), Vanderbilt’s
Race Relations Law Reporter (Ford), Columbia Journal of Environmen-
tal Law (Ford), and the Harvard Civil Rights Civil Liberties Law Review
(several foundations).
Clinical legal education affects Supreme Court decision making in
several ways. Law review articles, including students’ work, are cited in
Court opinions. The law clerks at the Supreme Court, said by Rehnquist
662 The American Journal of Economics and Sociology

to be mostly “leftists,” are really just full of the latest thing. “[T]he clerks
. . . are a conduit from the law schools to the Court. They bring with
them . . . the intellectual atmosphere from which they are newly come”
(Bickel 1965: 143).
The Rockefeller Foundation has been particularly prominent in sci-
ence programs, agronomy (thus the “Green Revolution”), and popula-
tion control studies and experiments. Foundations are an important
presence in media, especially educational TV and public broadcasting,
and are the funders of “independent” Internet news sources.
They are gatekeepers for academics in all fields. Getting grants for
one’s research confers legitimacy, which is necessary even for those
who are independently wealthy. Considerable prestige derives from
advisory positions in the foundations, which also facilitate funding for
new university ventures. Almost all academic grantees either agree with
foundation positions or self-censor. An occasional grantee may take the
money and conduct research that questions the legitimacy of elites, but
this has little influence on the course of history.
Foundations exert even more direct influence by co-opting activists
and their organizations. This is the method of channeling social change
noted by Frank Walsh. The radical activism of the 1960s and 1970s was
often transformed, by grants and technical assistance from liberal foun-
dations, into fragmented and local organizations subject to elite control.
Energies were channeled into safe, legalistic, bureaucratic, and, occa-
sionally, profit-making activities.
McGeorge Bundy, President of the Ford Foundation, testified at a
congressional hearing on foundations (U.S. Congress 1969: 371). When
he was asked why Ford supported radical organizations, he replied:

[T]here is a very important proposition here that 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
 How Foundations Exercise Power 663

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. This gave them
legitimacy as well as resources; their constituencies gained benefits and
leaders attained salaried positions. Some moderate groups may have
had radical factions; by funding certain projects rather than others,
donors threw their weight behind the more moderate tendency. Various
stipulations, formal and informal, could be attached to the grant. Foun-
dation trustees who were board members of funded organizations
could keep a close eye on activities.
To ensure that there would be an adequate number of attractive,
well-funded moderate organizations enlisted in the appropriate causes,
foundations also created organizations that appeared to be of
“grassroots” origin. 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. In
addition, “umbrella” organizations were created (e.g., The Youth Pro-
ject, Center for Community Change), which provided integrative serv-
ices and technical assistance to the frontline groups. They emphasized
that, with the right managerial or legal techniques, benefits could be
gained from the system.
The turmoil of the 1960s increased the number and sophistication of
foundation leadership programs. Their goal 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 must instead be taught how to obtain “tools” to improve the qual-
ity of life in their domain. Typical was the Leadership Development
Program of the Ford Foundation, which spent more than $11 million
between 1967 and 1975 to develop new rural leaders. Generous grants
allowed 700 fellows to pursue projects of their choice while acquiring
the means to function better within the system: learning how to testify
at congressional hearings, to apply for grants, and to use videotape to
publicize their cause. Most were tamed, and after leaving the program,
664 The American Journal of Economics and Sociology

they found their personal careers enhanced; in addition, good works

with concrete results (such as local clinics) did occur.
Foundations were active supporters of the civil rights movement, and
under the leadership of the Ford and Rockefeller Foundations, the
National Urban Coalition was created in 1967 to transform “black
power” into black capitalism. This coalition drew corporate foundations
into the “social change policy” arena for the first time, and 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 (MLK Center) 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, Heu-
blein, Corning, Mobil, Western Electric, Proctor and Gamble, US Steel,
Monsanto, Johnson & Johnson, Morgan Guaranty Trust, Union Pacific,
and Johnson’s Wax. One program,

the King Center co-sponsors with the University of Georgia, an annual

Martin Luther King, Jr. Lecture Series entitled, “The Free Enterprise Sys-
tem: An Agent for Nonviolent Social Change.” The series provides repre-
sentatives of the nation’s basic institutions with a platform from which to
respond to the needs of a nation undergoing rapid change and a world
coming to grips with its destiny. (MLK Center 1985: 10)

The large environmental groups, via the Environmental Grantmakers

Association, are funded by the liberal foundations, by industrial corpo-
rations, including ExxonMobil, Dow Chemical, and Monsanto, and by
some small radical funders. Ron Arnold (2014), a right-winger, com-
plains of this:

Mainstream reporters appear not to be aware of the component parts

that comprise Big Green: environmentalist membership groups, nonprofit
law firms, nonprofit real estate trusts (The Nature Conservancy alone
holds $6 billion in assets), wealthy foundations that give huge
“prescriptive” grants, and agenda-making cartels such as the 200-plus
member Environmental Grantmakers Association. They each play a major
socio-political role, with the prescriptive nature of many grants meaning
 How Foundations Exercise Power 665

the foundations tell activist groups what they will do, and how they will
do it, if they want money.

In addition to selective funding, the very structure and process of

grant seeking tends to transform a group or movement’s mission. 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.
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.
Foundations and their NGOs also provide employment for sons and
daughters of the rich who might otherwise be unemployed and disaf-
fected, along with those of any class who are dissident and trouble-
some. They help resolve the great threat to capitalism identified by
Joseph Schumpeter (1950: 143):

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 bour-
geois values.

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. 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 are powerful members of coalitions and collaborations
that may include overt and covert government departments, U.N.
666 The American Journal of Economics and Sociology

agencies, E.U. committees, the NATO funding arm, 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. govern-
ment. 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” (Bird 1992: 519).
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” soci-
ety, but also a worthy, culturally rich one that did not repress its artists
as did the proponents of “socialist realism.”

The architects of the [Ford] foundation’s cultural policy in the aftermath

of the Second World War were perfectly attuned to the political impera-
tives which supported America’s looming presence on the world stage.
At times, it seemed as if the Ford Foundation was simply an extension of
government in the area of international cultural propaganda. The founda-
tion had a record of close involvement in covert actions in Europe,
working closely with Marshall Plan and CIA officials on specific projects.
(Saunders 1999: 139)

Ford, the Kaplan Foundation, and others became “pass-throughs” for

the CIA project, Congress for Cultural Freedom (CCF). In addition, start-
ing in 1957, Ford provided its own funds for the CCF, which sponsored
writers and journals throughout Europe, including the notorious
Encounter. American jazz was highly regarded, especially among the
targeted European communist sympathizers, but U.S. symphonic com-
position and performance were barely known, so the Boston Sym-
phony Orchestra was sent on tour to fight the Cold War.
One of the strangest episodes was the CCF traveling exhibit of
abstract expressionist art, including works of Jackson Pollock and Mark
Rothko. The idea was to show the European intellectuals that not only
was the United States rich in avant-garde culture, but that it was
 How Foundations Exercise Power 667

honored and rewarded. In contrast, artists in communist countries were

stifled by puritanical, socialist realist strictures. Years later, the defenders
of CIA covert operations used this example to argue that covert opera-
tions were generally necessary because projects like these could never
be mounted by the U.S. State Department. Congressional leaders hold-
ing the purse strings would not countenance such works; they admired
the “capitalist realism” of Norman Rockwell.
In 1967, there was a brief period of indignancy in the United States
when these transactions 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 Munici-
pal Employees; the National Education Association; the National Stu-
dent 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.
Congress eventually created a new institution, in 1983, to put a differ-
ent face on this intervention: the National Endowment for Democracy,
modeled on the private foundation. NED operates throughout the
world, creating and supporting “overthrow” movements and “free mar-
ket” projects.
Eastern Europe was targeted as well. The Helsinki Accords of 1975
paved the way for many civil society organizations, financed by West-
ern foundations—including some from England, Canada, and Ger-
many. Helsinki Watch was created by foundations to monitor the
agreements. As a result, human rights organizations proliferated in East-
ern Europe. For example, in 1988, the Merck Fund supported the Cam-
paign for Peace and Democracy/East and West. Eastern European
participants became socialized into the comfortable NGO world, while
Western intervention into USSR, Mongolia, and Eastern European soci-
eties on behalf of human rights activists gained legitimacy. By the late
1980s, native NGO staff and exchange scholars were “waiting in the
wings” in East European governments, universities, and research insti-
tutes, hoping to apply their democratic-capitalist skills and knowledge.
The Ford, Rockefeller, Carnegie, MacArthur, Bradley, McKnight, Mott,
Mellon, Merck, Pew, and Soros Foundations and Rockefeller Brothers
668 The American Journal of Economics and Sociology

Fund supported East European scholars, universities, and institutes. In

1988, the Rockefeller Brothers Fund and George Soros financed the
International Management Center in Hungary, with technical assistance
from the University of Pittsburgh. By 1989, Soros was funding a totally
revised edition of the Great Soviet Encyclopedia.
Some private foundations help to finance the NED’s offerings; for
example, Smith Richardson, Mellon-Scaife, and the Mott Foundation,
which donated $150,000 in 1998 “to increase public confidence in
democratization and the transition to a market economy in Ukraine”
(Mott Foundation 1998). It also gave $50,000 for election monitoring.
The donors have founded many new institutions, untainted with
socialism. As local funds are lacking, foreign funding is considered the
only way to produce a truly independent sector. By 1995, there were
29,000 NGOs in the Czech Republic, 20,000 in Poland, and similar num-
bers in other countries (Quigley 1997: 16). They were almost entirely
supported by foreign corporations, foundations, governments, political
parties, and international institutions such as the European Union and
the World Bank. As the Eastern European socialist governments were
overthrown and destroyed, support for social services, the arts, univer-
sities, and research was no longer possible. Thus, the “West” came in to
save them. Notable was the foundation-like agency of NATO that sup-
ported all scientific research, not just into fine weapons construction,
but botany and psychological studies of mate selection. Another savior
was the Soros foundations, which created “independent” journalism in
Eastern Europe. Political parties are also funded by foreign foundations
and governments.
Foundations were agents of U.S. foreign policy in South Africa. South
Africa required deft treatment. U.S. public opinion will support
“authoritarian” anti-communist dictators, but apartheid was unaccept-
able to many in the United States, black and white. On the other hand,
the leading South African opposition was the African National Congress
(the ANC, which was banned and exiled for many years), and the South
African Communist Party was a major component. The ANC Freedom
Charter of 1955 stated its 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, partly
 How Foundations Exercise Power 669

by framing the debate in the United States. 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” (Study
Commission 1981: xi). At the same time, it had to take into account the
“full range of U.S. interests.”
The Commission had a large staff, and conducted extensive meetings
in the United States with “representatives of civil rights, antiapartheid,
religious, congressional, and student groups; university administrations,
corporations, research and public policy institutes, and state and local
governments; . . . and three former senior government officials: Henry
Kissinger, Donald F. McHenry, and Cyrus Vance.” It traveled to South
Africa and met with all elements throughout the country, and later con-
ferred with interested parties in England, France, and West Germany.
The Commission’s Report, which became a major policy document in
the United States, concluded that there needed to be genuine sharing of
political power, acceptable to all races. U.S. strategic interests that must
be protected included sea routes (for oil shipments); corporate invest-
ments; and access to minerals—not gold and diamonds—but chromium
and ferrochrome, manganese and ferromanganese, platinum and vanadium.
The Report warned of danger from the “growth of Soviet influence in
the region, promoted by white intransigence in South Africa, growing
political instability, rising levels of racial violence, and armed conflict.”
It did not, however, emphasize that the Communist Party, as a major
partner in the ANC, was an internal threat to capitalism, and not a “tool”
of the USSR. Nevertheless, Soviet “philanthropy” did help the ANC, and
was a major public relations benefit for the USSR vis-a-vis black Africa.
Among the Report’s recommendations was support for an arms and
nuclear embargo. It advised against a general divestment process or
economic sanctions. Corporations should be encouraged to improve
black welfare and follow the Sullivan Principles, which was a pledge to
promote equal opportunity in employment, decent pay, and human
rights in general. At the same time, pressure should be put on the gov-
ernment to share power with blacks. U.S. private organizations were
670 The American Journal of Economics and Sociology

urged to “support organizations inside South Africa working for

change, assist the development of black leadership, and promote black
welfare.”
Foundations had been working for some time to create NGOs as
alternatives to the liberation movement approach. 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 developing power in the
mining industry. A Ford publication quotes approvingly Halton Chea-
dle, a partner in the largest human rights and labor law firm: “Only in
unions have blacks had an opportunity to exercise democracy—the
practice of electing your leadership and holding your leadership
accountable.” It then notes: “Perhaps not coincidentally, the leader of
the mineworkers union, Cyril Ramaphosa, was recently elected
Secretary-General of the African National Congress, the nation’s oldest
political party” (Kauffmann 1991: 8).
Ford also gave grants to the South African Council of Churches,
scholarships to enable blacks to become lawyers, and generally helped
the moderate reformers. 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. How-
ever, South Africa’s resource distribution has hardly been altered, social-
ism evaporated from the ANC leadership, and the new black
governments are content to participate in the world market and its lead-
ership institutions such as the World Economic Forum.
In Indonesia, the Ford-Foundation-sponsored knowledge networks
worked to undermine the neutralist Sukarno government that chal-
lenged U.S. hegemony. At the same time, Ford trained economists
(both at University of Indonesia and in U.S. universities) for a future
regime supportive of capitalist imperialism.
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 alterna-
tive to violent intervention; it works along with it. However, even
where violence is absent or minimal, such funding serves aggressive
imperialism. The dollar has been used as a carrot, but often as a stick,
 How Foundations Exercise Power 671

waved at unemployed and/or starving people, whose economies have

been shattered through military or economic warfare. Whether they use
violence or not, wealthy American institutions undermine the demo-
cratic ideal whenever they create political parties, movements to over-
throw governments, NGOs, or cultural projects in other countries. The
current civil society offensive is not merely a loaded gift; in some places
it aims either 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 dismis-
sal from government jobs of many academics and public servants.
Some eventually found jobs in U.S. foundations’ “human rights” organi-
zations. Many had originally been leftists, but gradually came around
and became pragmatic.
Political and economic domination is complemented by the overseas
ownership of a nation’s religious institutions (an old story), universities,
cultural institutions, charities, human rights and environmental organi-
zations, and even dissident and overthrow movements. In short, civil
society may be made of imported materials, directed by foreign manag-
ers, and assembled by local workers on an overseas payroll.
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, Trilateral Commis-
sion, and World Economic Forum, but also the intergovernmental
bodies: the United Nations itself, and its specialized agencies.
During World War II, an elite committee within the Council on For-
eign Relations, the War-Peace Studies Group, had been meeting to plan
the postwar world, with special funding from the Rockefeller Founda-
tion. They decided that the economic terrain required by the U.S.
economy:

[W]hich came to be known as the “Grand Area,” included Latin America,

Europe, the colonies of the British Empire, and all of Southeast Asia.
672 The American Journal of Economics and Sociology

Southeast Asia was necessary as a source of raw materials for Great Brit-
ain and Japan and as a consumer of Japanese products. The American
national interest was then defined in terms of the integration and defense
of the Grand Area, which led to plans for the United Nations, the Inter-
national Monetary Fund, and the World Bank and eventually to the deci-
sion to defend Vietnam from a communist takeover at all costs.
(Domhoff 1998: 148)

In addition, the U.N. headquarters in New York was established with

a gift from Rockefeller institutions.
Among the agencies, the World Health Organization was practically a
continuation of the Rockefeller Foundation’s International Health Divi-
sion, and, in its formative years, was dominated by the Rockefeller
Foundation (Birn 2014: 129–140). Currently, the Gates Foundation has
taken over the leading role, and has incurred strong protests from the
professional staff of WHO for both its domination and its approach to
health issues (Global Health Watch 2008: 250).2
Ford, Rockefeller, and now the Gates Foundation (considered the
major controller of world agriculture) have set about remaking the agri-
culture of the world with the promise of ending hunger. Yet the basic
premise of the Green Revolution is now being questioned. The Interna-
tional Assessment of Agricultural Science and Technology for Develop-
ment (IAASTD 2009: 8) report, Executive Summary, stated:

[A]ssessment of modern biotechnology is lagging behind development;

information can be anecdotal and contradictory, and uncertainty on ben-
efits 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.

Conclusion

Our purpose here has been to reveal the power and influence of the
liberal foundations. The overall picture of the scope and realization of
their initiatives is seldom portrayed. The few comprehensive studies
 How Foundations Exercise Power 673

not subsidized by those foundations are rarely reviewed in publications

seen by the general public or scholarly journals. Certainly, many
aspects of our society and politics have been immune or resistant to
foundation plans, yet the total of successful endeavors is impressive.
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 sus-
tained or been successful. Nevertheless, the world that foundations
have had a significant role in creating does not appear to have a demo-
cratic, peaceful, or sustainable future.

Notes
1. 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 Colo-
rado 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. (cited in Gage 2009: 94) indicated that
he “would have taken no action” to stop his guards from attacking the workers.
2. In a 2008 memo leaked to the press, Arata Kochi, chief of the malaria pro-
gram 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 2008).

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