Hillary Clinton donor scandal puts spotlight on US philanthropy sector

Political to the end. EPA/Ray Stubblebine

Though she has yet to announce her 2016 presidential candidacy, Hillary Clinton is already assumed to be running – and has already hit trouble.

In recent weeks, there have been unedifying reports that the Bill, Hillary & Chelsea Clinton Foundation accepted millions of dollars from seven foreign governments during Hillary Clinton’s tenure as US secretary of state, skirting dangerously close to outright violation of conflict-of-interest agreements it had made with the Obama administration.

But this isn’t just a problem for Hillary’s imminent presidential campaign – it also indicates a deep structural problem with the whole edifice of American philanthropy.

The US’s philanthropic sector is massive and hugely powerful. It’s also unrepresentative, unaccountable and generally secretive. Despite having tax-exempt status, it exists outside democratic electoral or shareholder oversight and is entirely beholden to the interests and whims of the very wealthy and powerful and their donors – whether they are major transnational corporations, dictatorial governments, or lobbyists out for direct or indirect personal gain or client influence.

This way of doing things has been causing trouble for a long time.

Rockefeller row

In 1915, in the wake of a controversy about the political and self-interested character of the Rockefeller Foundation, the US Congress condemned the foundation as nothing more than a front for the industrial interests of one of the richest men in history, John D Rockefeller.

Rockefeller had wanted his foundation to focus on the “causes of industrial unrest” – this in the wake of a series of strikes for decent pay, conditions and union rights, which were bloodily suppressed by privately armed gangs in his own iron ore mines in Colorado.

It is unsurprising that exactly 100 years later, when the new corporate billionaires have set up their own philanthropic (or rather philanthro-capitalist) foundations, that a another public scandal is brewing around a major politico-philanthropist. After all, much this wave of billionaires derive their corporate wealth from the latest technological revolution, just as the Rockefellers and Carnegies set up theirs during the post-US Civil war era of rapid industrialisation.

And in terms of wealth at least, America is just as unequal and polarised a society today as it was when Rockefeller came under fire: in 1916, the richest 0.1% owned around 20% of total wealth, and today, the percentage is even higher, at around 25%.

Political animals

Politics is a fundamental raison d'être for American philanthropists, despite their foundations’ loud proclamations of non-partisanship and independence from both big business and the state.

The Clinton Foundation’s role has long mirrored and complemented the official approach of the US State Department, dealing as it does in microcredit initiatives, free-market boosterism, corporate-linked development strategies, and “partnership-building” above, through and beneath state structures.

In a way, it’s better to think of organisations such as the Clintons’ not as lobbying and fundraising foundations, but as tax-exempt intelligence-gathering bodies and diplomatic powerhouses. Their ultimate role is to channel American influence around the world and create lasting bonds to ensure stability in formal relations.

Working along these lines, foundations have been at the core of American “soft power” for a century, embedding American influence in difficult places. China is a core example.

Behind-the-scenes influence. EPA/Feng Li

American philanthropic organisations are now firmly embedded as major presences in Chinese territory. Since at least the 1970s, while public relationships between US politicians and their Chinese counterparts have fluctuated between politeness and froideur, American foundations have kept up a massive programme of complex bond-building work across the Pacific.

Independent of any explicitly articulated US government policies, the Rockefeller, Ford and Carnegie foundations – among many others – have long been establishing inroads and building major operations within China. The Ford Foundation, for example, has had an office in Beijing since 1978, from which it engages in developing the “rule of law”, efficient local election machinery, and greater non-governmental organisation activity. But in reality, most its efforts have focused more on stabilising Chinese society rather than democratising it.

It is the long-term work of these foundations that has made China and the US’s present interdependency virtually unbreakable. Yes, the US is reliant on goods from the East – and benefits increasingly from the hundreds of thousands of students and tourists that come to its shores – but the relationship works both ways.

US firms and other organisations have major presences in China, which is happy to accommodate their investment and avoid doing anything to turn them off.

This is the reality that a Hillary Clinton presidential campaign will have to negotiate. And while it may not do her any favours, the unflattering attention directed at the Clinton foundation might help shed some light on a hitherto very cloistered wing of America’s society and economy.

Foundations such as the Clintons’ are some of the world’s largest and most closed institutions, even as they are part of one of the world’s most open societies. In the interests of propriety and morality, their doors need to be opened, and their activities subject to meaningful democratic scrutiny.