The Demos founder and author of The Givers talks to Michael E. Hartmann about covering foundations and donors, the changing nature of the wealthy as a class, and the role of philanthropy in a democracy.
David Callahan is the founder and editor of Inside Philanthropy, an online publication covering how foundations and major donors are giving away their money, and why. He has written widely on trends in philanthropy, as well as American culture, public policy, and business.
Callahan’s most-recent book is The Givers: Wealth, Power, and Philanthropy in a New Gilded Age. Among his previous books are Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America, The Moral Center: How Progressives Can Unite America Around Our Shared Values, and The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead.
Before founding Inside Philanthropy, Callahan helped start Demos, a liberal think tank—prior to which he was a fellow at what became The Century Foundation and managing editor of The American Prospect.
Below is the first of two parts of an edited transcript of a discussion that Callahan was kind enough to have with me last month. The second part—in which he talks about covering foundations and donors, the changing nature of the wealthy as a class, and the role of philanthropy in a democracy—is here.
Hartmann: Where is home for you?
Callahan: I grew up in Hastings-on-Hudson in Westchester, New York. My father was the founder of The Hastings Center, which is a bioethics think tank—the first of its kind—so I actually grew up around the world of philanthropy, in that successful grant proposals paid for the mortgage on our house indirectly, my father’s salary, and The Hastings Center expenses. I was appreciative early on of the power of ideas and how interesting that world was.
Hartmann: Who funded The Hastings Center?
Callahan: The first grant was from The Rockefeller Foundation, and I think that Ford was pretty quickly the next up. They have a lot of core institutional funders for many years, and then major donors. But it’s tough. Bioethics is one of those issues that kind of fall between the cracks.
Hartmann: Where’d you go to school?
Callahan: I went to public high school and then Hampshire College in Amherst, Massachusetts. Hampshire was founded in the 1960s and has an alternative curriculum focused on really mastering core methodologies of learning and thinking, as opposed to a more-rote approach to memorizing and regurgitating knowledge. There’s a big focus on how you learn at Hampshire, and there’s quite a bit of latitude for students to do their own thing.
My first book, Dangerous Capabilities, originated as my senior thesis at Hampshire and that was a biography of Paul Nitze, the Cold War strategist. I was a foreign-policy and national-security wonk when I was in my 20s, and I continued that interesting into graduate school, where I studied U.S. foreign policy, international relations, and American politics at Princeton.
Hartmann: Why did you pick Paul Nitze?
Callahan: He was like the Zelig of the Cold War. He showed up at every key juncture in the Cold War, and he advised eight different presidents, and had his fingers in many of the main strategic decisions of the time. It was just a fascinating story.
Hartmann: Then you had a fellowship at The Century Foundation, which would be more philanthropic support in your life?
Callahan: Yes, exactly. I often joke that I’ve literally, until recently, spent my entire life on the philanthropic dole. From birth, basically, or at least something like age five on.
But yes, I in 1994 became a resident scholar at The Century Foundation, then still called the 20th Century Fund, which was started by retail magnate Edward Filene in 1919. It’s one of the early foundations focused on research and public policy.
When I came there, it was in the process of refashioning itself more as a think tank and less as a traditional grantmaker, but that was still in transition. I was a program officer for international affairs and managed some grant projects with different writers who were writing books, and I wrote my own book on ethnic conflict in U.S. foreign policy.
Then the late 1990s was the time that I started writing about philanthropy and war of ideas and the funding streams on left and right.
Hartmann: Why the pivot into the philanthropic sphere?
Callahan: A couple different things. One was, in 1994, after Newt Gingrich led the Gingrich Revolution and the Republicans took over Congress, there was a lot of attention to the young conservative intellectuals and policy thinkers, and the conservative movement. There was a lot of new awareness of the constellation of think tanks and policy groups that were developing strong ideas on the right, and of the foundations and major donors supporting that work.
I became quite interested in looking at all that and looking upstream at the philanthropy piece. I started really appreciating the power of funders—whether institutional legacy foundations like Bradley or Olin, or living donors like the Kochs—to really help build and scale the infrastructure of ideas and policy work.
I became interested in what the liberal side was doing and why it seemed to be less effective in that regard. That got me to thinking about the whole realm of think-tank funding and interested in starting a think tank myself.
Ideas and patience
Hartmann: So that’s the basis for forming Demos in 1999. First, though, let’s talk about the conservative policy-oriented funders you studied. What did they do so well? What did you learn from that study leading up to the founding of Demos?
Callahan: What they did so well—and you would know well, as one of the people who did it—is believing in the power of ideas, and funding them in a long-term way over years and decades, providing general support to key institutions, and providing support to leadership development and thinkers and books, and really investing over the long haul in creating an intellectual cadre that could really be the vanguard of a policy movement. In addition, investing in the communications infrastructure needed to broadcast those ideas out, and repurpose them, and sell them to multiple different kinds of audiences.
All that was just, together, a very-powerful infrastructure for shifting debates and really fleshing out key ideas in great—getting them all the way down, for example, to Cato’s calculator for how much you’re going to get a month from privatizing Social Security. Its comprehensive investment across the board really impressed me.
Hartmann: This is unfair, I suppose, because it’s too broad a brush, but has liberal philanthropy been able to successfully replicate that since then and, if so, to what degree?
Callahan: The great irony is that left-of-center foundations seem to believe less in the power of ideas. They’ve invested less in think tanks. They have invested more in advocacy organizations, and legal institutes, and technocratic policy development—but they have consistently underfunded intellectuals, and policy thinkers, and long-term policy work.
A lot of progressive philanthropy is very short-term focused. Much of the funding comes in the form of project grants for specific work with near-term deadlines try to move the needle on x, y, and z issue—as opposed to understanding, as a place like the Bradley Foundation did, that this is like … What did [Bradley’s first president] Michael Joyce used to say? This is like making fine wine. It would take years for it to really mature, and you’ve just got to be patient.
I think that progressive funders have lacked that patience. Also, they maybe overlearned the lesson of the 1960s, which is to think that everything comes from social movements—all the change from the civil-rights movement, and the women’s movement, and the environmental movement. That didn’t give adequate weight to the power of ideas.
Hartmann: Do you think conservative givers still take ideas as seriously as they did? Are there still vintners, or is everybody a craft brewer now?
Callahan: [Laughter.] That is the question that we’re interested in finding out. As far as I can read the grantmaking data, the money is still going out to the core intellectual and policy institutions on the right. They’re still receiving general-operating support from the usual stable of funders.
A place like AEI [the American Enterprise Institute], which I really see as most-impressive intellectual flagship of the right is doing better than ever. [Its previous president Arthur] Brooks really was an amazing fundraiser powered that place to new heights. It has a whole core of billionaire backers and others who are on board.
On the other hand, if you look at some other institutions, they seem to have lost their own faith and, of course, there’s the larger problem of what’s happened to the conservative coalition in the age of Trump. I’m sure it’s been a discouraging time to be an intellectual on the right. I listen to Bill Kristol’s podcast, and I know how much some of the people who actually believe in ideas on the right have been sitting around lamenting, What happened?
Hartmann: Is there similar tumult on the left now?
Callahan: There are a couple different things that have happened on the left over the past 10 or 15 years. One is that since about 2004, there really has been an effort to scale up stronger policy infrastructure and think tank.
The creation of the Center for American Progress, the expansion of Demos, which now has a $15 million-a year-budget, the Roosevelt Institute, the Washington Center for Equitable Growth are among the new or expanded policy institutes on the left that have emerged in the last 15 years—back in part by a new cadre of major donors, wealthy progressives like Herb and Marion Sandler, who are now no longer with us, Tom Steyer, and many others who have been willing to put money into this work. The Democracy Alliance, of course, is a collaboration of high-net-worth individuals who come together to progressive infrastructure.
There’s been a lot of progress, compared to where things we’re in the in the mid-1990s, but I can’t say that I see on the left any much-greater belief in ideas per se. A lot of the think tanks on the left don’t actually do much thinking. They do more real nitty-gritty policy development and trying to move policy ideas forward.
There’s not a lot of support for fellows writing books who are taking the time to really go deep. It’s a lot of more short-term tactical policy work that is supported in these institutions—although that work can be really important, obviously, in terms of fleshing out alternatives to our current health-care system, or thinking about new economic policies.
The other thing that has happened on the left is that there’s new social movements, new strength in the grassroots, a lot of young people coming in. You see that in the Sanders campaign. That does create some tensions and fissures on the left, as we’ve seen in this year’s Democratic primary, but I don’t think anything on the level compared to the kind of upheaval on the right and just how head-spinning it’s been to watch the Republican Party hijacked by a politician, or non-politician, that isn’t even actually a conservative. I can’t even imagine the cognitive dissonance of being a conservative right now.
Hartmann: Is it all too short-term? Is there too much giving to candidates or for public education during the weeks preceding elections? Is it all too politicized?
Callahan: A problem among the progressive Democratic donor class is that there’s too great of a faith that if you win the next election, you’ll solve a lot of your problems, so there’s a lot of focus on turnout and electoral spending and less awareness that we need to build this long-term infrastructure and the candidate is really the capstone of the pyramid. Candidates come and go. It’s really the strong foundation of power that you need to build.
There are a lot of people in the progressive world who get that, but there’s a lot of progressive donors who still don’t. They only really show up at election time. They give huge amounts of money for candidates, but that money could go a long way in supporting that infrastructure-building of policy groups and activists groups. That’s a challenge: educating the donor class. The Democracy Alliance has done a fair amount of that.
Obviously, you do need to win elections. There is a tension there.
Hartmann: What was the greatest success at Demos when you were there early on, and then maybe a challenge or two that was not met as well as you would have liked?
Callahan: We really helped develop a whole new set of set of ideas about how to expand the electorate—whether it’s revitalizing the Motor Voter law, or having election-day registration, or getting rid of felony disenfranchisement. These days, there’s a lot of recognition of how corroded and weak the underpinnings of our electoral democracy are, and the actual mechanics and processes of voting, and how anachronistic certain policies—like the fact that you need to register 30 days before an election in some states.
I can get approved for a mortgage in three hours. It’s just an antiquated, backward system of our democracy, and Demos was on that case long before it’s become the news that it is today.
Likewise, we really helped to bring attention to issues of economic inequality before that issue became front and center—in particular, some of the predatory practices of lenders that exacerbated that inequality.
I’d say Demos was quite ahead of the curve in helping surface certain issues that are now more widely recognized as problems.
Hartmann: It’s affiliated with a (c)(4), right?
Callahan: It has a (c)(4), like many (c)(3)s do these days. That’s all about giving your donors more options, and keeping them in the tent.
Information and transparency, and power and influence
Hartmann: When and why did you start Inside Philanthropy?
Callahan: I spent 15 years building Demos, from being employee number one to leaving at the end of 2013 a pretty-mature organization and holding different jobs within Demos along the way. One of the things I did for Demos was try to raise money, from both foundations and major donors. It’s a very-frustrating job, as everyone knows.
It’s frustrating in part because of a lack of good information and transparency. It’s hard to know what these foundations and major donors are thinking. It just occurred to me that there needs to be better information and that it would be really useful to fundraisers, to people who needed to get inside philanthropy and really understand what was going on.
The conception of Inside Philanthropy was that it would really be providing inside information about how this world works and that fundraisers, nonprofits would be willing to pay for that. At the same time, going back to the 1990s in my work on conservative philanthropy and think tanks, I was very interested in engaging these larger questions of philanthropy, and power, and democracy, and how wealthy donors and foundations were having influence over public life how to square that influence with the egalitarian ideals of this country—and what to do about it, if anything.
I came into starting Inside Philanthropy with really that dual-track agenda—news you can use, if you’re raising money, and also persistently raising these larger questions of how should we think about philanthropy in a democracy, and what kinds of ways may want to change the sector to make it more compatible with our democracy.
Hartmann: You did see the audience initially, and it sounds like still now, as principally, mostly fundraisers, as opposed to foundation people trying to watch each other?
Callahan: Yes, absolutely, although plenty of foundation people read it, too. We describe it as a great resource for anybody who raises money or gives it away for a living. It’s obvious why a fundraiser would find Inside Philanthropy useful, but grantmakers also find it useful because it’s great one-stop shopping for understanding what’s going on in the sector.
If you’re a climate-change grantmaker or are thinking about becoming one, for example, you can go to our section on climate change and get a pretty-good sense of who’s doing what. That is useful information.
Obviously, anybody who’s engaged in philanthropy wants to make sure that they’re filling a real need and adding value vis-à-vis what other funders are already doing. Funders want to learn from each other. They want to see what works. They want to embrace best practices. They want to be part of collaborations. All that requires good information-sharing across the sector.
Hartmann: You concluded either right away or early on that you’re not going to raise money from philanthropies to pay for this. You’re going to do it all through subscriptions. This is very entrepreneurial of you, David. Very risky. How have you been able to do this?
Hartmann: And how much is a subscription, by the way? (My employer pays for mine.)
Callahan: I used all my personal savings and borrowed a lot of money against credit cards, and borrowed money from my parents, and financed creation of the site. Then, I launched it and started getting some revenue right away with our $300-a-year subscription, which is now $400 a year.
People started signing up pretty early on. We started with almost a pay-as-you-go model, trying to make the site as good as it could be, with the number of subscribers we had and the amount of revenue we had and whatever other resources I could cobble together. We’ve just tried to make it progressively better as we’ve gotten more revenue.
It’s just grown. It works, because people really need this information. People will pay for journalism and content that helps them do their job. It’s not like asking people to subscribe to The Atlantic magazine so they can read provocative articles. You actually need to get past our paywall in order to do your work.
Hartmann: How many subscribers?
Callahan: We have over 4,000 subscribers now.
Hartmann: Those are mostly fundraisers?
Callahan: Yes. The last I checked, a very small percentage was foundation subscribers.
Hartmann: Isn’t $400 kind of expensive? The fundraisers who are able to pay that are the bigger nonprofits, aren’t they? I fully understand you’ve got to pay the light bill, though.
Callahan: It’s expensive for an individual. Any nonprofit that has any kind of fundraising budget, I think it’s within the realm of feasibility. When I was helping build Demos and we had only a $100 million budget, we still had like 15% of that allocated for development and fundraising. Fundraising budgets are big in organizations, and they need to be big.
The cost of our resource is modest, compared to some of the competitors. A Foundation Center subscription starts at $2,000 a year, and there’s more-expensive ones beyond that.
Hartmann: How many people work for Inside Philanthropy?
Callahan: We have about 20 different writers, some full-time and some part-time.
Hartmann: Just to clarify, when you say “We don’t take money from entities that we cover,” it’s not the case that you have said to yourselves, “We’re not going to cover this entity because we take money from them,” right? You take zero philanthropic dollars.
Callahan: Yes, that’s right. We take no philanthropic dollars. We don’t take money from anybody, for all the obvious reasons. It’s all subscriptions.
The conversation continues in Part 2 of 2 here.