Episode Summary “Faulty.” “Problematic.” “Racist.” In this episode, we talk about why these terms are now regularly used to describe the foundations that the nonprofit and philanthropic systems were built upon. Guest Christina Shimizu, a co-founder of Community-Centric Fundraising, briefly explores the relatively recent history of how these systems came to be, why they are built on deep injustices and how philanthropy and nonprofits are actually a political and economic system. Unpack all of this with us! If we don’t examine how these things came to be, we can never hope to reimagine them, improve them or do better, to benefit the communities we are trying to serve.
“Faulty.” “Problematic.” “Racist.” In this episode, we talk about why these terms are now regularly used to describe the foundations that the nonprofit and philanthropic systems were built upon. Guest Christina Shimizu, a co-founder of Community-Centric Fundraising, briefly explores the relatively recent history of how these systems came to be, why they are built on deep injustices and how philanthropy and nonprofits are actually a political and economic system.
Unpack all of this with us! If we don’t examine how these things came to be, we can never hope to reimagine them, improve them or do better, to benefit the communities we are trying to serve.
So many concepts were mentioned! Here are some links...(and sign up for our mailing list for future updates):
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Michelle Shireen Muri:
People don't think of philanthropy as a political and economic system enough. And that's exactly what it is. This is Michelle Shireen Muri, your host and fellow traveler on The Ethical Rainmaker, a podcast exploring topics that deserve a deeper examination in nonprofits and philanthropy, including the places we can step into our power or step out of the way. If you're new to this podcast or these topics, you might feel defensive, which is understandable. You might wonder why we present these critiques when so many people are benefiting from the good work happening in nonprofits and rely on the third sector for care, for critical services, and even for money. But if we don't examine how these systems and these dynamics came to be, we can never hope to reimagine them, improve them, or do better to benefit the communities we're trying to serve.
Michelle Shireen Muri:
One of the concepts I rarely hear defined is this notion, and I've said it many times myself, that the foundation that philanthropy and nonprofits were built on is faulty or problematic or racist.
Michelle Shireen Muri:
Well, today we're doing a deeper dive into the why. We'll specifically explore the relatively recent history of how these systems came to be, specifically in the United States and the fact that they're built on deep injustices. For our listeners in other parts of the world, don't worry, many of your histories are mirrored by this one. So the story is similar.
Michelle Shireen Muri:
Christina Shimizu is Co-founder of Community-Centric Fundraising, Director of Individual Giving at Seattle's Wing Luke Museum of the Asian-American experience. And she currently organizes with Decriminalize Seattle and the Chinatown-International District. She's the Co-founder of Activist Class, a political podcast set in Seattle, Washington. Christina is an experienced trainer on the intersections of class and race, and uses her analysis to examine and dismantle the ways philanthropic engagement perpetuates white supremacy and other systems of power. Welcome, Kristy, to The Ethical Rainmaker.
Christina Shimizu:
Yay. Thank you for having me.
Michelle Shireen Muri:
Word. One of the reasons I wanted to invite you on is that I realized that in all of the episodes that I've done so far, and also in a lot of conversations that I have with folks, we're often referring to the problematic nature of how philanthropy was built or how nonprofits were built, but I actually rarely hear anyone define exactly what that journey was and why it's problematic. And in our workshop that we did together just last week, the way that you laid it out, you are a fucking genius. You turn wonky policy shit into consumable information that can be understood by a broader audience and utilized. And so there are many reasons why I love you, and this-
Christina Shimizu:
Thank you, Michelle.
Michelle Shireen Muri:
... is not even among the most major, but it is a pretty incredible talent that you have. Yeah, of course, you're welcome. And I wanted to-
Christina Shimizu:
Thanks for the compliment.
Michelle Shireen Muri:
Well, you're incredible. And coming off of our work together last week, I thought it'd be useful to talk about problematic philanthropy.
Christina Shimizu:
I love that and I love the opportunity to nerd out with you. Have a conversation about something super niche.
Michelle Shireen Muri:
Dude, you're the coolest nerd I know. Okay?
Christina Shimizu:
So are you. You're a closet nerd.
Michelle Shireen Muri:
I am a closet nerd and I love how you talk about everything to do with the political economy of philanthropy. And I can just see the lines that you draw between all of these dots on a timeline and just how things became so donor-centered... Oh man, I'm getting tired. I can feel it. I wonder if you can talk to us a little bit about the history of philanthropy and why when we're having conversations about philanthropy or nonprofits and how problematic their history and their foundation is, what that even means.
Christina Shimizu:
There's always a story you've never heard before. And when you think about like who's in your family, you might know your parents' story. You might not, honestly. You might know your grandparent's story or had the privilege to have met your grandparents or the privilege to have met or known your great-grandparents. But do you know your family story earlier than that? Are you connected to any history that's earlier than that?
Christina Shimizu:
When we think about philanthropy and when we think about nonprofits and the system of providing resources to our community right now, do we really think about how that came to be and how that was formed in the United States over time? And do we think about it as a political and economic system? And do we think about it as a cultural system, a culturally-informed system, and how are we critical of which culture is represented in that, which cultures are represented in that and which cultures are not? What forms of care, what forms of philanthropy are recognized as elite and forms of support that are worthy of awards and honors, versus forms of support that are undervalued or invisible labor like care work that mothers do, that women do, that communities of color do that is oftentimes invisibilized, never awarded, never properly resourced?
Michelle Shireen Muri:
So true.
Christina Shimizu:
And so when I talk about the political economy of philanthropy, what I'm really talking about is this practice that a philanthropy that is formalized right now, that kind of works hand in hand with the nonprofit industrial complex or the structure of how our nonprofits operate institutionally with philanthropy and with different private and public forms of funding to create the structure of what we call the nonprofit industrial complex and what that is rooted in. What forms of colonial power that turned into different economic policy, that turned into different tax code, that turned into this whole system, this whole structure that we experience today. And really understanding the root of it and how it evolved, I think, gives us a clear understanding of what it is that's working, what it is that isn't working, and how we can have some agency and some power in moving forward so that it can work better for our communities.
Michelle Shireen Muri:
Thank you. Talk to us about what that beginning was here in the United States.
Christina Shimizu:
The first foundation was established in 1907 by Margaret Olivia Slocum Sage, and she was the second wife of railroad baron Russell Sage. She inherited $70 million and she was able to form a foundation with it. And at the time... I like to reference actually the Wing Luke Museum again, because the current building that we're in right now was built by 130 migrant laborers, Chinese American laborers who worked on those railroads. But at that timeframe, there was the Chinese Exclusion Act that made it illegal for Asian Americans to own land. And so while Margaret owned multiple homes, multiple mansions and was able to amass this $70 million or more from the exploitation of labor and the ability to acquire land, our immigrant POC communities, whose labor was exploited for that money to be amassed, also were systematically excluded from being able to build wealth in other ways.
Christina Shimizu:
A lot of people, I think don't realize that there weren't... Philanthropy in the United States, it's like relatively new. The way that we have formalized our systems of community care in this country are like just a little bit over 100 years old as a system. So even now, when we think about the movement in defense of black lives and how activists are calling to defund the police to reinvest in community and reinvest in systems of community care that will actually address the needs in the community like additional mental health specialists, increases in housing opportunities, having people show up that have drug user health knowledge and support. Those systems have been structurally starved from the public sector, as opposed to the punitive systems, the criminal punishment systems, the policing systems, but also the way that they're developed in this nonprofit industrial complex, and then through other sources of funding like through either the public sector or the private sector and philanthropy, are also new.
Christina Shimizu:
Prior to the Civil War, we only had mutual aid networks where people would help out their neighbors. They would help out neighbors who they culturally thought... And this was in white culture. This is colonial white culture in the United States. They were women and children who were deemed as those who were deserving of help and support. Already, we're seeing kind of the early formation of our systems of care adopt this culture of paternalism and saviorism, adapt to the culture of the patriarchy. We must help protect these poor defenseless people who are women and children, and we are their protectors, we are their saviors.
Christina Shimizu:
And so then in 1907, the country is growing and it's expanding in its development of infrastructure, Russell Sage, a railroad baron dies and leaves his first wife... Sorry. Well, his second wife, $70 million and land and multiple properties. And with that, she's able to hoard that in the first foundation that's established in this country. And that is sort of the beginning of the nonprofit industrial complex. The date that is often cited, however, as the creation of the nonprofit industrial complex is actually 1913, when a Revenue Act is passed that creates this 501(c)(3) tax-exempt status for nonprofits. And then with that also implements an income tax mandate on high incomes. But although wealthy people in this country are now beginning to be taxed on their wealth, they also have this outlet, this avenue to still control through foundations how and where their money will be spent. So they still get to protect all of the decision-making power and social power that comes with having wealth and also not have it taxed.
Michelle Shireen Muri:
I'm hearing you say at the beginning already, pre-Civil War, there were mutual aid networks that were serving, who was deemed deserving. So certain groups of women and children of certain classes and races were deemed deserving. There were mutual aid networks for them. This is where we're starting to see, you said, the formation of this type of aid. You also alluded to kind of a starvation of the system. We didn't have social services that we needed. And the 501(c)(3) nonprofit status was created in 1913.
Christina Shimizu:
With the Revenue Act of 1913.
Michelle Shireen Muri:
So 501(c)(3) status was created in 1913 with that Revenue Act. We already are seeing people put their money away in these big tax shelters. What happens next?
Christina Shimizu:
Quickly, taking a step back to talk through that mutual aid work, where communities just set up networks of care between neighbors and from knowing their neighbors and from knowing what the individual needs of their communities were, this was also the precursor to labor unions. So there were also workers who set up mutual aid networks who would provide networks of care among coworkers and families. And this was essentially like a socialist ideology. Or another way of looking at the formation of the nonprofit industrial complex is that it co-opted and sanitized the values of organized labor and of these socialist values too, of making sure that laborers who were being exploited could get the care that they deserved and the care that they needed. And then move it through this paternal system of nonprofits and foundations where wealthy people were then given tax incentives and tax breaks to care for the poor and the poverty that they themselves created.
Michelle Shireen Muri:
I was just about to say what makes that relationship paternalistic?
Christina Shimizu:
The very fact that they're exploiting labor to begin with, creating poverty to begin with, and then given the power to determine the needs and the resources that these poor communities that they create have access to and getting to determine what that care looks like. And so what happens next?
Christina Shimizu:
In 1917, individual tax deductions that benefit the wealthier passed. And then in 1921, so in less than a decade, there are grant-making tax deductions that are passed as well that benefit wealth accumulation in private foundations. So now private foundations are able to... Or any grant-making institution is able to gain access to tax deductions just for holding wealth and being a grant-making institution. And so this was really before there were any regulations in place for disbursement. So if you were holding on to like $70 million at that time, and only granting out $5,000, and your money was still able to access interest or investments in the market, it would grow. It would sit there and it would grow, but you were not in any way accountable to dispersing or paying out that money back into the community. Those reforms wouldn't come in to play until 40 years later-
Michelle Shireen Muri:
Wow.
Christina Shimizu:
... in the 1960s.
Michelle Shireen Muri:
We're defining the problematic foundation of philanthropy on nonprofits with Christina Shimizu right now on The Ethical Rainmaker. What gaps exist in your knowledge? Hit us up at hello@theethicalrainmaker.com, or contact us through our website and socials. We'd love to hear from you. Do you enjoy the topics we're bringing you? The best way to support this pod is by subscribing, sharing with colleagues, and contributing to our new patreon. Learn more at theethicalrainmaker.com.
Michelle Shireen Muri:
When we're talking about wealth hoarding, this is actually what we're referring to. As a wealthy person at that time, and even now, you can put your money into one of these tools basically.
Christina Shimizu:
I think that this is the part that gets me really excited because people don't think of philanthropy as a political and economic system enough.
Michelle Shireen Muri:
Yes.
Christina Shimizu:
And that's exactly what it is. The donor-advised fund, the foundation, any type of planned giving. All of the different ways that as fundraisers we market the benefit of giving as a tax deduction is actually problematic in the sense that we're starving the public sector. We're creating this idea that taxes are bad. And in fact, taxes... If we thought about how we could democratically work to determine the best and highest needs of our community, our system can pay for and take care of itself. We can take care of our people. For me, our sector needs to dream way bigger than we're dreaming right now, because systemic poverty cannot be solved by a nonprofit that deals with harm reduction, that deals with trying to care for the immediate needs and the survival needs of people if we're not actually focused in on what our communities need in order to thrive.
Christina Shimizu:
One of my favorite mentors told me when I first started this work, that it is critical that anyone in nonprofits or in philanthropy or foundations, need to be working themselves out of a job. If we're not working ourselves out of a job, then what is it that we're doing? And what is it that we're doing this for if we can't envision a world that is truly beyond poverty and oppression, where our work is unneeded?
Michelle Shireen Muri:
That's really useful. And so I'm seeing the connection between what you were first talking about around actually this piece where the community had needs that weren't being taken care of. And some members of the community were being taken care of because they were deemed worthy of that, deserving of that, and others weren't. Philanthropy starts existing in an official tax code capacity. Nonprofits start existing to provide the services that aren't being provided to folks who need assistance. And charity becomes a tool, a system, where philanthropists have a lot of power in deciding how a community get served and what community gets served with the money that they're willing to donate to a nonprofit. Money that they have been hoarding, and in giving away, are sharing with the community and yet they also have major tax benefits that make it absolutely a benefit to them personally to be able to do that work. Yes?
Christina Shimizu:
Exactly. And another key component of this is that the wealth accumulation of these philanthropists happened through extractive economies. They were able to extract and exploit labor in order to accumulate wealth. They were able to extract and exploit land in order to accumulate wealth. They stole land from the first people of this country, the indigenous people of this country and committed genocide. They stole people from Africa and exploited slave labor. They exploited immigrant labor from China in order to build railroads. And so the first foundations and any type of wealth accumulation just by the very nature of the capitalist economy, but especially during this period of US colonization is tied to deep exploitation and direct exploitation of human beings. This neoliberal/neocolonial system of finance is a way that we can detach ourselves from thinking about how we still are very colonized and are able to colonize and exploit land and labor through financial systems. But that still happens today.
Michelle Shireen Muri:
We're talking with Christina Shimizu, a Co-founder of Community-Centric Fundraising, a Seattle-based political activist, philanthropy wonk, and fundraiser right now on The Ethical Rainmaker. Learn more about Christina in the show notes at theethicalrainmaker.com.
Michelle Shireen Muri:
We just went through the the first steps of that history, a beautiful analogy of what that looks like when we're working in the nonprofit sector, but do we unclog the sink, turn off the faucet or mop? And many of us are choosing to mop, which is like the pointlessness of some of the work that we're doing when we're not changing the system. You tied in socialism and labor unions to the beginning of the history, and you tied in what happens now is still happening. Do you feel like there's anything missing in that?
Christina Shimizu:
I will say that if we want to make change in our sector and in our lives, then it's critical that we start developing, that we start seeking out a political education that gives us an analysis of not only the history and political economy of philanthropy, but of our specific sector, like the work that we do and that it represents. If we can't talk about how it was born, what it was born from, then we're too zoomed in then on where we are now.
Christina Shimizu:
What exciting things might we find if we start doing some of that research and start building that in to-
Michelle Shireen Muri:
I love it.
Christina Shimizu:
... how we think about the way that we do our work?
Michelle Shireen Muri:
Totally true.
Christina Shimizu:
I really think that our country, I think that we have an existential crisis. We need to get real with ourselves and we haven't figured it out yet when it comes to who still is deserving of care? How much do we value care versus how much we value this idea of rugged individualism and being able to access wealth and prestige versus just caring for our community and caring for our collective need. And I think that what it really boils down to is that question, and it's just as easy as that. And it's, for me, been interesting to look and see how this has played out over time.
Christina Shimizu:
In post-war eras, there is this general sense was still very racist period, of course, in American history. There's this just general sense that we had to take care of each other. It was important to have economic policy and domestic social policies that invested in American people, invested in jobs, invested in healthcare, invested in education, invested in the idea of the American dream, which was that people could have homes and afford food on the table, blah, blah, blah, blah, blah. And clearly, that again, was not accessible to everyone in our community. The GI Bill made it so that like only white families were able to access funds to buy their first home. Red lining and exclusionary housing practices were still in place. So again, more white families were able to pass on generational wealth, while essentially ghettos were created in the United States where people of color were not allowed to have access to the resources that they needed to thrive.
Christina Shimizu:
And then we see in the '60, a deep analysis. Lyndon B. Johnson is the president and he wants to fight the war on poverty in America. But that's mostly because wealth inequality has kind of risen to this extent where now there are really, really poor whites. And so like, oh, there's really, really poor whites. We need to all of a sudden fight a war on poverty at home, but at the same time we were fighting a war in Vietnam. And so this too called the question around racial tensions, this was on the cusp of the civil rights' era, and this was on the cusp of a women's movement. And so all of these things were happening socially in the United States and that led us to a period of reforms in philanthropy, where finally, because people had a stronger collective analysis of wealth inequality and racialized wealth inequality, and a distrust of accumulated wealth and a distrust of how that money would be spent and a desire for more accountability, the Tax Reform Act of 1969 is passed that imposes the 6% payout rule.
Christina Shimizu:
And then there's the Revenue Act of 1963 that distinguishes between public and private foundations, because there's this distrust of private foundations. Are now desired to understand more oversight. And this period too is known as this period of modern liberalism, where generally there's strong political support for economic regulation of the economy. There is opposition of tax cuts. We want more money funneling into our public sphere in order to support the expansion of public programs. And so with that, is the expansion of the role of government if we have government playing a greater role in providing healthcare, providing education, and providing these social services that we need, housing to all to survive. And at the same time, there's an expansion of civil liberties. But this all gets reversed, and this is really important to note, and this could be an entirely separate podcast, but this all starts to reverse itself two decades later in the 1980s, really one decade... I mean, it's really like the '70s and '80s. Neoliberalism is incubated in think tanks in the United States and then rapidly expanded through policy throughout the '80s.
Michelle Shireen Muri:
And what is neoliberalism?
Christina Shimizu:
Neoliberalism is a political and economic philosophy that's basically the exact opposite of new deal and liberalism. It's basically deregulation, privatization and cutting taxes, but long format it's like not wanting any regulation on the economy.
Michelle Shireen Muri:
Got it.
Christina Shimizu:
That would be like environmental protections as an example, the privatization of things that are offered in the public sphere. So things like education and healthcare are no longer or even banks, public banks, state banks. That all of these should be operating in the competitive free market and not operated by government. So the role of government shrinks and then also cutting taxes. So creating more incentive for business to reinvest in itself, giving money back to businesses to reinvest in themselves and not toward government. And the idea many will say behind that is that it'll create jobs, but really what we're seeing is this uneven distribution of wealth, this uneven wealth accumulation, and the creation of many millionaires, many of whom live in our state, Washington State, because we do not have an income tax.
Michelle Shireen Muri:
Wow. That's awesome. I want it distilled for me in a way that you do it. Like where you enjoyed exploring it, and then I get to reap the rewards of your hard labor and research, and get to hear about it in a way that makes sense to me so that I can use it for all the things that I or we all need to use this information for. And it's so important, but also not all of us are a policy wonk nerds. So I'm really glad that you were here to give that background.
Michelle Shireen Muri:
Christina Shimizu is an activist, a fundraiser and co-founder of Community-Centric Fundraising. Learn more about her work in the show notes at theethicalrainmaker.com, or find her on LinkedIn.
Michelle Shireen Muri:
Kristy, thank you so much for taking this time and joining us today to explain these concepts.
Christina Shimizu:
Yeah, thank you for having me as a guest.
Michelle Shireen Muri:
That's it for The Ethical Rainmaker. I'm Michelle Shireen Muri. Thank you so much for being with us on this journey, deeper into the world of nonprofits and ethical fundraising. And in this case, the political economy of philanthropy. There's a lot of information for you to dig into in the show notes. Don't forget to subscribe to this podcast so we can count you in. And if you value these conversations and want to offer financial support, please check out our new patriot at theethicalrainmaker.com.
Michelle Shireen Muri:
The Ethical Rainmaker is produced and edited in Seattle, Washington, by Isaac Kaplan-Woolner, with socials by Rachelle Pierce. We're sponsored by my fundraising consulting collective, Freedom Conspiracy, and you can find us at freedom-conspiracy.com. A special thank you to Stephanie Anne Johnson and the Hidogs for letting us use their song, American Blues. That's it for The Ethical Rainmaker. See you in two weeks.
Michelle Shireen Muri:
(singing).