In the 1920s, America learned through painful experience that private philanthropy cannot address systemic problems at national scale, built the New Deal and Great Society on that principle for fifty years, and then deliberately returned to the earlier failed model. This raises urgent questions for addressing our current crisis – questions about the proper boundaries between public and private responsibility when government itself acts illiberally.

Introduction

A colleague at a community foundation recently told me: “We’re not going to philanthropy our way out of this crisis.”

At first, I took his point literally: foundations and donors cannot possibly match the loss of federal funding for nonprofits after Congress’s 2025 cuts. But I now realize there is more to it.

At critical times in American history, we have looked to private philanthropy to solve enormous national problems. It failed. Not because philanthropy was incompetent or insufficiently generous, but because solving systemic problems at national scale is not philanthropy’s role. Some problems are so large that only government can address them.

This is not a new insight. We learned it before. And then we forgot.

The Birth of Philanthropy

Industrial tycoons of the 1880s and 1890s invented modern philanthropy. Historian Olivier Zunz charts this transformation in his book: Philanthropy in America. Unlike traditional charity, titans like Carnegie and Rockefeller founded universities and created foundations. They applied business principles to social problems and rewrote state laws to allow flexible long-term giving.

These large general-purpose foundations succeeded through alliances between wealthy industrialists and experts from academia and government. They developed ideas while leaving implementation to grantees. Nonprofits sprang up to do this work. But these partnerships oriented toward funder priorities rather than community needs.

“Philanthropy would not be a democratic value if it remained the domain of the wealthy,” Zunz wrote. “Only when the rest of the population aligned its charitable habits to the systematic search for the common good would philanthropy become a national commitment.”

This insight was a driving force behind mass philanthropy. Workers already gave regularly to churches, lodges, and labor unions. Local fundraisers leveraged that existing culture of giving to organize around single causes – particularly tuberculosis. They created community chests that pooled resources from ordinary people. Critically, these community chests were independent of the super wealthy.

Middle-class donors pioneered another idea: the community foundation. Like industrialists’ foundations, these promoted the common good through giving targeted to local needs. With a goal of democratizing philanthropy, community foundations kept investment and decisions about distribution separate.

Both community chests and community foundations shared a founding principle: pooling resources across a broader community.

Learning from Failure

Government relied on large foundations and mass philanthropy to coordinate national responses to big challenges, particularly disaster relief during World War I and into the 1920s.

As Commerce Secretary, Herbert Hoover developed “ordered cooperation.” Think tanks would expand federal policymaking capacity. Private charities would execute federal policy under government direction – at no cost to government. The model initially succeeded at expanding healthcare and education into rural communities, particularly in the South.

But Hoover’s no-cost ordered cooperation failed precisely where democratic equity mattered most.

The 1927 Mississippi River flood displaced 700,000 people, including 330,000 African Americans. Hoover needed business and political elites to implement relief under federal coordination. This required accommodating their economic interests. And that meant the relief policy maintained the sharecropping system in the South. National Guard troops ensured displaced Black families returned to cotton fields rather than leaving for opportunities in the North.

Hoover’s model proved incapable of addressing the racial prejudice at the root of the problems philanthropy sought to solve.

Julius Rosenwald – a leading philanthropist – confronted President Hoover in 1929 about these limitations. He told Hoover that philanthropy could not substitute for government responsibility at scale. Harry Hopkins, who grew up in the philanthropic world and later had a key role implementing FDR’s New Deal policies, concluded that treating welfare as charity creates stigma. Moreover, he saw firsthand that philanthropy lacks coordination capacity for systemic problems. Hopkins adopted a scale-matching framework: local problems can use local partnerships, but national systemic problems require federal coordination.

In sum, New Deal reformers adopted three lessons from Hoover’s failed formula:

1. Private philanthropy cannot substitute for public authority when tackling major problems at scale.

2. Challenging racial hierarchy requires government tools that private organizations lack.

3. The federal government must not only recognize large social inequities. It must also provide the money.

In response to the Great Depression, the Roosevelt administration concluded that government and private philanthropy were increasingly incompatible on joint welfare ventures absent an explicitly shared vision of the common good. The federal government’s role was to step in on national issues, even where its response conflicted with local philanthropic priorities.

The liberal consensus that emerged in the 1930s was adopted as policy by Democratic and Republican presidencies until 1970: government should regulate business, provide a basic safety net, and invest in infrastructure. Government exists to promote freedom and human dignity through efforts to eliminate poverty and expand equality.

If the Depression proved that national problems require federal coordination, President Johnson’s Great Society applied the same principle to broader challenges: poverty, racial inequality, and consumer protection. With federal funding and national coordination, a vast nonprofit sector did most of the local work. The result: Forty million Americans were poor in 1960, but by 1969 that number had fallen to twenty-four million. “That prosperity was shared by white and nonwhite people more fully than ever before,” notes historian Heather Cox Richardson.

A decade later, America would change again.

The Reagan Reversal

The election of Ronald Reagan ushered in a new era that permanently transformed the nonprofit sector.

David Callahan’s The Givers describes how wealthy corporate elites in the 1970s poured money into conservative think tanks aiming to roll back federal expansion. Political strategists turned these values into electoral victories through what Richardson describes as “white resentment, racism, and this cowboy mentality that the individual perseveres despite the federal government, not because of it.”

Reagan’s 1981 tax bill slashed food stamps and cut school lunch funding. Budget cuts from 1981 to 1983 meant a $33 billion funding loss for nonprofits – a 20% reduction. A quarter of legal aid offices closed by 1983, even as the number of people qualifying for services increased 14.5%.

Yet the Reagan administration promised that private philanthropy would step in.

It never did. Because it never could.

Total private giving has been stuck at roughly 2% of GDP for decades. The scale of the cuts was too severe. Nevertheless, the need remained. By 1990, the number of nonprofits had doubled. They learned to do less with less.

From 1933 to 1980, as the economy expanded, the wealth gap narrowed. After 1981, despite continued economic growth, wealth concentrated dramatically upward. The share of national income flowing to the wealthiest 1% has tripled since 1980, while median wages have barely moved.

And the nonprofit sector is bigger than ever.

What History Teaches Us

We tried outsize reliance on philanthropy in the 1920s. It failed. Even some philanthropists saw that widespread systemic problems require public solutions. We built a system on that insight for 50 years. When it grew too large, rather than reform it, we returned to the old, failed model.

This history raises uncomfortable questions. If Hopkins was right – that the scope of intervention must match the scale of the problem – what does that mean for civil society today when the federal government itself acts illiberally?

But as I have been researching this history, another set of questions keeps surfacing. These questions concern not just whether philanthropy can address systemic problems at scale, but the political character of modern philanthropy itself. What does it mean when philanthropy increasingly comes from ultra-wealthy individuals whose giving has outsize influence over policy and public debate? If, as Zunz notes, philanthropy lacks democratic value if it remains the domain of the wealthy, is it wise to look to the wealthiest among us to lead us away from authoritarianism? How can philanthropy itself be reshaped and renewed to make it more democratic?

I am still working through these questions. I hope to explore them in a follow-up essay. For now, I am convinced of this much: the history suggests we need to revisit fundamental assumptions about the proper boundaries between public and private responsibility. And we must return to century-old questions about the role of concentrated wealth and philanthropic power in our democracy.

Sources & Open Tabs (what I’m reading / what’s influencing my thinking):

• Olivier Zunz, Philanthropy in America

• David Callahan, The Givers

• Heather Cox Richardson, Democracy Awakening

• The Chronicle of Philanthropy, For Nonprofits, Trump’s Cuts Echo Reagan Era, but With Striking Differences

Civil society serves as democracy’s immune system, but defending what we have isn’t enough. We need reform that strengthens nonprofits’ democratic functions while honestly examining the structural problems that weaken their effectiveness.

The Role of Civil Society in a Functioning Democracy

In a 2004 speech, political scientist Larry Diamond described civil society as the independent, voluntary, and pluralistic space essential for democratic governance. He was speaking to Iraqi NGO leaders in Baghdad soon after the fall of Saddam Hussein’s dictatorship. His message is just as true for the U.S. today.

As Diamond explained, nonprofits are the core of civil society. They are democracy’s immune system. They step in when government fails to act. Nonprofits provide expertise when government does not know how to act. They hold officials accountable by filing lawsuits, advocating for new laws, and shedding light on decision-making. Diamond’s framework focused primarily on nonprofits’ responsive and protective roles.

But nonprofits do not just patch holes when government falls short. They make our shared spaces – our physical, digital, and civic commons – stronger, more inclusive, and more alive.

If civil society (and the nonprofit sector that animates it) is supposed to serve these democratic functions, we need to honestly examine whether it is actually doing so effectively.

America’s Vanishing Commons

I often think of civil society as caretakers of the commons. The problem is our civic and social commons are disappearing.

The unbundling of everything, as Eric Liu described it, has benefits. We have more choice in picking our news and music. How we get around town. Even how we identify ourselves. But technology and globalization have broken apart the social contracts that once held us together. Many of us are left with unstable jobs, distant brands calling the shots, and little say in the systems that shape our lives.

Americans are increasingly polarized. We are clustered into like-minded communities, where it is easy to caricature and distrust one another. It is harder to act together as a democratic public. Social media platforms promised to bring people together online but have failed to deliver. Without places where citizens meet as equals, democracy becomes impossible.

What started as a steady erosion of the commons from corporate interests is now a direct attack on civil society by the Administration. When nonprofits lose funding, real people lose access to healthcare, food assistance, and family support. But they also lose the civic infrastructure these organizations provide. Community health centers where neighbors meet. Food banks that anchor volunteer networks. Family service agencies that connect isolated residents to broader community life.

Wrestling with Uncomfortable Questions

This brings me to some challenging questions raised by Daniel Stid in a thought-provoking essay that has really stuck with me. I’m grateful for Stid’s framework. It has pushed my thinking in important ways. His argument that many civil society institutions have become “nakedly partisan actors subsumed by political goals” and “engines of polarization” deserves serious consideration. Civil society cannot be caretakers of the commons if it is inadvertently fueling the fire that is burning all around us. He suggests we need to “remake civil society so that it is worth defending,” and, while I agree, I nevertheless find myself wrestling with what that means in practice.

I am still sitting with Stid’s critique. Still trying it on. And honestly, I am not sure where I land yet.

On one hand, I have seen how some organizations operate as partisan actors while claiming non-partisan missions.[1] I see how this can tarnish the independence that should ground public trust in the nonprofit sector. I also see merit in Stid’s concern that organizations are increasingly polarizing in ways that turn off less-engaged citizens who might otherwise join pro-democracy efforts. If civil society alienates the very people it needs to reach, it undermines its own mission and purpose.

On the other hand, I worry that Stid makes too broad a claim. “If civil society weakens or twists too far in one direction or another,” he writes, “a liberal democracy is as much at risk of toppling as it would be if its government and politics or economy go haywire.” Yes, there may be instances of partisanship and/or polarization in some corners of civil society. That this partisanship and polarization within civil society poses the same threat to liberal democracy as an authoritarian government seems unfair. And I am reminded of the “special interests” rhetoric that frames nonprofits as partisan actors and echoes historical attacks on collective action. As historian Heather Cox Richardson documents, this language has been used for decades to delegitimize organizations that challenge concentrated power. Stid, in effect, is arguing that many parts of civil society feed into that rhetoric by playing to type. Maybe. I’m still sitting with that critique.

Here is what I keep coming back to: Basic democratic functions – like ensuring voting access or holding government accountable – have been reframed as partisan positions. When one political party attacks democracy itself, defending democracy inevitably appears partisan. Nonprofits monitoring constitutional boundaries face legal threats and loss of government funding. Groups everywhere fear losing their tax-exempt status for failing to support the President’s views and political agenda.

Is this systematic suppression of democracy’s immune system? Or have too many organizations abandoned their democratic role for partisan gain?

These are the kinds of questions that make Stid’s essay so valuable. It forces uncomfortable but necessary self-examination. These questions matter because we cannot solve problems we have not properly diagnosed. If civil society is struggling to fulfill its democratic functions – whether due to external suppression, internal structural deficiencies, or both – then simply defending civil society as it exists may preserve the very problems that limit institutions’ effectiveness.

Beyond Defense

Understanding these challenges helps clarify what reform might look like. Rather than just defending democracy and the role of civil society as it exists today, we need to expand it.

In fact, our history is filled with examples of democracy as an exercise in experimentation. Civil society does not just respond to threats or tend to existing commons. It innovates. It experiments with new forms of democratic participation. It creates new commons to expand the reach of democracy. Settlement houses modeled what government social programs could become. Community organizing developed new forms of civic engagement. Mutual aid networks created alternative economic relationships. Looking to our past, we can see that innovation becomes essential in moments like this one.

This innovator role for civil society is more forward-looking than reactive. It’s about creating new ways of doing democracy. By testing ideas like citizen assemblies, participatory budgeting, or deliberative polling. By creating new digital platforms for civic engagement. Through grassroots experiments in governance or accountability.

Three Paths Forward

This crisis forces a choice about where to focus our energy and resources. I see three approaches: resilience, reform, or revolution.

Resilience: Protect what we have. Resist. Anti-authoritarian litigation has exposed egregious policies and prevented worse outcomes. Without this defensive work, things would be far worse for democracy and the nonprofit sector.

Reform: Treat this crisis as an opportunity to fix underlying problems by reimagining civil society’s role in democracy. Turn negative into positive. This means strengthening the immune system rather than just treating symptoms.

Revolution: Start from scratch because our liberal democracy is fundamentally broken. Examining civil society’s role becomes pointless if institutions won’t survive.

I belong in the reform camp, though I recognize we need resilience too – there is nothing to reform if there is nothing of democracy left. As Scot Nakagawa observes, too often pro-democracy forces act as if our democracy were a finished project under attack rather than an unfinished work waiting to be completed.

Nakagawa reminds us that the democracy we inherited was built with tools of exclusion. Every expansion of democratic participation required breaking existing rules, not defending them. Civil society’s role is creating what democracy could become, not just preserving what it was.

I am encouraged to find thinkers from different worldviews – Stid and Nakagawa – reaching similar conclusions about the need for reform. Despite our different starting points, we all see reform as the path forward. The reform camp must be a big tent that includes voices from across the political spectrum. As Stid says, “if we are going to revitalize the liberal democratic project in the U.S., associations and leaders in civil society must lead the way.”

Reform means building civil society that can fulfill its democratic functions effectively while addressing the legitimate concerns Stid raises. It means moving from defensive positioning to democratic innovation. It means leaning into the idea of America’s liberal democracy as a work in progress.

That is work worth defending. Worth reforming and rethinking. That is work worth funding and investment and organizing around. Because our democracy cannot survive without.

Sources & open tabs (what I’m reading / what’s influencing my thinking):

• Larry Diamond, “What Civil Society Can Do to Develop Democracy” (Presentation to NGO Leaders, February 10, 2004, Convention Center, Baghdad)

• Eric Liu, You’re More Powerful Than You Think

• Daniel Stid, The Art of Association: Civil Society and the Liberal Democratic Project

• Daniel Stid, Taking Democracy for Granted

• Scot Nakagawa, The Anti-Authoritarian Playbook: Beyond Resistance

• Heather Cox Richardson, Democracy Awakening

• Olivier Zunz, Philanthropy in America

[1] Calling for nonprofits and civil society institutions to maintain their non-partisanship should not be confused with calling for them to remain apolitical. Nonprofit missions and viewpoints naturally intersect with policy. Fulfilling those missions is at times unavoidably political. As Olivier Zunz documents, the original regulatory framework requiring nonprofits to have an educational purpose while remaining apolitical was flawed from the start. This framework emerged from political battles in the 1930s rather than coherent policy principles – and it is worth reconsideration. I hope to further flesh this out in a future Substack post.

The systematic defunding of the nonprofit sector has created a forced evolution moment for American democracy’s immune system, raising fundamental questions about whether philanthropic resources can sustain civil society when real democratic reform might threaten the wealth that funds that very work.

Introduction

Something is happening right now, and I keep thinking about it. I bet you are too.

The federal government is pulling back from its role in ensuring basic social welfare. Not gradually. Not through careful policy debates. Wholesale. Overnight, billions in funding to nonprofits worldwide disappeared. Domestically, an estimated 2.8 million nonprofit jobs are at risk as organizations exhaust their reserves. The Trump administration slashed nearly $400 million in AmeriCorps grants alone, shutting down over 1,000 programs and eliminating 32,000 jobs. A federal court recently ordered much of AmeriCorps’ funding restored, but countless smaller organizations do not have the resources to wage the costly litigation required to save their federal funding.

Flagship nonprofit organizations that have operated for decades are closing their doors within weeks. Many more are merging with other nonprofits just to keep the lights on. Too many nonprofit leaders seem to be in denial about whether their organizations will make it to the end of the year.

State governments are scrambling to fill gaps they cannot possibly fill. They have lost federal funding too. Some are now banding together to safeguard vaccine access – an area normally overseen by the CDC before MAHA radicals within HHS dismantled it – which requires taking money from other priorities. But state governments face their own revenue-raising constraints. The math simply does not work.

Meanwhile, many foundations are giving emergency grants. They are redirecting money toward pro-democracy organizations. Funding litigation against administration policies. Building what they call “anti-authoritarian resilience.”

This reminds me of 2008 and 2020 – global shocks when philanthropy stepped up during crisis. But this is different. In those instances, the U.S. government stepped up too. This time, the U.S. government is causing the crisis. The underlying issues are bigger. More fundamental. More urgent. And definitely more political.

Democracy’s Immune System Under Attack

Most people think nonprofits just provide services: feed hungry people, help homeless families, provide healthcare. That is important work. But nonprofits do much more.

They fill advocacy gaps when government should act but will not. They fill innovation gaps when government could act but does not know how. They provide accountability, holding government to its promises. They expand democracy itself by creating new ways for people to participate in civic life.

When American democracy is under attack, nonprofits become democracy’s immune system. But what happens when that immune system is systematically defunded?

The Money Problem

Here is the stark reality: The nonprofit sector had estimated revenues of over $2.6 trillion before these cuts. Government provides huge chunks of that money through grants and contracts. Private philanthropy gives about $450 billion annually.

Philanthropy cannot replace government funding. Not even close.

This creates a forced evolution moment. The nonprofit sector cannot do the same work with dramatically less money. Strategic decisions about what to keep and what to abandon become matters of survival.

That was true before this summer’s One Big Beautiful Bill reduced tax incentives for charitable donations. Many wealthy donors are now hesitating. They are waiting to see the effects of the recent tax changes before committing large sums.

The Carnegie Contradiction

Here is what I cannot figure out: What happens when the emergency money runs out?

New initiatives targeting nonprofit resiliency have funding for maybe 12, 18, or 24 months. Then what? Will major philanthropic institutions stay committed to this work for the long haul? What about smaller family foundations that recently entered the pro-democracy space?

And here is the really uncomfortable question: What happens when rebuilding democracy requires tough conversations about wealth concentration? When the reforms needed most directly affect the fortunes of the people funding the reform work?

I keep coming back to this structural tension. Nonprofits need philanthropic resources to defend democracy. But those resources come from people who benefit from the very systems that may require fundamental change. The same extreme wealth inequality that created today’s philanthropic resources also created the conditions for American authoritarianism. Nonprofits need those philanthropic dollars to fight for democracy. But real democratic reform might threaten the systems that generate philanthropic wealth.

Andrew Carnegie illustrated this contradiction perfectly. He championed philanthropy while opposing democratic participation by poor people. He trusted his own judgment about what communities needed more than he trusted their own voices. Modern philanthropy operates differently but faces the same basic tension.

There is an important society-wide conversation needed about the role of wealth-inequality in causing the current crisis in American democracy, and whether American democracy can be reformed. Some believe wealthy philanthropists may support democratic and social reform up to the point where it threatens elite power. Some see capitalism as inherently incompatible with the promise of equality – particularly racial equality – in a multi-ethnic society. Because of this tension, some would-be reformers see revolution as the only way forward. Are they right?

The Herding Cats Problem

Then there is the coordination challenge. As a colleague reminded me recently, “philanthropy” is not a single entity making strategic decisions. It is thousands of individual donors, family foundations, and institutional funders making independent choices. Coordination between philanthropies with shared priorities has often proven ineffective. Some are funding direct services. Others are funding litigation. Still others are supporting grassroots organizing.

Is anyone thinking about how these pieces fit together? Is anyone asking whether our current approach can actually work over the timeline that democratic renewal requires?

What I Want to Explore

This is not the first time American democracy has faced existential crisis. Heather Cox Richardson’s excellent Democracy Awakening describes how previous major democratic expansions – Lincoln Republicanism, the New Deal liberal consensus, the Great Society – redefined the role and responsibility of government. Each major expansion was followed by systematic rollback by powerful interests. With each rollback, excluded communities organized and pushed further for change and democratic renewal. They created the networks and institutions to do the heavy lifting. The nonprofit sector plays that role today.

Maybe we are entering yet another iteration of American democracy. Maybe this crisis will force evolution that makes civil society more democratically effective than what existed before.

But that depends on whether we are asking the right questions now, while we still have some choice in how this plays out.

To be honest, I don’t know where all of this is headed. I am not ready to offer conclusions. I am still working my way through these issues. I am still gathering ideas. Still connecting dots. Still figuring out which dots matter most.

That is why I am starting this newsletter. I want to think out loud about these questions with people who care about the same issues.

Some areas I plan to explore:

• How resource scarcity might force innovation that preserves and strengthens civil society and American democracy long-term.

• What we can learn from historical moments when our democracy was under threat.

• Whether philanthropic dependence affects nonprofit independence in ways we have not fully acknowledged.

• How the nonprofit sector might evolve toward shared infrastructure and strategic coordination.

• What it means for civil society when government systematically withdraws from public welfare.

• How we should define the role of government and the role of civil society.

An Invitation

I am not interested in partisan point-scoring. I am not trying to attack philanthropy or defend it. I want to understand how these systems work and how they might work better during a period of unprecedented challenge.

If you work in nonprofits, I want to know what you are seeing on the ground. If you work in philanthropy, I want to understand how you are thinking about these trade-offs. If you study these issues, I want to learn from your research.

Most importantly, if you think I am asking the wrong questions entirely, I want to hear that too.

This will be a long-term exploration. To start, I will probably post something every couple of weeks or so as my thinking develops. The goal is not to solve these problems quickly. The goal is to think about them clearly enough that better solutions become possible.

Are you interested in coming along for this journey?

What questions would you add to this list? What am I missing? Hit reply and let me know.

Sources & Open Tabs (what I’m reading / what’s influencing my thinking):

• Heather Cox Richardson, Democracy Awakening

• Olivier Zunz, Philanthropy in America

• Anand Giridharadas, Winners Take All

• Scot Nakagawa, The Anti-Authoritarian Playbook

• The Chronicle of Philanthropy, What We Know — and Don’t Know — About the Nonprofit Layoff Crisis

• The Chronicle of Philanthropy, The Government Was Once a Steady Partner for Nonprofits. That’s Changing

• Inside Philanthropy, Civic & Democracy Grants for Nonprofits