The Idea and the Uses of a Foundation, Part I

GUEST: Dr. Vartan Gregorian
AIR DATE: 12/17/2011
VTR: 11/03/2011

I’m Richard Heffner, your host on The Open Mind.

And however over the years I’ve chosen to characterize today’s guest by way of introducing him so many times to our viewers – “A man for all intellectual seasons” may be my favorite.

Yet I couldn’t possibly do better in looking to someone else’s artful phrasing concerning my quest than by going back a quarter century and quoting the very opening sentence of his compelling 1986 New Yorker Profile by that late wonderful writer Philip Hamburger.

“The New York Public Library houses many treasures,” Hamburger wrote, “but few are as colorful, complex and enigmatic, civilized and stimulating as Vartan Gregorian, its President and Chief Executive Officer”.

Now that was then, of course, this is now. And having earlier taught at Stanford, the University of Texas and the University of Pennsylvania, my guest went on from the New York Public Library to be President of Brown University … and, almost fifteen years ago, to become President of the prestigious Carnegie Corporation of New York … itself now very much into celebrating its centennial as prime among America’s great foundations.

Now I’ve told Vartan Gregorian that in this first of perhaps several programs marking Andrew Carnegie’s formative foundation gifts of a century ago, I would like first to engage him in the very essence and meaning of foundations themselves … somewhat as John Henry Cardinal Newman so very long ago and Clark Kerr not so very long ago, respectively discoursed on the Idea and the Uses of a University.

First, though, full disclosure: over the years, Carnegie Corporation of New York has been quite generous to this program as well as to the very idea of keeping an open mind on the air.

Also, Vartan Gregorian recently added a charming and learned up-to-date Afterword to my 1956 abridged edition of Tocqueville’s Democracy in America.

But now, let me turn to Dr. Gregorian ands ask him why a foundation? What was Andrew Carnegie thinking about in giving all of this money and was he right?

GREGORIAN: Well, what you have … in the 19th century we have for the first time the modern foundation. We’ve had many charitable organizations … church related … but nothing secular … foundation … looking forward to solve problems, to invest in institutions rather than maybe act for charity.

The … comprehend modern foundation … want to understand that there was differentiation made between charity, which all religions demand it, advise it and preach about it … and foundation which planned ways … trying to cope with the solution … provide solutions … that have created misery, illness and other ignorance, which charity tries to cope with or to have a solace.

There’s difference between pity and sympathy and the rational investment in solving societal problems.

That marked the foundation’s concept. Andrew Carnegie and John D. Rockefeller were the first ones to approach it as scientific philanthropy, rather than giving charity.

Philanthropy and foundations go hand in hand because what they try to do is to study, to invest and find solutions, so that the rest of society can emulate … governments can emulate.

When Andrew Carnegie started his foundation, he was involved, he did not do out of guilt. He did not do it out of vanity. He was fortunate enough and most foundations … people who create the modern foundations were from humble origins. So they were not doing it as representatives of capitalist class and they were not doing out of guilt, or out of craving for immortality.

They thought they were fortunate enough to be rich that that would welcome responsibilities … why Bible said “To those much is given, much is expected”.

But instead of giving it as a sympathy … said … well you give to a person … is hungry … give fish … but give a fishing rod … because the purpose of philanthropy is not to make people dependent, but rather independent and pride … models of solutions … rational, scientific … what there was available … commonsensical … idealistic, but commonsensical and practical solutions to many of the problems.

As Andrew Carnegie was fortunate enough to become very rich, also fortunate enough to have ideas how to invest that. In many ways he wanted to be … apply those of reason to those of giving. Hence foundations … modern foundations.

HEFFNER: To laws of giving or to laws of getting?

GREGORIAN: To laws of giving, and after you give, you also get results. And he was a maverick capitalist in many ways.

HEFFNER: What do you mean “a maverick capitalist”?

GREGORIAN: Maverick because his ideas were revolutionary … that such pronouncements, even today, shock people. Aristocracies like potatoes … the best part is underground. Don’t brag about you ancestors … who are you? What do you do? What did you do to deserve your ancestors? What are you doing to become an ancestor in the making? To learn.

Second, that trustees of capitalism … or trustees of public wealth … you have to reinvest, hence the line … those who die rich … the person who dies rich … dies disgraced.

Who did not have the imagination and desire, the humanity … reason … aspiration … ideally to reinvest in society. This … these were … 1890’s … dramatically revolutionary ideas at the time.

HEFFNER: You said Rockefeller and Carnegie.

GREGORIAN: Yes.

HEFFNER: Is this an American phenomenon?

GREGORIAN: Foundation … modern foundations dealing with societal issues is a modern phenomenon.

Several years ago I was asked to give a lecture at NYU to 25, 30 university presidents from Europe and elsewhere about fund raising.

And as I spoke, the President of the University of Amsterdam said, “You’re saying something which is illegal. I cannot go, raise private funding in Amsterdam. It’s against the law. Government’s obligation is to take care of education, culture, health and others. Not private sectors.” So he was telling me something … that not much is left in Europe for private volunteer, local organization … volunteer … civil, civil society … but is governmental obligation.

So similarly, when I went to Mexico to give a talk to Mexican millionaires … I learned for the first time that philanthropy is a bad word in many ways … if public … private sector want to do it … because lover of humanity is the state.

Charity belongs to the private sector, not philanthropy. Because where Mexico and others got rid of Spanish … other countries … got rid of Spanish rule … along with it, the church was downsized and minimized its role, in order not to interfere in state’s affairs.

So philanthropy there is applied to the state’s obligation rather than private sectors … its church.

HEFFNER: Now, now as you tell me this, Vartan, you’re smiling. You’re, you’re telling a good story. But what occurs to me … when I think of health care …

GREGORIAN: Yes.

HEFFNER: … and that I’ve learned that health care is better and greater in other parts of the world where, I gather, the state provides it. Is this totally a good thing this notion of “the state is the good guy …”

GREGORIAN: Yes … well, that’s the, that’s the irony of it. You know some of this … the other day I was talking to someone about tenure.

HEFFNER: That awful …

GREGORIAN: That awful word … and I said, you know, we owe it to Bismarck. Said, “What are you talking about?”

Bismarck wanted civil servants of Prussia and in to Germany to be independent, continuing body. So whatever government comes, you don’t replace all the civil servants, and so forth, through patronage.

He wanted a body of people, an institution, which will keep their role independent of government’s coming and going. So he made professors part of civil service. And civil service … also social security. We owe age 65 to Bismarck. Because not too many people lived to be 65 … so we’re guaranteed … I’m being facetious, now … so that was set to provide social security.

So it’s not a radical idea, it’s was a conservative idea to provide cohesion of society together. And, and, so in a sense, what I’m saying …European tradition … coming from French Revolution on … some of the issues that we’re debating were resolved after that. From French Revolution to Napoleon.

When Napoleon came, you can have church … religious schools side by side with secular schools, it does not matter. But you had to pass one examination, state examination, in order to get a degree … in entire France. State was accrediting you.

We could not have … we have all kinds of local and regional accrediting committees and so on … with no national norms. But France resolved, I’m trying to say, religious schools and secular schools, by making state validator of their … quality of their education.

HEFFNER: But the question I would ask you … I, I don’t mean to put you in an uncomfortable position as the President of …

GREGORIAN: Yes?

HEFFNER: … this great foundation. Does it take away, in a sense, the matter of private philanthropy in this country … foundations …

GREGORIAN: Yes.

HEFFNER: … great foundations, with great wealth and great things that they accomplish …

GREGORIAN: MmmHmm.

HEFFNER: … does it mean that the state has to do less than it should be doing? Less than it is doing in other parts of the world …

GREGORIAN: Well, we are … that’s a very good observation. We have been caught in two traditions. When your man, de Tocqueville, visited the United States, the role of Federal state was minimal. Everything was local … and he admired that. The spirit of volunteerism.

Many, many organizations right after the American Revolution there were tens, if not hundreds of local groups, associations and so on … so much so that George Washington, in his Farewell Address … complained about those organizations will not be responsible to any government … ah, they’re working on that.

But we’re not agrarian alone, we’re urban. We’re no longer 13, 20 million … we are 350 million. We fought two World Wars, not to mention others. We became superpower, so the role of State has increased, but so has the, the private sector.

One of the things you were asking about foundations … their centrality. Today we have 1.6 million non-profit institutions in the United States. 1.6 million, which makes Americans still involved locally, regionally, nationally, internationally … in their destiny … one out of 10 Americans have said this before.

If not on this show, in some other interview … one out of 10 or 11 Americans work for non-profit organizations. Annually, $350 billion dollars is given to philanthropy in this country and charity. Half of it, of course, goes to religious organizations and others.

There will be a $20 trillion dollar transfer of intergenerational wealth in the next decade or so. Of which $4 trillion may go to philanthropic purposes. So philanthropy has become primary … its flagship is America.

It has sunk into the ethos of America, encouraging localism, volunteerism, nationalism … everything you want involved in it. So that Andrew Carnegie can give $16,000 to McGill University at the time and result in the discovery of insulin.

Now in Europe you don’t go say, “Look, I’m going to tell the state to … don’t bother anything … I’m going to, to a private philanthropy to do this”. So, but now, Europe is moving toward our direction. In United Kingdom, Germany, France, Italy … there are European now foundation centers and so forth.

We are, in many ways, teaching them that when something comes locally, don’t wait for somebody to come … to rescue, but you have to do it … naturally health and others are big issues. Not enough of private wealth can take care of them, except doing some research, which we’re doing … founding universities, which John D. Rockefeller did … University of Chicago, the Rockefeller family … Rockefeller University, which is doing lots of research.

Andrew Carnegie … Carnegie Mellon … so this non-profit sector … or independent sector … it’s more than a non-profit sector … is part and parcel of the American ethos. So much so, that even since we’re entering into Presidential campaign … mark my word … right before election … every Presidential candidate will issue his level of his or her philanthropic giving.

It’s expected of Presidential candidates to show how good an American they are, by indicating the records of their giving … whether to religious organization or charitable organizations … they have to give.

And most of the giving also of these foundations … actually most of giving … comes not from the well-to-do alone, but also some 70% of it comes from people less than $50,000/$60,000 income … because the ethos of giving is part of the American psyche now.

HEFFNER: Now what role does it … do our income tax … does our income tax structure play in this?

GREGORIAN: Well, people in the past speculated that foundations were created in order to avoid taxation or to invest in their egos and so forth.

But most of the people we’re discussing … John D. Rockefeller, Andrew Carnegie, Fisk … many others … did it before there was income tax. They did it, ironically, because we have dismissed some of these people as vain people, as ego-centric people … they may have been.

But they’re also very thoughtful people. They read about America, they read about how a society can be re-organized. Otherwise foundations become mausoleums for them … for glory. But it’s not the case.

Andrew Carnegie was a very well read person. So much so and had such a (laugh) chutzpah, I should use since I’m here in New York … he tried to reform the English language.

Can you imagine? This billionaire wanted to simplify the English language. So whenever we publish something of his, we get corrections as if we were mistaken.

Why should “have” as h-a-v-e … idiot h-a-v … alone. Taught … t-o-o-t … rather than taught … it’s simplifying. He was interested in everything. He was interested in democracy, education being foundation and pillar of democracy and at the same time, democracy being about citizenship rather than a taxpayer.

Taxpayer is not a great thing. Taxpayer is wonderful for you, but you … you’re a taxpayer because you’re a citizen, enjoying the rights of this country and obligations for this country.

So Andrew Carnegie at the same time wanted people to become citizens, conscious citizens and help this democracy to succeed.

HEFFNER: Now, how can you, of all people leave out the question of libraries?

GREGORIAN: Well, libraries were the vehicles for educating public … in addition to libraries which you know very well, some 5,000 around the world … libraries … and 2,600 or so in this country.

He also, believe it or not gave away 7,000 church organs. Because he even went to that level of detail, that people who go to church may not understand, maybe bored … understand subtleties of a sermon … long sermon given by the priest or minister, but they would never miss the importance of organ to life their spirits … masses.

Recently somebody from England told me they have several thousand organs that he also gave in England for the churches and others.

So in the Centennial, I’ve been thinking how, under the aegis of Carnegie Hall we may give an organ recital in one of the largest churches or synagogues, wherever that we can find … and invite people to see how … over 10,000 organs in … every Sunday … if they still play organ in churches or synagogues … they could praise glory to God …

HEFFNER: In the …

GREGORIAN: … thanks to Andrew Carnegie’s munificence.

HEFFNER: Vartan, how weighty is his hand on Carnegie Corporation today and the other Carnegie?

GREGORIAN: That is a wonderful question you asked me because I just had to wrestle with this in another Conference, I came from Phoenix. He said words to this effect:

I believe in perpetual continuation of my foundations … in order to meet the needs of the times. So I trust Trustees to pursue and adapt as long as … they may not be always right, they may be even wrong, but sooner or later, when you have wealth, people may rise to the occasion … people who come in the ranks, to rise to the occasion … to justice, for what wealth will create.

HEFFNER: No dead hand, then?

GREGORIAN: No dead hand. Maybe dead man can get out, but no dead hand to … because he was visionary … he thought of everything. He thought of the fact that you can fail and you learn from your failure.

Unfortunately, many foundations in the past and even the present, they don’t think scientific … scientifically … in a sense … in science you do something … you don’t succeed … that’s a learning process. Failure is a learning process. Not as a … not making a habit of it. But learning not to repeat it.

And Andrew Carnegie was fully cognizant of that. So one of the first … Carnegie is one of the first foundations, if not the first … to have annual reports. Also believed in transparency because foundations have to enjoy the public’s trust. They should know what you’re doing.

HEFFNER: Do you think they do in this country today?

GREGORIAN: To do what?

HEFFNER: Enjoy the public’s trust?

GREGORIAN: Well, during times of crisis … economic crisis, there are three institutions that get attacked or questioned. One is our higher education … they don’t teach well, they don’t teach at all, and … how many hours …they spending in the classroom … until you say, “How many lawyers are in courtroom, how many hours?” They say, “We’re preparing workload”. But one can argue this. But that’s not … you want some targets to criticize for economic times.

Universities are one. Second, foundations .. they’re tax exempt … why can’t we tax all of them? Government can do better job than they’re doing … which is easy way of divert … divert attention from all problems. And the third one is, naturally, how our youth has become indifferent, ignorant and so forth.

Years ago when I was Provost of University of Pennsylvania I welcomed the 50th reunion class. And I read a charge … how this generation is uncaring, lousy and so forth, so on, so on and they were all nodding.

I said “This was editorial 50 years ago in your newspaper about your complaint about modern youth.” Those three forces, or three locations detract attention become good targets. But nobody approached them scientifically. Because governments cannot experiment … no politician will act to be in charge … having authorized something that failed.

Foundations are there to experiment, to, to think head, to demonstrate and then save effort in order to allow government to see which ones they could be able to adopt without possibility of failure.

And that’s why early childhood, for example, our foundation for thirty years … continues the study of early childhood. So it became part of American educational mantras … early childhood and government and every politician bought it.

And as the role is to demonstrate, to prove and then to give it as a gift to the nation or organizations to be able to build around it.

So foundations have an independent mission in many ways that compliments, does not compete with governments.

HEFFNER: Question … we just have two minutes left and then you promised you will sit there and we’ll do another program.

What grade would you give the great foundations of this country today?

GREGORIAN: I would give “B”.

HEFFNER: What happened to the “A”?

GREGORIAN: Well, “A” is individual foundations … I’ll give some of them “A”. Collectively, we have to be able to collaborate. That’s a new phenomenon for foundations to collaborate. And we have to find the ways in which to collaborate.

HEFFNER: You’re saying you haven’t as yet.

GREGORIAN: We have tried. Yes, we have success … we are successful the last couple of years … many foundations collaborating. But it’s not in the nature of the foundation to collaborate. Because you have your own mission, you know … your own Board. You have your own Presidents … they all have to succeed. Somehow, in the past … like universities … very little cooperation among universities in the past. Now they’re trying, some of them compete. Because when you collaborate people think you’re weak, otherwise why would you collaborate? Other is getting … but ironically we’re collaborating more with foreign universities than with each other.

Foreign university are a prestige … that I am … relationship with Beijing. But if I have a relation with Harvard, Yale, Princeton, Brown … and so forth … they would say “I don’t have good English Department, I’m trying to compliment”. I don’t have … but you know, as a professor, you yourself know this.

Collaboration is number one necessity now among foundations. Because it doesn’t matter who does it, who gets credit … what’s to be done is more important because our nation’s needs are a lot and we cannot afford waste.

HEFFNER: And that’s the point at which we end this program and I ask you not to move … so that we can do the next program immediately. Thanks, Vartan Gregorian.

GREGORIAN: You’re welcome. Thank you.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. Meanwhile, as another old friend used to say, “Good night and good luck.”

And do visit the Open Mind website at www.theopenmind.tv

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.