A Brief History of Philanthropy in the United States

Philanthropy and charitable giving are not universally global phenomena across all countries and cultures. Here in the U.S., they have origins in religion, in the idea of mutual assistance, in democratic principles of civic participation, in the acceptance of decentralized and varied approaches to problem solving, in individualism, and in limited government.

With harsh conditions and a weak, distant government in early North America, early settlers joined together not only for the purpose of law and order, but also to help each other and to undertake activities -- such as fighting fires and building schools and churches – aimed at mutual benefit and protection. These kinds of experiences eventually produced a bubbling tradition of citizen action, individual efforts, and the formation of groups to promote the common good. Later, as waves of immigration began in the 19th century, newly arrived Americans used their churches and formed their own associations to support each other and to help the poor among them.

Philanthropic tradition in the United States is not merely the result of the evolution of attitudes and actions of the country’s white settlers, however. Native Americans and African Americans also had deeply rooted giving practices within their own cultures.

Influences of Religion & Civil War

The religious roots of American philanthropy are particularly strong. Religious leaders encouraged their congregations toward charitable behaviors. And so churches instilled in their members a sense of obligation to help the poor and needy (here and in other lands), and assist victims of natural disasters. For many, though by no means all, religious belief is still an important source of philanthropic endeavor.

A number of individuals and organizations stand out in the history of philanthropy in America.
Volunteers called it "begging" when, in 1643, Harvard conducted what is believed to be our first recorded fund drive. It raised 500 pounds and was thought a "great success."

Benjamin Franklin was an early and important embodiment of good works for the public welfare. He made donations to improve his community and to provide opportunities for people to help themselves. He founded local civic organizations large and small -- the volunteer fire company, the Pennsylvania hospital, the University of Pennsylvania and the Philadelphia public library.

Out of the civil war, a nation of diverse people, nationalities and cultures bound by shared tragedy, tested whether their "nation or any nation so conceived... could long endure." Separately but simultaneously, on both sides of the contest, armies of volunteers sold bonds and gathered contributions hoping for resolution.
These kinds of fundraising efforts introduced a process that, during the great wars of the 20th century helped galvanize the nation while formalizing and popularizing charity as fundamental to the American social conscience. And ultimately, the income tax Abraham Lincoln instituted to finance the Union's preservation grew to such an extent that exemptions from it now encourage charity—particularly among the wealthy.

The Wealthiest Re-Structure Philanthropy

Philanthropy remained an important but limited force until the early 20th century when it became harnessed to large-scale efforts at combating social problems, conducting research and promoting science.

One of the early proponents of modern philanthropy was the famously successful industrialist Andrew Carnegie. For Carnegie, individuals "won" wealth as a result of "survival of the fittest" through the forces of competition. With that wealth, he believed, came the obligations of being an agent of civilization. And so philanthropy became a tool for improving civilization. That it was also a tool for blunting radical reforms is noteworthy. Carnegie’s philanthropy included public libraries and other agencies providing the means by which people could pull themselves up by their own bootstraps and become more "fit" in the competitive landscape.

Carnegie prepared the way for oil magnate John D. Rockefeller, Sr., who in 1891 hired staff to help manage his philanthropic enterprises. The state of New York chartered the Rockefeller Foundation in 1913, but only after the U.S. Congress refused to do so.

Along with Carnegie and Rockefeller in the early 20th century, several civic and business leaders structured their philanthropy according to a corporate model. It seemed natural to use the familiar model of the corporations that provided the structure for their own personal success.

The new corporate organizational structure applied to philanthropy permitted more flexibility than charitable trusts, then the traditional mode of giving featured in English law. These new "foundations," were not necessarily designed to help people directly. Instead, they were to be the scientific instruments of reform and problem solving, and would address the root causes of poverty, hunger and disease.

The Roles of Optimism, Tax Breaks

This idea of systematic, scientific philanthropy is a product of an optimism and faith in the ability of science and reason to solve all human problems. It is actually the rationale for modern American foundations.

Pressured by an increasingly charitable America and the increasingly obvious need for charity in a booming post war economy, legislation in 1921 finally brought tax relief in exchange for personal giving. Corporate foundations came later and not until the concept of giving by businesses was resolved under United States law in 1935. Corporate foundations grew at a rapid rate during the 1940s, an era of high profits and high tax levels.

Today

Prompted by a combination of growing wealth, tax breaks, a sense of gratitude, and a burning desire to create a better world, giving in America has increased steadily.

The long history of philanthropy in the United States is now so deeply rooted in our national psyche it is as through "giving generously" even "at the office" has become infused in the American genetic code.

Around this, an entire industry has grown, but one rivaled by the growing influence of individual American donors of modest means. Grassroots contributors, many of them spurred by on-the-job fund-raising campaigns, have poured tens of billions of dollars into causes as diverse as the arts, social activism, disaster relief and education. Today, there are probably close to 1 million charitable tax-exempt organizations, employing full-time staff by the tens of millions, generating trillions in charitable assets and supported by the charity of over 100,000 private foundations and the volunteer efforts of more than 90 percent of our adult population.

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(Sources: The Council on Foundations; "Donors Big and Small Propelled Philanthropy in the 20th Century," Thomas J. Billitteri. The Chronicle of Philanthropy, January 13, 2000; Brief History of Philanthropy in America, Arizona Grant Makers Forum.)