Not Just Another Recession
Why the Global Economy May Never Be the Same
The world is experiencing a realignment unlike any other since the end of World War II. Nationalism and populism are surging in the United States and Europe, at the expense of liberal internationalism and democratic values. This poses a challenge to a wide range of institutions, including philanthropies committed to international development and social justice. Such foundations played a crucial role in building the liberal international order that has come under assault in recent years, and that the United States seems less willing to defend than ever before.
During much of the last century, philanthropic foundations based in the United States exported American ideals about democracy, market economies, and civil society. That mission was made possible by ideological support from and alignment with the U.S. government, which, in turn, imbued foundations with prestige and influence as they operated around the world. American philanthropies such as the Ford Foundation can no longer count on such support. Nor can they be sure that the goals of increased equality, the advancement of human rights, and the promotion of democracy will find backing in Washington.
As U.S. leadership of the global order falters, American foundations must blaze a new path. The first step will be recognizing difficult truths about their history. The old order they helped forge was successful in many ways but also suffered from fundamental flaws, including the fact that it often privileged the ideas and institutions in prosperous Western countries and failed to foster equitable growth and stability in poorer countries. For all the good that American philanthropies have done, they have also helped perpetuate a system that produces far too much inequality. Their task today is to contribute to the construction of a new, improved order, one that is more just and sustainable than its predecessor.
Although it was founded in 1936, prior to World War II, the Ford Foundation as it exists today took shape mostly in the war’s aftermath. The social and political upheaval that the war left in its wake and the widespread anxiety about future conflict colored every decision the foundation made from 1950 onward.
The foundation was chartered in Michigan by Henry Ford’s son, Edsel, and was designed in part to protect the Ford family’s estate from new federal inheritance taxes. In its early years, the foundation was a modest organization that funded projects of interest to the Ford family. But the war, along with the deaths of Edsel Ford, in 1943, and his father, in 1947, fueled the foundation’s transformation into a global actor.
Their bequests to the foundation totaled nearly 90 percent of the stock of the Ford Motor Company and created an endowment that was valued officially at $417 million in 1954 but was likely much larger. (A 1955 New Yorker article put the number, based on Ford Motor Company earnings, at closer to $2.5 billion, or $23.6 billion in today’s dollars.) That wealth made the foundation the largest philanthropy in the world, overtaking older institutions such as the Carnegie Corporation and the Rockefeller Foundation.
In 1948, Edsel Ford’s eldest son, Henry Ford II, asked the lawyer and investment banker H. Rowan Gaither to lead a study to determine what the foundation should do. Gaither’s team collected input from a wide range of figures across the American establishment, from Dwight Eisenhower to Walt Disney. Its report recommended that the organization commit itself to human welfare through, first and foremost, “the establishment of peace,” a lofty goal that could be achieved only by international cooperation and global economic development. This mission aligned perfectly with Washington’s push to construct a liberal order backed by U.S. military power and composed of alliances such as NATO, multilateral organizations such as the International Monetary Fund and the UN, and trade agreements such as the General Agreement on Tariffs and Trade. In embracing this emerging order, the Ford Foundation was hardly alone among the philanthropic set: the Rockefeller family, for example, had helped secure land for the un headquarters and facilitated the 1944 Bretton Woods conference, which led to the creation of the IMF.
To define the foundation’s role in the emerging order, Ford turned to some of the order’s most influential shapers. The first person from outside the Ford family to serve as president of the foundation was Paul Hoffman, who took charge in 1950 after having overseen the execution of the Marshall Plan in postwar Europe. To Hoffman, the foundation’s mission represented, in a sense, a global extension of the Marshall Plan’s goals: to foster democratic institutions and free markets, ward off the spread of communism, prevent the return of fascism, and secure American influence abroad. Hoffman toured the world, identifying projects to fund in democracies that Ford and the U.S. government deemed essential. Hoffman’s goals were to mitigate global tensions, develop understanding among peoples, strengthen international institutions such as the UN, and improve how the United States engaged in global affairs.
Other boldface names served in important positions at Ford, creating a revolving door between the foundation and the highest levels of the U.S. government. In 1950, George Kennan, the author of the famous “Long Telegram” (and a related, seminal article titled “The Sources of Soviet Conduct,” published pseudonymously in this magazine in 1947), took a leave from the State Department, during which he advised the foundation on its early programming and worked on a Ford-funded project to create, in his words, “a more up-to-date, more realistic concept of the objectives of American foreign policy: that is, what the American government ought to be trying to achieve in its foreign policies.” In 1952, John McCloy, after having served as U.S. assistant secretary of war, U.S. high commissioner for Germany, and the first president of the World Bank, was tasked by Hoffman with investigating “the conditions of peace”—a project that led to the foundation’s support of the Council on Foreign Relations (which publishes Foreign Affairs) and of organizations such as the Brookings Institution and the International Institute for Strategic Studies. McCloy later served as chair of the foundation’s board, from 1958 to 1965.
The cozy relationship between Ford and the U.S. government would eventually draw a fair amount of criticism, particularly when it came to the foundation’s influence on American foreign policy. John Howard, a staff member who accompanied Hoffman on his world tour, remarked that in India, “there was already suspicion that the foundations were just arms of the State Department; [Indian commentators] could never make the distinction between State and the Ford Foundation.” At the same time, critics in India and Latin America accused the foundation of entanglement with the cia. It’s easy to imagine how their interests might have converged during that period, given the close relationship between the foundation and the U.S. government. Nonetheless, efforts were made to ensure that, as Francis Sutton, a foundation official, wrote, “the CIA was kept at a prudent distance.”
Ford’s critics in Washington were more concerned with the foundation’s domestic programs than with its international ones. In the early 1950s, the U.S. House of Representatives’ Select Committee to Investigate Tax-Exempt Foundations and Comparable Organizations (known as the Cox Committee, after Representative Edward Cox, a Democrat from Georgia) sought to discover whether such foundations were using their resources for “un-American and subversive activities.” In a familiar Cold War paradox, some accused Ford and other foundations of being agents of American imperialism, and others accused them of being secret Soviet sympathizers.
As the Cold War intensified, alignment between the U.S. government and major U.S. foundations became a de facto alliance against communism, which both official Washington and its philanthropic allies saw as a major threat to peace and to their joint mission. A memo from Hoffman’s very first board meeting, in January 1951, makes clear that “the main danger of war stems from tension between the East, led by the Soviet Union, and the West, led by the United States.” According to Howard, Hoffman’s visits to places such as India and Pakistan stemmed from a “Cold War philosophy.” Although Hoffman “didn’t speak like a Cold War warrior,” Howard later recalled, “the mere choice of the underbelly of China was in the same genre of thinking.”
A foundation annual report from 1953 stated that the Ford Foundation would work “only in those nations whose political philosophy and objectives, if sustained or achieved, are incompatible with Communism.” Throughout the 1950s and 1960s, Ford invested millions of dollars to build state capacity in emerging democracies in Africa, Latin America, and Southeast Asia. The foundation established its first international office in New Delhi in 1952, in part due to concerns that intense poverty would imperil the newly democratic and independent India by giving communists an opening.
Fighting communism and promoting democracy through massive poverty-reduction initiatives became a mainstay of Cold War–era U.S. philanthropy. Beginning in the late 1950s, for instance, Ford collaborated with the Rockefeller Foundation to support what became known as the green revolution, helping to build and fund institutions focused on agricultural research all over the world. Vastly improving agricultural output, these efforts saved hundreds of millions—perhaps billions—of lives and helped lift millions more out of destitution.
Many of Ford’s activities abroad involved connecting foreign government officials with American academics and experts, who could aid postcolonial democracies in crafting plans for economic development and institutional reform. The foundation also trained foreign civil servants in fields such as business, finance, law, management, and urban planning. The Ford Foundation followed in the Rockefeller Foundation’s footsteps by building academic centers abroad and creating exchange programs for policymakers and academics. By the late 1970s, Ford had invested $450 million (approximately $1.7 billon in today’s dollars) in these programs.
In 1968, in coordination with the State Department, the foundation formalized these activities in the International Research and Exchanges Board, which became extraordinarily influential in places such as Hungary and Poland, and even in the Soviet Union itself. It also sought to consolidate postwar democratic gains in Western Europe. The origins of the European Union can be traced back to grants from Ford and other American foundations, which funded scholarly research on European integration in the early 1950s, the work of the French diplomat Jean Monnet (one of the founding fathers of the EU), and a series of conferences for young leaders from across the continent who wanted to forge a common European identity.
Through these kinds of projects, the foundation trained and supported a generation of civil servants, diplomats, and leaders around the world, thousands of whom went on to achieve great things—most notably the late UN Secretary-General Kofi Annan. Some, however, later served repressive, even violent regimes. These include a number of Indonesian economists at the University of California, Berkeley, who became known as “the Berkeley Mafia” when they went to work for Suharto’s dictatorship. Ford also helped train the so-called Chicago Boys, a group of Chilean economists who were educated at the University of Chicago with the help of Ford grants and who later joined the authoritarian government of Augusto Pinochet. These kinds of outcomes serve as reminders that foundations such as Ford do not have complete control over the downstream impact of their grants. Inevitably, some funding will have unintended consequences and confounding results.
Pinochet’s rise was part of a larger turning point for the Ford Foundation in the late 1960s and the first half of the 1970s. In democracies across Latin America in which the foundation operated—not only Chile but also Argentina and Brazil—right-wing autocrats came to power, often with Washington’s direct or tacit backing. Ford could no longer work closely with those governments and had to find new approaches to supporting democratic ideals there. It pivoted from assisting officials with national planning to supporting civil society organizations such as think tanks, watchdog groups, grass-roots organizations, and even certain religious societies. It also began to prioritize its advocacy for the rights and norms required to protect such groups, including freedom of expression and association and the rule of law. In Chile, following Pinochet’s 1973 overthrow of Salvador Allende, the foundation began to support groups that protected Chilean scholars and their academic work from the dictator-ship, including the Latin American Council of Social Sciences, the Emergency Committee to Aid Latin American Scholars, and the Vicariate of Solidarity.
This new focus on civil society organizations informed the foundation’s work in authoritarian countries in other regions, as well. The foundation supported a 1973 conference on legal aid at the University of Natal, in South Africa, which drew international attention to the apartheid regime’s abuses. In 1975, at the urging of several staff members, the foundation’s board of trustees approved a human rights program, which began with $500,000 to support reforms, individual rights, local organizations, and social movements in various countries.
Political change also led philanthropies to modify their approaches in the wealthy countries of the West. Foundations had played a significant role in building the postwar global economic architecture, including the system of international financial exchange that emerged from Bretton Woods. But in 1971, the so-called Nixon shock—which saw, among other developments, the United States abandon the gold standard—transformed the world economy. Ford adapted by establishing a program on international economic order, which supported research into new fiscal models, inflation, and national stabilization policies, and helped establish networks to connect economists and policymakers.
Ford also became increasingly known for its work on social issues in the United States, particularly civil rights and women’s rights, and the creation of new disciplines at universities. Much of the research that informed President Lyndon Johnson’s Great Society agenda was funded by the Ford Foundation—including Head Start, the federal program that supports early childhood education. (As a five-year-old in Ames, Texas, I attended one of the first preschools funded by Head Start.)
Whereas World War II had bred near-universal alignment between foundations and the U.S. government on most issues, the Vietnam War had the opposite effect. By sowing public distrust of the U.S. foreign policy establishment and reminding institutions of the danger of uncritically supporting government policies, Vietnam gave foundations ample reason to assert more independence.
Today, the world is once again undergoing tectonic shifts. Liberal values and the U.S.-led global order have come under assault. If Washington continues to retreat from its traditional role as the order’s principal guarantor, authoritarian regimes will grow stronger and illiberal ideas will spread. The rise of China means that foundations will have to learn to operate in a world defined by multiple spheres of influence.
This learning process has already begun. Consider, for example, the Carnegie Endowment for International Peace’s establishment, in 2010, of the Carnegie-Tsinghua Center for Global Policy, in Beijing, or the Brookings Institution’s investment in research centers in Beijing, Doha, and New Delhi. More foundations should follow suit by establishing partnerships outside the United States and making their programming less reliant on U.S.-centric views of global order and economic development. Just this year, for instance, the Ford Foundation has adjusted its own programs to be more global in nature, seeking to use our footprint in ten countries outside the United States to work together toward global outcomes on global issues—issues such as imbalanced financial flows from extractive industries, violence against women and girls, and the increasingly endangered space for civil society. In order to address such problems effectively, we will have to draw on ideas and talent from all parts of the world, working toward solutions that help encourage a new kind of international cooperation in a multipolar era.
Foundations must also invest in non-U.S. institutions and individuals who intend to stay in and serve their home countries. In 2001, Ford invested $280 million—its largest single grant ever—to create the International Fellowships Program, which funded the education of foreign scholars around the world and sought to build the capacity of universities outside the United States. By 2013, the program had paid for more than 4,300 fellows from 22 developing countries to earn graduate or postgraduate degrees, many of whom were educated in the global South. When the program ended, in 2013, 82 percent of the fellows it had funded were working for social change in their home countries.
A multipolar world will also foster the proliferation of non-American philanthropy. For most of the twentieth century, international giving was dominated by the great families of U.S. industry: the Carnegies, the Fords, the Rockefellers, and many others. During the first two decades of the twenty-first century, American philanthropic preeminence has persisted and even expanded, as foundations established by Michael Bloomberg, Bill and Melinda Gates, and George Soros have made tremendous contributions to human progress. But as other parts of the world produce greater wealth, U.S.-based foundations will have to share the stage with foundations established by wealthy individuals such as Mukesh Ambani of India, Aliko Dangote of Nigeria, Jack Ma of China, and Carlos Slim of Mexico.
This is a hopeful development, because American foundations cannot address the world’s most pressing problems alone. U.S. foundations must find ways to support the growth of philanthropy in other countries and unleash the potential of new wealth around the world.
The Ford Foundation has provided seed funding for local and regional foundations, such as TrustAfrica, and networks of philanthropies, such as the African Philanthropy Forum, the East Africa Philanthropy Network, and the China Foundation Center. By sharing ideas, best practices, and strategies for funding with these smaller, non-American groups, legacy foundations can offer the perspective they’ve gained through their own successes and failures. Yet at the same time, they must abandon the old habit of relying on top-down initiatives designed by technocrats in New York and Washington and listen instead to people with on-the-ground knowledge. Over the past 15 years, Ford has moved away from the practice of staffing its offices in the developing world with Americans and has benefited from tapping deep reservoirs of local talent.
In the postwar era, American foundations—working with the U.S. government and other countries, development agencies, the private sector, and civil society—helped build a global order that brought impressive advances in poverty reduction, the promotion of democracy, gender equality, and social progress but that also produced unsustainable inequality. Today, U.S. foundations have a responsibility to contribute to a more just and sustainable order. Doing so will require working with a broader range of partners and including voices that were left out of the twentieth century’s order-building project. The time for change is now, and there isn’t a moment to lose.
CORRECTION APPENDED (October 16, 2018)
An earlier version of this article misnamed the Chinese organization to which the Ford Foundation has provided seed funding. It is the China Foundation Center, not the China Global Philanthropy Institute.