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Founder: Oprah Winfrey
Area of Interest: Education, Social leadership, Women empowerment, Children, Poverty, Disaster relief
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The History of Philanthropy in the United States
Philanthropy in the United States began before the United States became a recognized political entity. Philanthropy has roots in a tradition stemming from religious beliefs, a history of mutual assistance, democratic principles of civic participation, pluralistic approaches to problem solving, and the American traditions of individual autonomy and limited government. Philanthropy developed in response to the hardships of the early settlers and distant, limited governmental structures.
Then, philanthropy meant that members of society banded together for self governance, took care of their neighbors, and provided necessary civic services. For example, in 1693, Harvard University conducted what many cite as the first recorded fund drive, raising 500 pounds for the school - a "great success." As the population grew and cities expanded, volunteers would ask, and donors would respond. Additionally, religious leaders encouraged their flocks to give to the poor and perform charitable acts, creating a strongly felt sense of social obligation for many. This and similar experiences developed into a tradition of citizen initiative and individual efforts to promote the public good. Perhaps most interesting, early settlers to the New World came from cultures and traditions without a strong record of philanthropy, thus making it a practice indigenous to the U.S.
War served as one of the major motivations for fundraising efforts. At the time of the Civil War, volunteers for both the North and the South sold bonds and sought contributions for the war effort.
During the wars of the 20th century, American leaders successfully utilized the same techniques that had previously used in the Civil War. Philanthropy served as a contributing factor in formalizing and popularizing charity as an aspect of the American social conscience.
Early philanthropists proved influential through their contributions to society and the practice. For example, Benjamin Franklin gave to improve his community and provide opportunities for people to pull themselves up by their metaphorical bootstraps. The various institutions Franklin founded include a volunteer fire company, the Pennsylvania Hospital, the University of Pennsylvania, and the Philadelphia Public Library.
Modern philanthropy stems from the ideas of Andrew Carnegie, found in an essay entitled, "The Gospel of Wealth." This piece, published in 1889, promoted ideas about what the wealthy should do with their property, that they should not be "leaving their wealth to their families, [but] administer it as a public trust during life." Andrew Carnegie's view of the wealthy individual also includes the idea that a person of wealth was the product of natural selection from the forces of competition. By the virtue of winning this wealth, this individual became an agent of civilization. Thus, he could use philanthropy as a tool for improving civilization and also simultaneously use it as a substitute for radical reforms. To this end, Carnegie started public libraries and other organizations or agencies to provide "ladders upon which the aspiring can rise."
Others further expanded on Carnegie's ideas. In 1891, John D. Rockefeller Sr. hired staff to help him manage his philanthropic endeavors. After the U.S. Congress refused to grant a charter for his philanthropic organization, Rockefeller successfully got the state of New York to charter the Rockefeller Foundation in 1913. This new form of philanthropic giving motivated by Andrew Carnegie, John Rockefeller, and Margaret Olivia Sage, meant that philanthropy used a structure similar to the business corporation for its activities. This structure provided more flexibility than charitable trusts, the traditional mode of giving from English law, and Boards of Directors took responsibility for overseeing operations, differentiating their roles from those of trustees in charitable trusts.
In the early 20th century, people began to use philanthropy to seek ways to combat problems, conduct research and promote science. Frederick H. Goff created the first community foundation in Cleveland, Ohio. Both private and community foundations served as the instruments or "scientific charity" of reform, problem solving, and address the root causes of poverty, hunger, and disease, instead of as direct aid providers. Systemic, scientific philanthropy provided the rationale for modern American foundations' faith in the ability of science and reason to resolve human problems.
In 1921, legislation provided tax relief for personal giving, and corporations received tax relief in 1935. With the legislated tax relief came corporate foundations due to the resolution of issues related to corporate giving. Corporate foundations grew rapidly in the 1940's, due to high profits and high tax levels. While tax incentives are important, donors' motivations are more complex than using the foundation as merely a tax-saving device. The earliest foundations were created prior to the institution of federal income tax laws providing tax benefits for charitable giving.
Several reasons for the increase in charitable giving could be favorable tax laws, a sense of gratitude, or a motivation to improve the world. Whatever the reason, the growth of charitable giving reflects a growth from an estimated $1.7 billion in 1921 to over $200 billion as of 2003. This also includes an 88% increase over the last decade as more money has flowed into philanthropy than some nations' gross national products. As of 2003, over 965,000 charitable tax-exempt organizations provide tens of millions employment opportunities, generate trillions in revenues and receive support from over 100,000 private foundations and volunteers. This redistribution of wealth would exceed $41 trillion. For example, in Arizona alone, over 686 foundations with aggregate assets of over $2 billion continue the practice of philanthropy.