The Real Regulatory Problem

The Pollyannaish view of the regulatory process in Cass Sunstein’s “Democratizing Regulation, Digitally” [Issue #34] is truly astounding. My wife has dealt with regulatory agencies professionally for the better part of the past decade, and her experience bears little resemblance to that described.

It’s true that regulators know little about the subjects they are regulating. But it’s also true that ideology, politics, institutional inertia, and a desire to justify one’s job play a huge role in the regulatory process. These factors cannot be overcome by an improved system for providing comments. This should not be surprising—these are elements of human nature and regulators are human. I’m sure behavioral economics has something to say on this as well.

The challenge is not to make the regulatory process better at bringing in information that can’t possibly be well understood or incorporated into decision-making. Rather, it is how to set up processes that: (1) make markets operate better so there’s less of a need for the problematic regulatory process; (2) try to align the incentives of regulators with the welfare of all citizens; and (3) provide some measure of competition among regulators to harness market forces to make regulation better.

Why laud more efficient notice-and-comment rule-making while not mentioning the big and interesting problems that people should be thinking about?

Doug Anderson
River Forest, Ill.

Community and Capital

I deeply appreciate Gara LaMarche’s thoughtful critique of the field I’ve been involved with—from program officer to CEO of a small foundation to foundation trustee—over the past 30 years. [“Democracy and the Donor Class,” Issue #34] And I fully agree with him. For some time now, I’ve been of the opinion that all private foundations should revert to community control within a decade of their founder’s demise. I would also heartily support mandated community involvement, representative of both the emerging electorate and marginalized groups, in the governance of all foundations to hold them accountable to community needs.

If these were implemented even for international funders, we would go a long way toward democratizing foundation capital by putting its use in the hands of those whom that capital is meant to serve, not those with the wealth to create foundations.

Ron White
Founder, Building Utopia Consulting, LLC
Santa Fe, N.M.

Mission Creep

I give Gara LaMarche a round of applause for being big enough to question his own actions over the past 20-plus years. [“Democracy and the Donor Class,” Issue #34]

I worked at the Council on Foundations for most of those years, and I saw how public policy involvement was pushed by many foundation leaders as the “sexy” way to be a philanthropist. Charity as a way to reduce the suffering of the least advantaged has had an honored place in all societies. But the use of wealth to change the very institutions and social relationships of modern society is recent, and sits uneasily with the idea of a democracy. Unfortunately, people who will never be affected by the policies and programs that they advocate (both conservatives and progressives) will continue to press their positions, and only growing public discomfort and criticism will (possibly) lead to some much-needed self-criticism and, perhaps, firmer regulations.

The general lack of rigorous, objective evaluation of foundation programs—particularly those managed in-house by large-staffed foundations—adds to the problem of activist foundations that answer to no one, not even themselves. Foundations may want to consider a return to the traditionalist role of being funders of objective research on issues and let other organizations use the knowledge created to develop policy positions and public lobbying efforts. This relatively simple retreat from directly designing public policy projects that are too closely associated with the personalities and beliefs of the founders and staff could begin to rebuild a needed firewall between wealth and political influence.

Joanne Scanlan
Former Senior Vice President, Leadership and Education, Council on Foundations
Sechelt, B.C., Canada

Remember the Small Donor

Thank you for this serious attempt to analyze philanthropy, its benefits, and its costs. [“Democracy and the Donor Class,” Issue #34] I spent 30 years of my life raising money for good causes, and working to spend as little as possible to produce as much as I could. I operated at a much smaller level than LaMarche describes, and as a result, the benefits to nonprofits outweighed the benefits to individual taxpayers.

And yet, if I can use myself as an example, those tax benefits are still important—perhaps even more so—because they encourage small-income donors to make small gifts, all of which add up to significance. I’m not countering LaMarche’s argument on the necessity to monitor and control gifts that deprive society of tax revenues; I’m only offering a reminder that areas like the arts could not survive without either tax support or contributions from many small donors.

Barbara Foster Schutz
Chapel Hill, N.C.

Building the Bridge

Jacob Weisberg has a simplistic view of the Nixon years. [“A Bridge Too Far,” Issue #34] He omits the conservative side of Richard Nixon: the racial strategy in the North and South, the appeal to angry white workers (e.g., “hardhats”), the “New Federalism,” “strict construction” on the Supreme Court, the aim to build a “new majority” on the Right.
All of these, contrary to Weisberg, paved the way for Ronald Reagan under more favorable political circumstances.

Bruce Miroff
State University of New York, Albany
Delmar, N.Y.