Despite the MSC’s purported commitments to sustainability, human rights and environmental groups have criticized much of its decision-making, arguing the MSC is not effective at regulating the sustainability of fisheries. A chapter of the Sierra Club, several European WWF offices, and Greenpeace have all criticized the MSC for certifying specific problematic fisheries. Further, over half of MSC-certified “sustainable” tuna is caught with controversial fish aggregating devices (FADs). FADs are floating structures placed in the ocean to catch fish, which many environmentalists view as unsustainable because they can trap bycatch, such as sea turtles and sharks.

Because the Marine Stewardship Council is designed to protect fisheries, not people or fish. The seafood industry is the main financier of the MSC, so, of course, the nonprofit does not fight for what would actually benefit the seas. 

Why has the world’s preeminent ecolabeling nonprofit gone against the advocacy of leading human rights and environmental groups? Because the Marine Stewardship Council is designed to protect fisheries, not people or fish. The seafood industry is the main financier of the MSC, so, of course, the nonprofit does not fight for what would actually benefit the seas.

According to the MSC’s website, 88.7% of the MSC’s income comes from “charitable activities (logo licensing).” This statistic indicates that most of MSC’s funds come from the seafood industry, which pays to use the blue MSC logo. In other words, the groups paying for MSC certification, the seafood industry, are the exact same groups keeping MSC in existence.

This funding structure may deter MSC from providing important information to consumers who trust its logo. For example, the seafood industry relies heavily on enslavement and forced labor. The seafood industry’s influence is likely part of the reason MSC largely ignores these human rights abuses in its certification process. If MSC prioritized the people and ecosystems harmed by the seafood industry, the nonprofit’s budget would take a massive, likely irretrievable, hit unless it found another funding source.

The Marine Stewardship Council is not unique among nonprofits. Despite not being profit-driven, many nonprofits rely on and are beholden to corporations and the ultra-wealthy.

Across the globe, corporations and the ultra-rich capture charity and the work of nonprofits. In this article, I delve into the long history of how the ultra-rich leverage charitable giving for their own financial benefit. I then analyze how corporations co-opt nonprofit missions to their advantage. I continue by discussing the more subtle ways corporations and the ultra-rich can change and erode the effectiveness and the mission of a nonprofit’s work. I conclude with a few ideas on how we move forward.

Nonprofits

According to the Center on Nonprofits and Philanthropy, the United States has approximately 1.8 million nonprofits. The most common type of nonprofit is known as a 501(c)(3) nonprofit, named after how it is organized under the U.S. tax code. These nonprofits are often referred to as charitable organizations or charities.

The defining trait of 501(c)(3) nonprofits is that they, as the name suggests, are not profit-seeking. They also face strict limitations on their political activities or lobbying efforts. If they follow these requirements, 501(c)(3) nonprofits are tax-exempt. Many charities, private foundations, universities, and churches are 501(c)(3) nonprofits. The U.S. recognizes several other types of nonprofits. However, this article will focus on 501(c)(3) nonprofits, which account for roughly 75% of the nearly $2 trillion in revenue and expenses from the nonprofit sector.

In 2022, donors gave $500 billion to U.S. nonprofits. About 64% of those donations came from individuals, 20% from foundations, 9% from bequests (donations made at death), and 6% directly from corporations. Further, about 33% of individual donations and 86% of bequests come from the top 1%. These donations come with enormous tax benefits, with individual donors being able to avoid taxes on up to 60% of their income by donating.

The Gilded Age(s)

Andrew Carnegie may be the most influential philanthropist of all time. He donated more than virtually anyone else in American history, built nearly 3,000 libraries, started a leading research university, and founded over a dozen other nonprofits that still operate today. Further, in penning The Gospel of Wealth, he literally wrote the book on philanthropy in which he claimed: “the man who dies thus rich dies disgraced.”

According to Forbes, Carnegie remains the second richest person in American history, adjusted for inflation. His philanthropic ideals were certainly not what led him to such riches. Instead, Carnegie accumulated wealth by paying his workers poorly, forcing them to work 12 hours a day in dangerous conditions, and going to great lengths to sabotage their organizing efforts. Meanwhile, he alternated living in a literal castle in Scotland and his Fifth Avenue mansion.

In 1892, his Carnegie Steel Company was making a record profit, which led Carnegie to reportedly proclaim, “Was there ever such a business!” However, Carnegie Steel, threatened by the company’s unionized workers and their (relatively) high pay, sought to destroy the labor organization. Carnegie Steel hired Pinkerton security guards at a steel mill near Pittsburgh, causing a confrontation later known as the “1892 Homestead Strike” that resulted in 16 deaths and the virtual destruction of the union.

Later in life, Carnegie ultimately gave away approximately 90% of his wealth by or after his death. In the end, he lived his life as he preached and was not the rich man who died “disgraced.” His thousands of libraries and many nonprofits surely have positively affected the world.

Elizabeth Kolbert, in her article “Gospels of Giving for the New Gilded Age,” highlights Carnegie’s disconcerting dissonance in asking, “[h]ow could a person ruthlessly exploit his employees and, at the same time, claim to be a benefactor of the toiling masses?” Similarly paradoxical, Carnegie’s Gospel of Wealth, though certainly pro-wealth redistribution, is full of dubious ideas, such as the idea that wealth naturally and justly accumulates into the hands of the few and that these few likely know best how to fight poverty.

Carnegie’s story leaves us with questions about how to approach philanthropy: Is the best model really one that requires someone to do heinous actions to be able to do good later? Do we really want the people willing to commit these acts to be the ones who decide what is “good?”

Kolbert argues we are yet again in a Gilded Age, and today’s ultra-wealthy have honed the philanthropy playbook Carnegie wrote. However, today’s billionaires are possibly no wiser and even less committed than Carnegie. 

Is the best model really one that requires someone to do heinous actions to be able to do good later? Do we really want the people willing to commit these acts to be the ones who decide what is “good?”

For example, Bill Gates regularly ranks at or near the top of the US’s most philanthropic billionaires, as he did in 2021, 2022, and 2023. Like Carnegie’s approach before him, Gates’ business practices also included questionable attacks on unions. A court also ruled the company he founded, Microsoft, guilty of illegal monopolistic practices.

Bill Gates is not exceptional in his ruthless pursuit of wealth. Amazon CEO Jeff Bezos, one of the richest people on the planet, actively tries to bust potential unions that are organizing in response to harsh working conditions and high injury rates. Mark Zuckerberg treated the people around him so poorly that Hollywood made a movie about it. Starbucks billionaire CEO Howard Shultz is in the news every week for a new union busing tactic. The list goes on.

Apologists for the ultra-rich are quick to ignore the unethical and destructive ways billionaires accumulate their wealth, insisting they are the ones who can save us from the world’s biggest problems, like systemic injustice, climate change, or the proliferation of dangerous technology.

OpenAI: A Billionaire’s Relapse toward Profit

Ignoring billionaires’ pasts has admittable allure. Take Bill Gates again; all his unethical practices happened a decade, if not decades ago. These days, he’s known primarily as a philanthropist striving to save the world. Like Andrew Carnegie before him, Bill Gates may also appear to be a benevolent billionaire, committing himself and his foundation to improving global health and fighting climate change.

Yet, when recently confronted with a new, potentially world-altering problem, he again chose profits over the common good. Bill Gates is no longer involved in Microsoft’s day-to-day operations. Still, his endorsement led to Microsoft’s aggressively investing in generative Artificial Intelligence (A.I.), including in OpenAI, owner of ChatGPT.

The founders of OpenAI started the organization as a nonprofit “with the goal of building safe and beneficial artificial intelligence for the benefit of humanity.” However, after Microsoft began investing, OpenAI formed a for-profit company to help benefit Microsoft.

Partially in response to this development, members of OpenAI’s board, some of whom were with OpenAI in its earliest days, moved to oust OpenAI’s CEO, Sam Altman. The OpenAI board was alarmed because OpenAI’s technology poses a significant risk to the world, and Altman has been dismissive of the potential catastrophe that could result from A.I. Microsoft, which has now invested $13 billion in OpenAI, called for Altman’s return as CEO. Upon Altman’s return, the board members prioritizing humanity’s safety over profits were pushed out.

A.I. is still young and full of potential, both positive and negative. However, as long as philanthropists continue to operate as businesspeople, it will develop toward profit-making.

The Systemic Limitations to an Effective Nonprofit

The A.I. example drives home a key point: Billionaires and the ultra-wealthy will go to great lengths to protect their interests as the system changes. Billionaires have little, if any, incentive to fight, or support others in the fight, for positive systemic change. Instead, they donate significant portions (but never significant enough to undermine their power) of their money to fix individual inequities—inequities that their exorbitant accumulation of wealth played a role in creating. They then get to justify their obscene hoarding of wealth by saying that they are “giving back” and that we should trust them (and maybe even thank them). Typically, this practice obfuscates the issue enough that there is no real accountability and little work done addressing these issues on a systemic level.

The winners of our age must be challenged to do more good. But never, ever tell them to do less harm.

Anand Giridharadas, author of Winners Take All, captured this dilemma eloquently in a speech to the Aspen Global Leadership Network, saying the challenge to the rich, “in a nutshell, is this: the winners of our age must be challenged to do more good. But never, ever tell them to do less harm.”

The ultra-wealthy do not fight to upend systemic injustices. Instead, they use charitable donations to gain tax relief while making sure their donations go toward shaping public policy in a manner beneficial to them. In his book The Givers, David Callahan argues that the rich are masking their policy advocacy as philanthropy and benefiting from it in multiple ways. Callahan estimates that “a sum in the low billions” of philanthropic donations each year goes toward shaping public policy. This amount is “much more than the combined annual political giving to candidates, party committees, 501(c)(4)s [a political variant of a nonprofit], and super PACs.”

Kolbert argues this outcome is doubly undemocratic because these donations are tax deductible: “For every billion dollars spent on advocacy tricked out as philanthropy, several hundred million dollars in uncaptured taxes are lost to the federal treasury.” Callahan puts the issue concisely: “It’s not just that the megaphones operated by 501(c)(3) groups and financed by a sliver of rich donors have gotten louder and louder, making it harder for ordinary citizens to be heard. It’s that these citizens are helping foot the bill.”

Stanford Professor Rob Reich, in his book Just Giving, notes that in addition to “[t]ax incentives for philanthropy [being] one of the largest expenditures” in the U.S. tax code, this spending also does not go to those who need it most. Reich states, “at most one-third of charity is directed to providing for the needs of” those with limited means.

The ultra-rich seem to have captured the field of “charitable donations” to create tax subsidies for themselves and generate PR opportunities. They take advantage of this system without addressing the systemic issues that led to their wealth and power and largely refrain from helping those most in need.

Worse, rich people are less likely to help those most in need. Reich notes that “the inclination to give to help meet basic needs declines as one rises up the income ladder.” The ultra-rich appear to have captured the field of “charitable donations” to create tax subsidies for themselves. They take advantage of this system without addressing the systemic issues that led to their wealth and power and largely refrain from helping those most in need.

Giridharadas sums up these problems nicely, saying this form of giving “tries to market the idea of generosity as a substitute for the idea of justice.” The idea is to “make money in all the usual ways, and then give some back through a foundation, or factor in social impact, or add a second or third bottom line to your analysis, or give a left sock to the poor for every right sock you sell.”

Earth Day: Corporation’s Perfect the Strategy of Co-optation

As seen with the Marine Stewardship Council and OpenAI, the involvement of corporations and the ultra-rich can have pernicious effects on nonprofits’ work. In the MSC case, the conflicts of interest were obvious, with industry directly funding their work. In the OpenAI case, Microsoft pressured the nonprofit to start a for-profit arm. However, the same influences can affect other nonprofits in subtler ways.

During the first Earth Week (known today as Earth Day), Philadelphians showed up en masse. With an estimated 20,000 to 40,000 people in attendance, Philadelphia had one of the highest turnouts across the nation. In a city unflatteringly referred to as “Filthy-delphia,” the Earth Week Steering Committee, led by college students, obtained all the pollution data the city had and brainstormed how to use this information.

The Committee considered a direct attack on polluting industries in the city. However, they also needed money to fund a whole week’s worth of activities. An invite to discuss funding came from an unlikely source: the Chamber of Commerce, comprised of the businesses against which the Committee had considered direct attacks.

The Committee spent three days debating whether the group should even attend the meeting. They asked themselves questions such as whether accepting the money would lead to being “co-opted by business” and whether they “would be diluting [their] effort[s] completely.”

Ultimately, the Committee accepted money from the same businesses that had caused the problems they were protesting. In return for a $45,000 pledge, the Committee promised not to “sponsor marches and demonstrations against the industries.” Additionally, each sponsor would get a line in the official Earth Day program. Perhaps this alliance is why the idea of Earth “Week” never took off. Corporations discovered that co-opting Earth Day was more effective than fighting it.

According to former Senator Gaylord Nelson, who helped lead the movement, the original goal of the Earth Day movement was to “summon the public support, the energy, and [the] commitment to save our environment.” The movement helped inspire the passage of transformative environmental legislation.

Today, however, as Slow Factory, an environmental and social justice nonprofit, described, Earth Day may be better understood as “a greenwashing marketing stunt for brands to push their nonexistent sustainability.” Slow Factory is not alone in its skepticism. Other climate activists lament that Earth Day has become more about getting out into nature or shopping Earth Day sales than “protesting and demanding change on behalf of those being hurt by the climate crisis.”

With companies such as ExxonMobil unashamedly celebrating Earth Day, these climate activists have a point.

Earth Day is just one example of how movements and organizations can be co-opted by businesses, resulting in a shift in their original goals and mission, leading to mission drift. Mission drift occurs when an organization loses focus of its intended goals, a loss that can manifest in sometimes subtle ways. A key driver of mission drift is when a nonprofit pursues funding that is inconsistent with its goals.

Harvard University: A Nonprofit Example of Mission Drift and Ultra-Rich Influence

Mission drift is not inherently good or bad. For instance, according to tablets inscribed at an entrance to Harvard Yard, Harvard’s original purpose was to train future Puritan ministers of the church. Since then, Harvard, a 501(c)(3) nonprofit, has changed its mission drastically, greatly expanding its student body and scope of study.

However, mission drift, when guided by the ultra-wealthy, can also lead a nonprofit astray. According to Harvard, the University’s mission is to “advance new ideas and promote enduring knowledge.”

At times, however, Harvard may be better conceived of as a landlord than a school. Harvard owns a significant portion of Cambridge, Massachusetts (its home base) and about 5,000 acres across Massachusetts. Perplexingly, it also owns 10,000 acres of California vineyards and allegedly over a million acres in Brazil.

These land investments are part of Harvard’s strategy to earn returns on its $50.7 billion endowment, though these land acquisitions may be hard to neatly connect to advancing the education of tomorrow’s leaders. Grey Moran wrote an article alleging that Harvard’s land acquisitions have exacerbated land and water conflicts globally, particularly harming indigenous people. Kat Taylor, a former overseer of Harvard’s investment fund, resigned in protest of these acquisitions and the acquisitions’ harms to the rights of indigenous people.

In response, the Harvard Management Company (HMC), the entity tasked with managing Harvard’s endowment, told Moran that the “Harvard Management Company focuses on environmental, social, and governance matters for all of its investments, to ensure long-term value for both the asset and the communities in which we invest.” According to Moran, locals disagree.

In addition to the pressures Harvard feels to expand its endowment through investments, the University also receives immense pressure from those who contribute to its gargantuan wealth. David Chen and Michael Corkery argue major donors are increasingly expecting policy sway at universities.

According to Chen and Corkery, donations to U.S. universities reached nearly $60 billion this year, with 80% of the donations coming from the richest 1%. Over the last three decades, the dollar value of donations has increased while the number of donors has decreased, giving these donors more power. This dynamic has led to what the American Association of University Professors at Penn described as “[u]nelected billionaires without scholarly qualifications … now seeking to control academic decisions.”

Bill Ackman has been a lead unelected billionaire without scholarly qualifications trying to influence Harvard University. In response to how Harvard students have criticized Israel, Ackman has come out with a series of demands. First, he demanded Harvard jeopardize student safety by releasing names of students affiliated with organizations that signed a contentious letter on the issue.

Ackman then started attacking Harvard University’s then-President, Dr. Claudine Gay. He demanded her removal and suggested that President Gay, the first Black person to lead the University, got the job only because of her race and gender. Ackman also argued President Gay “has done more damage to the reputation of Harvard University than any individual in our nearly 500-year history.” Remember, Harvard counts the Unabomber among its graduates and leading eugenicists among its former presidents. The University was built by exploiting the labor of enslaved people.

In response to Ackman’s demands, over 750 Harvard faculty members urged the Harvard Corporation (Harvard’s main governing body) to defend the “independence of the University and to resist political pressures that are at odds with Harvard’s commitment to academic freedom.” Harvard Law School Professor Ben Eidelson told the New York Times that Ackman was “an interloper” and that the University cannot “function as a university if [it is] answerable to random rich guys and the mobs they mobilize on Twitter.” For a while the Corporation ignored Ackman’s demands and chose to support President Gay. However, the Corporation ultimately relented, encouraging and accepting President Gay’s resignation.

Maybe an unelected billionaire who gets his vaccine advice from notorious anti-vaxxer Robert F. Kennedy Jr. and thinks Kyle Rittenhouse is a “civic-minded patriot” should not have had sway in university policy.

Then again, maybe Harvard capitulated to billionaires other than Ackman. Notably, Ackman is not a top Harvard donor and seems to be trying to settle personal grudges against Harvard, suggesting the University may not have viewed him as too meaningful a threat.

Maybe an unelected billionaire who gets his vaccine advice from notorious anti-vaxxer Robert F. Kennedy Jr. and thinks Kyle Rittenhouse is a “civic-minded patriot” should not have sway in university policy.

However, Harvard’s biggest donors also exerted their influence, albeit in a quieter fashion. For example, Ken Griffin, an early DeSantis backer who has donated over half a billion to Harvard, initially took a subtler approach to influencing the University’s handling of students’ critiques of Israel. He and his fellow Wall Street financiers have pushed “the most intense demands [of universities] behind the scenes.” This approach proved inadequate for Griffin. He has now halted his donations until Harvard “resume[s] [its] role [of] educating young American men and women to be leaders….” Griffin once complained that the rich actually have “insufficient influence” in politics, and Jacobin described him as the “MVP of buying elections.” He appears to bring a similar mentality to education.

Which billionaires are pulling the strings at Harvard and to what extent they exert influence is ambiguous. Less ambiguous, however, is that due to a reliance on ultra-wealthy donors, the interests of students and faculty—critical to the University’s mission of “advance[ing] new ideas and promot[ing] enduring knowledge”—often come second to the interests of billionaire donors.

Harvard is not alone in feeling these pressures. Other universities have shifted towards becoming landlords, with Columbia University and New York University ranking among the top 10 private property owners in New York City. Like Harvard, the University of Pennsylvania bowed to one of its major donors, Marc Rowan, and ousted its President based on similar criticism. Predictably, the billionaire was unsated and responded with even more demands.

The Innovation Model: A Subtler Form of Mission Drift

Another example of mission drift is when funders, often used to the for-profit world, push the idea of “innovation” on nonprofits. A leader in the innovation-focused funding model is Robin Hood, a nonprofit foundation founded by a hedge fund manager.

According to its website, “Robin Hood is New York City’s largest poverty-fighting organization. For over thirty years, [it has] been finding, fueling, and creating the most impactful and scalable solutions to lift families out of poverty in New York City.” Robin Hood is a “strategic grantmaker” that “initiate[s] and develop[s] long-term projects and partnerships that provide the best opportunity to deliver maximum impact.”

What all of the above translates to is Robin Hood wants new, innovative service models that can reach a self-sustaining point (often, here, self-sustaining means becoming marketable enough to find other funders to fund their services).

This idea that nonprofits need to be marketable or innovative is problematic. It’s not that marketing or innovation are inherently bad; rather, this model incentivizes nonprofits to market and innovate for the wrong people. The funders do not know best what communities need. Communities do. Nonprofits already have enough difficulties being responsive to communities where the nonprofit is not deeply rooted. Having to cater to big funders even further removed only exacerbates this issue.

This model incentivizes nonprofits to market and innovate for the wrong people.

Part of the innovation rationale is that nonprofits otherwise keep doing the same work (feeding food insecure people, providing legal services to those who can’t afford them, etc.) and that if this work were really doing good, their services would no longer be needed. However, nonprofits operate in a broken system and, at best, can mitigate the harms within the system, which are going to be the same unless the system gets fixed. “Innovative” strategies that appeal to hedge fund managers, whose wealth comes from “innovation” exacerbating inequality, will likely not strive to fix systemic issues.

Due to gross wealth inequality and the power such inequality yields, nonprofits, even those deeply committed to the pursuit of justice, face many pitfalls in achieving and sticking to their missions.

Ways Forward

The most obvious solution to the corporate capture of nonprofits would be to radically redistribute wealth in a way that chips away at inequality. With the top three richest people in the United States owning more than half of the U.S. population combined, wealth redistribution may be long overdue.

A good place to start might be the U.S. government taxing billionaires out of existence. Rebecca Ayres makes a strong case for such a policy. Redistributing wealth would broadly change the ecosystem within which nonprofits operate.

The U.S. government redistributing wealth is highly unlikely. The ultra-rich have captured the government, potentially even more handedly than they have nonprofits.

Even in the absence of radical wealth redistribution, nonprofits can still seek funding from the government. For instance, the Inflation Reduction Act of 2022 allows a portion of its $359 billion in funding to go directly to nonprofits.

However, the editors of The Revolution Will Not Be Funded, a collection of essays by activists reimagining nonprofits, warn that elements of capture can lurk in governmental funding. They contend that the U.S. funding nonprofits can allow the government to “monitor and control social justice movements, divert public monies into private hands through foundations, manage and control dissent in order to make the world safe for capitalism, [and] redirect activist energies into career-based modes of organizing instead of mass-based organizing capable of actually transforming society.”

Advocates also reimagine nonprofit funding through changes that do not require government involvement. For example, in Mutual Aid, Professor Dean Spade argues nonprofits can be places where “life-saving resources are redistributed, leadership skills are shared and developed, and people build radical consciousness and community.”

Spade advocates for a mutual aid model, which requires “collective coordination to meet each other’s needs, usually from an awareness that the systems we have in place are not going to meet them.” Instead of a world where nonprofits rely on the government or the ultra-rich, he imagines everyday people helping each other. In doing so, “[m]utual aid projects [can] work to meet survival needs and build shared understanding about why people do not have what they need.” Mutual aid can meet the survival needs Rob Reich argues the wealthy ignore.

However, mutual aid may have a scalability issue due to how wealth is distributed in the U.S. Foregoing donations from the ultra-rich and the government may leave some movements severely underfunded. Therefore, while mutual aid may be a step in a better direction, nonprofits and activists will also have to fight for other changes as well.

There is no easy solution for nonprofits, but hopefully, a multifaceted approach that fights for wealth redistribution, pressures the ultra-rich to behave differently, and reimagines funding can be a step in the right direction.  

Another potential solution is to change how donors invest. Just Impact Advisors is a nonprofit offering “exceptional value to donors through [its] ecosystem approach, focus on grassroots impact, high rate of return on investment, and willingness to make big bets on early-stage leaders and campaigns.” Such an initiative could help get the ultra-rich to shift their philanthropic activities away from the current self-interested model. However, talk of “exceptional value” and “high rate of return on investment” also opens the door for shifting nonprofits’ efforts away from what the communities themselves have identified as the most pressing needs.

There is no easy solution for nonprofits, but hopefully, a multifaceted approach that fights for wealth redistribution, pressures the ultra-rich to donate differently, and reimagines funding can be a step in the right direction.