Issue 13.2 | Spring 2016 / Guest edited by Soniya Munshi and Craig Willse

In the Shadow of the Shadow State

Reprinted with permission from The Revolution Will Not be Funded (edited by INCITE! Women of Color Against Violence. Boston: South End Press, 2009).

Organized philanthropy is playing a significant role in this age of tottering social standards, crumbling religious sanctions, perverse race attitudes, and selfish and ulterior motives.
—Ira De A. Reid, 1944[1]

Even in today’s world, Ira Reid’s words still ring true, descriptive of a scenario many contemporary social justice activists think is unique to our times. Yet, more than 60 years ago the dimensions of organized philanthropy’s “significant role” in the African American community prompted Reid to write an incisive analysis in which he noted two things. First, during a period of about 20 years, both reformist and radical Black groups had become increasingly dependent on foundation gifts over membership dues. Second, both donors and recipients acted on assumptions about each other and about the possibility for social change which, regardless of intent, reinforced the very structures groups had self-organized to dismantle.[2] These two obstacles—dependency and accommodation—did not destroy the US mid-century freedom movement; activists took down US apartheid in its legal form. Freedom was not a gift, even if donations advanced the work for freedom. Our challenge is to understand these paradoxes in the early 21st century, at a time when the US-led forces of empire, imprisonment, and inequality have even seized the word “freedom,” using the term’s lively resonance to obscure the murderous effects of their global military, political, and economic crusade.

Is there a non-profit industrial complex (NPIC)? How did it come into being? How is it powerful? In this essay I will work through these questions rather generally (one might say theoretically) and then illustrate how the mid-20th-century history is complicated in ways we can emulate, if not duplicate. And finally, I will offer a few suggestions about how organizations might think about funders, and about themselves. Other contributors to this volume will amplify specific instances and opportunities that current grassroots activists can use to strengthen and liberate our work, such that we are able to achieve non-reformist reforms on the road to liberation.

The Non-Profit Industrial Complex

During the past decade or so, radical thinkers have done a few turns on the term “military industrial complex.” Mike Davis’s “prison industrial complex”[3] was the first to gain wide use, in part because of the groundbreaking 1998 conference and strategy session Critical Resistance: Beyond the Prison Industrial Complex. It is useful to briefly consider what these “~ industrial complexes” consist of, and why they matter, by going back to President Dwight D. Eisenhower’s 1961 farewell address to the nation, in which he introduced the concept “military industrial complex.” He warned that the wide-scale and intricate connection between the military and the warfare industry would determine the course of economic development and political decision-making for the country, to the detriment of all other sectors and ideas. His critique seems radical when we remember he was a retired general, an anticommunist (speaking at the height of the Cold War), and an unabashed advocate of capitalism. But he spoke against many powerful tides. As a matter of fact, the United States has never had an industrial policy divorced from its military adventures (from the Revolutionary War forward), and the technical ability to mass-produce many consumer products, from guns to shoes, was initially worked out under lucrative contracts to the US military. However, in the buildup to World War II, and the establishment of the Pentagon in its aftermath, the production, delivery, and training for the use of weapons of mass destruction reconfigured the US intellectual and material landscape through the establishment of military bases, secure weapons research facilities, standing armed forces, military contractors, elected and appointed personnel, academic researchers (in science, languages, and area studies especially), pundits, massive infrastructural development (for example interstate highways), and so forth. Many taken-for-granted technologies, from the internet to Tang-brand powdered citrus drink, were developed under the aegis of national security. The electoral and economic rise of the southern and western states (the “Sunbelt”) ascended via the movement of people and money to those regions to carry out the permanent expansion and perfection of killing people on an industrial scale. In other words, without the military industrial complex, presidents Nixon, Carter, Reagan, Bush I, Clinton, and Bush II would never have achieved the White House.

When activists started to use the term “prison industrial complex” they intended to say as much about the intricate connections reshaping the US landscape as were suggested by the term “military industrial complex.” From “tough on communism” to “tough on crime,” the consistency between the two complexes lies in how broadly their reach has compromised all sorts of alternative futures. The main point here is not that a few corporations call the shots—they don’t—rather an entire realm of social policy and social investment is hostage to the development and perfection of means of mass punishment—from prison to post–release conditions implicating a wide range of people and places. Some critics of this analytic framework find it weak because the dollar amount that circulates through the prison industrial complex is not “big” enough to set a broader economic agenda. The criticism is wrong in two different ways: first, the point of the term “prison industrial complex” is to highlight the devastating effect of industrialized punishment that has hidden, noneconomic as well as measurable dollar costs to governments and households; and second, the term’s purpose is to show how a social policy based in coercion and endless punishment destroys communities where prisoners come from and communities where prisons are built. The connection between prisons and the military is both a not-surprising material one (some military firms have become vendors to prison systems, though most beneficiaries of prison and jail spending are individual wage earners—including retired military) and a not-surprising ideological or cultural one—the broad normalization of the belief that the key to safety is aggression.[4]

How does “non-profit industrial complex” fit into the picture? Both the military and the prison industrial complex have reshaped the national landscape and consequently shifted people’s understanding of themselves in the world–because norms change along with forms. Both the military and prison industrial complexes have led and followed other changes. Let’s look at the state’s role in these complexes. Importantly, part of the work the aggression agencies do is serve as the principal form of legitimacy for the intrigues of people who want to gain or keep state power these days. Why would they even need such cover? They and their ideologues have triumphed in promoting and imposing a view that certain capacities of the state are obstacles to development, and thus should be shrunken or otherwise debilitated from playing a central role in everyday economic and social life. But their actions are contrary to their rhetoric. Strangely, then, we are faced with the ascendance of antistate state actors: people and parties who gain state power by denouncing state power. Once they have achieved an elected or appointed position in government they have to make what they do seem transparently legitimate, and if budgets are any indication, they spend a lot of money even as they claim they’re “shrinking government.” Prison, policing, courts, and the military enjoy such legitimacy, and nowadays it seems to many observers as though there was never a time things were different. Thus normalization slips into naturalization, and people imagine that locking folks in cages or bombing civilians or sending generation after generation off to kill somebody else’s children is all part of “human nature.” But, like human nature, everything has a history, and the antistate state actors have followed a peculiar trajectory to their current locations.

During the past 40 years or so, as the Sunbelt secured political domination over the rest of the US, capitalists of all kinds successfully gained relief from paying heavily into the New Deal/Great Society social wage via taxes on profits. (The “social wage” is another name for tax receipts.) At the same time, they have squeezed workers’ pay packets, keeping individual wages for all US workers pretty much flat since 1973, excluding a blip in the late 1990s that did not trickle down to the lowest wage workers but raised higher level salaries. These capitalists and their apologists hid the double squeeze behind their effective rhetorical use of issues such as civil rights and affirmative action to invoke in the late 1960s and after the “wages of whiteness”–which any attentive person should have figured wouldn’t pay any better than they did at the close of Reconstruction a hundred years earlier.[5] While even white workers did not gain wage increases, the general southern strategy paid off, bringing Nixon to the White House, and bringing “the government”–the weak social welfare state–under suspicion. From then until now, the agenda for capitalists and relatively autonomous state actors has been to restructure state agencies that had been designed under the enormous emergency of the Great Depression (the New Deal) and its aftermath (loosely, the Great Society) to promote the general welfare.

While neoconservatives and neoliberals diverge in their political ideals, they share certain convictions about the narrow legitimacy of the public sector in the conduct of everyday life, despite the US constitutional admonition that the government should “promote the general welfare.” For them, wide-scale protections from calamity and opportunities for advancement should not be a public good centrally organized to benefit everyone who is eligible. Antistate state actors come from both camps, and insist that the withdrawal of the state from certain areas of social welfare provision will enhance rather than destroy the lives of those abandoned. Lapsed New Deal Democrat Patrick Moynihan called it “benign neglect,” while Reagan heir George H. W. Bush called it “a thousand points of light.” In this view, the first line of defense is the market, which solves most problems efficiently, and because the market is unfettered, fairness results from universal access to the same (“perfect”) information individuals, households, and firms use to make self-interested decisions. And where the market fails, the voluntary, non-profit sector can pick up any stray pieces because the extent to which extra economic values (such as kindness or generosity or decency) come into play is the extent to which abandonment produces its own socially strengthening rewards. That’s their ideal: a frightening willingness to engage in human sacrifice while calling it something else.

In fact, for so large and varied a society as the United States, abandonment is far too complicated for any single ideologue, party, or election cycle to achieve; experience shows abandonment takes a long time and produces new agencies and structures that replace, supplement, or even duplicate old institutions. Many factors contribute to this complexity. One is that large-scale public bureaucracies are hard to take down completely, due to a combination of their’ initiative and inertia; another is the fear that a sudden and complete suspension of certain kinds of social goods will provoke uprisings and other responses that, while ultimately controllable, come at a political cost. Here’s where non-profits enter the current political economy.

As a “third sector” (neither state nor business), non-profits have existed in what’s now the US since the mid-17th century, when colonial Harvard College was incorporated. Today there are nearly 2 million non-profits in the US, including, along with educational institutions, hospitals, schools, museums, operas, think tanks, foundations, and, at the bottom, some grassroots organizations. While the role of some of these organizations has not changed significantly, we have seen increased responsibility on the part of non-profits to deliver direct services to those in need of them. What also distinguishes the expansion of social-service non-profits is that increasingly their role is to take responsibility for persons who are in the throes of abandonment rather than responsibility for persons progressing toward full incorporation into the body politic.

Jennifer Wolch developed the term “shadow state” to describe the contemporary rise of the voluntary sector that is involved in direct social services previously provided by wholly public New Deal/Great Society agencies.[6] Legislatures and executive branches transformed bureaucracies basically into policing bodies, whose role became to oversee service provision rather than to provide it themselves. This abandonment provoked a response among organizations that advocated on behalf of certain categories of state clients: the elderly, mothers, children, and so forth.[7] It also encouraged the formation of new groups that, lacking an advocacy past, were designed solely to get contracts and the jobs that came with them. To do business with the state, the organizations had to be formally incorporated, so they became non-profits. Thus, for different reasons, non-profits stepped up to fill a service void.

The expansion of non-profit activities structurally linked to public social services was not new, nor could it be said that when public services were on the rise the voluntary sector stayed home. To the contrary, for more than 100 years the relationship between public and voluntary had been a fairly tight one.[8] But for Wolch, the shadow state’s specific provenance is the resolution of two historical waves: the unprecedented expansion of government agencies and services (1933-1973), followed by an equally wide-scale attempt to undo many of those programs at all levels–federal, state, county, local.[9]

Antistate state actors welcomed non-profits under the rhetoric of efficiency (read: meager budgets) and accountability (read: contracts could be pulled if anybody stepped out of line). As a result of these and other pressures, non-profits providing direct services have become highly professionalized by their relationship with the state. They have had to conform to public rules governing public money, and have found that being fiduciary agents in some ways trumps their principal desire to comfort and assist those abandoned to their care. They do not want to lose the contracts to provide services because they truly care about clients who otherwise would have nowhere to go; thus they have been sucked into the world of non-profit providers, which, like all worlds, has its own jargon, limits (determined by bid and budget cycles, and legislative trends), and both formal as well as informal hierarchies. And, generally, the issues they are paid to address have been narrowed to program-specific categories and remedies which make staff–who often have a great understanding of the scale and scope of both individual clients’ and the needs of society at large–become in their everyday practice technocrats through imposed specialization.[10] The shadow state, then, is real but without significant political clout, forbidden by law to advocate for systemic change, and bound by public rules and non-profit charters to stick to its mission or get out of business and suffer legal consequences if it strays along the way.

The dramatic proliferation of non-profits in the 1980s and after also produced a flurry of experts to advise on the creation and management of non-profits and the relationship of public agencies to non-profits, further professionalizing the sector. High-profile professors of management, such as Peter F. Drucker, wrote books on the topic, and business schools developed entire curricula devoted to training the non-profit manager.[11] As had long been the case, every kind of non-profit from the largest (hospitals and higher-education establishments) to the smallest sought out income sources other than public grants and contracts, and “organized philanthropy” provided the promise of some independence from the rule-laden and politically erratic public-funding stream for those involved in social welfare activity.

While we bear in mind that foundations are repositories of twice-stolen wealth–(a) profit sheltered from (b) taxes–that can be retrieved by those who stole it at the opera or the museum, at Harvard or a fine medical facility,[12] it is also true that major foundations have put some resources into different kinds of community projects, and some program officers have brought to their portfolios profound critiques of the status quo and a sense of their own dollar-driven, though board-limited, creative potential. At the same time, the transfer to the baby boomer generation (those born between 1946 and 1964) of what by the year 2035 will be trillions of dollars of inherited wealth began to open the possibility for more varied types of funding schemes that non-profits might turn to good use as some boomer heirs seek specifically to remedy the stark changes described in these pages.[13] Such initiatives and events encouraged grassroots social justice organizations that otherwise might have continued their work below the Internal Revenue Service and formal-funding radar to incorporate as non-profits to make what they have consistently hoped to be great leaps forward in social justice.[14] In other cases, unincorporated grassroots groups receiving money under the shelter of existing non-profits have been compelled to formalize their status because auditors have decided that the non-profits who sponsor them have strayed outside the limits defined by their mission statements.

The grassroots groups that have formally joined the third sector are in the shadow of the shadow state. They are not direct service providers but often work with the clients of such organizations as well as with the providers themselves. They generally are not recipients of public funds although occasionally they get government contracts to do work in jails or shelters or other institutions. They have detailed political programs and deep social and economic critiques. Their leadership is well educated in the ways of the world, whatever their level of formal schooling, and they try to pay some staff to promote and proliferate the organization’s analysis and activity even if most participants in the group are unpaid volunteers. The government is often the object of their advocacy and their antagonisms–whether because the antistate state is the source of trouble or the locus for remedy. But the real focus of their energies is ordinary people whom they wish fervently to organize against their own abandonment.

The “non-profit industrial complex” describes all of the dense and intricate connections enumerated in the last few paragraphs, and suggests, as is the case with the military industrial complex and the prison industrial complex, that something is amiss. What’s wrong is not simply the economic dependencies fostered by this peculiar set of relationships and interests. More important, if forms do indeed shape norms, then what’s wrong is that the work people set out to accomplish is vulnerable to becoming mission impossible under the sternly specific funding rubrics and structural prohibitions that situate grassroots groups both in the third sector’s entanglements and in the shadow of the shadow state. In particular, the modest amount of money that goes to grassroots groups is mostly restricted to projects rather than core operations.[15] And while the activist right (which has non-profits and foundations up the wazoo) regularly attacks the few dollars that go to anti-abandonment organizations, it has loads of funds for core operations; as of the end of the last century, the Right had raised more than $1 billion to fund ideas.[16] How core can you get? In other words, although we live in revolutionary times, in which the entire landscape of social justice is, or will shortly become, like post-Katrina New Orleans because it has been subject to the same long-term abandonment of infrastructure and other public goods, funders require grassroots organizations to act like secure suburbanites who have one last corner of the yard to plant.

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  1. Ira De A. Reid, “Philanthropy and Minorities,” Phylon5, no. 3 (1944): 266. [Return to text]
  2. Ibid. [Return to text]
  3. Mike Davis, “Hell’s Factories in the Fields,” Nation, January 1995, 32-37. [Return to text]
  4. See Ruth Wilson Gilmore, “Fatal Couplings of Power and Difference: Notes on Racism and Geography,” The Professional Geographer 54, no. 1 (2002): 15-24; Orner Bartov, Murder in Our Midst: The Holocaust, Industrial Killing, and Representation (New York and Oxford: Oxford
    University Press, 1996). [Return to text]
  5. W. E. B. DuBois, Black Reconstruction in America, 1860-1880 (1935; repr., New York: Atheneum, 1992); David Roediger, The Wages of Whiteness (New York: Verso, 1991). [Return to text]
  6. Jennifer Wolch, The Shadow State: Government and the Voluntary Sector in Transition (New York: The Foundation Center, 1990). [Return to text]
  7. For a thorough analysis of the politics of health see Jenna M. Loyd, “Freedom’s Body: Radical
    Health Activism in Los Angeles, 1963-1978” (Ph.D. dissertation, University of California, Berkeley, 2005). [Return to text]
  8. See Reid, “Philanthropy and Minorities.” See also Jennifer Klein, For All These Rights: Business, Labor, and the Shaping of America’s Public-Private Welfare State (Princeton, NJ: Princeton University Press, 2003). [Return to text]
  9. For a sense of the global dimension of this growth see Lester M. Salamon, “The Rise of the Nonprofit
    Sector,” Foreign Affairs 73, no. 4 (1994): 109-122. [Return to text]
  10. Robert W. Lake, “Structural Constraints and Pluralist Contradictions in Hazardous Waste Regulation,” Environment and Planning A 24 (2002): 663-681; Robert W. Lake, “Negotiating Local Autonomy,” Professional Geographer 13, no. 5 (1994): 423-442. [Return to text]
  11. Peter F. Drucker, Managing the Nonprofit Organization: Principles and Practice (New York: HarperCollins, 1990). [Return to text]
  12. Teresa Odenthal, America’s Wealthy and the Future of Foundations (New York: The Foundation Center, 1987). [Return to text]
  13. Lester M. Salamon, “The Nonprofit Sector at a Crossroads: The Case of America,” Voluntas: International Journal of Voluntary and Nonprofit Organizations 10, no.1 (1999): 5-23. [Return to text]
  14. Robin Garr, Reinvesting in America: The Grassroots Movements That Are Feeding the Hungry, Housing the Homeless, and Putting Americans Back to Work (Reading, MA: Addison-Wesley Press, 1995). See also Ruth Wilson Gilmore, Golden Gulag: Prisons, Crisis, Surplus, and Opposition
    in Globalizing California
    (Berkeley: University of California Press, 2007). [Return to text]
  15. Robert 0. Bothwell, “Philanthropic Funding of Social Change and the Diminution of Progressive
    Policymaking,” in Non-profit Advocacy and the Policy Process: A Seminar Series 2 (Washington, DC: The Urban Institute, 2001): 67-81. [Return to text]
  16. David Callahan, $1 Billion for Ideas: Conservative Think Tanks in the 1990s (Washington, DC: National Committee for Responsive Philanthropy, 1999). [Return to text]