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June 2012

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Philanthropy in the U.S.: an historical overview

Philanthropy has strong roots in religious beliefs, in the history of mutual assistance, in democratic principles of civic participation, in pluralistic approaches to problem solving and in American traditions of individual autonomy and limited government.

The hardships of early settlers to North America, where government was weak and distant, forced people to join together to govern themselves, to help each other and to undertake community activities, such as building schools and churches and fighting fires. Out of these experiences grew a tradition of citizen initiatives and individual efforts to promote the public welfare. Later, immigrants supported communities by giving through churches and forming groups to help the poor as well as organizing associations to assist each other in their new homeland. Native Americans and African Americans also had deeply rooted giving practices.

Religious leaders encouraged their members to give to the poor and to the charitable works of their churches. Giving to needy people in their communities, to the poor in other lands, to the victims of natural disasters and to their churches was a strongly felt obligation for many people. Religious beliefs are still an important motivation for being involved in philanthropy.

Early Philanthropists and Foundations

Benjamin Franklin, the inventor and statesman of the colonial era, was an early philanthropist. He gave to improve his community and to provide opportunities for people to help themselves. He founded local civic organizations such as the volunteer fire company and institutions such as the Pennsylvania hospital, the University of Pennsylvania and the Philadelphia public library.

It was not until the early twentieth century that individuals generally began to use their philanthropy to seek ways to combat problems, conduct research and promote science.

One of the early proponents of modern philanthropy was Andrew Carnegie, a wealthy business entrepreneur. He viewed the person of wealth as a product of natural selection by the forces of competition. By winning wealth, a person became an Agent of civilization, and philanthropy became a tool for improving civilization while at the same time substituting for radical reforms. His philanthropy included starting public libraries and other agencies that would provide "ladders upon which the aspiring can rise."

During the early years of the twentieth century, several civic and business leaders -Andrew Carnegie, John Rockefeller and Margaret Olivia Sage- organized their philanthropic giving in a new form, like the business corporations that were then so successful. The new corporate organizational structure permitted more flexibility than charitable trusts, the traditional mode of giving featured in English law. Boards of Directors, rather than trustees, were responsible for overseeing their operations.

Corporate foundations came later, after the concept of giving by businesses was resolved under United States law in 1935. Corporate foundations grew at a rapid rate during the 1940s, an era of high profits and high tax levels.

Source: An Abbreviated History of the Philanthropic Tradition in the United States. Council of Foundations.

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