New Directions for Carnegie Corporation of New York
A Report to the Board by Vartan Gregorian, President

February 2, 1999

The United States is a microcosm of the world's humanity. Every ethnic group, every race, and every faith is represented here, as is every continent and most cultures. For centuries America has been the land of natives and newcomers. Whether immigrants have come here for religious freedom, political asylum or security, education, economic opportunity, or reunification with family members who preceded them, they have all shared an optimistic belief that, once in their adopted land, they would have the chance to become masters of their own destiny.

The essence of our democracy lies in the proposition put forward in the 1776 Declaration of Independence, that we are created equal, that we are endowed by our Creator with certain inalienable rights, and that among these rights are life, liberty, and the pursuit of happiness. In other words, a free people can be trusted to know what is good for them.

Among the founding fathers, James Madison was the most acute in understanding that the diversity of interests and values in our society provided the very basis for political freedom. Political theorists from Aristotle to Rousseau had asserted that republican government could survive only in small communities where there was a consensus of values. Otherwise, it was feared, conflicts between groups would tear the society apart and lead to enforced order under tyranny. Madison, however, grasped a radically new, modern idea, one rooted in the very soil of America: that diversity itself could engender freedom and stability in a republic. In The Federalist Papers, Madison argued for an "extensive republic" that would contain diversity rather than assure the consensus preferred by the opponents of the Constitution. He explained that in our society "broken into so many parts . . . the rights of individuals, or the minority, will be in little danger from interested combinations of the majority."

Madison, moreover, saw a relationship between civil rights and freedoms and religious rights and freedoms — each drawing its protection from diversity: "In a free government," he argued, "the security for civil rights must be the same as that of religious rights. It consists in the one case in the multiplicity of interests and in the other as the multiplicity of sects."

Today the common ground of our democratic system and society is under strain. One threat to our cohesiveness is the problem of political apathy and cynicism, which has been compounded by the growing belief that political power has been taken over by organized, well-financed special interests able to push a political and social agenda that may not be on behalf of the common good. What is especially disheartening is the negative or indifferent attitude of so many of our young people toward politics and the political process and their sheer ignorance of our history, our constitution, and our rights and duties as citizens of this republic. Fewer than 20 percent of voters between the ages of eighteen and twenty-four voted in the 1998 Congressional races. We are in danger of becoming a spectator democracy, not a participatory democracy.

A second source of deep concern is the condition of religious, ethnic, and racial relations in our society. In parts of the country, people of differing backgrounds seem to be more divided than ever. The journalist Tony Horwitz, after traveling through the South, concluded that issues of race there remain raw and unresolved. Socially and culturally across the country there are ample signs of separatism and disunion along class, race, ethnic, religious, and gender lines. Commented Horwitz, "The whole notion of a common people united by common principles — even a common language — seem[s] more open to question than at any period in my lifetime." We speak of tolerance, but tolerance is not enough. We must go beyond tolerance to understanding and acceptance: understanding of the rich legacy of our past and of diversity as a source of our country's dynamism, creativity, and knowledge; and acceptance of "other" people's history and culture, which has formed our culture and which makes us a nation. America needs not just to know its parts but its common ground. It must know not just its diverse past but its common future. Education has an important role to play, but the solution is not multicultural study if this means only the study of the parts; we must know the sources of unity in our culture and nation as well.

In confronting issues of intergroup relations, we cannot ignore intergenerational relations. Much public discussion about an aging America deals with Social Security, Medicare, and social programs. These are unquestionably important issues, but, in the emphasis on the problematic aspects of aging, the tendency is to forget about the positive aspects of this development for our society. Older Americans on average have higher net worth than younger people; they are more politically active than younger people, and they have valuable expertise, experience, and wisdom to bring to the national dialogue about our major social, economic, and political challenges. Rather than exacerbate the confrontation and rivalry between the generations, young versus old, we must call upon older and younger people alike to seek ground on which there can be common understanding of the current challenges and agreement about the future goals and priorities of our democracy.

A fourth challenge to our national cohesiveness concerns the shadow side of the unprecedented economic expansion of the 1980s and 1990s: the widening income gap. Private income and wealth have become ever more concentrated in this country, while the incomes of the poorest 20 percent of families have tumbled. These disparities raise serious questions about fairness and equity and about the continued ability of American society to renew itself from the bottom. The issues are deeply complex and not amenable to simple solutions. At the very least, their impact on the social and political fabric of our nation must be better understood.

All of these fundamental issues will be the subject of study and grantmaking by Carnegie Corporation. Under the rubric of electoral reform, we will concentrate on research and analysis of campaign finance issues, including efforts at state and local-level reform and other political campaign practices. We will also support studies, research, and conferences on aspects of intergroup relations and the widening income gap. During 1999, the latter two areas will be pursued only at the Corporation's initiative.

A democratic government is only as effective as it is held accountable by its citizens, by voting, by understanding how democratic government functions, and by being attentive to the public issues of the day. As newer democracies around the world are building and celebrating the vibrancy of civil society, Americans are increasingly troubled by their own democracy. The private, nonpartisan National Commission on Civic Renewal, cochaired by William J. Bennett and Sam Nunn, in its final report (June 1998) confirmed that, despite the strong U.S. economy and freedom from the insecurity of the Cold War, public cynicism, particularly about political leaders, has rarely been more intense than it is today. The level of citizen distrust, suspicion, and disillusionment toward the government appears to be rising. In 1964, for example, about 62 percent of all Americans said government could be "trusted to do the right thing." Almost thirty years later, in 1993, only 14 percent shared that level of trust. National voter turnout for the presidential election has dropped from 63 percent in 1960 to less than 50 percent in 1996, the lowest in any industrialized democracy. In some local elections, voter turnouts have dropped below 10 percent. Young people have a distinct sense that politics is not about them. In a survey carried out by the National Association of Secretaries of State, two-thirds of the respondents ages eighteen to twenty-four said they do not believe their vote will count. Sixty percent of those interviewed believe the country is run by a few big interests looking out for themselves, not for the benefit of all. This distrust and disillusionment, said the commission on civic renewal, is taking a toll on the quality and nature of the dialogue between the American public and its leaders in Washington.

Campaign finance. A fundamental source of discontent in the American electorate is the perceived abuse of the system of political campaign finance. In the view of many observers, the campaign fundraising process has become so deformed and the intent of the campaign finance laws so flouted that many incumbents spend more of their time raising money for their reelection campaigns than interacting with their constituents and doing the public's business. Comprehensive campaign finance reform, it is argued, would not only assuage the public's growing belief that only "special interests" matter to their elected leaders, it would help to level the playing field, encouraging more individuals of modest means to run for elected office, particularly at the state and local levels.

The 1996 federal election campaigns were the most expensive in United States history, in which the two major parties, the political action committees, and other political organizations expended a total of $2.2 billion. The comparable figure in 1992 was $1.6 billion, and in 1994, $1.3 billion. In 1996, the median cost for a U.S. House race rose to $559,000, from $350,000 in 1994. In 1996 an average Senate race cost $3.5 million, up from $2.7 million in 1994. "Soft-money" contributions — unregulated funds intended to be used only for political party-building activities but often diverted to political advertising — have skyrocketed: in 1996, the Democrats and Republicans together raised a total of $262 million ($138 million for Republicans; $124 million for Democrats), triple the amount raised in 1992. Soft money is expected to double to $500 million or more by the presidential election in 2000.

It appears that reform is desired, even by those most invested in the system. In June 1998, the Joyce Foundation released the results of a research study of individual campaign contributors. The majority of these donors are persons of wealth, two-thirds of whom have contacted at least one member of the House of Representatives or Senate in the past two years. Despite their special access, these congressional donors are highly critical of the current system and supportive of major campaign finance reforms. For instance, three-fourths of them favor a ban on soft-money donations, and a majority support spending limits.

In August 1998, Public Campaign, an independent campaign finance reform group, released the results of public opinion surveys it commissioned in eight states: Colorado, Indiana, Mississippi, Missouri, New Hampshire, New York, North Carolina, and Ohio. These states overwhelmingly called for federal campaign finance reform. In Mississippi, for example, 58 percent of those polled favored passage of the McCain–Feingold bill, a central provision of which bans all soft-money contributions. Support for reform also crosses party lines, as the polls have found more Republicans than Democrats favoring McCain–Feingold in all the states surveyed except Colorado.

While reform at the federal level has failed thus far, success is beginning to occur in the states. Political and social reforms have often germinated at the grassroots and state levels. The movement for women's suffrage proceeded state by state. The 1993 Family and Medical Leave Act was passed in thirty states over eight years prior to federal action. The 1995 National Voter Registration Act — "Motor Voter" — got its start in the states. Many environmental and educational reforms also came through the states. About half the states have the ballot initiative process, which allows citizens to circumvent a reluctant legislature. In 1996, for example, virtually all the statewide campaign finance reforms were enacted by ballot initiative.

In addition, almost all the elections in the United States — and the bulk of campaign spending — occur at the state and local levels. Of the 513,000 elective offices in the United States, more than 99 percent are state and local. As action in the states is becoming more important, large political contributors are focusing more of their campaign giving on state legislative and gubernatorial campaigns. Aspects of health care policy, environmental protection, welfare reform, banking regulations, and tax policy are often within the domain of state legislatures, and where the power goes the money follows. Over the past five years, for example, an increasing amount of money flowing into state campaigns is from out-of-state special interests.

Political observers and members of the media are often not aware that many campaign finance reform bills are working their way through state capitals. Initiatives appearing on state ballots are being passed, challenging the widely held belief that real reform just will not happen. In its August 20, 1998, report, Reform in the States, Common Cause released a state-by-state analysis of campaign financing, ethics, and other government reform activities since the previous January. The report highlights an Illinois campaign finance and ethics reform law that prohibits candidates from using campaign funds for their personal benefit, improves disclosure of campaign funding, and bans political fundraisers in the capital while the legislature is in session. A Connecticut law prohibits political parties from transferring soft money into the state. The following November, citizens in Arizona and Massachusetts voted for ballot initiatives that would provide a fixed amount of public funding to candidates who raise a threshold number of small contributions and agree to spending limits.

Other campaign practices. According to a 1997 study by the International Institute for Democracy and Electoral Assistance, a Swedish organization, the United States ranked 139th among 163 democracies in voter turnout rates, low for an advanced democracy and most fledgling democracies. Only citizens over the age of sixty-five are maintaining their rate of voter participation. There are many reasons cited for low voter participation: lack of civic education in the schools, negative campaigning, the role of the news media, the diminution of voter education campaigns, the decline in grassroots, party-building mechanisms by both major political parties, and the increasingly corrosive public cynicism about government. As the 2000 elections approach, the Corporation will consider projects that aim to improve the tenor of campaigns and campaign practices, broaden public access to information on candidates and issues, and strengthen news media coverage of campaigns and candidates.

From the start, the vigor and richness of American society have been renewed by the work and aspirations of immigrants. First- and second-generation Americans have made up a large proportion of our fighting forces and have made disproportionate sacrifices in war to protect our democratic freedoms. At the same time, successive waves of newcomers have suffered discrimination, stemming in part from ignorance and in part from fear of economic competition. These attitudes are often influenced by racial, ethnic, and religious prejudice and misunderstanding. Newcomers themselves often bring prejudices with them to their new country.

Since today's youth of "minority" background are expected to be a collective majority by the year 2025, of whom a high proportion will be disadvantaged, urgent questions have naturally arisen as to whether our policies and our institutions, especially the education system, are equipped to prepare the next generation for the grave responsibilities of citizenship: to fuel the nation's economic strength, provide strong democratic leadership, shoulder an aging society, and throw off the bonds of racial, ethnic, and religious intolerance. Better knowledge, mutual understanding, and tolerance are essential for the success of our multireligious, multiethnic, and multiracial democracy. Despite progress since the beginning of the civil rights movement, however, interracial and interethnic tensions continue to provoke concern among the nation's leaders, as evidenced most recently by President Clinton's convening of One America in the 21st Century: The President's Initiative on Race. Efforts to combat racism often are stalled by the inability of public policy to improve social and/or economic conditions that enmesh many poor whites and persons of color. Poverty and limited opportunity exacerbate racial and ethnic tensions and impede efforts to improve intergroup understanding. Even though discrimination has been largely dealt with legally, the problem of hearts and minds remains to be resolved.

The dramatic influx of people of the Muslim faith (largely from Asia and the Near East) to America has become an added factor in issues of pluralism and tolerance. According to demographers, Islam is the fastest-growing religion in the country — a phenomenon that few recognize but that will have a profound effect on American society in the future. It is estimated that in America there are more Muslims than Jews and more Muslims than Episcopalians. (Worldwide, there are approximately 1.1 billion Muslims.) As viable Muslim communities evolve, our understanding of Islam in all its facets will be important for the harmony of our democracy. Islam is one of the three prophetic religions that, along with Judaism and Christianity, have a common God and Abraham at the core of their beliefs. To understand these faiths and their cultures and civilizations is essential if we are to continue to adhere to our tradition of religious tolerance, a tolerance that one hopes will be based on more than law alone. In this connection, we must be mindful of the fact that the Eastern migration to the West has also brought in many other people of other faiths and sects. Understanding their religious beliefs and cultures as well will be necessary if we are to continue having a nation based on religious freedom and separation of church and state.

Another dramatic demographic shift will be the retirement of baby-boomers in about fifteen years. Currently 13 percent of the people in the United States are aged sixty-five and older; by the year 2015 the percentage will rise to 22. Longevity has increased by twenty-eight years since 1900, due to improvements in medicine, nutrition, safety, and living standards, and it will continue to edge up during the next three decades. From a combination of factors, then, the number of Americans aged 65 and older in 2015 will be more than twice what it is today. Meanwhile, the number of those in the age group 16 to 64 will decline slightly. An aging population will also be a factor in Western Europe, Japan, and the Slavic countries, with many industrialized nations having a reproduction rate of less than one.

The needs of the aging population will prompt significant shifts in consumer demand, particularly for health, leisure, and other services used by older people. It is, therefore, an important time for the Corporation to revisit a subject with which it has already had considerable experience, beginning with the Aging Society Project (conducted by president emeritus Alan Pifer), which itself was an outgrowth of the Corporation's realization that resources for children were declining in relation to those for older Americans, presenting a complex social policy agenda that is still with us.

The Democracy program's work on intergroup relations will overlap that of Education, which is winding up its support of school-based research on youth intergroup relations. Still in development, the program will search for effective ways of fostering continuing public dialogue around issues of race, ethnicity, and religion and the aging society and promote full participation of new immigrants and new citizens in American civic life. At this time, no unsolicited proposals are being accepted.

Beginning with the oil crisis of 1973, with its consequences in galloping inflation and stagnant employment, and the later trends toward the globalization of trade and telecommunications, the weakening of organized labor, and changes in the wage structure associated with the shift from industrial manufacturing to a knowledge-based, service economy, we have entered the post-industrial age. On the positive side, the United States economy is currently robust, with unemployment in early 1998 the lowest in thirty years and inflation at below 2 percent per year. After two decades of stagnant growth, real wages for most workers are rising and productivity is picking up speed. Yet the 1998–99 edition of The State of Working America suggests that, when recent economic gains are put in their historical context, the living standards of most working families have lost ground. In the most recent decade, 1986–96, median annual family income fell by over $1,000, or 2.3 percent. Data for 1997, just released, show that the typical family has finally regained the after-inflation income level it enjoyed in 1989, but there is disappointment on another count: to achieve this level, the typical married-couple family with children has had to work 247 more hours (about six more full-time weeks) per year in 1996 than it did in 1989. American families are working harder than ever to stay in the same place and receiving fewer gains in the overall economy.

Historically, the Corporation has not given priority to economic analysis in its concern to improve the circumstances for poor children and families, although it has funded a number of discrete policy studies over the years. From the mid-1970s on (following early evidence of sliding family income, the large-scale entry of mothers into the work force, and the mounting influence of anti-welfare groups), the foundation began to take a look at the American family under pressure. We funded the research and advocacy work of the Children's Defense Fund, the comparative studies of social welfare policies in other industrialized nations by Sheila Kamerman and Alfred Kahn at Columbia University, studies of the urban poor by William Julius Wilson, and the Carnegie Council on Children. The council's final report, All Our Children: The American Family Under Pressure (1977), drew national attention to the growing problem of inequality of income and circumstance in American society and made controversial suggestions for federal policies to establish a solid family income floor. The Corporation has continued to support the work of Kamerman and Kahn and in addition established the National Center for Children in Poverty at Columbia University, which is currently planning a national education campaign to bring the public's attention to the fact that, despite general prosperity, more than 23 million children in our nation are living below the poverty line. Most recently, the Corporation has financed the work of Ray Marshall, former U. S. Secretary of Labor, and the Economic Policy Institute to develop analyses and recommendations for social policies that would promote broadly shared prosperity. Since the gap in wealth and income has a great bearing on our traditional concerns for the well-being of families and children and may affect the social compact that has served as a stable underpinning of our democracy, we, in cooperation with other foundations, will explore areas for joint study and analysis. No unsolicited proposals will be accepted at this time.

SPECIAL PROJECTS

In 1921, in the first annual report of the Corporation, President James Angell wrote:

As a result of my year's experience, involving not only extended conferences with the administrative officials of the other large foundations, but also intimate interviews with upwards of one thousand persons applying to the Corporation for assistance, I am persuaded that it is highly desirable to keep the door a little open to the rare and critical opportunity which now and again occurs to render a great public service, even though the field in which this is brought to pass lies a bit aside from the main highway which the Board may have wisely decided to travel.

Special Projects serves as a budget allocation through which the foundation can pursue grants in fields that fall outside the Corporation's major program areas. Under Special Projects in the future, the Corporation will encourage interprogram grantmaking, support a limited number of important "special initiatives," and continue to make grants for strengthening the nonprofit and philanthropic sectors of our country.