Budget Cuts, Charitable Giving and the Law of Unintended Consequences

“The law of unintended consequences, often cited but rarely defined, is that actions of people, and especially of governments, always have effects that are unanticipated or ‘unintended.’ Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.”

The Trump Administration’s budget cuts are primarily aimed at its perceived enemies and opponents: the Public Broadcasting System and National Public Radio; elite universities such as Harvard and Columbia, and according to Google AI, “Nonprofits in General: Across various sectors, nonprofits that rely heavily on federal grants and contracts are facing uncertainty and potential instability due to budget cuts and shifts in funding priorities. This has impacted services ranging from food banks and housing assistance to childcare and after-school programs.”

Simultaneously, the One Big Beautiful Bill extends and expands tax cuts for the wealthiest among us. As such, it will widen the already yawning wealth gap in America. President Trump himself is working hard to enhance his family’s fortune, while also striving to convert the federal oligarchy into an authoritarian regime.

Make way for the law of unintended consequences, which “politicians and popular opinion have largely ignored.”

The last time America had a wealth gap comparable to today’s was in the Gilded Age, “In United States history, the Gilded Age is the period from about the late 1870s to the late 1890s, which occurred between the Reconstruction era and the Progressive Era. It was named by 1920s historians after Mark Twain's 1873 novel The Gilded Age: A Tale of Today. Historians saw late 19th-century economic expansion as a time of materialistic excesses marked by widespread political corruption.” Mr. Trump admires that period and harks back to it fondly.

The Gilded Age was the age of the Robber Barons, titans of industry who battled labor unions, flaunted the law, and raped the land to amass vast fortunes. And what did they do with these vast fortunes? “Andrew Carnegie, John D. Rockefeller, and other Barons of Industry freely gave away most of their fortunes to charitable and philanthropic causes. These men, who amassed fortunes taking America from post-Civil War to world super power, are often looked back on as corrupt and at the core of worker exploitation, but their story is much more complex than that.

“Today we call them ‘Robber Barons,’ but despite the somewhat correctly placed anger, these figures of the American Gilded Age and leaders of Industrialization are perhaps better considered ‘the Great Philanthropists’.”

Consider Andrew Carnegie’s essay, “The Gospel of Wealth”. The steel magnate, who sanctioned the infamously bloody Homestead Strike, but then went on to establish one of the great private charitable trusts, argued that bequeathing all of one’s fortune to one’s children or to the general public was less desirable than administering it oneself.

"There remains, then, only one mode of using great fortunes; but in this we have the true antidote for the temporary unequal distribution of wealth, the reconciliation of the rich and the poor—a reign of harmony—another ideal, differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is projected to put it in practice by degree whenever it pleases. Under its sway we shall have an ideal state, in which the surplus wealth of the few will become, in the best sense the property of the many, because administered for the common good, and this wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves. Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them in trifling amounts through the course of many years.”

Many of today’s wealthiest Americans are following in Carnegie’s and Ford’s and Rockefeller’s foot steps. Perhaps the prime example is Bill Gates, whose Gates Foundation has made massive investments in world health. His foundation also is the best model for what might be done to fill the funding shortfalls fostered by the federal government’s retreat from its traditional role. The foundation only recently announced a $2.5 billion commitment to women’s health issues: “[W]e’re investing $2.5B through 2030 to advance over 40 innovations in five key areas—across a woman’s lifespan—that have the potential to deliver the greatest impact on women’s health; including obstetric care, maternal health and nutrition, contraception, gynecological and menstrual health, and sexually transmitted infection (STIs) prevention. Across the five areas, we see significant potential for health innovations—some already proven and ready to be scaled, and some still in development—to improve women’s lives.” I find it hard not to read this as a rebuke of the federal government’s current retrenchment on women’s reproductive rights.

If my point isn’t already obvious, let me explicate.

The Trump Administration’s goals appear to be: to increase the power of the presidency (implementing the “Unitary Executive” theory); to further enrich the wealthiest Americans, including Clan Trump; and to weaken or destroy liberal and democratic institutions that offend the President and stand in his way.

Here’s where the law of unintended consequences comes on stage. If —- and I emphasize this word IF —-the wealthiest among us follow in the footsteps of Carnegie and Gates, the funding gap might in large measure be closed. And, in Carnegie’s terms, the wealth gap as well. Concurrently, non-profits, ranging from NGOs to universities, receiving more of their funding from diverse, private sources, might enjoy a greater measure of autonomy. Concomitantly, rather than having increased the power of the ostensible “Unitary Executive,” Mr. Trump will have diminished it. Non-profits, no longer dependent on the federal tit, may feel sufficiently confident as to thumb their collective nose at the White House and the ever-more-intrusive federal bureaucracy.

Will some belt tightening be needed? Assuredly. But this could be healthy. Drawing upon my 40 years of experience in higher education, I can confidently say that eschewing some of the excesses of the post-WWII megaversity would be very beneficial to the higher-ed enterprise. So would adopting more efficient, focused institutional missions. We are seeing this happen already.

Today we are witnessing a “Coalition of the Willing” to combat Putin’s totalitarianism. A similar coalition could effectively combat Trump’s totalitarian initiatives by turning his policies back upon his administration.

Do the leaders and advancement professionals of America’s non-profit sector have the talent, courage and persistence to meet and master this challenge? I hope so. As the guru said, “We’ll see.”

I do believe “the law” is on their side.