From Behind Closed Doors: The Insidious Nature of Traditional (Corporate) Think Tanks and Non-Profits

Ryan MacLeod

The Center for an Urban Future (CUF), a small independent and non-profit public policy think tank located on Wall Street that focuses on “…highlighting the critical opportunities and challenges facing New York and other cities, and providing fresh ideas and workable solutions to policymakers” (Center for an Urban Future), exhibits many of the unsavory characteristics associated with other self-interested organizations. I served as a research assistant with the organization between August and December of 2014. When offered the position of research assistant, I was very excited about the possibility of amassing research experience while simultaneously helping poor and disadvantaged New Yorkers. However, I quickly became somewhat disillusioned with the organization. While steadfastly against the nefarious actions of the financial institutions in the lead up to the financial crisis, working at a firm physically located on Wall Street imbues this or any organization with an added sense of prestige. I joked that I was working on the “good part of Wall Street,” where people fought for the poor and working class. Unfortunately, it quickly became evident that their plight was secondary to the perpetuation of the organization. This “independent” organization, supposedly in existence to fight for working-class principals and people proved ultimately unwilling to challenge what I consider to be the systematic reasons for inequality. In this sense, this organization does more to preserve the status quo then actually fight for positive change. This paper will discuss my time as an intern at Center for an Urban Future and the broader effects that I perceive their and other non-profit’s work as having on society.

The genesis of my negative feelings towards the organization was the result of a combination of circumstances and events. I was hired as a research assistant to assist with the formulation of reports designed to positively impact public policy in New York City. Initially, this consisted of a great deal of secondary research, data entry, and other tasks that directly contributed to the writing of reports. I primarily worked on Creative New York 2014, an update to a 2004 report highlighting the contribution of creative industries to New York City’s economy. As it happened, an intern in the operations department quit and the person in charge of events and fundraising asked me to do some extra work for her. She explained that the center was considering honoring a former executive director of the Port Authority and Commissioner of the New York City Department of Environmental Protection with an award at the center’s annual gala. My task was to find contact information for the various people who served on the New York City library and Brooklyn library board of directors with him and I was provided a list of contact names.

In short, galas exist to fund organizations like the Center for an Urban Future, and they often choose honorees based largely on whom they believe can fill the building with rich donors. When a person is honored with an award, their friends, coworkers, former coworkers, people they served with on boards, and any rich or important person that they can be found to have crossed paths with will receive a personal invitation to the event (see appendix one). As I was researching board members of the New York library system, I was specifically instructed to not locate contact information for any “literary people”, and to “focus on the money.” Perhaps not coincidentally, CUF recently released a report in late September, Re-Envisioning New York’s Branch Libraries (Giles, Estima, & Francois, 2014), and a copy of that report accompanied or preceded many of the invitations to the gala. It seems the decision to devote the center’s limited resources to this topic was in some part related to the influential and wealthy people that have shown a great deal of interest in public libraries. By adding these names to the center’s rolodex and providing research that is likely to interest them, it is hoped that the rich and influential will be moved to share some of their largess with the center and fund future research.

The center’s report on New York branch libraries bothers me for various reasons. It should be noted that I had no role in this project and I have no information of how it came to be (who funded it, why they funded it, etc.). I can also say that the report seems to be well done and is a positive contribution to the New York public libraries. Yet, I cannot help but wonder whether the decision to complete this project was in any way tied to the rich and powerful people that served on the board of directors of the New York public library. Is it entirely coincidental that the Center for an Urban Future decided to devote so much of its limited resources to the exploration of the libraries of New York City and also decided to honor someone serving on the board? The issue at hand is not whether the library report can do some good; there is little doubt that it can. Also, with many think tanks and research organizations doing various reports throughout the city, it is important for CUF to carve out various niches in which they can do work that does not end up becoming redundant. However, by focusing on issues like libraries, street repair, creative industries, the spread of chain stores, along with other arguably minor issues, Center for an Urban Future is in some way giving the impression that what is preventing New York City from being a prosperous and equitable society is the lack of a few minor tweaks to the existing system.

Perhaps nothing illustrates CUF’s commitment to the existing system better than its other honoree at the gala, a prominent person in the Urban Investment Group of Goldman Sachs. Her work has included “spark(ing) the creation and preservation of thousands of units of affordable housing” as well as “(bringing) schools, healthcare facilities, food markets and other vital community resources to the New Yorkers who need them most” (Center for an Urban Future, 2014). On the surface, this would appear to be the exact type of person who deserves to be honored. She has clearly done many positive things to help the city of New York. Additionally, having attended the gala myself, it was obvious that she was incredibly popular with her employees and employers. I have no doubt that she is a dynamic and highly capable person who is doing great work that is helping people at the micro level. However, there is a much deeper issue than her apparently positive work in New York City: she works for Goldman Sachs.

Goldman Sachs is the bank that sold mortgage-backed securities to its investors and then bet that they would fail; it is the organization that contributes millions of dollars in campaign contributions to both Republicans and Democrats, particularly incumbents; it is the organization that spends millions of dollars in lobbying efforts to keep the rules favorable and regulations weak; it is the same organization that played a very large role in nearly bringing the world to financial ruin. Goldman Sachs has continuously fought against rules and regulations that would secure the financial industry and assist borrowers. I would argue that there is little doubt that the Urban Development department exists for less than pure reasons, largely to provide Goldman Sachs with good public relations and to give them access to events like the CUF gala. The city council people, deputy mayor, and other important attendees of the gala are present and witness Goldman Sachs being honored, and the Goldman people can make additional friends and contacts.

The Center for an Urban Future is located in the financial district of New York at 120 Wall Street. At some point, the Center for an Urban Future had to make a decision about what kind of firm it was going to be. It is clear from the center’s website which way it is chosen to go. The Board of Directors includes a person from Citigroup, J.P. Morgan Chase, and Goldman Sachs. The biggest financial crisis of the past 70 years has more or less gone completely ignored at CUF. Not one single report focusing on the financial industry has been released[1], and none is currently planned for the future. CUF tackles fringe subjects and nibbles around the edges of inequality. While I originally felt good about the work I was doing, I came to see myself as unintentionally being a cog in the machine that perpetuates an unjust and unequal system. While there is value in researching libraries and much of the various other work that has been done, there is a significant opportunity cost associated with it. By doing this work, we are neglecting other possible avenues of investigation. CUF has decided to allow Wall Street people on the board of directors, to honor them at our galas, and to be their friends. At the gala, everyone seemed happy to see everyone else and they will likely see them again at the next event. This, to me, represents a central problem of how inequality comes to be perpetuated.

If Goldman Sachs workers and executives make friends with influential people, including those at organizations like CUF that are supposedly fighting for economic equality, who will challenge them? It becomes very difficult to make a report that attacks an industry or organization when you know the people that run it on a first name basis and they are in large part funding your existence. This idea goes far beyond the CUF gala: consider those in charge of regulating the financial industry. Recently, the Sunlight Foundation of Washington D.C. (Influence Explorer, 2014) released a report highlighting the campaign contributions and (reported) lobbying efforts of businesses. At the very top of the list in campaign contributions between 2007 and 2012 is Goldman Sachs. This same report goes on to show a combined spending of $37.9 million from Goldman Sachs that resulted in $229.4 billion in federal business and support[2]. Lobbying and campaign contributions help the bottom line. Goldman Sachs almost certainly supports Center for an Urban Future for the same reason it gives campaign contributions and lobbies: it is in their best interest to.

Goldman Sachs is a publicly traded company, and their job is to maximize profit. Funding CUF is one less potential challenge to their maximizing their profitability if it helps prevent them from taking a critical perspective towards what they do. Add to this that contributions to non-profits like CUF are tax deductible. That is, Goldman Sachs can give money to CUF instead of paying some taxes. The choice of giving money to the government or funding a non-profit and exerting soft power over what they do (and do not) study makes it clearly in the best interest of Goldman Sachs to help fund CUF and organizations like it. It is good public relations and good for their bottom line. Taxes that could be used on entitlement spending or programs for the poor can be avoided by making contributions to non-profits, and CUF is a direct beneficiary of this system.

A non-profit is tax exempt since there are supposedly doing a more noble type of work, outside of the cut throat capitalist system. Yet, at what point does a non-profit outlive its usefulness? Organizations like CUF have no incentive to rock the boat, and that helps them stay funded and remain in business. The workers at CUF keep their jobs, offices, 401ks, business cards, and access to the city’s important people. They are self-interested, just as Goldman Sachs and most every organization is. If criticizing Goldman Sachs makes it harder to fund the organization and make friends, then they have shown that they will not do it. That is the choice that has clearly been made. The Great Recession has been met by a fierce effort by Wall Street banks to prevent any meaningful changes to the rules. Glass-Stiegel has not been re-invoked and most of the Clinton/Bush deregulatory efforts remain in place. Americans remain overwhelmingly in favor of additional Wall Street Regulations,[3] yet our representatives fail to act. Believing congress’ inaction is not influenced by the millions in campaign contributions and lobbying efforts would be naïve or disingenuous.

With rampant structural inequality and a financial system that brought our country to the brink of collapse, can it be seriously argued by anyone that organizations like Goldman Sachs are positively contributing to society? Even more absurd, can anyone argue that the good deeds of the Urban Investment Group can even begin to undo the countless evils done by the rest of Goldman Sachs?

Wall Street banks are very profitable[4] and would like to remain that way. They have grown “too big to fail,” and executives can become rich if the stock price rises, and if there is a crash the government will be forced to bail them out. CUF’s relationship with organizations like Goldman Sachs would seemingly contradict their commitment to “expanding economic opportunity and targeting problems facing low-income and working-class neighborhoods” (Center for an Urban Future). Hurt most by the financial crisis were low-income and working class people. Vacant housing hurts low-income neighborhoods, and the financial crisis has disproportionately decimated lower-cost neighborhoods (See Appendix 2). Yet, CUF honors and partners with Goldman Sachs, supposedly for the benefit of working class New Yorkers.

It is important to note that much of what I write of Goldman Sachs is not conjecture or opinion. They have paid billions of dollars in fines and settlements for their illegal actions, including a $3.15 billion settlement with the US government to repurchase mortgage backed securities from Fannie Mae and Freddy Mac (Snyder, 2014), a $550 million fine paid to the SEC[5] (Securities and Exchange Commission, 2010), and several others. While they dispute many of the facts relating to their role in the crisis, it is not unreasonable to view their settling of lawsuits and paying fines as somewhat indicative of their role, or at the very least their inability to prevent evidence that makes them look guilty from amassing.

It is very difficult to view CUF as taking a position that will truly assist inequality when considered through this lens. If organizations like the independent nonprofit Center for an Urban Future contribute to the perpetuation of the status quo, who is fighting for the working class? Supposedly, the very existence of this organization is to help the very people most hurt in the financial crisis, and those who would be most hurt in a future crisis. However, as with many organizations, CUF has become more interested in its own perpetuation. Its actions can more clearly be traced to their own self-interest rather to an actual attempt to curb of inequality. Their primary objective is to remain in existence and they act in ways consistent with that goal.

Non-profit organizations are hardly immune to being self-interested. When polio was cured, the March of Dimes did not go out of business; it changed its focus and exists to this day. By having Wall Street people on the Board of Directors, accepting donations from Wall Street firms, and honoring Wall Street people at their annual gala, CUF is making an investment in its own existence. The Wall Street money that CUF uses to run itself would almost certainly cease immediately if the center changed its focus towards a critical examination of the financial sector. Since its founding in 1996, it has (to my knowledge) not focused a report on taking a critical view of New York’s financial industry despite being located on Wall Street; this is all the more troubling when one considers that the largest financial crisis since the great depression was centered a few hundred feet away from their office. There must be some cognitive dissonance among the CUF members as they walked to work in 2008 to help the working class and somehow missed an obvious culprit that was literally steps away. A desire to remain in existence has a profound effect on inequality and is part of what helps perpetuate the unfair system described by Karl Marx.

Marx wrote of society being divided into two distinct classes: the bourgeoisie and proletariat. Using these terms, the gala would be considered a very bourgeois event, where the city’s rich and powerful come together to celebrate how they are contributing to the betterment of the poor and working class. Implicit in this is the assumption that the current economic structure that has been so advantageous for them is righteous and justified since organizations like CUF are around to help those that have fallen through the cracks. A gala is an event where not only do the rich and powerful beneficiaries of the capitalist system get to have a night of great food, drinking, networking, and fun; they also get to feel great doing it. They cut a (tax-deductible) check to CUF who will in a sense “take it from there,” freeing them to return to their highly paid and influential positions where they can pursue profit unabated and unbothered (and, to Marx, be themselves alienated by this pursuit). The lower class sees organizations like CUF fighting for them and the beneficiaries of the system redistributing their wealth. Many people view the economic system as being just despite their lack of success in it, and CUF’s existence adds to this. The bourgeois members of government make decisions to improve their chances of re-election and profit following their “service.” Inequality in America continues to worsen as Americans work harder and longer hours. Those owning the corporations profit further from the need of the proletariat to borrow to maintain their lifestyles as real wages continue to drop and students from non-rich families begin their lives riddled with student loan debt as college tuition rises. The banks, including Goldman Sachs, continue to profit from the destruction of the lower class and a tax deductible donation to CUF will not do anything to undo that.

CUF is, of course, not the reason for inequality; but it is hardly part of the solution. Rather, it is part of the superstructure, giving the outward appearance of fighting against inequality while in actuality not do so in any meaningful way. CUF workers are meant to feel important, if only on minor subjects[6]. Its existence further cements the capitalist system and keeps the few rich at the extent of the many not rich. This is not the type of organization I wish to spend my life helping. My experience has opened my eyes to the world, and the vast number of people that are willing to justify their actions by pointing out that “this is how the world works.” I raised these objections to certain CUF people and was essentially met with some version of “it is unpleasant to have to take Goldman Sachs’ money, but this is what we have to do to fund the center and do the good work we do.” This paper is my response to this answer.

As it happened, CUF had its “most successful fundraising event in the organization’s history,” which was met with cheers and applause upon its announcement. Each speaker spoke glowingly about the fantastic work of CUF, and how much better the city and world with be with more organizations like it. Everyone smiled, cheered, shook hands, exchanged business cards, drank, and had fun. There will be no awkward fears of bumping into anyone at future events. Everyone left happy and the status quo became just a bit more entrenched. CUF survives for at least another year, and the organization’s rolodex of potential ticket buyers has expanded for next year’s gala. The class divide of the haves and have-nots is ironically reinforced by the actions of an organization that supposedly exists to fight for the working class and against inequality. Through soft power, Goldman Sachs helps control the research topics without the need to say anything about what CUF should and should not write about. There need not be a formal conspiracy when incentives are in alignment. I argue it is implicit in the monetary support to not criticize, and both sides understand the deal perfectly, choosing not to speak of it. Everyone gets along and nothing actually changes.

At the event, the executive director of CUF thanked Goldman Sachs for their “incredible generosity.” They spent a lot of money that night. Would shareholders of a publicly traded company tolerate Goldman Sachs spending tens of thousands of dollars on some think tank if it did not benefit the company? I suspect not. CUF’s desire to survive and endear themselves to the rich and powerful limits the scope of its potential research and reports through soft power. The Center for an Urban Future’s location on Wall Street would add instant credibility to any criticism of the financial sector and the CUF staff is more than capable of doing that type of report. That is the type of work I would have liked to have taken part of in my time with the organization. But it has not, and as far as I can tell will not. Even as CUF cranks out reports to fight inequality, the city, country, and world will likely continue to become more unequal, and that is a shame. CUF does do work that is helpful. To put it in terms related to CUF’s successful street repair report that led to policy changes that improved the roads, they are filling in pot holes while ignoring the Grand Canyon. The growing inequality in the United States is a major issue and I wish CUF could do more to fight back.

Non-profits in general are usually started with good intentions and have a mission statement that makes it seem worthy of financial support and tax exempt status. But if the firms that perpetuate inequality are funding these non-profits, how will things change? The next time you see an organization tout its non-profit status, I suggest you take a closer look.

Bibliography

Center for an Urban Future. (2014). 2014 Gala. Retrieved from Center for an Urban Future: https://nycfuture.org/gala/2014

Center for an Urban Future. (n.d.). About. Retrieved November 11, 2014, from Cebter for an Urban Future: https://nycfuture.org/about

Center for Responsible Lending. (2014, July 18). Center for Responsible Lending. Retrieved from Wall Street Regulation Still Needs to be tougher, Americans Overwhelmingly agree in new CRL/AFR poll.: http://www.responsiblelending.org/media-center/press-releases/archives/Americans-Agree-Wall-Street-Regulation-Still-Needs-to-be-Tougher.html

Giles, D., Estima, J., & Francois, N. (2014). Re-envisioning New York’s Branch Libraries. New York: Center for an Urban Future.

Influence Explorer . (2014). Retrieved from Fixed Fortunes: http://influenceexplorer.com/fixed-fortunes/

Securities and Exchange Commission. (2010, July 15). sec.gov. Retrieved from Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO: http://www.sec.gov/news/press/2010/2010-123.htm

Snyder, B. (2014, August 22). Fortune. Retrieved from Goldman Sachs in $3.15 billion settlement with federal regulators: http://fortune.com/2014/08/22/goldman-sachs-in-3-15-billion-settlement-with-federal-regualtors/
Notes

[1] This is to my knowledge, and since I discussed the topic of this paper with one of the researchers and he did not correct my assertion that the center has done no work in this regard, and since my search of the website yielded no results of this type, I will assume it to be so.

[2] For all companies, $5.8 billion in combined lobbying and campaign contributions netted a return of $4.4 trillion through support and federal business.

[3] For example, a Lake Research poll released in July 2014 reported 78% of voters “believe that financial rules and enforcement need to be strengthened, and that Wall Street’s bad practices have not changed enough” (Center for Responsible Lending, 2014).

[4] For example: http://www.goldmansachs.com/investor-relations/financials/current/quarterly-earnings-releases/ . They are publically traded and their profits are widely public.

[5] Including an admission that “CDO Marketing Materials Were Incomplete and Should Have Revealed Paulson’s Role”

[6] The Center did do work on workforce development, which is arguably more important than the other topics, but can still be seen as “nibbling around the edges” of an unfair system.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s