April 07, 2008
The Gift Horse: Philanthropy and the Public Interest
Michael Blim
Americans gave away $300 billion dollars to charity in 2006. The amount is equivalent to twice the gross domestic product of Finland, three times that of the Philippines, and six times that of Morocco. Americans, in other words, give away a lot of money.
By virtually any ethical code I can think of, to give is godly, or at least goodly. A dollar passed to a homeless person, a dollar to kids selling candy for their band, or another to a Salvation Army soldier on a street corner at Christmas time – these little gifts signify our compassion. Sure, sometimes we think “there but for the grace of God,” or treat the gift as fulfilling an obligation to help our social inferiors. Compassion however tenuous is the basis for our actions.
But let’s take a closer look at the gift horse: Could it be a Trojan horse? In every other walk of life, we simply assume that money is power, and power is money. Consumers have purchasing power. Congress has the power of the purse. Bankers have the power to propel our economy, or as we are learning now, the power to ruin it. We hope that Ben Bernanke has the power to save it. Corporate bosses use their power to hire, fire, invest—and work to appoint boards of directors that will pay them ungodly sums for their efforts.
Charity, and especially at $300 billion dollars a year, is power. We give to whom we think deserves it, and we give it for things or services we believe are useful or necessary. We decide, and deciding is power.
The more money you give, the more power you have. The point of philanthropy, Andrew Carnegie believed, was to move society in the direction you want to see it go. He of the bloody Homestead Strike gave it all away. Carnegie gave monies that built local libraries, supported the development of standardized educational testing, dug up Mayan ruins, helped identify DNA, discovered radar and hybridized corn, among other things.
You may agree with the priorities of the present-day Carnegies, or not. But you can’t vote for or against them. In America, it’s their party, and they can do what they want.
In our new Gilded Age, the rich are richer than at any time in our history. This is also the golden age of philanthropy. Every day one can open the newspaper and find another instance of generosity. Museum wings and paintings, hospital buildings and science research centers, new buildings on America’s college campuses, new efforts to conquer diseases and learn the secrets of life – these are the types of things that a moment’s reflection brings to mind as instances of modern philanthropy.
The edifice complex of modern philanthropists irks some among their number. William Gross, a billionaire discussed by Stephanie Strom of the New York Times, (September 6, 2007) writes that “when millions of people are dying of AIDS and malaria in Africa, it is hard to justify the umpteenth society gala held for the benefit of a performing arts center or an art museum. … A $30 million gift to a concert hall is not philanthropy, it is a Napoleonic coronation.”
As Gross notes, philanthropy is an advertisement for virtue. It feeds a Pharaonic conceit of the rich that they are the anointed builders of society. The sentiment treads a well-worn path. “God gave me my money,” claimed John D. Rockefeller. And even if the money were tainted, it could be washed in the blood of the lamb. “People charge Mr. Rockefeller with stealing the money he gave to the church,” noted one Cleveland pastor. “But he has laid it on the altar and thus sanctified it.” (Matthew Josephson, The Robber Barons, 1962 [1934])
For all of the misery Rockefeller brought to millions of Americans – he was perhaps the most hated man in the American heartland at the end of the 19th Century – his monies were put to work trying to wipe out hookworm and yellow fever, Donald McNeil Jr., wrote in the March 4, 2008 New York Times. His son devoted family resources to support birth control at home and abroad, among scores of other things including a gift of the land upon which the United Nations headquarters was built.
Bill and Melinda Gates and Warren Buffett are perhaps today’s greatest American philanthropists. They have pooled their fortunes into a $60 billion dollar foundation, and a large part of its funds support efforts to eliminate worldwide scourges such as HIV, tuberculosis, and malaria.
This last campaign against malaria has prompted some serious concern about the role of private philanthropy in setting a worldwide policy direction. Should philanthropists, however generous, decided world public health goals? Should their foundations using the power of the purse make scientific decisions about the values of one vaccine over another, one treatment over another?
Not everyone thinks so. The Times’ McNeil reports that many experts disagree with setting malaria eradication as the present goal. They believe that an eradication campaign mis-directs precious financial resources into a battle that presently cannot be won, while under-funding or overlooking more practical solutions that can drastically reduce infection. (You may recall that in my last column, I noted how the diffusion of $6 mosquito nets and $3 antibiotic treatments is achieving a dramatic reduction in malaria infection rates.)
The argument, as McNeil reports, is also about power. Who shall decide? It is perhaps not surprising that the Gates Foundation is the gorilla in room. If it says that eradication is the goal, how could it not be? Dr. Arata Kochi, the malaria chief of the World Health Organization, acknowledges the fact by his attack on the power of the Gates Foundation to dictate the shape and focus of the world campaign against malaria.
Kochi, McNeil reports in another posting for the Times (February 23, 2008), accused the Gates Foundations of creating a research cartel that kept funding among themselves at the expense of other, perhaps just as rewarding initiatives. In an internal WHO memorandum, Kochi speculated that the Gates-sponsored malaria campaign could have “implicitly dangerous consequences on the policymaking process in world health.” He has been one of many who have argued for pressing malaria control rather than what they see as the unrealistic and more costly goal now of complete eradication advocated by the Gates Foundation.
Described as a highly effective bureaucratic reformer of the world health effort against malaria, Dr. Kochi lost his job, according to McNeil’s February 23 report, because he had offended the Rockefeller Foundation, another major public health player.
McNeil writes: “Some scientists have said privately that the foundation is ‘creating its own WHO.’”
Herein lies the point, not coincidentally useful to be made 8 days before Income Tax Day, when charity giving deducts $40 billion dollars from the federal tax take.
Money is power. Private money can create public power. In a sense, the rich buy public power the way other people buy groceries. They also buy “rights” to use public power in any way they see fit. Some decisions may be good or bad; some outcomes may be good or bad.
Nobody votes on their choices. Only the occasional weight of shame deters these masters of the universe from doing what Carnegie set out to do: to remake the world in a way he thought was better.
Gilded Age, Golden Age of philanthropy, tarnished and impoverished democracy. This is part of the design of our times.
Posted by Michael Blim at 10:02 AM | Permalink




Comments
Out of curiosity, does that $300 billion include church building, bibles, and other "idealogical" goals?
Posted by: akatsuki | Apr 7, 2008 10:54:30 AM
As a US taxpayer, I count myself as a major giver of gifts to oil companies, the military industrial complex and reckless wall street investment banks, not that I have any choice in the matter.
Posted by: Jared | Apr 7, 2008 11:02:16 AM
The Times’ McNeil reports that many experts disagree with setting malaria eradication as the present goal. They believe that an eradication campaign mis-directs precious financial resources into a battle that presently cannot be won, while under-funding or overlooking more practical solutions that can drastically reduce infection.
This is neither here nor there. Let us say we collectively would spend amount x on "practical solutions" to malaria. It turns out Bill Gates wants to spend 5x on eradication. Let him! We can continue to spend x on mosquito nets. Unless you're claiming the Gates money actively hinders your own malaria efforts - instead of merely being directed differently - there's no reason to worry about his activities.
Posted by: D | Apr 7, 2008 11:49:10 AM
Unless you're claiming the Gates money actively hinders your own malaria efforts - instead of merely being directed differently - there's no reason to worry about his activities.
You miss the authors point. A substantial portion of that 5x is money that would be subject to public deliberation under a more progressive tax structure. If those resources would save more lives being directed at mosquito netting, rather than rosary beads, christian science bookstores, DDT dusters or whatever else Mr. Gates decides, we have no recourse or voice in the matter. What's worse, this decision is in the end underwritten by the charitable exemption—subtracting money from the x available for "practical solutions."
Posted by: Zerstuckelung | Apr 7, 2008 12:30:56 PM
I'm sure a more progressive tax code would indeed change the sums x and 5x, though I'd submit the almost trivially small character of each sum in relation to the overall GDP or taxation base or whatever would make charitable giving an odd basis for debate on tax policy.
But consider possible concrete outcomes of a more public charity:
- We'd very possibly decide not to spend at all on Africa, after all they're not our people and there are real problems at home
- Decide not to spend on condoms for AIDS or family planning involving abortion
- Decide to ignore climate change because it's too politically explosive
The mere fact that one outcome involves "public deliberation" does not make it better than another competing outcome that involves individuals doing what they think best.
Posted by: D | Apr 7, 2008 12:43:44 PM
How relevant can any discussion of philanthropy be if it fails to bring to our attention the implicit restrictions that are placed upon the process by the all-important tax-exemption. What seems like a good system winds up being a gate through which many beneficial and productive endeavors cannot pass as they fail to qualify.
The Google Foundation is leading a movement away from this and attemps to use its philanthropic endeavors, not to generate a tax shelter it doesn't need to simply make more money when it already has an embarrassment of riches, but rather to stimulate productive, ostensibly profit-making ventures, targeted at using innovation and market solutions to improve the lot of those who might benefit for a day from a hand-out but will ultimately, it is hoped, grow strong enough to pull itself, with some help, up onto its legs and beging the march towards genuine progress. I think an examination of philanthropy that doesn't address this is neither wide nor deep enough to bring us the kind of understanding it deserves if we really wish to do more than assuage our guilt or alleviate an ugly stain.
Posted by: doug l | Apr 7, 2008 1:45:21 PM
I agree with D.
Public funding (govt to govt.) often has a way of going to politically motivated causes, occasionally disappearing into the coffers of kleptocrat rulers of donee nations in dire need of the funds. And as many have pointed out, tax payers hardly have any say in how tax funded charity should be spent. Moreover, if the donor nation is more focused on war than charity, guess whose share of the pie will be sliced thinner. Although the brutish Bush administration can count the US initiative to treat and control AIDS and Malaria in Africa as its most effective and compassionate endeavor, research funding for the NIH has seen a decline. It doesn't take a genius or an accountant to figure out where much of that money has gone and continues to go.
Posted by: Ruchira | Apr 7, 2008 4:05:33 PM
Nobody votes on their choices.
Well, it is their money. But if you want to argue for a more progressive tax structure, criticising philanthropy seems an odd way to go about it. Would the beneficiaries of a more progressive tax structure make better philanthropic decisions? Or would the government? D & Ruchira say no.
Only the occasional weight of shame deters these masters of the universe from doing what Carnegie set out to do: to remake the world in a way he thought was better.
But by and large, it is better, isn't it?
Posted by: Sagredo | Apr 7, 2008 9:43:15 PM
You miss the authors point. A substantial portion of that 5x is money that would be subject to public deliberation under a more progressive tax structure.
That would have to be quite a different, rather than just 'more progressive' tax structure. In simple terms, Gates founded Microsoft, owned a large fraction of the company's stock (which, at the time, of course, was worth virtually nothing). Over time, that stock became worth a great deal, but he did not sell it. Until he sells it, there are no capital gains to tax, regardless of how progressive the rate is (or are you proposing that unrealized gains should be taxed?) Before he ever sold it, he transferred the stock to the foundation -- which then sold it. At what step (or steps) in the process should the government have confiscated the wealth via progressive taxation?
And here's another perspective on the wealth of Gates and Buffet -- the point being that the annual returns from their fortunes are not large compared to the funds that even local units of government control:
http://www.tcsdaily.com/article.aspx?id=040708A
Had the fortunes of Gates and Buffet been completely expropriated by Uncle Sam, the money would have been lost in the noise -- barely a ripple on the surface of the pond. A 5% return on $100 Billion is $5 billion. Total annual U.S. government spending (federal, state, and local) is $5 trillion:
http://www.usgovernmentspending.com/index.php
So, the Gates Foundation annual resources are on the order of 0.1% of those controlled by government units in the U.S.
Are you really arguing that the government should not allow the single two most successful individuals to amass even 0.1% of the power of government? That such 'outsized' influence is intolerable?
Posted by: Slocum | Apr 8, 2008 8:28:05 AM
I think Michael Blim's series of artcles is very welcome, not because everything he says is necessarily right, but because these are issues that should always be raised: what does society owe to an individual and what does he /she owe society, when does the triumph of self-interest become a loss to everyone else?
Here in Israel, for example, there's a Russian Jewish oligarch named Arkady Gaidamak who donates millions to populist causes, such as running a tent encampment for 1,000s of those displaced during the 2nd Lebananese War, or buying major football clubs. Now he is cashing in on his openly purchased popularity by running for Mayor of Jerusalem. His money is all clean - fresh from the laundry.
I often think it wouldbe great to harness the rich, as Blim suggests, but the catch is that money buys loopholes, goes offshore, does what it wants to. If one country, yes even the US, tries to tax the rich "to much" they just skip to another flower that is pinnning for a visit from the money bee.
Posted by: aguy109 | Apr 8, 2008 3:32:05 PM
Can we call him a "charity shark?"
This man was once THE government. He is making up for lost time at break neck speed. Funny the event was organized for the following purpose:
The event raised about $1.5 million and brought together dozens of billionaires, celebrities and activists to network about tackling such problems as global warming, water shortages and disaster relief.
Posted by: Ruchira | Apr 9, 2008 12:16:20 AM
Post a comment