Philanthropy Makes Me Angry, 4/11
but what to do about it?
Measured in terms of its size, the philanthropic sector is big and getting bigger; this is not necessarily a bad development in itself, but the sector’s growth in recent decades has been striking. Ideologically, the largest foundations’ policy-oriented grantmaking is lopsidedly liberal and getting more so—or, in the current jargon, it is “woke” and getting “woker.” Most troubling, perhaps, is that philanthropic organizations have become more and more politicized.
He identifies some of the problems, but the solutions he presents seem unsatisfying. For example,
In The Givers, Callahan floats the idea of redefinitions that would serve to move many (c)(3)s into the politically permissive (c)(4) category, where contributions to them would not be tax-deductible.
. . .Philip Hackney writes: “I think about the great potential of well-democratically-harnessed philanthropy and seriously doubt that can be accomplished within the space of ‘private’ philanthropy. I lean strongly towards eliminating tax benefits for this private ‘philanthropy’ by denying tax exempt status to those organizations that are not public charities.”
Simply limiting or eliminating the tax deduction for charities would send more revenue to government. It is hard to say what the consequences of that might be. But government might be less woke than the philanthropic sector, just because government has more inertia.
What I would like to see is a cultural norm that gives higher status to for-profit investment and lower status to non-profits. For-profit firms are accountable to customers. Non-profits are at best accountable to donors and at worst allow wide discretion to managers who are trend-followers and toadies.
All that said, I don’t practice what I preach. We use a family foundation to give to charities instead of government. This year, we probably will donate to aid refugees from Ukraine. That cause will fall off the radar screen at some point, but that is when aid will be most needed.
Here is how philanthropy has evolved:
stage 1: let's pool our labor to help fix some problem
stage 2: we are all really busy, so let's pool our money to pay people to fix some problem
stage 3: we are frustrated we can't fix the problem ourselves so let's pool our money to lobby the government to force everyone else to spend their money or time fixing the problem
I will add that a lot of non-profits are shams, acting as lifestyle vehicles for their leaders. I went to school with a bunch of rich kids in the ivies and many of the philanthropic organizations they run are a joke -- family trusts that pay the kids as managers a salary, support all kinds of travel, have some high profile parties that support the leaders' social status, and very little spent on actual results.