Against Philanthropy
- Posted by: Jenny Price , JustinGabbard
- on August 9, 2007 at 5:24 pm
As a writer and historian, I have received grants from the Mellon, Guggenheim, and Cummings Foundations. Still, despite the risk to my future solvency, I’d like to argue, for a moment, against philanthropy.
The average major U.S. corporation maximizes profits as its primary goal, while paying more limited attention to social and environmental consequences. It attempts to minimize wages and the costs of material services, and does not prioritize a minimal carbon footprint and other measures of sustainability. Then, the company and its executives donate a tiny percentage of their profits to try to fix the social and environmental problems to which their business practices contribute. In the process, these donors receive sizable tax write-offs that impoverish public social and environmental programs. And most philanthropic foundations are endowed by and invest their assets in these same companies, which create the very problems the foundations address.
Undoubtedly, most philanthropists mean to make the world a cleaner and more equitable place. Yet it’s like trying to reduce your sugar intake by eating 125 chocolate bars every day and then swearing off the occasional Pop-Tart. It’s as if the right hand has never met the left. But here is the punch line for this argument: We can all be good citizens much, much more effectively in the course of making money than in the course of giving money away.
| Quote: |
| It’s as if the right hand has never met the left. |
Happily, this reasoning is starting to appear in the mainstream. Just this year, the decidedly pro-free-market Los Angeles Times published three articles investigating the highly lionized Bill & Melinda Gates Foundation. Like most U.S. foundations, this one invests 95 percent of its assets and uses 5 percent to fund programs. The foundation has famously made the AIDS crisis its first priority—but as a shareholder, it invests millions in pharmaceutical companies that refuse to make AIDS drugs affordable. In the Niger Delta, a $218 million Gates Foundation program provides polio and measles vaccinations. Yet the foundation invests $423 million in five major oil companies whose oil-plant emissions have created a regional epidemics of respiratory illnesses. These emissions have also been linked to immune deficiencies that make children more vulnerable to polio and measles.
Altogether, the Times found that at least 41 percent of the foundation’s available assets—and at least 87 percent of future partner-in-philanthropy Warren Buffett’s company—is invested in companies whose labor, accounting, and environmental practices clearly fuel the crises that the foundation sets forth to ameliorate.
But what if Gates and Buffett simply applied their sentiments as philanthropists to their work as CEOs in the first place? What if they seriously prioritized employee salaries, benefits, and job security—from Seattle to China? And if they emphasized sound environmental practices, which reap long-term collective benefits at the expense of outsize profits and outrageous executive salaries? They might not have $30 billion to give away, but giving away that much might not be as necessary. We sanctify philanthropists who give away the millions they earn in part by hoarding ever larger shares of corporate profits. Instead, we should be asking how they accumulate and invest the inordinate sums of money that make their generosity possible.
In the meantime, the United States is losing $40 billion annually on tax write-offs for philanthropy. And the public is ceding its power to set priorities. The assets of the Gates Foundation now dwarf the World Health Organization budget. Does anyone really want any single private interest to exercise such extraordinary influence on international health policy? On our own shores, meanwhile, charitable donations to domestic organizations that grapple with poverty and racism have declined to an all-time low. Wealthy donors apparently have concluded that social and economic travesties across the ocean are more appealing to address.
A small part of the solution, and a huge part of the problem: that’s philanthropy in 2007. And yet giving away money cannot possibly be an irredeemable action. First, make sure you do no harm. Pay workers fairly for the wealth they help you accumulate, and don’t create and contribute to enormous environmental messes. Only then, think about handouts. Right hand, meet the left hand.
DISCUSSION: 10 Comments
Thank you for risking your income in order to write this article.
Personally, I think the whole non-profit model is flawed – generally non-profits have to go begging for money from these corporate foundations, and they have to ask their boards (generally populated by rich people) how to run their organizations. As more money is filtered through private non-profits rather than governments, rich people get more powerful and voters are undermined.
On the other hand, there are some very exciting companies out there that combine making the world a better place with making a profit – Working Assets comes to mind. The internet also offers some very innovative opportunities for a new, more democratic kind of philanthropy – sort of the public radio pledge drive/Howard Dean campaign model. Take a look at http://www.kiva.org for an example.
Sadly, you completely missed the point. While it is true that you must watch closely to whom you give, it is at least as important to consider what you give, and whether it’s really such a good idea at all.
A flood of donated second-hand clothes from the first world practically killed off Africa’s textile industry, and its peasants are starving because of free food from the United Nations—who can compete with free goods?
Not only that, but people are being entangled into a dangerous dependency. If their own industry is kept low and their markets non-competitive, they are dependent on a steady flow of aid. This not only applies to food and clothing. Developed nations provide third-world countries with roads, water supply and medical infrastructure for free, but when the aid dries off the infrastructure will collapse because no-one can provide upkeep and maintenance.
Aid organizations often boast about the jobs they create. But what good are those jobs if they are paid by charity alone? Even worse yet, these jobs keep invaluable skilled workers from entering the local job market, where they could help close the divide between developed and third-world countries.
I’m not proposing not to help at all—of course not. But helping people is much more difficult than simply throwing food, money and power plants at them. Such measures mainly help aid organizations and their affiliates.
Build infrastructure, but make them pay fees. Help them to fight corruption, so that their taxes are put to good use. Educate people. Provide troops to put an end to violence, so that the country can start to rebuild itself. They always say “teach a man to fish.”
Point well taken. However, there are many responsible corporations run on a triple bottom line (profit, planet, people) who contribute philanthropically. Key is to raise standards and perhaps devise a Corporate Philanthropy Reporting system that help beneficiaries and the public decide who the good philanthropists are.
One critical point to challenge in your courageous article is government’s capacity to spend taxpayers’ funds effectively. That’s questionable when it comes to funding creative, innovative, society-wide initiatives that make a difference. Social entrepreneurs, civil society and NGOs have been rather good at discovering what citizens need, a task not exactly suited to politically controlled government.
Well, there are some flaws in your argument: Gates could not help in any way the AIDS or malaria sufferers from his CEO position (as Microsoft is powerless in the pharmaceutical industry and has a rather slight footprint in Africa), nor Buffet from his multiple investments has anything to do with pharmaceuticals and very little with Africa.
Having all their employees happy, environmental and paying more taxes will not help much the AIDS or malaria sufferers, as the world status quo before their existence proved.
I tend to look favourably at their philantropic approach as being a foundation with independent and stable income allows them to approach problems that nobody has approached before. As always, you don’t have a guarantee that they do it well, but government or WHO existed before them and have not been very succesful in promoting malaria research…
And it’s better than spending their disposable income in militias or luxurious life.
Yes, philanthropy is problematic for all the reasons state above (lack of public oversight over what should be public funds, the hand-out issue, the investment issue, etc).
What is ignored by this article and people’s comments is the hidden purpose of philanthropy (I say hidden because most people don’t see this). That is, charity’s purpose is to give a human face to unfettered capitalism. The problem, in fact, is in government and not in either philanthropy or the business world. Businesses are doing just what their purpose is: make money. Foundations are doing what their purpose is: do what rich people with a bad conscience want them to.
The only way to solve the issue is to give people the ability to decide on their own development (either through government or some kind of alternative structure.
Finally, although I definitely agree that sustain dependency. The solution is not to ‘teach a man (or woman) to fish’. Not only is that paternalistic, but it contributes to the belief that the free-market is inherently good and only need a little tweaking here and there. Rather, I’d like to think of the work I do with my nonprofit as: ‘creating democratic spaces that enable peer-to-peer learning so that communities – who obviously have been fishing for thousands of years – can not only teach one another how to fish but also figure out the really pressing problem: why have they forgotten how to fish in the first place?’
I found several issues with this article. I would have let just one slide, but there are just too many to let it go.
> Corporations donate a tiny percentage of their profits / receive sizeable tax writeoffs.
You have to pick one here: big or small? A corporations donation to charity will equal the size of their writeoff for doing so. 1% of profits is a small number, $90M and is an equally small number when compared to overall profit. But that same $90M is A LOT of money for a charity. One side can’t be referred to as big at the same time the other side of the equation is referred to as small; numbers don’t work that way.
Also, why assume a tiny percentage of profit? Verizon matches charitable contributions up to $100k annually. Entry-level salary at Verizon is about $35k. If each employee tithes 10%, that’s 3500*242k = $847M; now DOUBLE that because it’s all matched.
Now after being the person at my company who goes around bugging people to donate to the annual charitable contribution campaign, I’ll be the first to say that employees do not donate anywhere near 10% of their income. But they could. I find it neglectful of the author to not even so much as mention an individual’s responsibility in improving the world, but instead demanding that those with more money change their ways.
> But what if Gates and Buffett simply applied their sentiments as philanthropists to their work as CEOs in the first place?
Here’s how it would have turned out: neither of them would be in a position to makes as big of an impact as they are now. The capitalist world favors those who specialize in what they do best. Buffet is very good at investing. Over his lifetime, he has been able to use this skill to amass an incredible sum of money in a relatively short amount of time. He did this by being very shrewd and rejecting living a life of luxury. His intent was never to horde cash for himself or his family, but to amass and disburse to those who need it.
> In the meantime, the United States is losing $40 billion annually on tax write-offs for philanthropy.
One could also argue that the charities themselves are costing the United States billions due to their non-profit status. That would be an equally ridiculous claim.
Corporations are taxed on their profits. Now if corporations were to prioritize employee salaries, welfare, and benefits, those added costs would count as labor cost for the corporations. This would lead to smaller corporate profits (since increased labor cost would be subtracted from revenue) and the United States would STILL be “losing” billions in tax dollars. And where would new money toward employee benefits and welfare be going? Into a 401k that invests in ExxonMobil and other large multinationals that the author seems to hate so? Going to pay the outrageous health care fees that the oh-so-ethical health care industry rakes in? Given the choice between that, Uncle Sam, or charities, I’ll go with the charities to make the best use of my money.
> On our own shores, meanwhile, charitable donations to domestic organizations that grapple with poverty and racism have declined to an all-time low.
Might this have something to do with poverty in the US nearing historic lows?
Also, why the hatred toward non-domestic charities? I send the majority of my charitable donations overseas to places like Senegal, Cambodia, and Peru. I would consider more giving overseas to be a GOOD thing, in hopes that maybe Americans are earning a better world view.
Your comments are right on target! Thank you for revealing the big picture. I especially love your comment about ascertaining why a specific population has “forgotten how to fish in the first place.” Kudos, and thanks for your assumption that these peoples can find the initiative to solve their own problems, if given the opportunity. Not all can without substantial aid, but like the example of the micro-loan programs in South America, many people can use the aid they get to create vital cottage industries to support their families and communities. Fair trade organizations do the same thing, which is why I only buy Fair Trade coffee and chocolate, and anything else I can find. There is much we can do to support the planet through informed consumerism, which we should all be doing.
You wrote:
“Also, why the hatred toward non-domestic charities? I send the majority of my charitable donations overseas to places like Senegal, Cambodia, and Peru. I would consider more giving overseas to be a GOOD thing, in hopes that maybe Americans are earning a better world view.”
I also make a substantial portion of my “charity contributions” to foreign aid. In fact, private citizens in the U.S. combined, if my source is correct, give more money to foreign aid than the government. We just need to be mindful to give it to responsible organizations that do not enable the problem they attempt to solve.
Perhaps, just perhaps your view point is to narrow. For while you in fact do make some good points, yourself and hundreds of millions of individuals, as well as whole cultures have benefitted from philanthrophy.
The librarys set up by donations, think tanks that benefit mankind as a whole seem to have slipped from your view. Your wide ranging critisms seem to not touch on the creation of centers of knowledge, or for that matter those projects which strive to uplift individuals and groups the world over.
wow i totally agree. americans who made their wealth in the US always seem to help out other countries first. what about the kids in their hometown. Why do people always adopt babies from other countries ?are there no kids that could be adopted in America?