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Against Philanthropy

The business of giving is doing more harm than good.

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.
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.

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