How philanthropy benefits the super-rich
September 8, 2020 3:19 AM   Subscribe

Philanthropy, it is popularly supposed, transfers money from the rich to the poor. This is not the case. There are more philanthropists than ever before. Each year they give tens of billions to charitable causes. So how come inequality keeps rising? By Paul Vallely.
posted by Cardinal Fang (27 comments total) 28 users marked this as a favorite
 
The disproportionate influence of the mega-wealthy may explain, it concluded, why certain public policies appear to deviate from what the majority of citizens want the government to do.
No shit, Sherlock.
posted by flabdablet at 4:11 AM on September 8, 2020 [22 favorites]


QFT: David Callahan, the editor of the Inside Philanthropy website, puts it this way: “When donors hold views we detest, we tend to see them as unfairly tilting policy debates with their money. Yet when we like their causes, we often view them as heroically stepping forward to level the playing field against powerful special interests or backward public majorities … These sort of à la carte reactions don’t make a lot of sense. Really, the question should be whether we think it’s OK overall for any philanthropists to have so much power to advance their own vision of a better society.”
posted by chavenet at 4:40 AM on September 8, 2020 [30 favorites]


But gifts to registered charities are tax free. So a gift of £100 would cost the standard taxpayer only £80, with £20 being paid by the government. But the highest-rate taxpayer would need to pay out only £55, because the state would provide the other £45.

Not sure I follow the logic of this, but it feels like some form of logical fallacy. (Non Causa Pro Causa?) As often as I've advocated for inviting the rich to a barbecue, what they do not pay in tax being paid by the government seems not quite the right way to think. Or perhaps the way some economists think, which is often another logical fallacy.
posted by sammyo at 5:37 AM on September 8, 2020 [2 favorites]


Philanthropy is preferable to correct taxation.
posted by Homemade Interossiter at 5:50 AM on September 8, 2020


sammyo, while it is true that there isn't a 1-to-1 relationship between currency donated vs tax revenue lost, because of the current system in place where certain charitable donations are tax deductible, some tax revenue is lost (and that amount can be significant) therefore a shift between democracies determining where funds should go and the wealthy within those democracies does occur.

Not only does stronger taxation reduce inequality within a society, it reallocates wealth towards the will of the people. That's the theory anyway.
posted by gwint at 5:58 AM on September 8, 2020 [6 favorites]


Rip $X/yr out of what I call the paycheck economy via rent-seeking in supply-constrained necessities -- natural resources, real estate, health care -- give $0.1X/yr back and you're considered a great philanthropist and not the root cause of our escalating impoverishment.
posted by Heywood Mogroot III at 6:00 AM on September 8, 2020 [11 favorites]


These sort of à la carte reactions don’t make a lot of sense

sure they do, just on a shorter timescale.

i would like the number of incredibly wealthy and powerful people to be zero, and for there to be no need for any such people to act as philanthropists because we've built a better society. since that's apparently going to take a while, and in the meantime there are herds of kochs and fascists merrily trampling the fabric of our already-not-that-great society further into the dirt, you bet i'm keen on soros et al contributing to the rearguard action. they're intermittently hypocritical sticking plasters rather than solutions, but you work with what you have. why not treat the symptoms while continuing to push for a cure?

i see the argument that the mere existence of left-wing billionaire philanthropists helps to sustain the framework of tax-allergic philanthropy that enables the sacklers and their ilk. that doesn't change the fact that gates' undeserved billions led to polio being virtually eradicated, it just adds context.
posted by inire at 6:04 AM on September 8, 2020 [5 favorites]


I do find the assumption of this article that people assume greater philanthropy = less inequality to be odd. Don't most people see most philanthropy as attacking symptoms rather than root causes since in many cases the root causes are the philanthropists themselves?
posted by gwint at 6:07 AM on September 8, 2020 [4 favorites]


I do find the assumption of this article that people assume greater philanthropy = less inequality to be odd. Don't most people see most philanthropy as attacking symptoms rather than root causes since in many cases the root causes are the philanthropists themselves?
I don't think that's how it works. When you say that you don't think there should be billionaires, people often point to things like Bill Gates's charity to justify the existence of billionaires. Look at all the good that he has done, that wouldn't have been done if he weren't a gazillionaire! And it is true that Bill Gates's foundation has done excellent things and saved a whole lot of lives. But there still shouldn't be billionaires, and no one guy should be single-handedly setting global public health priorities, even if he gets it right sometimes. So even the good billionaire philanthropists in the end prop up an unjust system.

But I agree that in the moment, we all have to work with what's at our disposal, and sometimes that means working with billionaire philanthropists.
posted by ArbitraryAndCapricious at 6:22 AM on September 8, 2020 [8 favorites]


This reads like Valley got really excited over Anand Giridharadas' excellent 2018 book Winners Take All (which is about exactly this subject) and decided to write his own version. So much so that I was genuinely shocked not to see his work referenced in this excerpt.

One of the most interesting things about Giridharadas' work is how he ties the McKinsey-type consulting industry into it. Valley's assertion that it's the conservative philanthropists who are pushing for more neoliberal approaches to regulation and so on doesn't really hold water; Giridharadas lays that particular sin at the feet of philanthropists from across the political spectrum, and he brings receipts. Highly recommended if you're interested in reading more about this subject.
posted by Fish Sauce at 6:36 AM on September 8, 2020 [11 favorites]


Future Perfect did a whole season on philanthropy vs democracy. They had episodes on the zombie philanthropy which was interesting. Just because a philanthropist is dead, it doesn't mean that they stop shaping society. Their foundation is still bound to use their massive amounts of money to carry out the dead person's wishes in perpetuity, even if it doesn't make a lot of sense, even if the dead person was kind of terrible.

They also had a great episode on the Olin Foundation (creator of the Federalist Society) and it's effect on the American legal system.

And a great one on the PTA. If I donate money to the school my kids attend, I don't get a tax break. But if you're rich enough, then you can get partially reimbursed by the state - even though you are literally just buying your own child a better education.
posted by Garm at 6:39 AM on September 8, 2020 [4 favorites]


Couldn't one set up a non-profit with the sole purpose of supplementing funding of public schools, and thereby make donating to your school tax-deductible?
posted by grumpybear69 at 6:57 AM on September 8, 2020


The disaster in the US of marrying school system budgets to property taxes is a whole other ball of wax.
posted by gwint at 7:05 AM on September 8, 2020 [4 favorites]


As often as I've advocated for inviting the rich to a barbecue, what they do not pay in tax being paid by the government seems not quite the right way to think.

I mean it's not how an anti-tax advocate would want you to think - they want you to feel taxes more so you want less of them.

The principal at work here is loss aversion - humans tend to place more value on avoiding loss than making the same amount of gain.

In any given taxed transaction, it's going to be one party pays X, and then the government gets Y and the other party gets Z. For example if an employer pays $20 to the government and $80 to the employee, it is the same situation as the employer "paying" $100 to the employee but withholding $20 for the government.

Both situations end up with the same money in the same places - employer is down $100, the government is up $20, and the employee is up $80. But it feels worse if you have to pay $20 in tax out of "your" $100 than if you only had $80 in the first place.

That's why the payroll tax for social security in the US is half paid by the employer and half paid by the employee - it absolutely is more complicated than necessary - but it was a compromise between people who wanted to hide the tax from employees and not trigger loss aversion and people who wanted to make the employee feel like they're paying for every penny of it and trigger their loss aversion, thus making them more anti-tax.

It is also the reason why tax breaks are more popular among fiscal conservatives than spending. The net effect of a $50 tax break is the same as paying the person $50 - the government has $50 less than it would have otherwise had and someone has $50 more. But since tax breaks don't count as spending/losing money, it doesn't trigger loss aversion and fiscal conservatives are a lot more ok with it.

All of this is a long winded way of saying that yes, their analysis is correct to a large degree - the net effect of a $100 donation by a person who claims it as a tax deduction and gets a $45 break on their taxes is that the person has $55 less than they would otherwise have, the government has $45 less than they would have otherwise had, and the group that received the donation has $100 more than they would have otherwise had.
posted by Zalzidrax at 7:18 AM on September 8, 2020 [11 favorites]


It seemed to me that the thrust of the article was that philanthropy wasn't itself the issue - the issue was that many philanthropists contribute to causes that don't really change things all that much. Either they contribute to institutions that only ultimately benefit the already-wealthy (i.e., grants to Ivy League schools, arts institutions like symphonies and museums, etc.), or they address issues in a community which the community regards as a lesser problem (i.e., Bill Gates' fund to eradicate polio, in regions where the people see other issues as bigger problems), or they act as random Dickensian deus ex machinas that rescue an individual out of a given situation but leave everyone else behind (i.e., the scholarship that takes the one kid out of a poverty-stricken community, but leaves all the other kids behind).

And there's some truth to that - we should be trying to rescue all of society instead of rescuing just a few, and we should also be letting a community decide what the most pressing problems there are within their own borders.

I'm a little conflicted about pooh-poohing the philanthropical contributions to the arts, however (for....personal reasons). In times of economic crisis, government arts funding is usually one of the first things to get axed - but the arts actually support a MAJOR share of the economy, and encompass a whole lot of different kinds of sub-businesses you may not have considered. Let's have a for-instance:

Mr. and Mrs. Hoity-Toity learn that Dame von Gluben was just cast in La Traviata at the Met. They decide to get a ticket. Here's all the people who will get work as a result of Dame von Gluben appearing in La Traviata and in Mr. and Mrs. Hoity-Toity deciding to attend.

* The other 10 people in the cast, none of whom are as big a name as Dame von Gluben, will get work.
* A team of costume designers will get work creating the costumes.
* A construction crew will get work building the set.
* An electrics team will be able to get work designing and installing the lights.
* A legal team will be able to get work negotiating Dame von Gluben's contract.
* A group of security guards will get work keeping an eye on the theater.
* A team of box office staff will get work processing Mr. and Mrs. Hoity-Toity's purchase and making sure they get their tickets.
* A team of ushers will be on hand to show the Hoity-Toitys to their seats, resolve any inter-audience seat squabbling, and generally keep order to make sure the Hoity-Toity's have a nice night. They'll also be able to help Mrs. Hoity-Toity if she needs an assisted-listening device.
* Oh, some engineers will have gotten work selling that assisted-listening device to the Met.
* The crew at the nearby parking garage will be able to get work parking Mr. Hoity-Toity's car.
* The wait staff and chefs at the quaint little bistro one block over will also get work serving Mr. and Mrs. Hoity-Toity a lovely dinner after the show.
* And let's not forget that the cheaper pizza places and delis surrounding the theater will also have gotten a few weeks' worth of business from Dame von Gluben, the rest of the cast, the construction team working on the sets, the light team, the costume team, the legal team, the ushers, the box office staff, the security guards, and the parking garage guys.

That's all from just one show - that one show is actually bringing business to eleven different industries, and that's just the ones I can remember off the top of my head.

The arts are vastly undervalued as an economic driver, and often these philanthropic grants are the only things keeping them going. I hear the concerns about how the patrons may be among the elite, but the benefactors are of all walks of life, and I get uneasy when people talk about doing away with them.
posted by EmpressCallipygos at 7:27 AM on September 8, 2020 [15 favorites]


yes but also the viewpoints expressed in works that are funded by the rich by necessity reflect in some way the views of the rich.

the localized economic trickle-down effect of rich-funded productions is, well, it's a trickle-down effect, I'll leave it there. but in terms of broader cultural effect the rich-funded arts are tantamount to enemy propaganda.
posted by Reclusive Novelist Thomas Pynchon at 8:04 AM on September 8, 2020 [5 favorites]


probably the chief value of the arts in terms of reducing inequality is that the arts help to turn some of the children of the rich into members of the middle classes.
posted by Reclusive Novelist Thomas Pynchon at 8:06 AM on September 8, 2020 [14 favorites]


It is also the reason why tax breaks are more popular among fiscal conservatives than spending. The net effect of a $50 tax break is the same as paying the person $50

And it's often literally the government paying them that $50 as a check or direct transfer. But the check has TAX RETURN in the memo section and not COMMIE WELFARE, and that makes it okay.
posted by GCU Sweet and Full of Grace at 8:22 AM on September 8, 2020 [4 favorites]


If the poors got hold of that $50 instead they'd only spend it on cheap drugs or cheap alcohol, which is clearly immoral. Cocaine and Krug or GTFO.
posted by flabdablet at 8:47 AM on September 8, 2020


I learned an important thing about foundations when Trump settled with a golfer after stiffing him a million dollars for a hole in one... by donating from Trump’s foundation to the golfers foundation. It seems every family with money has one of these slush funds.

Another aspect not mentioned in the article is that foundations let you set up your heirs with a board seat and salary. Whether it’s a sinecure, a salad dressing enterprise, or whatever it’s a way to get around inheritance taxes (to take a cynical view) or to give your children something productive to do (the “charitable” view). Foundations are frequently make-work programs for the kids.
posted by sjswitzer at 1:00 PM on September 8, 2020 [2 favorites]


Adam ruined billionare philanthropy a couple of years ago. Very worthwhile watch.
posted by rednikki at 1:23 PM on September 8, 2020


The arts are vastly undervalued as an economic driver, and often these philanthropic grants are the only things keeping them going. I hear the concerns about how the patrons may be among the elite, but the benefactors are of all walks of life, and I get uneasy when people talk about doing away with them.

Then imagine the increase in efficiency when the state seizes the wealth of the philanthropists and distributes it to everyone so it isn't just specific artforms that rich white people like that can keep artistic sectors going.
posted by Ouverture at 1:26 PM on September 8, 2020 [7 favorites]


Then imagine the increase in efficiency when the state seizes the wealth of the philanthropists and distributes it to everyone so it isn't just specific artforms that rich white people like that can keep artistic sectors going.

Oh, if that actually DID happen that would be far better. My fear, though, is that even if the state does take over the wealth of the philanthropists, the arts are still going be an afterthought - only this time they'd be an afterthought without state funding and without philanthropy.
posted by EmpressCallipygos at 1:30 PM on September 8, 2020


My fear, though, is that even if the state does take over the wealth of the philanthropists, the arts are still going be an afterthought - only this time they'd be an afterthought without state funding and without philanthropy.

That is certainly a possibility, but a lot more people are starving and struggling now under the current system than would be starving and struggling under a new system where everyone's material needs are met.

It would be a strange worker's revolution indeed if it stops short of radically changing how we also think about the workers who create art.
posted by Ouverture at 2:54 PM on September 8, 2020 [1 favorite]


It would be a strange worker's revolution indeed if it stops short of radically changing how we also think about the workers who create art.
As we come marching, marching in the beauty of the day,
A million darkened kitchens, a thousand mill lofts gray,
Are touched with all the radiance that a sudden sun discloses,
For the people hear us singing: "Bread and roses! Bread and roses!"
As we come marching, marching, we battle too for men,
For they are women's children, and we mother them again.
Our lives shall not be sweated from birth until life closes;
Hearts starve as well as bodies; give us bread, but give us roses!
As we come marching, marching, unnumbered women dead
Go crying through our singing their ancient cry for bread.
Small art and love and beauty their drudging spirits knew.
Yes, it is bread we fight for -- but we fight for roses, too!
As we come marching, marching, we bring the greater days.
The rising of the women means the rising of the race.
No more the drudge and idler -- ten that toil where one reposes,
But a sharing of life's glories:
Bread and roses, bread and roses!
The Poor People's Campaign did a Labor Day video with Bread and Roses yesterday, but unfortunately, it was only on Facebook
posted by hydropsyche at 5:13 PM on September 8, 2020 [4 favorites]


The main issue with charity is the strings that are attached to the money. I work at a non-profit. We get a lot of Capital Funds. What we don’t get is Operating Funds. Meaning we are rich in toys byt not rich in Labor. This hamstrings us so heavily it is a running joke with the accountant how to book time as a GAAP approved expense.

All the toys in the world are useless if you have no one to play with them.
posted by daq at 11:58 PM on September 8, 2020 [5 favorites]


(Something struck me just today about endowing a charitable foundation. Even if I like what it does (not a zombie foundation by a terrible founder as @Garm describes), the idea that an endowment makes the foundation self-supporting -- not a bit of it! It's supported by ongoing capitalist extraction through the financial system.)
posted by away for regrooving at 12:00 AM on September 9, 2020 [1 favorite]


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