The Philanthropy Trap

Is philanthropy an unalloyed good? Or does philanthropy have its downsides too? If you’re wondering what could be wrong with individuals voluntarily giving to charitable causes that serve the public good, let me just narrow the scope of my criticism to giving from the ultra wealthy—fat cats like Bill Gates or John D. Rockerfeller, who set up these huge foundations worth billions of dollars.

Is philanthropy an unalloyed good? Or does philanthropy have its downsides too?

If you’re wondering what could be wrong with individuals voluntarily giving to charitable causes that serve the public good, let me just narrow the scope of my criticism to giving from the ultra wealthy—fat cats like Bill Gates or John D. Rockerfeller, who set up these huge foundations worth billions of dollars.

It’s not that I think the world would be a better place if these billionaires simply blew all their money on frivolous luxuries. My concern is that these foundations set up billionaires to decide exactly what counts as the public good. And who are they to make such decisions? Making billions of dollars does not make you an expert on the needs of society.

Of course, in our capitalist society, money equals power. And when you’ve got tons of money, you can influence all sorts of things that ordinary people simply can’t. Whether we like it or not, that does seem to be the way the world works. So, the wealthy have a greater say on what counts as the public good, and those who fund foundations or direct initiatives get to shape public policy in ways that you or I do not.

I don’t want to get into a discussion here about the problems with capitalism, and how the vast economic inequality it creates is the reason for such power asymmetries. The point is, though, that these power asymmetries are fundamentally undemocratic. They give the wealthy too much influence in deciding what the greatest needs are for society at large and they silence the rest of us. If we lived in a true democracy, surely what counts as the public good is something that ought to be decided by the people.

But, given that we do live in a capitalist society with vast inequality, what is the alternative? Isn’t it better that the super rich donate some of their wealth rather than spend it all selfishly on themselves and their families? Other than overthrowing the capitalist system, are there any other possibilities?

One obvious candidate is to impose a much greater tax on the ultra wealthy. If we actually taxed the 1% more, we could use their wealth to do lots of good in the world, without them dictating what counts as the public good. Wouldn’t this be more democratic?

Sadly, that does not seem like a completely satisfactory answer. For a start, it’s not as if we, the people, have much power in deciding how our taxes are spent. How much of these taxes on the ultra wealthy would actually be spent on the public good and not on, say, funding more wars? If we had confidence that giving the government more money was a good way to serve the good, then more of us would choose to do that rather than donating to our favorite charities.

Second, government is so often mired in bureaucracy, and it can be so slow to adapt to the quickly shifting social landscapes. These foundations are not so bound and thus can change their priorities more easily.

Third, it’s not clear that governments even have the will to tackle these big social problems. Or if they do, their efforts are obstructed at every turn by ideologues who think that if the market doesn’t provide social goods, government has no business doing so either.

So what is the answer?

Would the world be a better place without charitable organizations that are funded by the billionaire class? Or do we need organizations like the Gates Foundation and the Clinton Global Initiative to tackle chronic social problems?

Should we welcome the input of successful entrepreneurs, both in terms of their money and their innovative ideas? Or will we just end up with the equivalent of an app to “solve” homelessness?