In this post, I would like to talk about a criticism of charity that I believe was only briefly discussed in class—the issue of billionaires/millionaires ‘controlling’ our nation’s most prominent philanthropic efforts. From the early 20th century, these big time philanthropists, from Rockefeller and Carnegie to their modern counterparts such as Bloomberg and Zuckerberg, have been criticized for funding projects that seem to support their own personal agendas. There is this perception that philanthropy is undemocratic because organizations founded by the nation’s wealthiest can make decisions to solve complex issues without any regard to the majority’s opinion. I’ve thought about this idea since the beginning of the semester, and after doing some research, I believe that this isn’t necessarily true.
Something that must be kept in perspective is how radically decentralized giving in the United States is. I found an article on ssr that states only 14% of total giving comes from foundations started by the wealthy. The vast majority of annual donations come from ‘normal’ individuals or ‘everyday’ donors, which equates to about $2,500 per household. One of the biggest non-profit organizations in the world, the Bill and Melinda Gates Foundation, gives grants at about $4 billion per year. If my calculations are correct, that constitutes about 1% of the nation’s annual donations (out of the total $360 billion that Americans donate per year). I (along with the author of the article) think it is safe to say that there isn’t a significant concentration of power in this example.
I think a good analogy to further prove my point is comparing philanthropy to any market in American capitalism. In our consumer market, prices and qualities of goods sold are heavily shaped by the demand of buyers. Similarly, I think the majority of projects and grants of non-profit organizations are shaped by everyday donors, who have access to websites like charitynavigator and other resources to make informed decisions. And just as products with no demand die out in the marketplace, if an organization’s goals do not align with the majority, it too will become obsolete. And to counter the argument that philanthropy is undemocratic because decisions can be made without regard to the government, I actually think this is the very thing that makes philanthropy democratic. As Yale law professor Stephen Carter says, “individuals who give to charity often measure the needs of the community by different calipers than centralized policy makers, and will therefore contribute to a different set of causes.” This leads to a diversity of spending that would be impossible through the state alone, and for this reason Carter refers to philanthropy as democracy in action.
I would like to end my post by asking what are your thoughts relating to this topic? Do you think that philanthropy is controlled by the few and is an instrument to fulfill personal agendas? Or do you think philanthropic efforts truly reflect what the majority of society wants and is a great example of democracy in America?
Links:
https://ssir.org/articles/entry/12_common_criticisms_of_philanthropyand_some_answers
Hi Michael,
ReplyDeleteThank you for selecting this topic to write about in your blog post. You start the post with the question "is philanthropy really in the hands of the few" , and then provided an argument for it not being true. I'd like to just discuss the counter-argument and address a few of the issues you spoke on. Before speaking specifically on any area, I just want to state that the not for profit sector is massive, diverse and consist of many unique markets. One thing true of the environmental nonprofit sector of Charlotte is going to have a completely unique market structure and concentration compared to the public safety nonprofit sector of Pittsburgh. That being said the dramatic financial challenges of recent have led to growing pressure for the U.S. nonprofit organizations to consolidate.
This phenomenon was studied by Bruce Seaman and Dennis Young of Georgia State University in their academic journal article " Measuring Concentration and Competition in the U.S. Nonprofit Sector: Implications for Research and Public Policy." They studied the market concentration (through HHI) and resource equality ( through Gini coefficient) various nonprofit sectors across the country. They found that about half the markets fell into the "dominated category" consisting of less concentration/unconcentrated markets with vastly unequal distribution. For example, Seaman and Young analyzed the around 2800 nonprofit arts organizations in New York city area and found that the "top 10% or 279 organizations accounted for 90% (89.54%) of all expenditures in this market area, with the largest four nonprofits comprising almost 40% (39.22%) of the market’s size." The next largest segment of markets fall into the "monopolistic market" category, with both unequal distributions and high concentration. The environmental nonprofit sector of St. Louis falls into this category. It consist of only 31 organizations total, with 4 organizations controlling 87.5% of the market and the largest organization accounting for almost 80% (79.5%) of the market.
Donations to foundations may be radically decentralized, with the majority of donations coming from "normal" donors, but when it comes time to spend the money its done by the hands of the few. This leaves these organization and individuals with vast unchecked power to wield in how they see fit.
"Power Corrupts; Absolute power corrupts absolutely"
Sincerely,
David Engelmann
Seaman, Bruce A., Amanda L. Wilsker, and Dennis R. Young.
Measuring Concentration and Competition in the U.S. Nonprofit Sector: Implications for Research and Public Policy. Nonprofit Policy Forum, 2014, https://www.degruyter.com/view/j/npf.ahead-of-print/npf-2014-0007/npf-2014-0007.xml. Accessed 19 Mar. 2018.
Hi Michael,
ReplyDeleteYour argument is definitely convincing. I definitely agree that we as philanthropists have a certain degree of power over what issue areas are addressed and that we can make up for the government's lack of attention towards certain problems.
However, I don't quite agree with your argument that the wealthy have less or just as much leverage as everyone else when affecting which issues are addressed. The Gates may give only about 1% of all charitable donations per year, however, they donate much more than the average American can donate, and these donations can be very influential. By combining all of the donations from the general public, we are getting an inaccurate view of public influence, in my opinion. Everybody favors their own issue area or organization based off of their experiences and because of this, the $360 billion is split up and dispersed to various foundations and causes. Bill and Melinda Gates' foundation, however, funnels large sums of money into organizations of their choice (for example, education). These generous donations can make a huge impact on the issue area or organization they choose to donate to, which may have very positive or very negative consequences on the community they are serving. This is because Bill and Melinda Gates choose (for the most part) where this money is going and how it will be utilized, and the community doesn't really have a say in the matter at all.
If the public pooled all of their resources together and made very generous donations to a few charities up to par with the Gates,' I would say philanthropy is completely democratic. But since wealthier donors have a stronger say in what causes are addressed compared to donors with fewer resources, I believe there is a certain inequality of power that donors have in the philanthropic field.
Of course, there are many democratic aspects of philanthropy as you have mentioned, such as focusing on causes neglected by the government and being able to choose which issue areas are addressed.
An article I read from The Atlantic titled "Is Big Philanthropy Compatible with Democracy?" argues that we must expand this democracy in the field of philanthropy and funnel our resources into already established organizations rather than creating new ones, so that our resources are more focused, used more efficiently (as older organizations usually have a greater understanding of how to manage their financials) and have a greater impact on various issue areas. Additionally, with fewer organizations, the public's money will be pooled together to make donations on a much larger scale than before that could be comparable to the donations made by wealthier philanthropists. This will assist in evening the playing field.
Below is the article I referenced.
https://www.theatlantic.com/business/archive/2017/06/is-philanthrophy-compatible-democracy/531930/
Hey Michael,
ReplyDeleteYour article brings up a good question about whether the rich have too much influence on philanthropy. I see your point that in total donations amounts, the wealthy do not constitute the majority of annual U.S. donations. However, I am more inclined to agree with David and Allyson on this one. Using the figures your provided, if each household provides $2500 in donations annually, then the Bill and Melinda Gates foundation have the influence of 1.6 million households. While 1.6 million individual households would donate their $2500 to a variety of charities, Bill and Melinda Gates get to decide a handful of charities that are given all that money. I was also going to speak about the Atlantic article that Allyson mentioned. It is difficult to ever critize philanthropy, especially on the scale that Bill and Melinda Gates do it. However, there seems to be an issue that one man has as much influence as 1.6 million households. That much influence might discourage smaller philanthropists from donating because they feel that their contribution is not influential. An ideal scenario would be if all donations, big or small, were pooled together and divided among many different charities but I do not foresee a scenario where the government would tell philanthropists how to donate. I appreciate your points about how philanthropy is for everyone, as it should be. However, it just seems that the rich have too great of an influence in the philanthropic world.
Hi Michael,
ReplyDeleteI think we can all agree that the nation’s most affluent individuals do wield a great amount of influence thanks to the donations they’re capable of making and the foundations they’re able to support. However, in the article I’ve linked below, it’s mentioned that the wealthiest 10% in the nation contribute only 25% of charitable donations. Therefore, I agree with the idea that more credit should be given to the general public for its collective contribution. Outside of the question of whether or not philanthropy is democratic, I took your argument to be in favor of that simple recognition. I believe many of us fail to recall the power of small donations. This discussion brings me back to our class’s constant concern of “What difference can we really make with such a small amount of money?” Wealthy individuals and groups do have the power to direct major philanthropic movements. However, no matter how small our contribution, we still have the power to make a difference of our choosing.
Article:
https://www.yourfoundation.org/blog/posts/why-donations-every-size-count