Rob Reich, Professor of Political Science, Stanford University Center for Ethics in Society, Center on Philanthropy & Civil Society, has just released a new book called “Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better.” The book is a big milestone, a delivery of almost twenty years of research, teaching, and inquiry into the ethical, political, and economic dimensions of philanthropy.
His book offers a rich historical context of everyday giving by people like you and me as well as “Big Money” giving by billionaires. He makes his thesis, arguments, and proposed solutions with data and entertaining storytelling.
I have been following Rob Reich’s research and work for sometime now. I first heard him speak in September, 2012, at the Stanford Nonprofit Institute where he shared some of his research and ideas on the social sector economy. He also shared the concept proposal and strategy for the first GivingTuesday as one solution to create philanthropic pluralism.
Last week at Stanford University, Rob Reich did a book talk and discussion. Rob Reich gives an overview of the provocative arguments and proposals from the book in the keynote address (first 45 minutes of video) followed by a lively panel discussion with Mariano-Florentino Cuéllar and Nicole Taylor.
Here’s a summary of my notes:
The spirit of giving and volunteerism have been the underpinning of American Society since its inception. However, something is changing. In 2017, $410 billion was given in philanthropy. But there is a startling nuance, one percent of donors gave 49% of the gifts. Where’s the little guy, the everyday donor? 80% of giving is from individuals, with the remainder by foundations and corporations. But the number of non-givers is rising over the last decade – and in 2014 volunteering hit an all-time low. Does that mean that income inequality crowding out everyday giving?
Rob started his talk with a warning: Scholars and citizens need to pay far greater attention to philanthropy in a democratic society. It deserves our scrutiny, not just our gratitude. His research has looked at the policies and social norms that philanthropy and how it does or does not support democracy or even undermines it.
To illustrate his thesis, he shared two stories. One of ordinary charitable giving and one of “Big Philanthropy.”
The everyday giving story is from his own experience. He enrolled his kids in the public school and got an email from the local school foundation in an affluent suburb of Silicon Valley. The email said something like this: “Dear Parents, your expected, but voluntary contribution is $2,000 per child.” He thought it was noble effort to champion public schools and education. However, wealthy towns can raise more than poor towns. He set up a small project to study this and collected the data, comparing amount raised per child in wealthy school districts versus disadvantaged ones .
This example, he went to say, does serve to solve inequality, but amplifies it. Good public schools increase property values. (Realtors are some of the most enthusiastic donors to these school foundations.) These contributions are tax deductible. The government is subsidizing inequality!
He noted that when you think of philanthropy, it is supposed to be about helping the poor. When you look at the landscape of philanthropic data, shockingly little is given to poor and disadvantaged. For individual giving, 60% goes to religion compared to 10% of charitable giving goes to the poor or basic needs like food/shelter. He further noted, the wealthier you are, the less likely you are to give towards basic needs. His data revealed that the charitable preferences of wealthy people are not the same as everyday givers. Wealthier people tend to support education versus basic needs.
Charitable giving turns out not to be “alms giving” or helping the poor. If you ask social scientists what the best predictor of someone making a charitable gift, it is if someone you know asks you to support a charity – whether on Facebook or in person. Having someone know you know ask to donate is what kicks a donation out of someone. And, people to tend to know people in their own income class. Wealthy people tend to ask other wealthy people to give to wealthy people charitable preferences. Less wealthy people tend to ask less wealthy people to give less wealthy people charitable preferences. Charitable giving isn’t about addressing inequality, it becomes about something else.
The second story is about “big philanthropy,” people with millions and billions of dollars and large family foundations to distribute their wealth. He shared a brief history of John D. Rockefeller as a philanthropist and why he set up a large general purpose foundation. His adviser was Frederick Gates who told Rockefeller that they would need to ask Congress for a special bill because the administration cost would be so large it would be subject to public scrutiny. And, indeed, it was.
Reich shared the criticism and skepticism of “big philanthropy” from government and other leaders at the time. Most notable quote was from Teddy Roosevelt, “No amount of money in spending on charity on such a fortune can compensate for the misconduct in acquiring it.” Lots of skepticism from other people about the way the money was acquired. GK Chesterton, noted “Philanthropy is becoming the recognizable mark of a wicked man.” Many went on the record and spoke out against charitable foundations formed by wealthy individuals, even if money was earned in a respectable way. Why? Because it is repugnant to a democratic society. Foundations are a menace to the welfare of civil society.
Reich points out that it puts greater power in the hands of already powerful people. Big Philanthropy is about power. Private assets for public influence. This is done is the guise of being a generous person. And the Big donors get praised. The appropriate response is to scrutinize to see if it supports or undermines democratic ideals.
Private charitable foundations are a worry because they are exercise of power by the wealthy, are unaccountable and not transparent. Reich shared this statistic in support of the point he was making: There are 100,000 foundations in the US today. Approximately 90% do not have a web site.
He said that rather than routinely celebrating the big philanthropy donors, we need to have policies and social norms around philanthropists that support democracy, not dismantle it?
He shared a snippet from book about some of his conclusions how to remedy the situation. He focused on both everyday donors and Big Philanthropy.
One recommendation had to do with the tax code. If two donors give a soup kitchen $1,000, it will cost the wealthier person less because of tax breaks. He called this the “Upside-Down Effect.” He proposes eliminating the tax deduction and replacing it with a tax credit that would treat all donors equally versus amplifying the wealthy. He also suggested that philanthropy be separated from government and power and be more about diversity and pluralism, citing Giving Tuesday as an example.
There is a lot more in his book which should be every nonprofit and individual donor’s reading list.