Thursday Thoughts - March 31, 2022: Is Philanthropy Really Broken?
What is philanthropy, really?
Spilling Ink (or bytes)
There is no shortage of stories about what is described as fundamental problems with philanthropy and the nonprofit sector. Even a cursory search online will show article after article decrying how the sector is not addressing the issues of our time or how philanthropy is nothing more than a tax shelter tool for the extremely rich and well off. It seems like there is no shortage of opinions on the shortcomings of philanthropy.
Such pieces opine that most of society’s most pressing problems could be solved if there is a more equitable distribution of funding to nonprofits or if those that safeguard philanthropic dollars were more lenient - this post was one of the most interesting in that regard.
So, what is philanthropy?
All of these thoughts and ideas bring me back to the basic idea of what is philanthropy? One common definition of philanthropy is “the desire to promote the welfare of others, expressed especially by the generous donation of money for good causes”. On the face, that seems like a perfectly good and acceptable definition of the word. So, let’s dig into it.
Philanthropy at it’s core is a donation. It is a VOLUNTARY action in which an individual gives money to a good cause. What makes the donation voluntary? It is voluntary in the amount, the time, the form and the cause in which that donation is made. A $5 donation made to the guy on the corner is philanthropy. A $5 million bequest to a local hospital is philanthropy.
Furthermore, who gets to decide which cause is “good”? This decision is left to the donor. Individuals that make donations are free to choose which good causes better fit their own individuals values and beliefs. Some donors believe poverty alleviation is worth their efforts, others might think climate change is their primary concerns. No one donor is right or wrong, they simply have different values.
And it may go without saying, but philanthropic donations are not taxes. Taxes are generally not voluntary. I don’t get to decide the time frame or the form or the amount in which taxes are paid. If I buy a shirt at the store, I pay a set amount as sales tax. If I put gas in my car, I pay fuel taxes. I get no say in the amount or where those dollars go.
I only bring this point out because there are tons of online discussions that philanthropists need to fund certain programs or organizations over others. When we strip the voluntary components of philanthropy we aren’t creating a better system of philanthropy, we are in effect, creating a new system of taxation. A system of taxation that isn’t necessarily directed by government, but rather directed by a culture and a society that favors some causes over others.
It goes farther because when these involuntary contributions are made (whether through government imposed taxes or societal imposed philanthropy) we are creating systems in which effectiveness and efficiency are not necessarily rewarded. Notice that when the voices calling for this new form of philanthropy are talking, they aren’t asking the ultra-rich to give to the most efficient and most effective of organizations, they are generally asking people to make coerced donations to certain organizations, regardless of how well they manage the donation.
Philanthropy is not just a playground for the rich
Take three minutes and watch this video.
This video was produced by the Lilly School of Philanthropy at Indiana University and the message is clear — anyone can be a philanthropist, regardless of race, gender, age, religion, even class.
It rubs me the wrong way when those that give their opinions about philanthropy consistently fail to talk about how ANYONE can participate in philanthropy. Anyone can make a voluntary contributions. And the internet has helped democratize philanthropy. Charity rating sites, such as CharityNavigator (that yes, have their own issues) at least help provide an objective guide for individuals to make philanthropic choices. Foundations, like Fidelity Charitable now open up the world of Donor Advised Funds to more middle and low income individuals to help maximize their philanthropic donations.
Philanthropy isn’t really broken, our attitude towards it is
It has never been easier to make a philanthropic donation. Philanthropy is not broken, what is broken is our attitude towards it. We can’t think of philanthropy as a tool to just get money out of high worth individuals to get funneled to certain causes. What we can think of philanthropy as is an opportunity to allow people to invest in those causes that are near and dear to their heart on their own terms.
I’ve had my say, what’s yours? Feel free to comment and share and also shoot me an email at pinnaclestrategiesltd@gmail.com
Stay Well,
Bill