Nonprofit Newswire | More criticism of Billionaire Challenge

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August 10, 2010; Source: Star Tribune |

In yesterday’s Newswire we wrote about criticisms that German billionaire, Peter Kramer, voiced in Spiegel about the Gates and Buffet billionaire pledge effort. He called the effort, “a bad transfer of power from the state to billionaires.”

Today an editorial in the Star Tribune in Minnesota argues that when wealth is given to charities, the tax base shrinks, making it impossible for the government to do its job.

The author takes on the notion that charitable giving of any sort by these billionaires, or anyone else for that matter, constitutes “an unalloyed benefit to society.” His first argument is one of democracy (though the author calls it accountability or the nonprofits’ purported lack of accountability). He suggests that allowing government to take funds through taxes is fundamentally democratic because the government’s leaders are elected by voters, while in contrast, no one elects nonprofit leaders, they can’t be voted out of office if people don’t like their grantmaking decisions and priorities. “If, as some politicians so vigorously contend, the rich are not paying enough in taxes in Minnesota,” the author said, “they should not be allowed to give away their tax-producing wealth, which allows them to pay even less.”

Essentially, by relying on the charitable generosity of the billionaires, we are saying that we would rather have these billionaires make decisions about tax deductible money in our name rather than having the people we elect to Congress and the White House make those allocations. Maybe the subtext is that the tax rate is too low, rich people pay too little in the way of taxes, and government needs to bulk up the public’s decision-making arena. This debate is going to intensify.—Rick Cohen

  • PMA

    As the article points out, based on kramer’s logic all charitable giving runs counter to a “legitimate democratic state” since charitable giving to 501c3’s is tax deductible….

    Seems more like an excuse not to give rather than a legitimate criticism of the giving pledge.

    If you don’t want to participate, fine. But why be negative about philanthropy when so much good comes from the generosity of others?

  • Claudia D.

    The critics of this new private philanthropy make a good point. In general, private philanthropy has several “chronic” conditions that limit its impact on the lives of the most vulnerable people in our communities. And while there are commendable and notable exceptions to the patterns described below, after 30 years in the field, I am not uncertain of these patterns.
    1. Rarely do private philanthropists make sustained, multi-year investments that produce high quality, accessible and reliable services to the poor.
    2. Private philanthropy’s interest and commitment to funding new ideas keeps them from making investments in things that work and helping providers close the 10-20 year gap in moving the most effective practices to scale.
    3. Rigorous and public accountability for results is rare among private philanthropists. Even in the face of abundant evidence that certain models are not capable of producing outstanding results many funders sustain them because they appeal to their rosy and dreadfully under-informed view of social issues. The gritty and unglamorous work of producing practical and sustainable remedies to human suffering often don’t align well with their own world-view and life experiences.
    4. The compensation levels, lavish offices and conferencing lifestyle of many private philanthropists is not commensurate with the risks taken or rewards produced in this industry.
    Even in Minnesota where we have a long tradition of individual, family and corporate philanthropy: the amassing of private wealth and and using it for the betterment of the community; one has to wonder if the private control of so many resources has really produced the sort of sustained investment is things that work.
    Operating foundations and public charities 501(c)3’s with an endowment seem to be intrinsically more accountable to the public, rewarded for efficiency and interested in results.

  • Mark Rubin

    Criticizing generosity always amuses me, as I think it says more about the critic than the donors he or she criticizes. (It’s rather like my Right Wing gas guzzling friends complaining about the fact that I drive a Prius.) That all said, Peter Kramer has a point. In America, at least, we’re taxed at historically low rates, and many tasks that government has traditionally fulfilled have been offloaded to the private sector, including the nonprofit world. Thus, while a more perfect world might involve more money for government, that is not the world in which we live. Further, the prime leaders behind the Billionaire Challenge are also advocates for higher taxes, so I don’t think their giving is about controlling how money is spent. Rather than being anti-democratic, they are responding to the failure of our allegedly democratic society to meet basic needs.

  • RichardS

    I believe all of these billionaires were already been taxed on this money that they have decided to re-invest for the common good. They have earned that money and I believe they have earned the right to give it back to efforts that they so choose. There is nothing democratic about wasteful spending on projects and efforts that drives politicians to keep their power through re-election. It’s equally as democratic (if not more) to let our elected officials decide on our tax structure/policy to help guide resources to efforts that help the greater good. If you don’t like their tax policy than just vote them out. That’s democracy.

  • J. Van der Kooij

    If youre not willing to give up your whealth just keep it for yourself don’t try hard to stop other people from doing this.