Does Philanthropy Fuel Societal Inequity?

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February 6, 2013; Source: Boise Weekly

Boise Weekly columnist Ted Rall probably doesn’t think much of Ayn Rand, who worshiped at the cult of the capitalist nobiliary. Rall seems to want the head of uber-wealthy New York City Mayor Michael Bloomberg, the founder of Bloomberg News. Rall isn’t swooning over Bloomberg’s latest donation of $345 million to his alma mater, Johns Hopkins University, which he notes is a well-endowed institution to begin with. As NPQ recently noted, this decisive philanthropic gesture puts Bloomberg’s total giving to the university at more than $1 billion, making him the most generous living patron to any American educational institution.

Rall’s language is confrontational and acidic, as in this passage seizing on the severe damage and psychic stress suffered by “those poor cold slobs” in NYC from the recent Hurricane Sandy: “If there’s anything more nauseating than watching this rich pig bask in the glow of his philanthropy while the citizens he is tasked with caring for turn into popsicles, it’s the failure of anyone in the system to call him out. For $345 million, the mayor could have put his city’s storm victims up at the Four Seasons for years.”

Let’s see. Estimates suggest that Sandy left approximately 20,000 New York residents homeless (though there were approximately 47,000 homeless New Yorkers prior to Sandy, making New York the city with the most homeless people in the U.S.). The Four Seasons’ minimum rate is $595 per night, so Bloomberg’s money might be able to do what Rall suggests for a few months, but certainly not years. In any case, Rall’s viewpoint is tied to his collectivist concept of equality and his argument that “No one deserves to be rich. And no one should be poor. Everyone who contributes to society, everyone who works to the best of their skills and abilities, deserves to earn the same salary.” But how would such a utopia allocate resources and encourage ingenuity?

Rall goes on to argue that large-scale giving itself skews the economy with its random generosity and creates the false public perception that equality exists and is improving. He is not the only voice making such an assertion. As NPQ has previously noted, historian Robert Dalzell, author of The Good Rich and What They Cost Us, supports the notion that the ultra-rich are perpetrating a false sense of security in our socioeconomic system. Rall quotes Dalzell:

“For many people, the generosity of these individuals who made so much money eliminates the problem that wealth poses, inequality poses, in the society…We tend to conclude that such behavior is typical of the wealthy, and in fact it’s not…This whole notion of ‘the good rich’ I think reconciles us to levels of inequality in the society that in terms of our democratic ideology would otherwise be unacceptable.”

There is no question that much American wealth is ill gotten. However, some billionaires with a golden touch find their way to the top by creating jobs and enhancing productivity, which should increase the wealth of a large working class (though only in a well-regulated economy, mind you, and there are myriad examples of how the U.S. falls short in that regard). Rall’s view is that capitalism is evil and our system of rewards is a sign of rotten American character—one that philanthropy masks. What are your thoughts? We welcome your comments. –Louis Altman

  • Devon Kearney

    I think the relationship isn’t quite as direct as to say that philanthropy fuels inequality, in the sense of causing it. But it’s hard to disagree that the two are related in some less direct way.

    For one, the argument is sometimes made that charity, as it used to be called, just creates a more comfortable poverty, smoothing the sharp edges of inequality that could lead to populist backlash. This is debatable. In the modern day, there is a growing sector of social change philanthropy that supports nonprofits engaged in more structural efforts to reverse inequality and end poverty, rather than ameliorate it.

    But for most nonprofits, accumulations of wealth are what allow us to exist, whether from governments, rich individuals, or foundation endowments. A small number of very large nonprofits, such as Amnesty International, receive a significant portion of their income from relatively small gifts. But the majority cannot sustain effective work without a substantial body of large gifts in one form or another. And indeed, over the two decades I have been in the field, we’ve gone from the conventional wisdom that 80% of our income comes from 20% of our donors to something more like 90/10. Our sector has matured over the last half-century, creating more and more organizations and allowing more sophisticated organizations to attract talent with ever more competitive compensation. But I wonder, sometimes, whether the curves of rising income inequality and of nonprofit growth don’t track one another very closely, and if so, whether this is perhaps no coincidence.

  • michael

    Interesting use of Bloomberg as the foil in this piece. Critique his gift to Johns Hopkins, but the folly of Sandy relief (much like Katrina) was a masive _government failure_. Once again we see a lumbering bureacracy failing to meet the needs of the populace….and even enforcing rules which hurt people (ie: labor laws which kept non-union electricians and linemen from helping get the grid back up thus needlessly keeping people in the dark for weeks)

    The most effective releif was supplied by nonprofits in coinjunction with the efforts of private enterprise (can we finally recognize the brilliant ability of Wal-Mart to ship goods to a specific place in an extrodinarily fast fashion) Let’s learn this lesson and celebrate private philanthropy and private enterprise.

  • jcg

    this is the type of counterintuitive nonsense that looks like an interesting headline but does not seem to be based on any evidence.

  • Prentice Zinn

    Philanthropy fueling inequality? Well, there are reasons why we call it “structural inequality”.

    This week’s Chronicle of Philanthropy’s Year in Review for 2012 offers some big data on the matter:

    Elite Causes Get Lion’s Share of Big Gifts. “$7 out of 10 dollars donated last year go to alma maters, to hospitals, and cultural groups that have served them and their own foundations.”

    Ouch! Is anyone surprised?

    Most institutions fuel social inequality. They reflect the dominant social order of the times. This is not to say that we lack do-gooders down with the good fight against structural inequality, but who believes that the dominant institutions – nonprofits, education, healthcare, government, media, and business challenge inequality in any deep way?

    Most of the journalistic and social science critique of philanthropy comes down hard with truckloads of evidence illustrating the Jekyll/Hyde face of philanthropy vis a vis social inequality.

    But that stuff is dusty and not much fun to read.

    Slavoj Zižek’s critique of charity in the form of a video animation “First as Tragedy, Then as Farce” is an introduction to the debate that is way more fun.