The Questions We Need to Ask in Order To Change Philanthropy

Originally published on www.cnmsocal.org

In a 2012 article Misplaced Giving Priorities of America’s Wealthy, author Pablo Eisenberg argues that billionaire philanthropists shouldn’t be lauded for any amount they give to any cause. Instead, they should be pushed to give more and to focus on fixing the rising problems we have right here in our country, like poverty, homelessness, and hunger. In When Charity Isn’t Charitable, Author Peter Singer argues that donations shouldn’t even be tax deductible if they are to religious or arts organizations.

Do you agree? Before you say yes or no – let me ask a few more questions.

First, what is charity?
Certain terms get tossed around like synonyms when they are not, like nonprofit and charity. According to Merriam-Webster, a charity is an “organization that helps people in need”. Nonprofit means “not existing or done for the purpose of making a profit”. Those aren’t the same thing.

I’m not here to argue that arts organizations like symphonies mostly serve the wealthy, and therefore they shouldn’t be allowed to receive tax-deductible donations. But I would argue that we need to be a little more careful in the words we are using. Perhaps creating more of a distinction between organizations that are helping the underserved and those that are promoting other types of public good would change the conversation about philanthropy.

We might also put parameters on what mission goals can be eligible for nonprofit status. Singer points the finger at an organization called Answers in Genesis, “a Kentucky-based charity that upholds the literal truth of the first book of the Bible and seeks, in its own words, ‘to expose the bankruptcy of evolutionary ideas, and its bedfellow, a ‘millions of years old’ earth (and even older universe).’ He follows with “Let’s be clear: If donations to Answers in Genesis are tax deductions, then all the rest of us American taxpayers have to pay more for the government services we need. Why should taxpayers be subsidizing such absurdities?” Indeed.

Are all donations equal?
If I make $35,000 a year and give $3,500 to an organization with a budget of $1.5 million a year and someone who is worth $1 billion gives $1 million to that same organization, should the billionaire get special attention from that organization? From the press? $35,000 is very hard to live on, even if you are single (especially in Los Angeles), and providing 10% of that income is quite a meaningful gift. The billionaire gave 0.1% of his earnings, which is like me giving $35 dollars (that’s like 2.5 fancy cocktails out at a bar).

That said, the billionaire gave the organization more than half of its budget in one fell swoop. Does the meaningfulness of the gift matter?

Now let’s say I gave $3,500 to an organization that does amazing work lifting people out of poverty. The billionaire gives his $1 million to Harvard, which already has an endowment of $32.7 billion. Does your perspective change at all?

Regardless of your feelings on this, it does affect you. There are a handful of billionaires out there, but most nonprofit organizations will not be collecting any donations from them. Most donations will be made from individuals and families on very tight budgets. In fact, there is a whole generation of donors arising that have a lot to give in the way of time and talent, but not treasure. Ignoring their meaningful gifts now (despite the small dent it makes on your organization), could cause you to lose out on larger gifts in the future.

Who is responsible for educating the public on how to be philanthropic?
I believe this is our biggest problem.

Wealthy donors are talking to their tax accountants and other wealthy people about philanthropy, if they are talking about it at all. The average American probably isn’t talking about it much either. I know for people in my age range, we mostly talk about philanthropy in the form of ice bucket challenges and walks for a cause and marathons. Most young people don’t know how to create a personal budget, let alone add charitable donations to it.

There needs to be a larger conversation with the average person. Nonprofits and funders talk about philanthropy all the time, but it rarely hits the ears of those outside of our bubble. There is a rising tide of interest in “change” and “doing meaningful work,” but philanthropy is not so much a part of that conversation.

I am afraid that the answer to the question above has not been answered, because there is no clear answer. Nonprofits, funders, wealth advisors, donors, parents, teachers, etc. etc. etc. need to work together to move the needle forward. The issue of philanthropy (not time or talent, but treasure specifically) needs to find its way into pop culture, into every day conversations, before we will see much change.

So back we go to the original questions. Do we focus too much on the donations of the wealthy? Does the gift placement matter more or less than the gift size? Is there a right and wrong way to give?

What do you think?