The specter of great philanthropy?
Paul Vallely, a British journalist and author, set out to write a book on philanthropy in the UK to see the book grow relentlessly from there. The result is massive and rambling work that encompasses how various religious and moral traditions have discussed charity or philanthropy over the millennia, how the main practices and institutions of philanthropic giving have changed over the centuries, and how people have generally changed The topic of philanthropy has been discussed for the past few decades. Some readers may be familiar with one or the other of these stories, such as the creation of endowments for endowments staffed by full-time professionals in the Carnegie and Rockefeller era. But it’s an unusual book that tries to pull together all of these and other threads in the history of philanthropy.
The very essence of philanthropy: From Aristotle to Zuckerberg – its introduction, its conclusion, and the entire second half – focuses on a series of interlocking debates about philanthropy today, debates that Vallely reports on, explores and contributes to. These “debates” could better be described as criticism of how (and why) many business leaders have handled charitable donations, what and how they spend their money, and whether their philanthropy is good for democracy in particular and societies in general . But all works have flaws. This one does it too and like the book they are great.
The first problem is that the criticism on which Vallely relies is tarnished by deep political prejudices that set hard limits on the value it can add. Great philanthropy requires a fortune. At a time when wealth is made rather than inherited, the biggest donors are often the top success stories in the for-profit world. It is therefore not surprising that critics who are predominantly on the political left approach the topic with a certain degree of skepticism or even hostility. Their allegations are many and varied: tycoon philanthropy often lacks transparency, it is motivated by ego gratification and can serve itself (sometimes even actually acting itself), it cannot be as effective, it can be so powerful that it distorts Government policy, takes money from the public purse (through favorable tax treatment) and lacks accountability of the democratic process. This is a whole lot of complaints about people giving away a lot of money and even considering the charitable deduction. It also reflects politically skewed assumptions.
Consider Vallely’s extensive discussion of “philanthropic capitalism”. He describes tech billionaires, hedge fund managers, and others determined to advocate philanthropy, “the secrets and techniques they used to build their business empires.” He doesn’t seem to mean this as a compliment. Most emblematic of all, they “seek to improve the efficiency, effectiveness, capacity, and accountability of charities through persistent strategies, performance metrics, and cost-benefit calculations.” However, these particular “techniques” – strategy development, use of metrics and cost-benefit analysis – do not distinguish the for-profit sector. Anyone who has been deeply involved in private business (which critics of billionaire philanthropy tend not to do) knows that using these techniques is what makes charitable activities and what business-minded donors have tried to use their donations for charity in ways that actually adds value: a tendency to start with experiments rather than uniform programming; Focus on results rather than inputs as a key measure of performance; striving to find out where they are wrong in order to avoid or at least end costly mistakes; willingness to change staff if it turns out to be disappointing; and a determination not just to conduct a cost-benefit analysis, but to respond to it, for example by closing down poorly performing programs. Jeff Bezos didn’t create amazing values because he measures things, but because he does something with those measurements. All of these ways of “doing business” in the broadest sense are not a given to many people who work in nonprofits, and they are downright exotic in government.
What has drawn philanthropists into many fields is precisely the failure of governments to get important results.
A related tendency also runs through the second half of the book. Vallely, like other left-wing critics, emphasizes that charitable contributions, provided they earn tax deductions, are subsidized by taxpayers. A significant portion of every dollar, pound, or euro that major donors spend would otherwise have been used to fund government spending on schools, hunger, housing, healthcare, and more. This opportunity cost justifies Vallely (and others) repeatedly asking and judging whether contemporary big dollar philanthropy is good enough. Vallely is open and seems more than open to the idea that “the money donated by philanthropists could be better used if it were collected as taxes and spent according to the priorities of a democratically elected government”.
This hypothesis raises some big questions that are open to heated debate. But you wouldn’t really know that on these pages. The absence is painful. Who said the government was democratically elected? Philanthropists have spent billions in developing countries ruled by dictators, many of whom Vallely would no doubt recognize that they are not exactly obsessed with the best interests of their subjects. To give this money to these dictators would certainly be a step backwards. What about paying tax bills to elected governments in rich countries to spend on development? The foreign aid record – official development aid – provides a generally depressing answer. Trillions have been spent, but sustainable growth, such as lifting people out of poverty, has centered on countries that have received relatively less aid, not mountains of it. Another crude test whose spending is more effective: Do we think a higher percentage of government aid or Gates Foundation spending in developing countries has ended up in Swiss bank accounts?
What about the tax dollars that rich country governments spend at home? Vallely is certainly on stronger ground here. But how reliably do democratically elected governments even then efficiently spend money on those in need, for the common good and in harmony with the values and priorities of their people? We can absolutely identify cases where government spending meets these criteria. We can also identify bridges to nowhere, budgets bloated by side payments to special interests, entitlement programs nowhere near as advanced as most adopt, regulations driven more by alarming headlines than rigorous data, sub-par programs, which still go on and on, and expenses in areas like “education” and “health” which – if you look under the hood – go mainly to well-paid employees. Ignoring these things is pretending that public election theory never happened.
This preference for government also betrays a misunderstanding of something essential. What has drawn philanthropists into many fields is precisely the failure of governments to get important results. For this reason, donors support inner-city Catholic schools, various medical innovations, the treatment of trachoma and river blindness, and granular services for unhappy people whose welfare states are simply not well equipped to help. There was ample space in this great book to ponder when charitable dollars could predictably be better spent than government programs.
Vallely criticizes the influence of plutocrats in general. Sometimes his comment is pointy. For example, he describes Charles and David Koch’s “attack on science” and “attack on public order”, their “strategy of taking control of the underlying political culture” and the general “radicalism” of their agenda. The images are threatening, all “dark money” and threats to the general will and the common good. But when Vallely thinks of Chuck Feeney, George Soros and Michael Bloomberg, the tone becomes noticeably softer. These billionaires promoted causes with which progressives identify such as “human rights”, health care, gun control, democracy and “refugee aid”. Vallely seems unable to consider the possibility that the lower taxes and regulations advocated by the Kochs could add to the general enrichment of Western societies, from which poor people have benefited more than anyone else. He looks away from some obvious left-wing thinking mistakes about how the world works (don’t ask if Jeffrey Sachs and his Millennium Villages are scrutinized). And he doesn’t seem to know that the prejudices at work here affect how convincing his conclusions can be.
Vallely is right, of course, to say that the history of philanthropy is “littered with projects and programs that fail”. Donors have wasted immeasurable sums on vanity projects, blunt plans and wrong strategies, and boring civic projects that are perfectly nice but probably don’t make a big difference to anyone. But also charitable donors, including mega-donors, have done amazing things. Andrew Carnegie built and equipped libraries that helped nurture rich lives and careers. The Rockefeller Foundation funded numerous medical breakthroughs and was instrumental in the Agricultural Green Revolution associated with Norman Borlaug. Private donors large and small supported the Thurgood Marshall litigation team as they worked their way up to Brown against the Board of Education, along with many other civil rights efforts. Already now, Dolly Parton’s Imagination Library is sending monthly packages to infants and toddlers whose homes may be long with video games but books.
Vallely’s own text would have been more nuanced and powerful if he had thought about why governments may allow so much leeway for philanthropists, why a diversity of views among donors is a good thing, and how we have benefited from the good works of so many tycoons – even robber barons like Dolly Parton.