What’s Wrong With Philanthropy?

Inequality and poverty is on the rise, but so is philanthropy! Should we be concerned or delighted? Philanthropy is not the same as charitable giving. It is best defined as the strategic management of donations to worthy causes. What is wrong with that? Surely it is good that, when it comes to giving money to charity, a growing number of individuals and corporations are choosing to adopt a professional approach to getting more ‘bang for their buck’ when they give money to charity.

Philanthropy appeals to the general public because as much as we may feel that we ought to want to be good citizens, to help our fellow man and to provide for public services, when you get right down to it there is no doubt that most people have a clear preference for lower rather than higher tax bills! The philanthropists appear to let us off the hook, stepping in to finance public services, the arts, scientific research, education and sports, and to support the spiraling costs of maintaining our infrastructure and our cherished national institutions. For this reason we are inclined to heap praise and gratitude on philanthropists. Philanthropy appeals to governments too. Private funding enables governments to keep taxes lower than they would otherwise be. This helps to appease the electorate and to keep governments in power.

So what is there to worry about? Surely philanthropists should be praised for setting up independent trusts and foundations to directly target good causes. Might there even be a reason to encourage philanthropy by offering tax breaks and other incentives, to stage public ceremonies as demonstrations of thanks, to grant philanthropists privileged access to otherwise closed areas, even a seat in the unelected chamber of government?

Many philanthropists have come to anticipate this type of response to their gift-giving activities. Should we be rewarding philanthropists in these ways? By offering philanthropists tax breaks we create a situation in which many donations to worthy causes through charitable giving do not in fact belong to the philanthropists in the first place! Employing family and friends on the boards of the charitable trusts confers salaries on them and allows scope for waste as well as corruption. The pattern of expenditure is determined by a handful of private individuals who have the power to support or deny support to various causes. So what’s wrong with philanthropy? Well, to my mind, quite a lot actually! We should be wary of incentivising ‘giving’ in order to fund public concerns through private philanthropy.  The plethora of exceptions within the tax system, rather than incentivising individuals to act in the public interest, simply leads them, and their sophisticated accountants, to establish more and more ways to wiggle though the loop holes. We should be closing loop holes, simplifying the tax system and properly funding government provision of public services.

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