August 14, 2023
Earlier this summer, The Giving Institute published Giving USA 2023 which is a barometer by which we measure our nation’s philanthropy. Many readers were focused on how total giving, which totaled $499.3 billion, was a concerning 3% less in 2022 than it had been in 2021. I, however, was more interested in another part of the study – the information about the share of giving coming from large donors. That is where we can better understand how the democratic nature of American philanthropy, This is the “public” in whose interest we judge charitable giving. These are the individuals who are worthy of being given significant tax benefits.
That part of the study continues to tell us that American philanthropy is becoming less and less democratic and less and less in the public’s interest.
According to a summary of “Giving USA 2023” offered by the Winkler Group “Over the past decade, the number of donors has declined by 19 percent. In 2022, donors dropped by 10 percent….This past year, five percent of all philanthropic giving came from only six donors. If just one of these six had chosen not to give, our overall picture would have looked even worse….The sustained reliance on gifts from the wealthiest Americans—at the expense of mid-level and lower-level gifts—is particularly troubling.”
6 donors gave 6 percent of total giving; Let me repeat that so it sinks in, 6 individuals were able to give away $25 billion in a single year!
Four years ago, writing for Nonprofit Quarterly, I observed that mega-donors were changing the nature of American philanthropy. At one time over 60% of total philanthropy had come from individual small donors, but that share had been shrinking year by year and now is less than half. While the amount of total giving was growing, it was more and more coming from larger and larger, wealthier and wealthier donors who gave differently. Rather than give directly to charities and operating non-profits, their gifts more and more went to Foundations and Donor Advised Funds where they could retain total control of their wealth and use it as they saw fit. And when large donors did give gifts directly to nonprofit organizations they were able, because of the size of their gifts, to have great control of how those organizations operated. “…nationally, the swing has been…profound. The number of private foundations has continued to grow, and for those who want many of the personal benefits of a foundation without all the overhead, donor-advised funds have become a vehicle of choice and are growing rapidly. All this reflects the growing importance of wealthy individuals. As NPQ has noted, ‘Over the past 14 years (for which we have data), we have seen a decline in the share of Americans who are donating at all, and a decline in the amounts donated by the typical American household.”
My concern then, as it is now, is that wealthy donors can and do see their donations as solely personal decisions and have little reason to accept any outside control of how they define the “public benefit” they are achieving. They have no need to have their personal priorities tested against a broader measure of the public’s need or desire. Their donations come with directions and too often buy them influence and control in how their recipients should do their charitable work.
This is a time when, as I recently lamented, about our collective refusal to take on the structural issues that hurt so many of our neighbors that “we, as a nation, refuse to take decisive action to ease the pain and lower the harm. We know that people are harmed by being forced to live in poverty. We have evidence that giving people a guaranteed income makes a significant difference in the quality of their lives. We know it eases pain.” But mega-philanthropists believe that they should retain control of what the charitable response should be to these harms and hurts.
When, rather than having government provide the safety net that many of us need, and fix the structural problems that cause harm, we are often told that the answer can and should come from our personal actions as donors giving out private organizations established to help those in need we must be concerned about how those philanthropic efforts are directed and be sure that they are really being done in our collective interest.. This concentration of philanthropic power in a few hands seems as dangerous as it is in the political arena. As unlimited political giving has given greater and greater power to shape public policy it is also giving greater and greater power to the very rich to determine how charity works and who it can help. That is as concerning to me as the political influence of the very rich is.
But perhaps I worry too much.
Andrew Marantz recently profiled a benevolent mega-donor, Lean Hunt-Hendrix for the New Yorker. Ms. Hunt-Hendrix is heir to part of the mega-fortune amassed by oil baron H. L. Hunt. As Marantz describes her, she is trying to do things I am trying to do while providing evidence that we should not be worried about wealth’s power:
“Basically, she is a philanthropist, though she is reluctant to use the word, given her skepticism toward much of what passes for philanthropy. She donates money to leftist social movements, and she leverages her connections to persuade other rich people to do the same. She gave early funding to Black Lives Matter activists, and to the long-shot primary campaigns of members of the Squad. Since 2017, through her organization Way to Win, she has helped raise hundreds of millions of dollars for left-populist politicians….Hunt-Hendrix aspires to what she calls “philanthropy-in-solidarity,” a more cozy-feeling arrangement that allows donors to see themselves as collaborators in activists’ struggles. “
One can find similarly glowing articles about other donors who give in ways that I would judge as societally positive, donors like Mackenzie Scott, Melinda French Gates, and George Soros. At the same time, there are articles about those whom I differ with on philanthropic approaches like Mark Zuckerberg and Bill Gates.
But this doesn’t reassure me; rather, I am more worried than ever as reports like Giving USA 2023 tell us of further philanthropic concentration.
As the list of mega-givers that agree with me grows, begs the bigger issue.
Marantz began his profile describing some of the choices that a liberal-thinking philanthropist might make about how to use their fortune:
“Let’s say you were born into a legacy that is, you have come to believe, ruining the world. What can you do? You could be paralyzed with guilt. You could run away from your legacy, turn inward, cultivate your garden. If you have a lot of money, you could give it away a bit at a time—enough to assuage your conscience, and your annual tax burden, but not enough to hamper your lifestyle—and only to causes (libraries, museums, one or both political parties) that would not make anyone close to you too uncomfortable. Or you could just give it all away—to a blind trust, to the first person you pass on the sidewalk—which would be admirable: a grand gesture of renunciation in exchange for moral purity. “
The problem is that they are making this choice with no check or balance. They can do what Ms. Hunt-Hendrix has chosen to do or they can do what they have chosen to do. They all decide what is in the public interest without the public having any say about it. Almost every time I open an issue of the Chronicle of Philanthropy’s daily newsletter I find a feature (like this one from August 14) I find a list of major gifts to a range of nonprofit organizations. Each one is very personal to the donor; take them together over the year and I think you will be hard-pressed to see them relating to sany sense of national priorities and non are reflective of democratic decision-making.
Should we be reliant on the whims and individual decisions of wealthy men and women to do the “right” thing? The “right thing” is a personal decision in our individualistic society. Does it override community and group; and is can it ignore our democracy?
Great wealth is corrupting. We shouldn’t be deceived. Even good people trying to do good things are doing harm by perpetuating the reality that all things are individually judged and valued. Free choice makes sense when we are talking about what flavor of ice cream I want next Sunday or what part of the country I want to live in or which candidate I want to vote for. But when it has almost unlimited wealth behind it, when I can decide to buy enough chocolate ice cream to crowd out the production of vanilla because that is my preference it is problematic.
Let’s not be deluded. Mega-wealth is a cancer that will destroy our nation. Unstopped we will be living in a nation where the only important issue is how the handful of people who have enough wealth to buy their way into the discussion are allowed to govern us all. I am concerned that we might already be there.