Philanthropy, Power and Perversion

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Beware the hand of giving?
Beware the hand of giving?
Beware the hand of giving?

‘Tis the season to be jolly. Oh, the true joy of unselfishness! Do-gooders unite! Let’s all celebrate the spirit of the season! Praise the day and pass the offering plate! And speaking of the offering plate, Walmart will be open late on Christmas Eve!

This time of the year means giving some material item to a family member or friend that they most likely don’t need or even like. After all, there is a reason Dec. 26 is the second busiest day for retail sales. This travesty is no secret. It is as recurring and about as welcome as the cold-and-flu season. Yet it does not stop the annual post-Thanksgiving pilgrimage to the mall. This insanity has produced absurdly rude behavior, fistfights, and, yes, even death as people charge into Black Friday.

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If the holidays are truly about the spirit of giving, instead of candidates for the Ugly Sweater of the Year Award, why can’t somebody come up with an act of help or kindness that could be truly useful to the recipient? For example, if Johnny is good at math and sister Lulu is a bit dim on the subject, why can’t Johnny give Lulu math tutoring for the holidays rather than an expensive video game? To this observer, that is the real spirit of giving. OK, I admit the example is a bit unrealistic but surely Johnny could come up with something better than an iPhone cover to give to Lulu.

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There are, of course, at least a dozen reasons why materialism trumps gifts, so why fight the retail lobby? Well, it just seems as if the holiday material madness has never been worse and that is reason enough.

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In Search of The True Spirit
In the real world, concern for human welfare and advancement is called philanthropy. This time of year it’s really trendy. Most of us associate it with money-raising efforts for altruistic causes such as finding a cure for cancer or some other equally major cause. Each person can pick their favorite cause and contribute either time or money, no matter how large or small it may be. And philanthropy is almost universally looked upon with respect and admiration by the world. A recent article in The New York Times, by Tara Siegel Bernard, even dished out some advice on the true meaning of philanthropy:

If you were to listen to a handful of ethicists and charity experts make their case, as I did this week, you might be swayed to send more of your money to people in distant lands. They argue that if giving is about pure altruism, individuals would be sending a greater share of their charitable dollars abroad; even small dollar amounts can have powerful results for people living in extreme poverty.

Criticizing philanthropy is akin to the proverb “never look a gift horse in the mouth.” But the truth is there is a dark side to philanthropy — and what more joyful time of the year to discuss it than now?

Much of philanthropy is not about altruism but power. The embarrassing truth is that only a portion of each dollar you donate ever makes it way to its intended recipients. As a general rule, the larger the charity, the larger the overhead and the smaller amount left to aid the cause. (There are well known best practices for proportion of fundraising and overhead to programming. Charity Navigator says fundraising and overhead should be no more than 25% of expenses; other groups suggest 35%. Meantime, many analysts believe measuring overhead is a terrible indicator of effectiveness in the first place.)

John Emerich Edward Dalberg Acton first stated in 1887, “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” Does that sum up today’s charity world? Consider a few points.

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When the true spirit of philanthropy is carried out by all of us it can be a strong and positive force in our lives. Historically, philanthropy has been the domain of the deep moneyed members of society and used for income tax deduction. Go to any black tie charity event and the honoree is likely to be someone with a recent financial success that is enhancing his or her image while keeping Uncle Sam at bay.

Having observed these charity charades for many years, I find them to border on the creepy. However, I do realize that it is a game that has been played for as long as there has been money and needy causes. And, for the most part, they represent small fish compared to what is unfolding at the present time.

Now the One-Percenters Have Really Gone and Done It
60 Minutes recently ran a segment titled “The Giving Pledge” in which Charlie Rose interviewed mega-philanthropists like Bill and Melinda Gates and Warren Buffett. Thus far, this kind group has lined up 115 billionaires to take a pledge to donate at least $500 million to philanthropy. This effort has amassed more than $500 billion in commitments.

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Imagine that! The combined total from Gates and Buffett alone is well over $100 billion; much of their time, energy and resources have been devoted to helping wipe out deadly diseases like polio and malaria in Africa. In his typically techno-innovative style, Gates has come up with some solutions that promises to reduce water pollution and improve infant mortality in many Third World countries. The recipients are genuinely grateful and none are required to appear in an ad for Windows 8. That is real kindness.

So with all this good having taken place and much promised for the future, who could criticize? Well, let’s not forget the immortal words of Acton. With all this economic power, all this ability to change to world, how do we know when somebody makes a dumb move, or simply one that brings unintended consequences?

Good question. Consider another question: If so much dough is being put to work in Third World countries, what about the third class citizens in the U.S.? What about the 45-plus-million citizens on food stamps and with little or no hope of a job? What about the fact that the U.S. has one of the highest poverty levels of any industrial country in the world? What about the fact that we incarcerate a larger percentage of our population — and for longer terms, giving them no training and releasing them with little more than pocket change? Yes, it is good to save a starving child in Rwanda, but how does that help an American family avoid obesity from a daily diet of fast-food? These are the symptoms of the real problem: America must create jobs to support its high-cost infrastructure. As businessmen, these individuals don’t invest in things like U.S. manufacturing because it doesn’t yield a profit. As philanthropists, who needs profits?

Perversion of Power
Never before has so much economic power be concentrated in the hands of so few, with the power both to do good as well as evil. It’s almost absurd to suggest that well-intentioned multibillionaires throwing money at good causes could possibly achieve anything but good results. Not true. It is a well-accepted premise in sociology that the solution of one social problem in turn creates another.

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It is a fact that no charitable action is going to please everyone because politics, religion and other issues inevitably enter into the mix. The Gates Foundation is currently holding out a $1 million offer to anyone who can design a more user-friendly condom to help reduce the spread of HIV. Who could debate the virtue of this effort? Well, perhaps a few religious organizations?

Meantime, the world population is projected to reach 12 billion by 2050. Even at the present level of seven billion, feeding everyone is already showing signs of stress: In the past 15 years the FAO Global Food Price Index has spiked 138%. That crop yields have flattened in the past five to 10 years has also hurt. If feeding our population is a problem, what is the virtue of actions which, in addition to preventing HIV, will add more hungry mouths to feed? If the world were a family of six earning $5,000 a year, the basic question would be this: since you obviously can’t afford to feed the children you have, you have no intention of having more children, right? Now, is this a callous approach to human suffering? Yes. But these are also issues over which wars have been fought.

The legendary bond manager Bill Gross recently remarked, “Economies function best when the wealth is broadly spread throughout the population.” The same could be said for philanthropy. It may be correct that concentration of capital increases the odds both of finding a solution to a problem and finding a solution quickly. But that is not the same thing as democracy. In other words, what happens if some gazillionire decides to solve the world’s housing shortage by building huts out of asbestos? Granted, that sounds far fetched, but is it really?

The rest of us former members of the middle and upper-middle classes can be grateful we don’t have to make these global decisions. We need only to be thankful for the good spirit of the holidays, aware of the credit card bills that will be forthcoming and dedicated to hitting the gym to lose those 10 holiday pounds. Happy holidays everyone and best wishes for a satisfying and rewarding 2014. And by the way: if it turns out all well, you might want to start a charity. It will save you a load of dough in taxes not to mention all the other perks of altruism. Like power.