February 23, 2006 | Read Time: 7 minutes
This country’s most-generous donors give little or nothing to nonprofit organizations that work to reduce poverty or eliminate the social and economic inequities of our society.
A review of gifts made last year by the 63 donors on The Chronicle’s list of the nation’s biggest benefactors, as well as a look at the list compiled by Indiana University’s Center on Philanthropy showing all gifts of $1-million or more that individuals made in 2004, reveal a pattern of giving that is widening the disparity between America’s large, relatively rich, established nonprofit institutions and those that are small, struggling, and less established.
It is those small groups that tend to focus on helping the needy, minorities, and other vulnerable people. And the lack of support those groups get from the wealthy parallels the pattern of giving by the nation’s major foundations, offering a sharp reminder that charity — giving to those who are most in need — has increasingly become only a small part of philanthropy.
The overwhelming majority of the beneficiaries of the nation’s wealthy were universities and colleges.
Private and community foundations, medical centers, and museums and arts institutions were also very popular.
A small scattering of groups like the Boy Scouts, Salvation Army, Nature Conservancy, and Boys & Girls Clubs, as well as libraries, public and private high schools, land trusts, and parks also received significant sums.
Two large gifts — from the computer entrepreneur David Duffield and the estate of the late fashion designer Geoffrey Beene — went to animal-welfare organizations.
Only two major donations from individuals went to what might be called watchdog or advocacy groups. Human Rights Watch received a five-year, $15-million matching grant in 2004 from Herbert and Marion Sandler, who are the chief executives of Golden West Financial Corporation, in Oakland, Calif. Last year the American Civil Liberties Union received $6.5-million from Peter B. Lewis, the Ohio insurance executive.
At least this year has gotten off to a quick start for civil-rights groups, as Jon Stryker, heir to a medical-supply fortune, gave $1-million to the National Gay and Lesbian Task Force, in Washington.
Still, of the major donors in this country, only two have consistently focused their giving on poverty and on efforts to promote social and institutional change. Fortunately, they are also two of the most-generous benefactors in history.
Bill and Melinda Gates have dedicated their philanthropy to improving the health of low-income people, especially overseas, and a small but growing portion of their foundation’s money is going to groups that advocate on behalf of the poor.
Although the financier George Soros gave a huge gift — $205.9-million — to Central European University last year, he has already given billions of dollars to the Open Society Institute, a network of foundations that have a strong record of giving to antipoverty and advocacy organizations.
The other big contributors gave to more traditional organizations in 2004 and 2005.
Boone Pickens, the oil executive, donated $165-million to Oklahoma State University for its athletics programs, while the heiress Caroline Weiss Law left $225-million to the Museum of Fine Arts in Houston, in 2004. Eli Broad, the insurance and home-building executive, and his wife, Edythe, pledged $100-million apiece to their own foundation and to Harvard University.
David Rockefeller pledged similar amounts to both the Museum of Modern Art, in New York, and Rockefeller University. Lawrence J. Ellison, the founder of Oracle, pledged $115-million to Harvard, and Jan T. Vilcek, inventor of a popular anti-inflammatory drug, and his wife, Marica, pledged $105-million to New York University’s School of Medicine. And so the list of large gifts to universities goes on.
One exception from this pattern is the gift of $103-million by Pierre Omidyar, founder of eBay, and his wife, Pam, to Tufts University. The Omidyars told Tufts officials to use the money to make small loans to businesses in developing countries. The profit from this lending will go toward the university’s endowment, scholarship programs, and other activities.
Otherwise, most of the money that wealthy people gave to higher-education institutions went to endowments, new buildings, and in a very few cases, scholarships for needy and minority students.
With a handful of exceptions, no major gifts went to homeless shelters and soup kitchens, social-service organizations, mental-health clinics, housing groups, or organizations that help immigrants. Nor did any significant gifts go to grass-roots youth organizations, leadership-training groups, civil-rights advocates, community-organizing groups, and other social change-oriented institutions.
The severe cutbacks the federal government has made in financing for social programs in recent years, often accompanied by similar reductions in state funds, have endangered many community-based organizations that have provided essential services to the poor, minorities, and other needy people.
Foundations and wealthy people have not filled this budgetary gap. In fact, many grass-roots groups, especially in the South, report that philanthropic money has become scarcer. The result: Many small nonprofit groups have either gone out of business or have had to reduce their programs and staff. Even some well-regarded national organizations have been forced to close because they had insufficient funds.
Why have wealthy people refused to give their money to social change, advocacy, and watchdog organizations?
Do they not believe that charity is an important element of philanthropy? Do they fail to recognize that social- and economic-justice issues are at the heart of a democracy that has permitted them to amass their wealth? Aren’t they interested in making certain that our government agencies and political system are publicly accountable, held in check by such nonprofit watchdog organizations as the Center for Public Integrity, Common Cause, and the Project on Government Oversight?
According to most observers of philanthropy, the answer to these questions is that wealthy donors give to institutions with which they are familiar and from which they and their families have benefited — colleges and universities, medical facilities, and museums and other cultural organizations. They are also comforted by their belief that such large institutions are well managed and publicly accountable.
Moreover, most wealthy people are neither exposed to the realities of distressed populations, cities, and rural areas, nor socially in touch with people who might suggest alternative recipients of their largess.
Whatever the reasons, this almost total disregard for some of society’s most important and troublesome problems is inexcusable. What is even more vexing is that wealthy Americans are rewarded handsomely by the nation’s tax system for their narrow, parochial contributions.
Can anything be done, short of radically altering our system of tax incentives?
One long-term approach might be to develop a cadre of socially responsible wealthy donors and foundation leaders who could reach out to peers and educate them about the possibilities of supporting nontraditional organizations.
It would take some missionary zeal and persistence to bring about some change. What is clear is that the current advisers and gatekeepers to the wealthy are not doing the job.
In his insightful article, “A Failure of Philanthropy,” in the winter 2005 issue of the Stanford Social Innovation Review, Rob Reich, an assistant professor of political science at Stanford University, observed that “if public policies governing philanthropy, such as tax subsidies, are indeed worsening social inequalities, then American philanthropy is failing. For isn’t charity supposed to remedy inequalities by assisting the poor and disadvantaged?”
The deductions for charitable giving cost the United States treasury a lot of money. In 2005, charity tax write-offs were expected to amount to $36-billion, according to Evelyn Brody, a professor at Chicago-Kent College of Law. Only three other types of tax breaks cost the government more.
As the poor and disadvantaged are increasingly ignored by philanthropy, can the United States justify a system that not only makes this possible but that also is supported by the nation’s taxpayers, many of them people who are struggling to make ends meet?
Is it time to alter the nation’s tax incentives? Should Congress eliminate tax deductions for contributions that support the sacerdotal activities of churches, rather than the services they provide?
Could lawmakers create special tax incentives that would increase giving to antipoverty and environmental-justice efforts, both their advocacy work and their direct service?
It is not clear how best to change the system. What is clear is that foundations and wealthy individuals have increased the gap between the haves and have-nots. And they continue to ignore the advocacy and watchdog groups that are essential in maintaining the checks and balances in our democratic society.
Pablo Eisenberg, a regular contributor to these pages, is senior fellow at the Georgetown University Public Policy Institute. His e-mail address is pseisenberg>@erols.com.
