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It was once safe to assume that giving money to charity was perceived as a worthy act, but in recent years a growing debate has gnawed away at that idea. Days like Giving Tuesday, which falls this year on Dec. 3, attempt to keep consumers focused on giving rather than spending.
Even though Americans are giving more money than ever to nonprofits, like many aspects of American life, there’s a divide in philanthropy. Fewer middle-income and lower-income households are giving money to charity, while richer donors proliferate, making bigger and bigger donations.
Some critics view mega-donations from people like Amazon AMZN, -1.07% founder Jeff Bezos and former New York City mayor Mike Bloomberg as a troubling symptom of income inequality. Outsized philanthropic gifts let the wealthy advance their own self-serving agenda, they argue, while getting good press — and a tax deduction to boot.
‘Just say no when asked to make a contribution at the cash register, on the phone when it rings at dinner time, or on the sidewalk.’
Meanwhile, some of these philanthropists allegedly contribute to the very social problems they claim to be solving by heading companies that don’t pay their workers a liveable wage, critics say.
Phil Buchanan, the director of the nonprofit Center for Effective Philanthropy, addresses some of these critiques in his book, “Giving Done Right: Effective Philanthropy and Making Every Dollar Count” (2019).
His book comes as the college-admissions scandal and lawsuits against OxyContin maker Purdue Pharma, owned by the Sackler family, who are also major arts philanthropists, have served as reminders of the complicated relationship between the 1% and philanthropy.
He talked to MarketWatch about how donors can make better choices and what the rise of mega-donors means for democracy.
MarketWatch: What’s your advice for people who want to give money to charity?
Buchanan: Get clear about your own goals. You will feel more of a sense of satisfaction if you focus your giving, which means you have to say no to a lot.
Just say no when asked to make a contribution at the cash register, on the phone when it rings at dinner time, or on the sidewalk. If you respond just in the moment — based on emotion or pressure — you will look back on your charitable contributions and they will feel random.
Fewer middle-income and lower-income households are giving money to charity, while richer donors proliferate, making bigger and bigger donations.
We all have things we have to do. If your niece is raising money for her school project and asks you to make a contribution, you’re going to do it because it’s your niece. But you’ve got to limit that kind of giving if you want to really pursue some goals that are important to you.
MarketWatch: It’s hard to resist when everyone is looking at you at the cash register and they ask if you’d like to help a child who’s hungry today.
Buchanan: Right. But the reality is that is not a good moment, with a line of folks behind you, to make an informed and thoughtful decision.
You could argue, well it’s only one dollar. Still, I would say, it’s better to just budget for what can you set aside for giving. Maybe you let yourself have 20% for the relational stuff that you feel you need to do, like when your coworker is running a race for a disease that affected someone in her family.
Charis Loh Phil Buchanan, author of ‘Giving Done Right: Effective Philanthropy and Making Every Dollar Count.’
MarketWatch: In New York State’s recent lawsuit against opioid makers, Attorney General Tish James alleged that the Sackler family, the owners of OxyContin-maker Purdue Pharma, made major donations to museums including the Guggenheim and the Metropolitan Museum of Art to “whitewash their decades long success in profiting at New Yorkers’ expense.” How does that affect philanthropy as a whole?
(Editor’s note: The Sacklers have denied allegations that Purdue distributed hundreds of millions of dollars to the family when the pharmaceutical company discovered it was facing lawsuits over the opioid crisis in the U.S. related to OxyContin, a highly-addictive pain killer; the Sacklers have said they will defend themselves “vigorously.”)
Buchanan: It shouldn’t tarnish all of philanthropy anymore than Volkswagen VW, -1.17% cheating on the emissions test should tarnish all of business. We need to be able to distinguish between the bad actors and the good ones. Critique of philanthropy is healthy. But let’s critique particular problems or failures.
For example, I’m really critical of the Gates Foundation’s work in U.S. public education and I’m critical of a lot of particular examples of philanthropy that hasn’t worked very well. But I also have a lot of positive things to say about what the Gates Foundation has done in global health, though I’m sure they’d be the first to admit they haven’t gotten everything right there, either.
We need to be able to distinguish between the bad actors and the good ones. Critique of philanthropy is healthy. But let’s critique particular problems.
(Editor’s note: Last year, the Rand Corporation released a report, “Improving Teaching Effectiveness: Final Report,” which criticized the $575 million Intensive Partnerships for Effective Teaching initiative, designed and funded by the Bill & Melinda Gates Foundation, and said it didn’t raise student grades or improve teacher retention or effectiveness.
Allan Golston, the president of the U.S. program at the Gates Foundation, told Education Week in a statement: “We believe that this work, which originated in ideas that came from the field, led to critical conversations and drove change and partnerships across the country. We have taken these lessons to heart, and they are reflected in the work that we’re doing moving forward.”)
MarketWatch: There’s a lot of critique right now that mega-donors hurt democracy by advancing their own agenda at the expense of others. Are mega-donors are problem in your view?
Buchanan: There’s been an unfortunate conflation of frustration with wealth inequality and frustration about our approach to taxation with broad-based cynicism about the motivations of anyone with wealth. My experience working with major donors is that most of them are not the Sacklers.
‘What do we really want to say to people? Do we want to say to them that we are so cynical that we will view with distrust every effort to try to give back?’
I am glad that Bill and Melinda Gates decided they wanted to try to do something about people dying globally of diseases they don’t need to be dying of. If you look at the decline in worldwide childhood mortality — which obviously cannot solely be attributed to the Gates Foundation — it’s stunning.
What do we really want to say to people? Do we want to say to them that we are so cynical that we will view with distrust every effort to try to give back? Or do we want to encourage people to give back and condemn what should be condemned?
Many of these critiques don’t even mention the well over 1 million nonprofit organizations that are affected by the decisions that people make about giving.
MarketWatch: What’s the right way for someone like Amazon founder Jeff Bezos to carry out their philanthropy?
Buchanan: One of the big challenges for major donors is that they almost by definition can be pretty disconnected from the people and the issues that they’re trying to address. Philanthropy usually is more effective when it is really informed by those closest to the ground.
I talk to a lot of big donors and I’ll ask them, “You were in business and your company IPO-ed and now you’re moving into being a significant donor, so how are you getting up to speed? What if you shadowed a couple of nonprofit directors and saw what it was like to do their jobs and talked to some of the intended beneficiaries of their work?”
The big challenge for someone like Jeff Bezos is how do you get out of the bubble, and really learn from those on the ground?
(This interview was edited for style and space.)
