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#301 Necessary But Insufficient: the Response of the Philanthropy World

February 20th, 2018

Richard Marker

In the almost 16 years since I have become self-employed, I have learned that there are both professional advantages and disadvantages. One of the double-edged swords is the ability to say or write whatever one wishes without clearing it with anyone. Of course, that doesn’t mean that there aren’t consequences to that freedom. For example, not everything I say in my public presentations or in my writings endears me to all of my fellow philanthropoids, and I am aware that such outspokenness has cost me some contracts. I sometimes say things that challenge common orthodoxies in the field. This post is another example of that.

Before my Jeremiad, let me be very clear: I am a big believer in the indispensability of voluntarism in giving of time, money, and leadership. This is true everywhere in the world and has been for as long as there have been structured societies. I also believe that it is advantageous [but not mandatory] that there be some incentives to do so, such as tax deductions, although this is far less universal. In a very high percentage of the nations and peoples of the world, education, healthcare, social welfare, and much more would simply not exist if it were not for that voluntarism, whether organized by faith based or secular institutions’.

Moreover, full disclosure, for a good part, but not all, of my career, I was a beneficiary of that voluntarism. I was employed by universities, non-profits, and foundations all of which exist because of voluntary giving. [I have also been employed by for-profit companies and am now mostly an independent contractor – a profit making venture most of the time.]

Having stated my bona fides, and affirming the necessity of our sector, what is my beef?

It is that our sector continues to advocate for the wrong things, or more correctly, inadequately advocates for what will truly make a difference.

The recent tax law, which I consider to be an embarrassment and an abomination for its shameless pandering to the super-wealthy and its concomitant disregard for those in need, has probable real implications for charitable giving. I say probable because it is by no means certain that the tax changes will in fact yield lower giving.

I agree with the pundits that it will probably depress giving by mid-level donors in the short run, but history doesn’t support that that depression will continue over time. In fact, if one looks at the implications of tax changes on charitable giving over the long run, one sees short term gains and short-term losses concomitant with tax changes, but that over time giving reverts to a mean and has remained there for a very long time. [There have been many pleas and attempts to increase that percentage, but with only marginal success.]

Moreover, most studies show that charitability is only marginally influenced by taxes, and when it is, it mostly has to do with how – not whether – one gives.

Having said that, it is true that this is a time when we need every incentive possible because of the vastness of the needs, and the tax sham certainly doesn’t do that.

But even were charitable giving to double, it would only make an incremental difference in the moral hole the USA has dug for itself in its recent policies. Maybe the tax scam will save the average person in the USA a few hundred dollars as they promise, but it comes at the same time when congress is radically reducing support for health care, education, food insecurity, and – if they have their way, social security and Medicare! The probable financial net loss to most people far exceeds the incremental tax savings.

And this is all accompanied by a reduction in consumer protection and in abetting climate degradation.

[If I wanted to get “political”, I would add to this shameful litany the incessant attacks on the judiciary, the press, science, and the truth, but let’s leave that discussion to another time.]

Not only do these changes portend economic hardships for many, but underneath, a veritable meanness of spirit, a culture of misanthropy, the very opposite of what our field is supposed to stand for.

To be fair, many in our field have been actively and assertively leading the good fight. But for too many institutions in the fields of philanthropy, the advocacy begins and ends with charitable deductibility and similar self-authenticating issues. Yes, it is worthy to encourage charitable giving, but hardly sufficient to redress these wrongs. As a field committed to improving our world, making it more sustainable and equitable for all, our voices should not be heard as defending our own needs, but rather demanding that what we stand for matters. These are public policy matters; they are a reflection of our tax priorities; they are statements about our national character, our ethics, and our values. Optics matter.

Most of us are in the field of philanthropy because of our visions for what our limited [even if generous] resources can help bring about. Let’s not let those visions be reduced to transactions on a tax return.

What then is the proper role of philanthropy in these times? There are numerous approaches.

a. Risk Capital: A recently widely disseminated piece out of the venerable Ford Foundation reaffirmed philanthropy’s role as society’s risk capital. Most of us in this field come to that same conclusion at an early point of our ventures in this field, and it is always worth re-discovering and re-affirming our uniqueness. After all, who besides our field is exempt from plebiscites, or is accountable to stakeholders beyond our own boards. We can, should, and must take risks that other sectors might legitimately shy away from. [That doesn’t exempt us from appropriate humility that our guesses or investments may be wrong, but when we are right, our investments can be transformative.]

In normal times, I would applaud this recent reaffirmation of our unique role, but these are not ordinary times. Our risks work best in times of stability and a common commitment to basic societal institutions. Our risks are more suspect if the education, social service, health care, and even cultural institutions are not adequately supported. Are we supporting risks to get us back to an authentic baseline – or avoiding our responsibility?

b. Funding what government won’t. Some segments of our sector celebrate examples where voluntarism of money and time have successfully replaced programs that taxpayer supported institutions no longer can afford. Those successes or noble experiments most typically are present in the education sphere, but not restricted to them.

However, leaving aside the moral challenge of having human needs dependent on the good will of voluntarism, or whether this reflects public policies that are sustainable over time, on a practical level it is simply impossible to privatize all of the basic needs of an industrialized, or post-industrial society. The scale, the alignment of need with available resources, and the accountability to the public make it all but impossible.

c. Continuing to support what we always have This approach has served society well in the past. The need for cultural or local institutions will always be there even after a particular disaster or financial crisis passes. Many argue that those continuing investments save many millions of dollars over time and give a much-needed social stability especially in times of turmoil.

The logic of such support is unassailable, but today there are radical changes in the funding landscape. When Ultra High Net Worth funders can give 9 and 10 figure gifts to museums and orchestras and universities, what real difference does the average person’s – even the average wealthy person’s – annual gift make? At this time when our disruption is not primarily financial but ethical and existential, does keeping to the well-trodden best express our best philanthropic interests?

d. Becoming real change agents. Over the years, I would often challenge funders [clients and students] when they would say that they want their funding to “make a difference.” I point out that “making a difference” means that something is different than it would be without your funding, and that often means taking chances. [see a. above]. Some would acknowledge that they mean something much more modest than being a change agent, rather that they want to focus on institutions that will be sustained or enhanced by their gift. Others took the message to heart and thought long and hard about what difference they really did want to make and if they were prepared to be disrupters.

At this time in history, the disruptions are being caused by public policy challenges that go deep and wide. To be change agents requires going beyond an “industry” or “priority interest” in our funding. To be change agents even requires going beyond our own sector. It means leveraging our resources, all of our resources – financial, influential, and knowledge – to address potential cataclysmic disruptions. [In the case of the environment, these are clearly not exaggerations; in the case of the character of our nation, they are also existential.]

I think you can gather where I stand. That doesn’t’ mean that funders who choose a, b, or c. are bad funders, but they should be conscious of where those decisions sit in the context of current needs. For those who share my alarm at the fragile state of our union and planet, it is hard to shy away from a commitment to d.

Advocacy matters more than ever before. As funders, let’s make sure we are advocating for that which can indeed make the difference.

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