#247 Musings Beyond the Bunker (Thursday January 13)
Good morning,
People have a lot to say about philanthropy, most focused on how much it benefits both the recipient and the donor. Here is a curated conversation about responses about a recent musing on philanthropy:
A TRADITION OF GIVING
I had asserted that many wealth managers claim that few of their richest clients are charitable. David Mersky suggests that I am “looking at too narrow a slice of the world...The vast majority of the population who do not have wealth managers are in fact philanthropic in their own way. At one point, the data showed the more than 90% of the US population did in fact contribute to some charity or another and that on average the giving was in the $2,500 range.” This is great news.
Mark Schwartz points out that Albert Brooks did some research on charitable giving in the U.S., as compared with other countries. He juxtaposes Jimmy Carter’s words against the facts. Carter said at a Nobel Prize forum that Americans don’t care about the suffering of the poor around the world. Brooks takes him to task, noting that “the average American citizen gives away three-and-a-half times as much money each year as the average French citizen, seven times as much as the average German, and 14 times as much as the average Italian.”
Brooks says this is not just the philanthropy of the rich. “This is an authentic difference in culture—once again something I do believe we can be quite pleased with. The questions, then, are why does it matter and which is pushing and which is pulling? Is the fact that we’re, generally speaking, a richer country the reason that we give so much, as I’d always thought? Or is what John D. Rockefeller would have said true: that the fact that we give so much is one of the secrets to our success?”
TRENDING POORLY
Yet, despite high degrees of giving, there is cause for concern. David maintains that “The trend is not good…the number of people who contribute to any kind of charity is diminishing, in some cases radically. In the Jewish community, as measured by Federation giving, the number of donors has plummeted in the more than four decades in which I have been tracking data. For example in the late 80’s Boston’s Jewish Federation would receive 35,000 gifts. Today, the number is less than 12,000. More money is being given by far fewer people. All in all, that is not the sign of a healthy community. And, what does it say about our ability to transmit the value of tzedakah to the next generation when we do not do so by our own example?”
This is a great concern and is not unlike the experience of our own Jewish Federation here in Los Angeles and many other organizations. The giving continues in greater amounts, but contributed by fewer people. As a society, we are failing in maintain the “culture of giving” that has made America uniquely charitable as a society.
With the focus increasingly on “big gifts,” we tend to forget the need to inculcate and nurture a culture of giving. Jack Hubbard, former President of USC, once commented to me that every time he looked out at the expanse of graduates each year at commencement, he knew that there were deci-millionaires, centi-millionaires and even billionaires in the crowd. The trouble is that he didn’t know which fit these categories. He concluded that institutions must create an environment where all gifts, great and small, are honored and respected.
WE ARE ENCOURAGING GIVING BUT MAYBE IN THE WRONG WAY AND FOR THE WRONG PURPOSES
Another big problem is that many younger, more “involved” givers want to be able to control their giving to specific projects that they support and are unwilling to rely on funding the needs that professional teams have identified as critical needs. Again, David suggests that the problem with giving “lies as much with the nonprofits who focus increasingly on the ‘impact” giver.’ The community no longer matters. Those who complain about an absence of a culture of giving would better bemoan the lack of a culture of asking.
But even when there is giving, it seems to go too often to institutions that pander to the elite and their tastes and David Lash notes that, “Not only do very few people of means engage meaningfully in philanthropy but of those who do far too few give to charities and causes that help those who are struggling. I think museums, operas, and universities are wonderful institutions, well deserving of generosity.” He notes that “giving to organizations that help the poor, the disabled, the elderly, children, the strangers and immigrants, do not get a substantial enough percentage of our societal largesse. Many charitable folks do not get their “hands dirty” with gifts of that nature, instead they give to relatively “safe” charities, things they can see, things in their lives, not to the poor and underserved, not to those that are invisible to them, not to those to whom they cannot relate.”
Giving need not be on a large scale; it begins with donations of any size, given often (like Jack Hubbard noted). While some believe they can have the greatest impact by focusing gifts in large amounts, Mark DiMaria argues for giving smaller amounts but giving often—quite literally weekly—to a number of charities, as he has done consistently ever since I’ve known him (and I’ve known him since shortly after the earth cooled).
NOT ALL CHARITIES ARE THE SAME
We as a society have decided that charitable deductions are available for giving to all nonprofits, regardless of size and impact on the underserved. I have had a hard time reconciling why we provide the same charitable deduction for contributions to, say, the USC athletic department as we do for contributions to organizations doing great work serving the underserved (where, I might add, government should be doing more). While I haven’t resolved exactly how I would do this, I would probably have some sort of sliding scale that differentiates among these institutions. Universities increasingly behave like for-profit institutions, with salaries rising in the administration and athletic departments, while being increasingly stingy with assistant professors, residents, and scholarships. Perhaps a way to provide more equity would be to reduce the deduction for institutions with endowments that exceed some amount or some percentage of their annual revenues (remember that this information is available on the Form 990s these institutions file each year).
While I understand the reluctance to engage in deciding when corporate salaries are too high (although I might), we are subsidizing these institutions and have a right to expect something in return. Losing some or all of their tax-exempt status might be one of the solutions.
YOU’RE HAPPIER IF YOU GIVE
The final word is from Albert Brooks, who points out that people who give to charity are 43% more likely to report that they are “very happy” people.
Have a good day,
Glenn