The Good Society (part 2 of 2)

The philanthropy of the wealthy serves many purposes, but primarily it assists in the social reproduction of the upper classes.

So Teresa Odendahl concluded in Charity Begins at Home: Generosity and Self Interest Among the Philanthropic Elite. In addition to demonstrating that the primary beneficiaries of the philanthropy of wealthy individuals are wealthy individuals, Odendahl criticized the complicity of the US tax code in perpetuating this kind of self-dealing, through limitations on the threshhold for itemizing charitable deductions, for example, and an estate tax code that preserves the prerogative of the wealthy both to familial inheritance and institutional influence. Since charitable tax deductions are justified on the premise that the individual and the state are and should be partners in a trust for the public good,it's hardly surprising that Odendahl's book was received in 1990 with skepticism from parts of the non-profit and academic (ie university) communities that were implicated in its findings. (This is anecdotal; a google search turns up a lot of other more supportive academic responses as well).

I'm not a scholar in this area, and until Stephanie Strom's piece in the NYT (see part 1 of this 2-part post), I hadn't seen her analysis showing up in popular discourse on philanthropy, which has itself exploded thanks to the celebrity billionaires who realize that saving the planet is a good long-term (and short-term) business strategy, and the eager media who cover their missionary activities for the same reasons.

Not surprisingly, these increasingly prominent and influential donors are approaching their new philanthropic enterprises with the kind of entrepreneurial, often creative, sometimes speculative strategies and expectations that worked for them in the corporate world, and in the process they are reshaping the way traditional not-for-profit organizations do business.

For one thing, they are demanding unprecedented levels of organizational control in exchange for their 'gifts', and are succeeding in attaining this control in the name of 'accountability' and 'transparency'-- virtually unassailable pieties in this post-Enron era. The Wall Street Journal recently reported on the establishment of the lofty sounding Center for Excellence in Higher Education 'that will advise donors on how to attach legally enforceable conditions to their gifts'.

In other words, the difference between 'donors'[:a term that conventionally describes those who make 'gifts'(:a term that not only conventionally but legally describes payments made with no reciprocal exchange of goods or benefits)] and 'purchasers' (a term conventionally understood to describe those who are specifically and explicitly engaged in the reciprocal exchange of goods or benefits) is no longer meaningful.

I am not a lawyer, but it seems to me that (and I would welcome legal opinion on whether) the IRS exceeds its mandate in granting 501(c)(3) status to an organization established to 'advise donors on how to attach legally enforceable conditions to their gifts'.(A relevant passage from the IRS web site on criteria for exempt status:The organization must not be organized or operated for the benefit of private interests.... No part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction).

All of these developments bespeak the increasing deference of the state to the market and its abdication of responsibility for the public good to those who have the least interest in pursuing it.

Major universities and other not-for-profit organizations could certainly benefit from external audits that might puncture some of the simultaneous hubris and false humility many regard as a badge of honor and service. (The classic equation is: we'll pay people badly, but reward loyalty, long hours and commitment to the cause and culture. Never mind performance. This plays well to boards comprised of wealthy people who serve in order to enhance their social positions and placate their consciences).

Today's capable and increasingly activist donors are rightly lauded for their commitment and worthy ambitions, but they also threaten the independence of not for profit entities and the public good and public trust they represent. It's been so long now, I'm trying to think of what you call the indigenous managers who implement colonial rule. That's what our American ngos risk becoming under the influence of high stakes, big money philanthropy, and that's what threatens the interests they are authorized and privileged to represent. It's odd that Americans are so quick to condemn and eager to regulate large contributions to individual public servants on the general assumption that big gifts obviously buy influence; and yet so indifferent to the growing influence of large donations to corporate public servants (ie, not for profit 501(c)(3)s) . Obviously individual and corporate interests are much more closely intertwined than this dichotomy suggests, but this is yet another instance where we Americans continue to demonstrate our willingness to sacrifice real individuals to our constitutional fetish of the individual.