When Philanthropists Get It Wrong

October 15, 2013

Economist Zoltan Acs, who has made his academic mark mostly by thinking and writing about entrepreneurship, has lately trained his lens on philanthropy, in an engaging book called Why Philanthropy Matters. Appropriately, for a scholar of the entrepreneurial impulse, Professor Acs spends much of his book talking about the kind of philanthropy practiced by wealthy and successful people during their lifetime, and how that kind of enterprising philanthropy benefits society.

 

I mention this not to endorse the book, necessarily, but because a recent critique of it, in the Summer 2013 issue of the Stanford Social Innovation Review, raised an interesting point that shouldn’t be left undebated. The review, by sociologist Robin Rogers of Queens College, takes issue with the book’s enthusiasm for philanthropy as a force for societal reform and reinvention. Professor Rogers counters that the tax incentive for charitable giving “places policymaking powers in the hands of an elite few,” with possibly sinister effects on democracy.

 

Some of this is a question of political philosophy — how much voice in public affairs should wealthy people have, and how much should we encourage them to use their wealth in the public interest, as they see it — which I will leave to others. But the example that Professor Rogers offers of an undemocratic exercise of individual philanthropy struck me as exactly backward.

 

“What happens,” she asks, “if these philanthropists are wrong? What if they select policies that don’t work (as Bill Gates arguably did with his small-schools initiative)? Are they accountable to anyone for those choices?”

 

Let’s start with the obvious point that no government agency is compelled to back “programs selected by megaphilanthropists,” in Professor Rogers’s phrase. If philanthropists support something that doesn’t work, they are unlikely to attract much of a following from the cash-strapped public sector. Attend just about any philanthropy conference to hear foundations complain about how many of their best, most successful demonstration projects end up ignored by government. On those rarer occasions when governments do embrace a philanthropic project, or pick up an idea that was incubated by a foundation, they (and the taxpayers) effectively benefit from a subsidized test of that idea before adopting it wholesale.

 

Now, when the test produces disappointing results, as the Gates small-school initiative did, does that make it some sort of disservice to society, or a malign influence on public policy? The beauty of independent philanthropy (whether by wealthy individuals or by their legacy institutions) is that it can and should explore ideas that aren't ready for — and may never be right for — widespread public adoption. The Bill and Melinda Gates Foundation arguably did an enormous public service by helping to test an idea that had been widely popular among reformers, had many advocates in the public sector already, and had a strong theoretical underpinning. The fact that the results were disappointing meant that the foundation saved taxpayers much of the cost of trying this idea out on their own — something that many people, not just philanthropists, had been urging them to do. How is democracy disserved by that?

 

It is the diversity of the philanthropic sector — including the diverse philosophies and interests of living donors — that makes it a valuable resource for government and society. Unlike government, foundations tend to be eager to try new ideas, take risks, and (at least sometimes) acknowledge mistakes. Where would government go for that kind of enterprise and experimentation if they couldn’t get it from philanthropy?

 

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Tony Proscio

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Rip Rapson
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The Kresge Foundation