Someone has just donated millions of dollars to charity. What’s the first thing that comes to mind?
If you’re like most people, you’ll have an automatic reaction: “That’s so nice of them!” “How generous!” You’ll go online and give their Facebook page a thumbs-up.
It can be very nice of mega-donors but it can also be dangerous and unaccountable. There’s a lot at stake—both positive and negative— with the number of foundations and other legal entities that are springing up among a new generation of wealthy philanthropists.
According to their website, the National Committee for Responsive Philanthropy serves as an independent watchdog for foundations. It’s mission is to “promote philanthropy that serves the public good, is responsive to people and communities with the least wealth and opportunity, and is held accountable to the highest standards of integrity and openness.”
It’s founder, Pablo Eisenberg, has concrete suggestions to reform the philanthropic sector:
- Increase the percentage of their endowments that US foundations have to spend each year, from the current requirement of 5% to at least 8% and require foundations to invest in areas of the greatest social need.
- Reduce tax incentives for setting up foundations in order to increase the amount of federal money for social programs. In 2007, for example, charitable deductions came to $40 billion; some donations help the poor but others—say to the already wealthy Guggenheim Museum—don’t and nevertheless provide tax benefits.
- Limit the size of large foundations and rethink board representation. Boards should not be a tight group of family members; at family foundations over a certain size, at least two-thirds of board members should be non-family members of the public.
Eisenberg is talking about the risks of concentrated power and lack of democracy in the sector. This is not far from what Benjamin Franklin was saying about charity in the 18th century. Why can’t everyday people have more of a say in what affects their lives rather than rely on systems of patronage and generosity from above?
Prominent thinkers like Eisenberg are asking the important but taboo question of:
Is charity —— in its current form —— really all that good?
If the point of charity is to be redistributive of resources, it may not be working that well if we aren’t, firstly, redistributive of the very power that controls how charitable dollars are spent. Better philanthropy would ask its constituents, “What do you want to make your lives better?” and fund accordingly without judgment.
This is not, unfortunately, how most philanthropy operates today. Donors still believe—usually falsely—that they know better than the people themselves.
At the vanguard, though, are a few groups asking their constituents for feedback. These groups believe it is fundamentally the right thing to do. Some believe it is also the smart thing to do—that it will help them improve their programs and achieve greater social impact.
Regardless of their motivation, the fact that they ask for this feedback is changing one of the most singularly autocratic sectors in what purports to be a nation of democratic ideals.