Philanthropy Book Reviews: We read 'em so you don't have to

The Good Rich and What They Cost Us, by Robert E. Dalzell Jr. Yale University Press, 2013.

Why Philanthropy Matters, by Zoltan J. Acs Princeton Unversity Press, 2013.

The first of these books describes what the second embodies: the American tendency to believe that all bad things can be fixed by the generosity of rich people. This is patently false, which turns the authors’ portraits of “the good rich” into little more than a specialized version of the Vanity Fair profile, full of admiration and sublimated envy.

In The Good Rich . . . Robert E. Dalzell Jr. eventually gets around to pointing out that rich people are not actually more generous than you and me; that they use an awful lot of their wealth on themselves and their children and their children’s children; and that, to the extent they give at all, they give to organizations other than those chosen by the rest of us.

Dalzell is hardly the first to notice the conspicuous consumption inherent in philanthropy, which includes giving money to prestige institutions (universities, hospitals, art museums) primarily used by the very people who give the money, or people like them. And his chapter-long histories of rich people throughout American history, while modestly interesting, don’t really explore the ways in which donations distort the pattern of consumption for all the rest of us, particularly through tax favoritism.

In The Nonprofiteer’s view, what the “good rich” cost us is the ability to make decisions democratically. If Mark Zuckerberg gives $500 million to the Newark school system, he gets to dictate what the school system does, making the "public" part of "public schools" meaningless.  However generous his intentions, he's laying a heavy thumb on the scale of public decision-making, and those of us who care about democracy should be concerned. Perhaps mega-philanthropy is only a subset of the ways money now runs American politics, but it’s a big subset, and it’s made more dangerous by the fact that it’s either invisible or considered beyond reproach.

At least Dalzell agrees that mega-philanthropy is, or creates, a problem: . . . And What They Cost Us.   Acs, by contrast, is all enthusiasm for the philanthropy’s role in what he calls “American capitalism,” by which he means capitalism designed to make individual entrepreneurs very rich. (As opposed, say, to Western European capitalism, which is designed to serve other functions such as increasing employment or controlling income inequality.) Rather than merely describing philanthropy as a safety-valve through which excess concentrations of money can escape, Acs argues that true philanthropy (defined as giving to universities, hospitals and other research centers) is a pillar of capitalism, fueling innovations which will serve as the basis for still more enormous fortunes. That is, rich people’s giving is good for us even if we don’t see it, as it paves the way for the next generation of rich people, who are good for us because their philanthropy paves the way for the next generation of--well, rich people.

Even Acs, though, would be hard-pressed to devise an excuse for wealth concentration more troubling than Dalzell's defense of the common foundation practice of granting only a small percentage of income while leaving significant principal untouched in perpetuity.  Praising John D. Rockefeller for pioneering this approach, Dalzell notes,

The millions of dollars in stock with which he endowed his foundations remained invested in the businesses from which the money had come . . . and thus continued to be productively employed in the nation's economy.  In contrast, Carnegie's libraries, paid for in cash as they were built, took capital out of the business of making steel, ultimately constituting a kind of tax on society at large.

No matter how many times the Nonprofiteer read these sentences, she couldn't get them to make any sense.  Carnegie's libraries actually replaced a tax which would otherwise have been levied on communities which wanted libraries.  Moreover, the idea that capital moved "out of the business of making steel" has therefore disappeared is absurd: in Carnegie's case it went into the business of making libraries, where it provided employment and education to people in desperate need of both.  It seems bizarre to praise the withholding of money as a form of philanthropy superior to its distribution; but perhaps no more bizarre than to claim that tax incentives should go to rich people (re-styled “job creators”) instead of to people who will spend the money (thus powering the economy and actually creating jobs).

The two authors share an obsession with The Giving Pledge, though at least Dalzell acknowledges how relatively few people have signed it, how many of the signatories had already begun the process of giving away their fortunes and--most interesting--that "just under 20 percent of the richest Americans are related to at least one other person on the [Forbes 400-richest] list."

The past decade has changed philanthropy: “return on investment” and other business concepts are assuming a larger and larger role in determining what giving is worthwhile. And it’s fairly easy to slip from asking about society’s return on the donor’s investment (does this reading program really work?) to asking about the donor’s return on the donor’s investment (does this reading program get positive press for me and my business?). Neither of these concepts improves the nonprofit world, and neither of the books describing them addresses the real issue: the tax regime under which the rich get richer, the poor get babies and charities get contributions too small for the tasks they’re asked to cover-–which is nothing more or less than sustaining the public welfare.

That used to be the job of democratically-elected governments, and no amount of philanthropy can replace that.

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    Nonprofiteer

    The Nonprofiteer is Kelly Kleiman, principal of NFP Consulting, which provides Board development, strategic planning and fund-raising services to charities and philanthropies. Through her consulting practice and in her guise as The Nonprofiteer, Kelly has spent the past 25-plus years helping small and mid-sized nonprofits organize themselves better and raise more money. These days she focuses especially on helping them use high-skill volunteers. Kelly is also a lawyer and freelance journalist whose reportage and essays have appeared in the New York Times, Wall Street Journal, Washington Post, Christian Science Monitor and other dailies; in magazines including In These Times and Chicago Philanthropy; in the alternative press; on websites including the Huffington Post; and on the radio, including the BBC and WBEZ Chicago Public Radio. She and her fellow "Dueling Critic" Jonathan Abarbanel present a weekly podcast of their reviews of Chicago theater at DuelingCritics.net. Earlier in her career she was dean of admissions of IIT Chicago-Kent College of Law and Executive Director of the Chicago Children’s Choir, and practiced real estate and zoning law with the firm of Rudnick &amp; Wolfe. Kelly holds undergraduate and law degrees from the University of Chicago. She was a founding Board member of the Association of Consultants to Nonprofits and also served for 5 years on the Board of the Association for Women Journalists–Chicago. She can be reached ("Dear Nonprofiteer . . .") at KellyNFP@yahoo.com.

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