In the Before Times, we were more at leisure to have philosophical discussions about the nature of philanthropy and income inequality and taxation and due diligence and ethics and the confluence (or colliding impact) of all of those things.
With the daily grinding worry of every sorry aspect of the COVID pandemic starting to recede for many of us (in countries with leisure classes), those discussions have started anew – but with the added grit-filled lens of 20/20 in our hind-sight.
It’s a time of social upheaval we’re living through right now, and maybe we’re lucky to be living through it, because after the awfulness, we can hope that good things will come. World wars, influenza pandemics, suffrage, civil rights, gay rights – you can’t say that those were good times for the people who moved them forward, but they were working with hope for a better future. And better things did happen.
Philanthropy is about nothing if it’s not about hope. I have said that phrase so many times over the years and it has only ever had one meaning to me. But looking at our sector now I see with more clarity that it’s actually about two things.
It’s about when philanthropy is about nothing. And when it’s about nothing but hope.
I have two things that I want to tell you about that led me to that realization, because I was struck by how philanthropy can actually be about nothing.
Earlier this month, the Boston College Law School Forum on Philanthropy and the Public Good released a report called “Impact of the Rise of Commercial Donor-Advised Funds on the Charitable Landscape 1991-2019.” (Honestly, take a look. It’s not a boring report. Ray Madoff and James Andreoni wrote it, and there are awesome visualizations by Helen Flannery).
Here are some meaty takeaways:
- Since 1981, charitable giving in the United States has stayed steady at about 2 percent of disposable income.
- Fidelity established the first commercial donor-advised fund (DAF) sponsor, Fidelity Charitable, in 1991. At that time, about 5% of giving went to foundations with the rest – 95% of giving – going directly to charities.
- By 2019, 13% of all giving went to donor-advised funds and 15% went to foundations, so that means only 72% went directly to nonprofits.
- Private foundation assets have grown over 500% over the past 30 years, from $165 billion in 1991 to $996 billion in 2019. From 2007-2019, total donor-advised fund assets grew over 300% from $32 billion in 2007 to $142 billion in 2019.
- Madoff and Andreoni, in collaboration with analytics firm Data Lake LLC, crunched numbers from Giving USA and form 990s to find out what would have gone directly to charities if it wasn’t for DAFs and foundations. Their calculations show that between 2014 and 2018, nonprofits missed out on about $300 billion.
Three. Hundred. Billion. Dollars.
So there’s money moving into “philanthropy” but it’s not going to the nonprofits that do the work. This is when philanthropy is about nothing, and certainly not about hope. This is about amassing assets and control. It’s the business of philanthropy.
A really interesting overview
The second thing I wanted to point you to today is a piece from BBC Radio 4 in the UK called “Tainted Money.” It’s well worth your 27 minutes and 45 seconds.
It’s presented by Dr. David Cannadine, a specialist on the history of business and philanthropy and professor of history at Princeton.
Cannadine distils the concerns and struggles within the charitable sector today – the growing importance of due diligence research, ethics in fundraising, income inequality, and the nature of unequal power in philanthropy.
Along the way he interviews or features audio clips from several people who are well-known within philanthropy circles including Dr. Beth Breeze, Prof. Rob Reich, Anand Giridharadas, and billionaire philanthropist Stephen Schwarzman, among others.
The segment brings up some great questions, including:
- If we put on our nonprofit’s no-fly list anyone who could possibly be (or have been) tied to some form of tainted business, at what point is there no one left for us to ask?
- What causes should billionaires (not) be allowed to influence with their largesse? Who decides?
- Are tax evasion/avoidance, income inequality, and the business of philanthropy inextricably interconnected or are they separate but concurrent problems?
These are fascinating and difficult issues for us to be aware of and we all, from our unique perspectives, have a part to play in figuring out how we move forward, whether that’s in our own department, our own nonprofit, as leaders within our regional and national professional associations, and as caretakers for the future of our sector.
We have to work with hope, and we have to work at it.