“the Role Of Philanthropy In Alleviating Student Loan Debt” – There is more philanthropy than ever. Every year they give tens of billions to charitable causes. So how does inequality grow?
Philanthropy is popularly believed to transfer money from the rich to the poor. That’s not the point. In the United States, which statistics show is the most philanthropic nation, only a fifth of the money donated by big givers goes to the poor. Many go to the arts, sports teams, and other cultural activities, and half go to education and health care. At first glance, this seems to fit the popular profile of “giving to a good cause.” But dig a little.
“the Role Of Philanthropy In Alleviating Student Loan Debt”
In 2019, the largest donations to education went to elite universities and schools attended by the wealthy themselves. In the UK, over two-thirds of the millionaires’ donations – £4.79 billion – went to higher education in the 10-year period to 2017, with half of that going to just two universities: Oxford and Cambridge. When the rich and middle classes endow schools, they give more to those who attend them than to the poor. In the same decade, British millionaires gave £1.04 billion to the arts and just £222 million to poverty alleviation.
The Philanthropy’s Crucial Role In Alleviating…
The common assumption that philanthropy automatically leads to redistribution of money is incorrect. Many elite philanthropies are for elite causes. Instead of making the world a better place, it largely reinforces the world as it is. Philanthropy too often favors the rich – and no one charges charity for it.
The role of private philanthropy in international life has grown dramatically over the past two decades. Nearly three-quarters of the world’s 260,000 charitable foundations were created by then, and between them control more than $1.5 billion. The largest issuer is in the US, with the UK in second place. The scale of this giving is enormous. The Gates Foundation alone gave out £5bn in 2018 – more than the foreign aid budgets of the vast majority of countries.
Philanthropy is always an expression of power. Giving often depends on the personal whims of the super-rich. Sometimes it aligns with societal priorities, but sometimes it contradicts or undermines them. Increasingly, questions are being raised about the impact these mega-donations have on public priorities.
The relationship between philanthropy and democracy is accompanied by a number of tensions. While modern philanthropy can bring enormous benefits, the sheer scale of modern giving can reduce spending in areas such as education and healthcare to the extent that it can override the priorities of democratically elected governments and local authorities.
The Gift Of Giving
Part of this influence is indirect. Bill and Melinda Gates’ philanthropy has brought enormous benefits to humanity. When the foundation awarded its first major grant for malaria research, it nearly doubled the amount of money spent on the disease worldwide. He did the same with polio. Thanks in part to Gates (and others), approximately 2.5 billion children have been vaccinated against the disease, and polio cases have declined by 99.9%. Poliomyelitis has been practically eliminated. Philanthropy has ameliorated the failures of both the pharmaceutical industry and governments around the world. Since its inception in 2000, the Gates Foundation has awarded more than $45 billion and saved millions of lives.
However, this approach can be problematic. Bill Gates can decide to solve a problem that the local population does not consider a priority, for example, in an area where polio is far from the biggest problem. He did something similar with his education philanthropy in the US, where his fixation on class size diverted public spending from the real priorities of local communities.
Other philanthropists are more deliberately interventionist. Individuals like Charles Koch on the right or George Soros on the left have succeeded in changing public policy. In the US alone, more than $10 billion a year is devoted to such ideological persuasion.
The result was what the late German billionaire shipping magnate and philanthropist Peter Kramer called “a bad transfer of power,” from democratically elected politicians to billionaires, so that it’s no longer “the state that determines what’s good for the people, but rather the rich who decide.” . The Global Policy Forum, an independent policy watchdog that monitors the work of the UN General Assembly, warned governments and international organizations that before taking money from wealthy donors they should “assess the growing influence of major philanthropic foundations and especially Bill & Melinda Gates Foundation… and analyze the intended and unintended risks and side effects of their activities. Elected politicians, a UN monitor warned in 2015, should be particularly concerned about “unpredictable and underfunding of public goods, lack of monitoring and accountability mechanisms, and the prevailing practice of applying business logic to the delivery of public goods”.
How Helping Can Reinforce Or Attenuate Status Inequalities: The Case Of Nonprofit Organizations
Some forms of philanthropy can become not only undemocratic but anti-democratic. Charles Koch and his late brother David are arguably the most prominent examples of right-wing philanthropy. But there are plenty of others, especially in the United States, who take up causes that many find controversial and even distasteful. Art Pop used the fortune he amassed from his chain of discount stores to help tighten laws to prevent voter fraud, even though such fraud is negligible in the US. The Pope’s move to require voters to show ID at the polls effectively disenfranchises the 10% of voters who don’t have ID because they are too poor to own a car and are unlikely to go to the expense of getting a driver’s license. ID card just to vote. Such voters—many of them black—are statistically less likely to vote for the archconservatives that Art Pop smiles upon.
But do such philanthropic activities manipulate the democratic process more than billionaire financier George Soros’s campaigns to promote responsible government and social reform around the world? Or a movement sponsored by hedge fund billionaire Tom Steyer to encourage more young people to vote on climate change? Or Internet billionaire Craig Newmark’s attacks on fake news? In each case, these wealthy individuals are motivated to intervene by something that stems from their life experiences. By what measure can we assume that some are more legitimate than others?
David Callahan, editor of the Inside Philanthropy website, puts it this way: “When donors hold views we hate, we believe they are unfairly skewing the policy debate with their money. Yet while we like their causes, we often see them as heroic steps forward to level the playing field against powerful special interests or backward public majorities… This kind of à la carte reaction doesn’t make much sense. Really, the question should be, do we think it’s generally good for any philanthropist to have so much power to advance their own vision of a better society.”
The idea that a benefactor’s money depends on what they want is deeply ingrained. Some philosophers argue that each individual has full ownership of his or her resources—and that the only responsibility of a wealthy person is to use their resources wisely. John Rawls, one of the most influential philosophers of the 20th century, saw justice as a matter of fairness. He argued that citizens fulfill their moral responsibility when they contribute their fair share of taxes that governments use to care for the poor and vulnerable. The better off are then free to dispose of the rest of their income as they wish.
Poverty Alleviation 2
But what the rich give to charity is not entirely their money. The tax break funnels money from ordinary citizens to causes chosen by the wealthy.
Most Western governments offer generous tax breaks to encourage charitable giving. In England and Wales in 2019, an individual earning £50,000 a year paid 20% of that in income tax. For those earning more, between £50,000 and £150,000 is taxed at 40%, and above £150,000 is taxed at 45%. But gifts to registered charities are tax-free. So £100 would cost the standard ratepayer just £80, with £20 being paid by the government. But the highest rate payer only had to pay £55 as the state provided the other £45. Thus, the super-rich philanthropist finds himself in a position where a large percentage of their gift is funded by the taxpayer. It thus becomes much less clear whether the money given to charity can fairly be attributed to them entirely. If taxpayers are getting part of the gift, why shouldn’t they have a say in which charity gets it?
In Britain, the total cost to the state of various tax incentives for donors in 2012 was estimated by the Treasury at £3.64 billion. Tax relief for charities has existed in Great Britain since income tax was introduced in 1799.
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