The Shortcomings of Philanthropy

Philanthropy no substitute for a truly just society
February 1, 2012

When U.S. investment guru Warren Buffett donated $31 billion to the foundation headed by software mogul Bill Gates and his wife Melinda, visions dawned of a new golden age of philanthropy. The mammoth gift doubled the size of the Bill & Melinda Gates fund, making it by far the world’s largest charitable foundation, three times the size of Henry Ford’s foundation and 10 times larger than the Rockefeller’s.

Buffett was effusively lauded by politicians, media pundits, and even by many civil society groups, who welcomed the prospect of more aid in their efforts to reduce world poverty, AIDS, and other afflictions.

Far be from me to denigrate such a grandiose act of altruism. Buffett deserves the praise lavished on him, as does Gates. But if anyone thinks that the horrendous social, economic, and physical ills that plague billions of the world’s people can be remedied by charity alone, on any scale of magnitude, think again. Even if all 754 of the world’s billionaires were to emulate Gates and Buffett — a most improbable scenario — the massive problems of poverty, hunger, disease, and pollution that confront us would be moderated by no more than an infinitesimal degree.

I give both Gates and Buffett credit for sharing some of their enormous wealth. But larger crumbs from the tables of the rich are not the solution to global deprivation. Gates has even admitted as much when he said recently that “inequalities won’t be solved by letting pure capitalism work on them.” And he conceded that poor world governments can’t adequately address the problems of poverty and hunger either. “So my money,” he added “is needed to help move things along.”

Buffett has been even more candid in criticizing the growing gulf between the rich and poor (and the shrinking middle class) in the United States. He says the most affluent should be taxed a lot more than they are, and deplored an unfair tax system in which his secretary pays a larger part of her income in taxes than he does.

Of course, both Buffett and Gates, like the confirmed capitalists they are, were quick to reject any notion that they or any other plutocrat should be forced to share their wealth – that it had to be a voluntary act of charity. Even so, they were both scolded by their prosperous peers for expressing such heretical views.

It was a sharp reminder – if one were needed – that the two billionaires are in no way representative of other members of the opulent one-percent élite. Such a humanitarian model is completely alien to their mindset. If the amassing of as much wealth as possible — by any means — is your main driving force, you tend to measure your worth by the size of your wealth. To voluntarily reduce your riches is therefore to lower your self-esteem.

One of the free-market ideologues reacted to the Buffett endowment in a scathing op-ed in a local paper. He accused Buffett of betraying and undermining capitalism, which he described (accurately) as a system for making money, not giving it away. He also noted bitterly that only mega-billionaires like Buffett and Gates can part with so much of their booty and still stay comfortably in the wealthiest class.

One does not have to be a cynic to suggest that, although philanthropy on the Gates-Buffett scale may be unselfishly motivated, it does bring substantially significant benefits:

  • All charitable donations are tax-deductible.
  • A sharing-the-wealth image is good for business.
  • To the extent that charity helps people to escape poverty, sickness, and illiteracy, it also helps turn them into profit-generating consumers of hamburgers, movies, even computers.
  • The more that charity is relied upon to alleviate the ill-effects of unregulated global markets, the less the pressure on governments to take broader and more effective remedial action.

Nor are large grants and bounties always given without strings attached. Are the recipients obliged to buy their relief from specified corporations? Are they expected to show their appreciation by supporting specified political leaders? If they are educational institutions, are they supposed to inculcate in their students the appropriate tenets of capitalism and free enterprise?

The donors, too, are expected to have the “right” political attitudes. Several years ago, when the Dixie Chicks offered $1 million to the American Red Cross, the Red Cross refused to accept the money because the singers had publicly criticized the foreign policies of then U.S. commander-in-chief George W. Bush, especially his invasion and occupation of Iraq. Political correctness, it seems, is insisted upon at both ends of the charity spectrum.

Bill Gates has spent a billion or more of his foundation’s dollars on American and Canadian public schools, and it would be naive to assume he doesn’t favour schools that are dedicated to graduating compliant workers and consumers rather than independent thinkers.

“A compelling case can be made for keeping corporate leaders out of our classrooms,” says Philip Kovacs. “When they shape our schools and other institutions according to their needs, their ideology undermines the democracy the schools purportedly serve.”

Nicholas Ruiz, a professor of the humanities at Florida State University, also questions the altruistic motivations of corporate philanthropists. Calling it “capital masquerading as good-will,” he wonders if its main purpose is not to provide a benevolent mask for corporate malevolence.

“So Warren Buffett, the second richest American white man, gives $31 billion to Bill Gates, the richest American white man. Bravo. But why not instead give $1,000 to each of the 37 million Americans who are living in poverty?”

A pertinent question. The answer, of course, is that such a wide dispersal of Buffet’s wealth would fail to make much of a dent in the extreme U.S. poverty rates, and indeed would make the ineffectiveness of all such charity much more obvious. In an economic system that glorifies material gain rather than magnanimity, the generosity of atypical tycoons like Buffett and Gates is clearly an aberration.

If we had an economic and political system that was designed to distribute the world’s resources more equitably, the poor wouldn’t have to rely on the crumbs tossed to them from the tables of the rich. Their entitlement to a decent standard of living would be built into the system. Instead, we not only fail to put limits on greed, but also fail to tax back enough of the excess accumulated wealth to fund the public programs needed to really help the poor.

The governments we now have continue to be committed to a tax system that not only allows the richest among us to hoard most of their money, but even enriches them further with tax cuts, handouts, and subsidies taken from the taxes paid by lower-income earners.

By all means let’s compliment Buffett and Gates on their munificence. But let’s not slacken our efforts to change a system that substitutes such voluntary (and exceptional) wealth-sharing for a system geared to achieving real social and economic justice.

(Ed Finn is the CCPA's Senior Editor.)