It was once safe to assume that giving money to charity was perceived as a worthy act, but in recent years a growing debate has gnawed away at that idea.
Even though Americans are giving more money than ever to nonprofits, like many aspects of American life, there’s a divide in philanthropy. Fewer middle-income and lower-income households are giving money to charity, while richer donors proliferate, making bigger and bigger donations.
Some critics mega-donations from people like Amazon’s Jeff Bezos and former New York City mayor Mike Bloomberg as a troubling symptom of income inequality. Outsized philanthropic gifts let the wealthy advance their own self-serving agenda, they argue, while getting good press — and a tax deduction to boot. Meanwhile some of these philanthropists continue to contribute to the very social problems they claim to be solving, by say, heading companies that don’t pay their workers a liveable wage, critics say.
Phil Buchanan, the director of the nonprofit Center for Effective Philanthropy, addresses some of these critiques in his new book, “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.”
He talked to MarketWatch about how donors can make better choices and what the rise of mega-donors means for democracy. His book comes as the college admissions scandal and lawsuits against OxyContin maker Purdue Pharma, owned by major arts philanthropists the Sackler family, have served as reminders of the complicated relationship between the 1% and philanthropy.
This is a lightly edited and condensed version of the interview.
‘Just say no when asked to make a contribution at the cash register, on the phone when it rings at dinner time, or on the sidewalk. — Phil Buchanan, author of “Giving Done Right”
MarketWatch: What’s your advice for people who want to give money to charity?
Buchanan: Get clear about your own goals. One of the great challenges is, there are so many pressing issues, how do you decide? You will feel more of a sense of satisfaction if you focus your giving, which means you have to say no to a lot.
Just say no when asked to make a contribution at the cash register, on the phone when it rings at dinner time, or on the sidewalk. Because if you respond just in the moment based on emotion or pressure, you will look back on your charitable contributions and they will feel random and not aligned with whatever thoughtful decision you made about your priorities.
We all have things we have to do — if your niece is raising money for her school project and asks you to make a contribution, you’re going to do it because it’s your niece. But you’ve got limit that kind of giving if you want to really pursue some goals that are important to you.
Q: It’s hard to resist when everyone is looking at you at the cash register and they ask if you’d like to help a child who’s hungry today.
A: Right. But the reality is, that is not a good moment, with a line of folks behind you, to make an informed and thoughtful decision.
You could argue, well it’s only one dollar. Still, I would say, it’s better to just budget for what can you set aside for giving. Maybe you let yourself have 20% for the relational stuff that you feel you need to do, like when your coworker is running a race for a disease that affected someone in her family. But try to have 80% relate to the goals you set for yourself.
Charis Loh
Phil Buchanan, author of "Giving Done Right: Effective Philanthropy and Making Every Dollar Count."
Q: In New York State’s recent lawsuit against opioid makers, Attorney General Tish James contended that the Sackler family, the owners of OxyContin maker Purdue Pharma, made major donations to museums including the Guggenheim and the Metropolitan Museum of Art to “whitewash their decades long success in profiting at New Yorkers’ expense.” (The Sacklers have vigorously denied the allegations and say they will defend themselves.) How does that affect philanthropy as a whole?
Buchanan: It should be condemned. It shouldn’t tarnish all of philanthropy anymore than Volkswagen VW, +1.48% cheating on the emissions test should tarnish all of business. We need to be able to separate out and distinguish between the bad actors and the good ones.
It doesn’t seem to me logical to generalize as some have, to say, because some quote unquote plutocrats have behaved terribly, therefore anyone with wealth is the same. This is not a logical analysis in my view.
Critique of philanthropy is healthy. But let’s critique the particular instances of problems or failures. I try to do that in my book. For example, I’m really critical of the Gates Foundation’s work in U.S. public education and I’m critical of a lot of particular examples of philanthropy that hasn’t worked very well. But I also have a lot of positive things to say about what the Gates Foundation has done in global health, though I’m sure they’d be the first to admit they haven’t gotten everything right there, either.
We have to be able to learn from the mistakes and also learn from the successes.
Q. There’s a lot of critique right now that mega-donors hurt democracy by advancing their own agenda at the expense of others. Are mega-donors are problem in your view?
Buchanan: There’s been an unfortunate conflation of frustration with wealth inequality and frustration about our approach to taxation with broad-based cynicism about the motivations of anyone with wealth.
My experience working with major donors is that most of them are not the Sacklers.
The fact is, I am glad that [big donors like] Bill and Melinda Gates decided they wanted to try to do something about people dying globally of diseases they don’t need to be dying of. If you look at the decline in worldwide childhood mortality — which obviously cannot solely be attributed to the Gates Foundation — it’s stunning.
‘What do we really want to say to people? Do we want to say to them that we are so cynical that we will view with distrust every effort to try to give back?
What do we really want to say to people? Do we want to say to them that we are so cynical that we will view with distrust every effort to try to give back? Or do we want to encourage people to give back and condemn what should be condemned? Let’s condemn the Sacklers, absolutely, but to paint with a broad brush is unfortunate and could have really negative consequences ultimately for nonprofit organizations and the people they serve.
Many of these critiques don’t even mention the well over 1 million nonprofit organizations that are affected by the decisions that people make about giving.
Q: What’s the right way for someone like Amazon AMZN, +1.38% founder Jeff Bezos to do their philanthropy?
Buchanan: One of the big challenges for major donors is that they almost by definition can be pretty disconnected from the people and the issues that they’re trying to address. Philanthropy usually is more effective when it is really informed by those closest to the ground. The people themselves who a donor or philanthropist seeks to help are after all the best experts on their own lives.
I talk to a lot of big donors and I’ll ask them, ‘How are you getting up to speed? You were in business and your company IPOed and now you’re moving into being a significant donor, so how are you getting up to speed?’ They’ll often tell me about the experts or other donors that they’ve met with.
I always encourage them, for the issues that they care about, ‘What if you shadowed a couple of nonprofit directors and saw what it was like to do their jobs and talked to some of the intended beneficiaries of their work?’
The big challenge for someone like Jeff Bezos is how do you get out of the bubble that you inevitably reside in if you’re someone like him, and really learn from those on the ground?
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