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Post No.: 0906philanthropy


Furrywisepuppy says:


Wealthier people obviously find it easier to conduct in philanthropy than the poor. It shouldn’t be surprising that those who are able to give more (e.g. those living in the ‘Global North’ compared to the ‘Global South’) usually give more in absolute terms.


Yet, on average, the richest 20% give a smaller relative percentage of their income to charity than the poorest 20% (~1% versus ~3% in 2010/11).


Many super-rich people also aggressively avoid paying taxes too. Such avoiders, and evaders, free-ride off those who pay their fair percentage of taxes according to their incomes – off those who pay for the public services and infrastructure that help the avoiders and evaders make and maintain their wealth, like for the education and health of the workforce and transport network that help their businesses to operate. The more money you make, the more you’ve proportionately directly or indirectly relied upon publicly-funded services and infrastructure – hence the fair amount of tax to pay will relate more closely to the percentage of one’s income rather how much one pays in absolute terms.


Some of the poorest who earn under the personal allowance threshold may pay zero income tax and might directly receive more in benefits than they pay in tax – but the richest indirectly receive more via their use of public and common goods through themselves, their own businesses or the businesses their investment funds have shares in.


Anyway, taxes are spent on democratically-expressed public or common interests by virtue of which government we democratically vote for.


But because charitable giving is generally tax deductible or comes with tax relief, wealthy philanthropists – instead of paying these taxes that’d serve these democratically-expressed public or common interests – can serve their own parochial interests or at least personal visions of a better world. Sometimes their visions align with the wider community interest (e.g. improving global immunisation rates) but sometimes they only align with a narrow interest (e.g. funding elite private schools). So philanthropy can be hit-and-miss – it can serve a philanthropist’s own niche interests rather than urgent or major national or global interests that affect many more lives.


Taxes are for the common good (it’s like charity, except you benefit from it too), and what’s been forgotten by many citizens is the pro-social benefits that result from them – one suggested solution is to remind everyone of and to get everyone more involved in precisely where tax money is spent on a local and national level so that people aren’t just thinking of taxes as something that ‘takes away’ or is ‘taxing’ but as something that creates and maintains the vital things around us in our streets, healthcare, defence, economy, etc.. An experiment showed that if people could vote for where 5% of their taxes directly went to then they felt much happier about paying it.


Well people ought to be able to infer what taxes are paying for from which policies have been democratically voted for. Alas, many people vote not based on carefully understanding candidate manifestos and policies but on their political party allegiances.


Regarding paying taxes, being in relationships, being members of unions/treaties or any time there’s some ongoing give-and-take – most of us are biased by focusing more on what we’re paying out/giving while ignoring or diminishing the significance of what we’re receiving in return. We can be so ignorant about all the fluffy tax-funded benefits we receive around us. We too easily take these things for granted.


Now everything in this post about philanthropy shouldn’t be taken as tarring every philanthropist or philanthropic act with the same brush. Some make crucial contributions to the world in the right way. Hardly all are embroiled in fraud. But philanthropy by the wealthy is frequently about ‘conspicuous compassion’ or conspicuous giving i.e. they wouldn’t have donated to a charity unless everyone (at least within their circles) knew about it. So it’s less about the giving itself and more about the ‘hey look, I’m giving’. Hence the lavishly expensive charity balls, galas, dinners or social events where they could’ve simply saved that money and given that away too! (A good idea has been these ‘don’t come’ and ‘non-event’ charity fundraisers where people can donate money not to waste time or money attending a fancy event. But they haven’t quite caught on.)


One could retort however that it precisely puts social peer pressure upon those invited to come and then donate, in large amounts, and if a worthy cause receives money then that’s all that matters. If it takes a raffle prize or some other prize to incentivise those who’ll only give if they get something in return then, once more, if a worthy cause receives money then that’s all that matters. Ultimately, does it matter whether people give due to altruistic or selfish reasons? Giving is giving. Just give.


But many far less wealthy people who give to charities don’t get or seek any recognition for their acts. They just help at the front line, give blood, give cash and don’t post what they did on social media. They don’t expect a prize for it. So it’s hardly just wealthy philanthropists who make a big difference to the world. And if the wealthy, in more private and hidden circumstances, aggressively avoid paying their taxes (e.g. via offshore tax havens), they’d be greater heroes if they simply paid their fair share of taxes. Indeed, even though the richest 1% own ~50% of all the world’s wealth (the poorest 50% of the world’s population own just 0.75%!) – when we aggregate all charitable donations and taxes – the collective efforts of the poorest 99% amounts to far more than what the richest 1% contribute.


The media buzz around a celebrity visibly donating a large amount or otherwise helping a cause can propel that charity or cause (even more) into the spotlight though. Celebrities can give a campaign a well-known face and help raise awareness. But if the act is insincere or isn’t sustained because it was just for their PR, the charity may commit to projects that’ll have to be cut a couple of years later. This is why most charities prefer to receive regular ongoing and predictable, recurring donations (like from a direct debit). The main thing is donating to a cause one truly cares about and sustaining that support for far more than a campaign, because if people follow what celebrities do, they’ll also follow this insincerity and eventually neglect that cause too.


Also, it can sometimes feel simultaneously preachy and hypocritical when super-rich celebrities ask much poorer people than them (the general public) to donate to a cause while they bask in their mansions, live jet-set lifestyles and sometimes evade their taxes! It’s not a problem of asking the public for donations but we want to see these super-rich celebrities put a lot more in than they do towards these causes themselves. Indeed, when the richest 10% own 90% of all wealth – you know it’s really down to them to solve any crises that involve finance! Hence the real reason why most crises still persist in the world today even though they can be technically solved today is because the richest 10% aren’t doing what they can and arguably should do.


Maybe these charities would do worse without these celebrities raising awareness of their causes? But super-rich people have the ability to actually solve once and for all many world problems if only they put enough of their own money where their mouths are.


It also matters where the money for philanthropy came from if it came from crime for instance – it’s like harming millions of lives then doing something kind for several thousand people so that one can launder one’s reputation. This is in principle what Pablo Escobar did when ruining lives worldwide with cocaine but winning over much of the local Columbian population by building hospitals and housing for the local poor. On balance that’s not brilliant. Philanthropic donations to institutions or charities that are in the donor’s personal interests sometimes hide the activity of money-laundering the proceeds of crime. Some tax-exempt foundations have been directly involved in fraud too, like the Donald J. Trump Foundation.


We need to look at the net effect of the good and bad they contribute – not just the good they want us to see. Some major philanthropists in history were wealthy slave traders donating buildings to a city, and statues got built to recognise their ‘goodness’ too, like Edward Colston in Bristol, England. Some corporations cause lots of harm but then point out how they support a worthy cause, like a multi-level marketing firm that targets and profits from vulnerable women, and then donates a small amount of those profits to tackle domestic violence against women(!)


Really, too few rich are philanthropic, and a higher taxation rate on higher earnings is arguably more effective overall if we concurrently tackle aggressive tax avoidance and evasion. A progressive system of taxation and state welfare and public services is more effective than philanthropy. It’d be better for these individuals and corporations to pay their fair share of taxes and let a democratically-elected government decide how to best use this money to fund and invest in things that are in the public’s wider interest. Niche causes shouldn’t be neglected but they shouldn’t receive disproportionately outsized attention either.


The more pressing societal needs should sensibly receive more attention. It’s also better to enact changes at the public policy level to tackle major problems at their root (e.g. tackling inequality, injustice, environmental concerns), and the government should know better what are the real pressing needs and is in the best position to tackle them because the government is in charge of the overall economy and nation (I suppose ‘should’ is the word though!) The government is whom petitioners and protestors lobby to when they feel there’s a critical issue to address (although lobby groups can be highly narrow in their interests too).


We routinely find innately talented children/people just not receive the opportunities to better the world for everyone when they could have and would have if they had the resources and support to. A progressive tax system and means-tested benefits is a way to reduce inherited family disadvantages and give more equity to children of the following generation.


So philanthropy remains worthwhile but is no substitute for taxation in practice. A case in point is that the USA consistency ranks as one of the most generous countries in the world (when polling how many people gave to charity) yet it has one of the highest poverty rates within the OECD. It’s not as reliable a source of support. It doesn’t empower people as voters or political actors as much either.


Philanthropy, like charity generally, is undoubtedly a laudable act (read Post No.: 0902 for more) but it depends on whom or what wealthy philanthropists donate to and how. Compared to ordinary charitable donations made collectively by lots of different people, the large single donations made by philanthropists can allow them to command some influence (e.g. they could stipulate conditions with their donations, or they might even get their name on a university building they’ve funded, which can mean their children receive favourable treatment if they go to that university). It’s this oversized influence from a single donor that makes philanthropy less democratic. Large donations carry political influence too.


Yet, done well with genuine heart and targeted at truly worthwhile causes, philanthropy can be more strategic, proactive, long-term and sustained at tackling tough problems.


Some don’t believe in giving at all despite their own fortunate circumstances because they believe that self-sacrifice is wrong or that ‘the weak should just be left to perish’. They’re miserly and lonely. We shouldn’t put a price on life yet money does equal lives because it can save lives in a concrete, practical sense; which means more billionaires could be heroic rather than hogs.




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