Is There a Charity “Crisis”?

The Chronicle of Philanthropy recently released a list (“America’s Favorite Charities”) of 100 nonprofits that received the most financial support last year. Nearly all of them received more charitable donations (adjusted for inflation) than they did prior to the Great Recession. But the magazine has a problem with these charities: they’re increasingly supported by—you guessed it—“the rich.”  “The Chronicle analysis,” explain the editors, “revealed a schism at the top of the charity world caused, at least in part, by the country’s growing economic divide.”

Similarly, in his new book, Just Giving, Stanford University professor Robert Reich warns that while we like to “celebrate donors, large and small, for their generosity,” philanthropy “can be a plutocratic exercise of power.” And another recent book, Winner Takes All, by New York Times writer Anand Giridharadas, attacks wealthy Americans for trying to atone for their sins by donating to charity, instead of fighting for policies that promote equality through redistribution of wealth and income.

One problem, according to the Chronicle, is that the wealthy donate their funds to “high-fliers”—institutions with professional development officers who know how to ask for big gifts. These institutions, the editors suggest, already have plenty of money and disproportionately serve the wealthy. The editors cite especially the growth in gifts to universities. While it’s true that universities waste a great deal of money, and a few have more wealth than they know what to do with, these large gifts more often than not are directed toward scientific research. In recent years, for instance, Nike cofounder Phil Knight gave $500 million to the University of Oregon to fund a new complex for basic research; Michael Bloomberg donated $300 million to the Johns Hopkins School of Public Health; and Larry Ellison gave $200 million to the University of Southern California for cancer research. It’s easy to criticize the wealthy for giving to well-heeled institutions, but medical and scientific research helps everyone.

The Chronicle laments that donations to the American Cancer Society are down.  But this may mean that donors are directing support for cancer research to other institutions, such as medical schools and specialized research programs, which may actually do a better job than the ACS at discovering new treatments and cures.

What about the decline in giving to “blue-collar” organizations like the United Way and Jewish Federations of North America, which rely upon small gifts from middle- and working-class Americans? United Way’s CEO argues that organizations like his are suffering because America’s vibrant middle class is disappearing. “The question of the health of the United Way is almost a question of the health of middle income philanthropy,” he says.

This is a plausible reply from a CEO whose revenues are down, but other explanations exist for the challenges these organizations are facing. Perhaps many donors would rather give to more narrowly tailored organizations than the United Way, or to local organizations that they know better. Younger Jews are more likely to give to secular causes than were their parents and grandparents. But this shift has more to do with contemporary approaches to Jewish identity than to the disappearance of middle-class Jews. It may also be the case that those same donors are giving more to liberal organizations like Planned Parenthood, where donations have increased in recent years. Middle-class donors, far from disappearing, are simply changing their patterns of giving.

For philanthropy critics, the campaign to discredit charity is based on the premise that only centralized government programs can properly address inequality. From their point of view, the giving habits of the wealthy are both a cause and an effect of the unequal distribution of income, such that every donation, no matter how well intentioned, is brought under suspicion. The liberal media jeered when Jeff Bezos announced recently that he planned to donate large sums to homeless shelters and early-childhood education; they wanted him to support more government initiatives to help the needy in his home city. But maybe Bezos has noticed that government programs have done a better job of perpetuating poverty than lifting people out of it, and that private organizations funded by philanthropy have a better track record.

Indeed, government programs can serve as a disincentive for charitable giving because people come to assume that funding health research or helping the poor is the government’s job. For instance, according to the Philanthropy Panel Study, a project at the University of Indiana’s Lilly Family School of Philanthropy, religious Americans are the most likely to donate to charities—both secular and religious ones. Utah consistently ranks as the most generous state in the country in terms of how much its citizens give on average, but the state government is not particularly generous when it comes to spending on poverty programs. The Mormon Church has developed its own safety net to help the needy, whether they’re church members or not.

Religious communities seem to represent just the kind of “democratization” of philanthropy that critics claim they want to see. But instead of encouraging the formation of stronger communities, where people support one another and invest in research, education, the arts, or food banks that benefit their neighbors, they would instead have us send our money to the government, which will decide—for our own good—how best to spend it.