It can be confusing to grow up in the free world. Year after year, your teachers stress the importance of democracy, about how modern governments depend on the idea of equal representation. Then you open the news and read about Bill Gates and Warren Buffet. You read about giants of the private sector who wield financial power that, statistically, none of us will ever be able to touch. What gives? Apparently, there is a conflict between a government by the people, of the people, for the people and an economy by the dollar, of the dollar, and for the dollar.
This tension between democracy and capitalism is arguably the most divisive philosophical issue of our time. And your stance on this is none of our business. Instead, we at Token Ibis are trying to push a relatively sensible opinion in our limited field: philanthropy. In this article, we’ll be going over why inequality in philanthropy is a problem, how we should approach it, and why Universal Basic Philanthropy is the way to bring the power of social impact back into the hands of the people.
The Gilded Age of Giving
Let’s get some statistics out of the way:
- As of 2019, the 15 wealthiest billionaires in the U.S. control as much wealth as the bottom 50% of the country.1
- Between 2000 and 2017, the proportion of charitable giving that came from the wealthy (income > $200,000) increased by 73% relative to everyone else.2
- Only about 1/3 of all current charitable donations go toward causes that directly impact the poor and disadvantaged. 3
- According to the U.S. Treasury, the charitable tax deduction will cost the government about $75 billion in revenue per year over the next ten years.4
The picture is clear: wealth inequality is a pressing issue in the United States, and it is affecting the flow of money into charity organizations. We believe this poses a critical problem. Among the many differences between capitalism and democracy, the most important is that private wealth mostly affects single individuals while public policy affects us all. You might not care how many yachts Jeff Bezos can fit in his bathtub. But you should care about who can vote, how public schools operate, and which ecosystem we destroy next. Similarly, you might care very much about our welfare system, public media, and dozens of other institutions that are increasingly being dominated by private philanthropic dollars.
Perhaps we could turn a blind eye if this philanthropy, disproportionately funded as it is, was at least funding universally supported goals. In reality, most people are surprised to learn that only about 1/3 of donations go toward the causes that they typically associate with charity. The rest might go to fund art galleries, private universities, religion (the non-charitable arms), or politically-biased think tanks. Of course, there is absolutely no reason why billionaires should not be able to contribute to the 40 billion dollar Harvard endowment. However, to call these activities “charity” is a bit of a stretch, and to subsidize them with public dollars is baffling.
We now arrive at the final piece of the problem. Of the 75 billion dollars in yearly tax deductions for charitable donations, an overwhelming amount benefits the wealthy. For a struggling family that doesn’t pay much in taxes, giving comes from the heart. For a business mogul with billions of dollars of tax breaks on the line, the decision might come from somewhere else. How much should we care? For comparison, here is a shortlist of alternative public uses for 75 billion dollars:
- A Universal Basic Philanthropy program of $340 per year for every adult citizen in the U.S.
- Increase government spending on the state of New Mexico by 500%. 5
- One new Apollo program every two years. 6
TLDR; The takeaway is this: we live in a system where the wealthy are very quickly developing a monopoly over charity. Most of the money goes towards causes other than charity, and the government spending billions to make the problem even worse.
A New Perspective
According to the Philanthropy Roundtable, more Americans than ever are losing faith in the nonprofit sector, yet a resounding 79% still support the charitable tax deduction.7 Why? I think the problem is that history has trained us to view philanthropy in terms of gifts. “If Mark Zuckerberg donates to a museum instead of buying a private jet,” someone might say, “of course he should get a tax deduction.” But here’s the things with gifts: the decision to give is a noble choice for the individual, but the ability to give is a product of circumstances.
Increasingly, philanthropy is a luxury that the average American can no longer afford. What’s another dollar to reform homelessness when you can barely pay rent? What’s an opinion in the way your child gets educated at school against the need to feed her when she comes home? Popular wisdom tells us that philanthropy is a decision to be generous, but reality demonstrates that far too many have no choice at all.
In a time when the public has become disillusioned with our lack of a voice in the political system, we need to start seeing charitable giving for what it is: a vote. We need to recognize that nonprofits reflect the moral values of society, that philanthropy is power, and that this power belongs to the people.
Philanthropy by the People
Over the coming months, we will be covering a wide range of economic ideas and technological solutions. However, ultimately, our duty is to the people. At Token Ibis, we like to say that giving away money is the fast food of social impact. If you want to feel good about yourself for five minutes, then write a check. If you want to get more, then you have to do more.
Universal Basic Philanthropy is not about constructing a complex network of finances and technology. It’s about creating the simplest system possible for money so that we can leave as much room as possible for human decency. We have plenty of reason to believe that this strategy will pay off.
- In a behavior study, 58% of participates went on to volunteer after donating.8
- The net worth of volunteer hours in the United States is about $167 billion per year.9
- Controlling for other factors, people who report volunteering for altruistic reasons are likely to live longer than those who don’t.10
Once again, the story is clear: giving leads to volunteerism, and if we can get that cycle started, everyone wins. The key here is that money enables engagement, not the other way around. For every “gift” that UBP might discourage from a wealthy donor, how many millions of citizens will be empowered to participate, to stay informed, and to make a difference with their time?
As a society, we have done the money part wrong for the better part of history. And yet, through all this time, human generosity has prevailed. The Token Ibis team believes that there is a way to set things right. We believe that this is only the beginning, that someday everyone will come to acknowledge the capacity for social impact as a basic human right. When the day comes that the powers of economic systems are finally aligned with human values, we will have entered a new age of philanthropy, and the possibilities will be boundless.
“When wealth is centralized, the people are dispersed. When wealth is distributed, the people are brought together.” – Confucius
- https://www.federalreserve.gov/releases/efa/efa-distributional-financial-accounts.htm, https://en.wikipedia.org/wiki/List_of_Americans_by_net_worth