5 Apr 2017

The power of the elite philanthropists

From Jesse Mulligan, 1–4pm, 3:08 pm on 5 April 2017

Most of us have heard about the generosity of philanthropists like Bill and Melinda Gates, or Mark Zuckerberg who have pledged to give away the majority of their wealth.

But outside the media spotlight, there is a secretive, elite world of philanthropists who use their charitable donations to shape public opinion and policy. 

Bill and Melinda Gates

Bill and Melinda Gates. Photo: Wiki Commons

David Callahan is the founder and editor of the media site Inside Philanthropy, and co-founder of the national think tank Demos. 

He talked to Jesse Mulligan about uber donors and his new book, The Givers: Money Power and Philanthropy in a new gilded age.

Callahan says these days the rich are a lot richer than they used to be, and there’s a lot more of them.

“Just about everywhere you look you’ll find wealthy people with big ideas, big ambitions and deep pockets who are trying to do good in society as they see it, but often with ideas or proposals that raise a lot of controversy.”

The US has not revisited laws that govern charitable giving for almost 50 years and Callahan says a lot has changed since then.

In 1982 in the Forbes 400 List of the richest people in the US only had 13 billionaires - there are now more billionaires than can fit on the Forbes 400 List.

Callahan says many of those people have taken the ‘giving pledge’ which was put together by Warren Buffet and Bill Gates, in which people vow to give away all their wealth.

Those people have more assets put together than all of the 90,000 or so foundations in America in the last century.

“It’s just a gigantic amount of money that’s built up over this gilded age and now is poised to enter the charitable sector.”

He says there’s been a mindset change in which more people in the wealthy upper class now feel like they should donate.

“Many of these people are very mindful that they got very lucky in ending up so wealthy, they recognise that they didn’t do it themselves, that other institutions and society as a whole helped them.”

There are many wealthy people who have put their money towards causes such as fighting climate change, advancing LGBT rights, and improving the criminal justice system, Callahan says, but notes it’s often been used to promote economically conservative positions.

He says many philanthropists are well meaning, but their version of society can involve making big improvements to public policy or changing entire sectors.

“Government’s going down, philanthropy’s going up and I really see that as bringing about a power shift.

“Who has the resources to solve problems and do big things? And it’s not we the citizens anymore.”

He says when billionaires solve problems they don’t have to answer to the public or voters.

“If they screw up there’s not necessarily any consequences.”

When Facebook founder Mark Zuckerberg and wife Priscilla announced they were giving away 99 percent of their $60 billion fortune, it prompted backlash and criticism at too much power being in their hands, he says.

“Who are those two individuals to have so much power in our society, even though clearly this is a very well-meaning couple?”

Callahan says people tend to cheer the billionaires they agree with but jeer the ones they don’t.

“If you’re on the left the Koch brothers are the devil, and there’s a lot of concern about their giving, if you’re on the right there’s criticism of George Soros.”

He says we need to step away from the substance of it and look at the deeper questions of equality and democracy.

“Even if you do agree with what these people are doing, the fact is that they have much more power to shape policy than your average citizen… in a democracy we’re all supposed to be equal in terms of how much say we have.”

He says there’s also growing secrecy around philanthropic gestures.

For example, Mark Zuckerberg has set up a company to front his philanthropy which means they’re not constrained by the rules for charities.

“The money can flow with little transparency since LLCs don’t have to report who they give donations to.

 “We don’t know who’s giving it, we don’t know what they want, we don’t know where it’s going.”

One of the big causes of wealthy philanthropists over the past 20 years has been to improve public schools, pushing for more charter schools, he says.

“Philanthropists have effectively scaled up and created a parallel education system in the US and that has produced a lot of push back from people who feel that private money doesn’t belong in public education.”

Callahan wants to see more transparency around philanthropy and limits placed on the gifts that go towards shaping public policy and influencing government decisions.

“Ultimately the problem is that so much power is in the hands of the top… 0.01 percent.”

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