Saturday, April 29, 2017

Pluto Philanthropy

The words plutocrat and  plutocracy are increasingly being used, given the makeup of our government at the highest levels and a trend in giving. No, they don't refer to the dwarf  planet or a beloved Walt Disney character, Mickey Mouse's pet pup. The words derive from the Greek ploutos meaning wealth. A plutocrat is a person whose power or influence derives from wealth and a plutocracy is defined as a government ruled by the rich.

Of the 16 members of the Trump cabinet two are billionaires and 12 are multi-millionaires. The total net worth of the cabinet members is $4.5 billion. No one quite knows the net worths of the president or his children.but certainly it is safe to assume they are in the upper millions.

If the recently announced tax reform package, skimpy as it is in detail, is any indication, the main beneficiaries of proposed tax cuts will be the rich. There appears to be a bone or two thrown to the middle class, but they are bones that Pluto the Pup might ultimately find undernourishing and unworthy even of burial in the backyard.

Philanthropy has its share of plutocrats too. In February The Chronicle of Philanthropy released its list of the 50 Most Generous Donors in America in 2016. The total given by those in the list was $5.6 billion, with a median gift of $55 million. There are familiar names here such as Bill and Melinda Gates  (#9), and Michael Bloomberg (#2). Topping the list were Phil and Penny Knight (Nike) who gave an astonishing $500 million to  the University of Oregon along with another $400 million to Stanford.  In fact 48% of the total given by the listed donors went to colleges and universities.

So, what could be wrong about this generosity? Like anything else revolving around money, power is the issue and that what is being increasingly discussed. A recently published book by David Callahan "The Givers: Money, Power and Philanthropy in a new Gilded Age" was the subject of an article in The New York Times April 14 that included an interview with the author. He calls the megadonors "super citizens" but questions the wisdom of their ability to donate where they want and for what purpose with little accountability - for instance to either shareholders or voters.

In matters of policy he cites the examples of Mark Zuckerberg's well-meaning venture into improving the public schools in Newark NJ, where he invested $100 million in 2010 in what was a "top down" effort to influence performance and behaviors of schools and their administrators. The results were widely viewed as failed, with the main beneficiaries being the consultants -  not the students. Might there have been a better investment of these dollars towards education reform?

To be sure, there are many examples of successes that Callahan cites, such as the Gates' emphasis on public health  and vaccinations.The point is not to belittle the generosity but rather raise an issue framed by Mr. Callahan: "philanthropy is rising as government is falling. Ordinary people do not feel their voice counts. They feel the wealthy have too much power and calls the shots."

What gives the public the right to question the prerogative of private individuals and foundations to give away money as they see fit? For one thing, as a matter of public policy, these "super citizens" (I rather like "pluto philanthropists")  receive billions of dollars in tax breaks. As an example, the U.S. Treasury estimates that the billionaires that signed the Buffett/Gates Giving Pledge -those who agreed to donate to charity 50% of their fortunes- their gifts would cost the government  an estimated $740 billion in lost tax revenue over ten years. For that, the ordinary citizen has at least the right to call the question.

I am putting aside the almost age old tradition  - at least back to the first Gilded Age with the likes of Andrew Carnegie-  of donating big bucks and getting your name on a building. The stakes have risen however. with hedge fund mogul  John Paulson getting his name of an entire graduate school at Harvard - The Harvard John A. Paulson School of Engineering. That is what $400 million will get you at the richest university in the world, one that nests on a $35.7 billion endowment.

There's the old play on the Golden Rule: "Them that has the gold makes the rules."  But the inequality gap is widening rapidly in America and that is not healthy for our democracy. Recall that  the etymological root of the word democracy is the Greek demos - people, with cracy, from the Greek kratos, power or strength.

In the case of  the super gifts, at the least more transparency would be welcome, especially in the arena of donating to tax exempt advocacy groups that espouse candidates or public policy issues, such as education and health care reform.

With all the attention given to these mega gifts, the donors of small amounts to local causes dear to respective hearts should not be intimidated or forgotten. These donations, often made year after year and in some cases at some sacrifice, are the bedrock of our nation's philanthropy.

I love the stories of unknown philanthropists, which I have reported to you from time to time. I leave you with one to cheer you up, should that be necessary. On April 14 the Boston Globe reported that one James H. Connors had died at age 89 in Medford MA. Mr. Connors had lived for years with his (also unmarried) sister Thelma in a small rented apartment in a vinyl-sided house. He ran a lock and key service. Unknown to anyone but his lawyer he had inherited a sizable stock portfolio. His legacy was more than $3 million to create a foundation that, starting this summer, will annually award $3000 scholarships to 50 high school students in Medford.

Thank you Mr. Connors and thank you all donors, mega or mini, whose gifts make a difference.

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