At this year’s World Economic Forum at Davos, billionaire Michael Dell, the 25th-wealthiest man in the world, weighed in on new proposals to tax the very wealthy. Dell said he was “much more comfortable” giving through his private foundation “than giving…to the government.” He’s not the first billionaire to confuse his obligations to society and conflate charitable giving with paying taxes.
Indeed, the discussion about solutions to most social problems are too often sidetracked by stories of beneficent billionaires and their charitable deeds. Lost in a fog of generosity is the recognition that philanthropy is not a substitute for a fair and progressive tax system and robust public investments in poverty alleviation, infrastructure, economic opportunity, and social protection.
To be sure, there is strategic philanthropy in the United States that sustains a vibrant independent sector. But that sector is in jeopardy, thanks to the increasingly top-heavy nature of philanthropy and the ways that the super-wealthy are creating a taxpayer-subsidized extension of their private wealth and power.
Philanthropy mirrors the wealth inequality trends of society overall, with more wealth and therefore more giving clout concentrating in the hands of billionaires like Dell. Charitable giving vehicles, such as donor-advised funds, are now part of the menu of tax avoidance strategies that the ultra-rich use to stash their wealth. The risk in this increasing inequality is not only to the independence of the nonprofit sector, but also for our democracy and society as a whole.
The list of philanthropic abuses goes beyond President Trump using his personal foundation to illegally funnel tax-exempt funds to campaign consultants or toward the purchase of paintings of himself. The ways in which philanthropy is being abused include:
Self-serving policy advocacy. Some wealthy donors, especially those in the Koch brothers’ network, are “weaponizing philanthropy,” using their considerable wealth and power to undermine democratic institutions and rig the rules of our economy in their favor. As journalist Jane Mayer documents in her book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, wealthy donors are funneling tax-exempt funds to think tanks and advocacy groups to further a wealth-protection agenda in the political arena.