FaithWorld

from Felix Salmon:

Philanthropy: You’re doing it wrong

Merry Christmas! Maybe it's because of some vestigial religious undertones to this holiday, or maybe it's because the end of the tax year is rapidly approaching, along with the urgency of maximizing your annual deductions. Either way, this is a particularly philanthropic time of year. And since I'm personally feeling very charitable right now, I've decided to do you all the favor of telling you that when it comes to philanthropy, you're doing it wrong.

Interestingly, philanthropy is one of those areas where the richer you are, the more likely you are to be doing it spectacularly wrong. So to make you feel better still, this is aimed mainly at the mega-philanthropists: the people who give away millions of dollars and feel fantastic for doing so. These are the people at the heart of the debate over capping the mortgage-interest tax deduction: they receive an outsized proportion of its costs, on the grounds, to quote Bob Shiller, that

charitable giving can substitute for a good part of the things that the government would otherwise be doing itself, a factor that is rarely introduced into budget calculations. Indeed, in many cases, individual philanthropy may be more effective than government expenditures.

Being "more effective than government expenditures" is a pretty low bar to hurdle. But that doesn't mean it's reasonable to assume that most philanthropic donations hurdle it with ease. Remember John Paulson, with his $100 million gift to the Central Park Conservancy: I think I'm entirely safe in saying that the government, in the form of the New York City Department of Parks & Recreation, spends its money a lot more carefully and effectively, despite the fact that it has to divvy up its budget across 5,000 different properties, including Central Park.

And the much bigger problem is that Paulson is no exception here. Let's run down the list of things you're likely to be doing wrong, if you're a rich philanthropist:

from Felix Salmon:

Can charitable donations offset despicable behavior?

It was quite surprising when Jed Rakoff, scourge of Wall Street, sent Rajat Gupta down for only two years on Wednesday. After all, federal sentencing guidelines suggested that Gupta should get a sentence four times longer than that. And Gupta wasn't some small-time crook grubbing for dollars with inside information, either: he did enormous damage to the reputations of central icons of our capitalist system, like McKinsey and Goldman Sachs. But for all that, said Rakoff, he is at heart a good man:

“The court can say without exaggeration that it has never encountered a defendant whose prior history suggests such an extraordinary devotion, not only to humanity writ large, but also to individual human beings in their times of need,” Judge Rakoff said.

This kind of reasoning is found outside the courthouse, too. For instance, Gary Belsky defends Lance Armstrong in New York magazine this week, on the grounds that the ends (raising lots of money for charity) justify the blood-doping means. "If you’re an obsessed sports fan", says Belsky, then Armstrong's actions can't be excused. But for the rest of us, isn't it great that he managed to use that activity to raise so much money for cancer research?

Americans gave $291 billion to charity in 2010, more than 1/3 to religious groups

(A man dressed as Santa Claus from the Volunteers of America charity waits for donations near the Saks Fifth Avenue store in New York December 19, 2007/Ray Stubblebine)

U.S. donations to charity rose to $291 billion last year, but it was still more than 6 percent below a 2007 record as the nation struggles to recover from its worst recession in decades.  Americans gave nearly 4 percent more in 2010 compared to 2009, the Giving USA Foundation and the Center on Philanthropy at Indiana University said,  perking up after the recession sparked the biggest giving slump in four decades.

Religious groups accounted for the largest single recipient class by far, receiving more than one third of total donations, according to the study released on Monday.