Opinion

Felix Salmon

Philanthropy: You’re doing it wrong

By Felix Salmon
December 26, 2012

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:

You meddle in the internal workings of the charities you donate to, even though you’re not on the board.

If you’ve done your homework, then you’re giving to a certain charity precisely because you admire the way it gets things done. If you don’t admire the way it gets things done, then you should find a different charity: there are many very good ones out there.

What’s more, your experience in the for-profit world is not nearly as valuable as you think it is. The executives are probably good at flattering you by asking you for your advice: the slogan in the non-profit world is “if you want advice, ask for money; if you want money, ask for advice”. Once again, be humble. They live these issues every week; they know them better than you do.

Remember: the things which work in your business aren’t necessarily a good idea in your philanthropy. One of the reasons why so many rich businessmen give money to microlenders is that it’s a model they’re intuitively very comfortable with. Even if there’s very little evidence that it actually does much good.

You set up your own foundation.

The classic waste of money and resources. Foundations are expensive things to run, both in terms of overhead costs and in terms of opportunity costs. A well-run foundation will be staffed with qualified philanthropic professionals; such people are not easy to find, and if you do find them, the fact is that their talents could almost certainly be put to better use elsewhere.

The main reason why people set up foundations rather than just giving their money to the needy is that foundations are a have-your-cake-and-eat-it-too form of philanthropy: you get to say that you’ve given your money away while at the same time continuing to have ultimate control over that money. That’s great for your own personal power and influence, but it’s almost never the most effective way to spend your money.

Personal foundations are also the easy way out: a way of saying “I know I want to give my money away, but I can’t be bothered to actually do it yet.” If you’re committed to philanthropy, that’s not good enough. You’re trying to improve the world, rather than trying to create a tax dodge which gives away the bare minimum every year.

You give your money to Harvard, or any other large endowment.

The Harvard endowment currently stands somewhere north of $30 billion. If it grows at 5% a year, that’s $29 million per week. The marginal utility of your donation is probably smaller here than anywhere else. The general principle here is this: giving money to a well-endowed institution is just another way of not actually spending your money.

You fund architecture.

It’s generally easier to raise money for a new building than it is to raise money for continuing operations, which is one reason why charities often embark on huge capital campaigns. But such campaigns often end in tears, with cost overruns which necessitate staff cutbacks or even high-level resignations. Leave the ego-infested world of architecture to others: your money can always be better spent elsewhere. Mission-building is more important than edifice-building.

You encourage mission creep.

If an organization is doing great work in Cambodia, don’t offer it a large amount of money to do the same thing in Nicaragua. Donations with strings attached are bad; donations which essentially force a non-profit to do something it never particularly wanted to do in the first place are much, much worse. Examples would include most cancer wings at hospitals; or a dedicated yoga center at a university. (I’ll come back to that example.) Charities are under constant pressure to move away from their core mission and towards where the money is; don’t be part of the problem.

You kid yourself that your mere presence on the board, or your “celebrity endorsement”, is valuable.

It’s your money that’s valuable — the money you give to the organization, and the money you can persuade others to give to the organization. The main value of your presence on the board is the implicit or explicit financial commitment that comes with it.

You are a rich and important person, but no one is going to give money to this organization just because you did.

You’re a tease.

Charities are forced to put a lot of effort into buttering up donors and potential donors. Don’t be part of the problem: don’t waste their time. If you’re going to give money, give money. If you’re not, then say so, clearly.

You confuse philanthropy with social climbing.

Philanthropy is one way of feeling better about yourself; buying the admiration of your friends and peers by ostentatiously giving money to their favorite causes is another. Do not confuse the two.

You think that going to to charity balls constitutes charitable activity.

Some people actually enjoy these things. If you’re the kind of person who likes to dress up in black tie spending an evening in an orgy of rubber chicken and self-congratulation, then by all means go to as many of these things as you like. But if you’re not that kind of person, and you feel that you can’t politely decline, then just take the money you would otherwise spend on a table, and donate it to the organization directly. That way the charity gets all of the donation, and you get four hours of your life back.

Amazingly, charity balls aren’t even the most inefficient way of giving to charity. Paul Sullivan recently glowingly profiled Cindy Citrone, who went to Sotheby’s and spent $425,000 on “a small, pink-diamond ring and diamond bracelet that had the word love written on it in rubies.” That was probably near the market price for those jewels, and in any case, given that this was an auction, there was certainly an underbidder willing to pay almost as much. So even though the auction proceeds were going to charity, the marginal benefit of Citrone’s $425,000 was pretty tiny. And yet, somehow, Sullivan managed to write a column implying that this was a good way of giving money to charity. Donating the jewels was a genuine charitable act; buying them, not so much.

You put your name on a building, or anything else, for that matter.

Why?

You transactionalize your giving.

The world of non-profit fundraising has become increasingly transactionalized: everything’s a tit-for-tat operation, these days. Give a small amount of money and you get a yellow wristband; give a large amount of money and you get to rename the entire organization you’re funding after yourself. It’s an invidious trend, and the only way to reverse it is for prominent philanthropists to refuse to play the game. The Jewish charitable tradition of tzedakah calls out anonymous gifts for especial praise: philanthropists and charities alike should take note.

All too often, meetings between fundraisers and donors turn into a kind of bargaining session: if you give us this, we’ll give you that. The conversation ignores the important — how the charity will use the money to improve the world — and concentrates instead on the banal: what the charity can do to publicly thank the donor.

In one particularly odious recent case in New York, two foundations which helped pay for a big new FDR memorial on Roosevelt Island went all the way to the state’s Supreme Court to ensure that their names appeared so prominently as to damage the whole architectural construct. In their minds, the quality of the memorial itself was less important than the conspicuousness of the thank-yous.

It’s incredibly easy to find examples of all of these sins, but one in particular jumps out at me for the way it encapsulates many of them at once. Here’s Andrew Rice, talking about the way that the University of Virginia’s Teresa Sullivan tried to get money from one of its richest alums:

One of Sullivan’s most promising targets was Paul Tudor Jones, a Virginia alumnus, billionaire hedge-fund manager and philanthropist. Though he had given away countless millions, Jones considered his brain to be his primary asset: he was fond of saying that “intellectual capital will always trump financial capital.” He had already given large sums to his alma mater, and he told Sullivan that he and his wife had an exciting new idea: endowing a center for yoga.

“I thought, Oh, man, people are going to be very cynical about this,” recalls Bob Sweeney, UVA’s fund-raising chief. So Sullivan convened a dinner at her home with professors of religion, medicine and other disciplines. “I said, ‘O.K., let us think about it a little bit,’ ” she said. “We began talking about, wait a minute, it’s not just yoga.” The group swiftly produced a proposal for a multidisciplinary Contemplative Sciences Center, which was vetted by Jones’s paid yoga consultant. In April, Sullivan announced the $15 million gift, one of the largest of her tenure.

This was all part of a multi-year buttering-up campaign, of someone who is convinced that just by thinking about the University of Virginia in the right way, he can do more good than by giving it money. The University, of course, knew exactly what it needed money for, but Paul Tudor Jones wasn’t interested in what the University thought: he had his own ideas — and his own paid yoga consultant.

When someone offers you $15 million, and a very large part of your job is to raise money, you can’t just laugh and say their idea is ridiculous. Instead, you have to spend an inordinate amount of valuable management time, across multiple university faculties, and eventually construct a white elephant that no one actually wanted in the first place.

And so the lesson here is pretty simple: Don’t be Paul Tudor Jones. Instead, have some humility. Here’s one idea: for every dollar you spend on overhead and payroll at your foundation, make sure that you donate a dollar earmarked for overhead and payroll somewhere else. Those are the funds which are always the hardest to raise, after all.

If you did that, you would be helping to counteract one of the most corrosive and invidious memes in the nonprofit sector: the idea that it’s incredibly important to look at the “overhead ratio”, and give only to charities which spend a small proportion of their money on overhead, and a large proportion of their money on program activities. It really isn’t. But partly because a lot of people think that it is, this year I gave to DNDi, the Drugs for Neglected Diseases initiative, an amazing nonprofit which is basically all overhead. Its job is to coordinate the work of organizations all over the world, from non-profits to pharmaceutical companies to multilateral organizations to national health ministries, and to get them all working together to create drug cocktails which can cure devastating diseases in some of the most forlorn parts of the world.

What else should you do? Well, if you’re one of those extremely wealthy people who has pledged to give away most of their money, then follow the spirit of the pledge, rather than just the letter. It’s not enough to set up a foundation which will receive most of your wealth when you die: that’s, quite literally, a cop-out. Instead, embrace the concept of front-loading, and give the money away right now, as much as you can. In a world which is getting richer, your money is best put to use now, rather than in the future. And in a world with many vicious cycles, an increase in up-front investment can prevent enormous damage down the road. You’re not building a business with permanent equity capital, you’re trying to make a difference. And if you think that the world would be better off if you invested the money, made a huge return, and then gave away that much larger sum — well, that’s just your hubris at work. Remember, in philanthropy, you’re meant to be the humble one. The graveyards are full of people who dreamed of giving away hypothetical future riches. Much better to give away real present ones.

What’s more, if it turns out that you really are very successful, and that your wealth is going up rather than down, increase your giving commensurately. This is a tough one: even very large-scale philanthropists like George Soros have found it very difficult to make a serious dent in their wealth by giving it away. But it is possible. Do it.

Finally, there’s something that all of us can do, whether we’re dynastically rich or really rather poor: volunteering. But weirdly, volunteering is harder for the rich, who can more easily afford the time commitment: they often think that time spent volunteering is wasted.

The logic, after all, is simple and clear. The value to the charity of my labor is $x; so if I just donate $y>$x then the charity is better off. What’s more, the value of my time is $z>$x, so in a way I’m destroying value by volunteering.

The problem with this logic is that it ignores the enormous value to the volunteer of volunteering. Volunteering is the best and most effective way of piercing the bubble that all wealthy people live in every minute of every day, and of giving such people a gut-level understanding of the problems the charity is trying to solve.

On that level, volunteering is much more effective than some fact-finding poverty tour, where a bunch of rich donors or potential donors jet in to observe the Great Work Being Done in some far-flung country. The logistics involved in organizing such tours are substantial, and the good they do is minuscule. So if you want to see for yourself what an organization is doing, find out by doing that work yourself.

But volunteering is also worthwhile for its own sake. It gives an extremely valuable perspective on life, one that’s hard to find elsewhere. And it can be incredibly rewarding, in ways both expected and unexpected. Find time to do it: almost nobody ends up regretting the time they spent volunteering.

The theme here is humility, mixed with seriousness. Giving away money effectively isn’t fun or easy, and although it can be rewarding, it’s important to keep your eyes on the job at hand, rather than on maximizing those rewards. Philanthropy has always been self-serving in large part, and that’s never going to end. But there’s no good reason why you should be part of the problem.

Comments
32 comments so far | RSS Comments RSS

While I’m not an Upper East Side mega-philanthropist, I agree that there is enormous value to the volunteer of volunteering.

If Willard Mitt Romney had done significant domestic volunteer work among the U.S. working class or poor, I’m convinced he never would have made that condescending set of remarks about 47% of Americans not taking responsibility for their lives.

Posted by Strych09 | Report as abusive
 

Extremely important for charitable institutions: If you have managed assets, have your portfolio reviewed by an independant professional on a regular basis.
Jissachar Polak, Asset Management Quality Assurance

Posted by ASMAQA | Report as abusive
 

Fantastic Post Felix!

One of the things that impresses me most about Warren Buffet’s giving is that rather than start his own he chose instead to fund one by his rival. I’ve read your excellent blog for years and I think you’ve said some good things about the Gates foundation.

I’m a lot more optimistic on Paulsen’s Central Park gift as well. Did he do it to buy some good will… of course he did… but dig a bit deeper and I think you’ll find that the money will be pretty well spent. (Not in comparison to doctors without boarders or the like mind you… but in comparison to Facebooks gift of equal size to Newark’s public schools.)

Central Park is managed in a private public partnership wherein the Central Park Commission (made up of well to do wealthy) raises 90% of the parks 45 million dollar annual operating budget through investment income and private donations. Unless they have an endowment above a billion dollars we can impute that most of that money is raised annually.

Now you might be tempted to say humm… 45 million dollars annually expended on a space something less than 1.5 square miles… but don’t go there. Central Park is likely the most visited park in all humanity. Some estimates put Central Park visits for the month of August above the annual attendance of Yellowstone and the Grand Canyon combined.

In my wonderful state (the greenest out of all 50) we constantly battle over how our most visited state parks heavily subsidize the remote public spaces where daily use fees don’t come close to covering operational costs. I (perhaps selfishly) am a strong proponent of putting parks where the people are. A park close to population is inherently more valuable than one which requires substantial travel.

Posted by y2kurtus | Report as abusive
 

Terrific post, Felix, maybe your best ever!

I’ve taught for the past few years at an inner-city girls school, one of those many small-mission charities that helps complete pieces of the picture that the government has missed.

The teachers are largely volunteers, either working through volunteer missions or accepting a salary that is less than half what they could make elsewhere. The budget, per student, is much less than what the public schools spend, and we give the girls the instruction and role models they need to prepare for college and life. a simple mission, and not a terribly expensive one.

Yet our primary fundraising comes through glitzy “galas” that are designed to give the wealthy a chance to show off to their friends. And a wealthy donor gave us a set of 12 computers for a “21st century science classroom”. Which we didn’t really need (we already have a computer room that the science classes can use as needed), didn’t really fit the room (it was small before we stuffed 12 computers into it), and wasn’t an efficient use of money (we can get donations of used computer equipment without spending hard-to-find cash). But it made him feel good and got his name on the door.

We can’t keep the copier supplied with toner and paper (no budget for boring stuff like that), a need for which I chipped in a few hundred last month. Would be nice if donors would fund the need, not the glitz.

Posted by TFF | Report as abusive
 

“These are the people at the heart of the debate over capping the mortgage-interest tax deduction:”

Methinks you meant to refer to the charitable donation deduction.

Posted by Auros | Report as abusive
 

Felix, you many many worthy points. Well done.

To get a more intensive view of “evolved” philanthropy, look at Maimonides, the 12th century rabbi and philosopher, who “nailed” the motivations for why people give — then and now — with incredible precision. It is still remarkably relevant even with our 21st century on-line, crowd funding and new ways we aggregate charitable dollars.

You did not mention donor-advised funds as a way for philanthropists to give. They are not exactly like private foundations. They are more efficient, allowing donors to pool their charitable assets under a single charity rather than start lots of new private foundations, each of which has its own overhead, management and record-keeping.

Donors who used donor-advised funds can give anonymously, give internationally (if the sponsoring charity allows those grants) and with far less overhead so more funds get to charities ultimately. DAFs (the nickname) pay out far more than the 5% private foundations are required to do. Some pay out 17% to 20% annually to charities.

I teach a philanthropy course at University of Pennsylvania and make many of the same points you make to the graduate students who take my 14-week course. Kudos for your keen observations.

Happy New Year,

Eileen Heisman
National Philanthropic Trust
Jenkintown, PA

Posted by erheisman | Report as abusive
 

Wasn’t Jones one of the principal figures behind the University of Virginia Board of Visitors’ decision to fire Sullivan? He was reported to be elated when she was dumped. Of course that scheme went very awry. The students and faculty demanded her reinstatement and she continues today as the President of the University. I think he is still on the Board of Visitors too, is he not?

Posted by Chris08 | Report as abusive
 

Here is Wikipedia’s account of the matter:

Sullivan was unanimously elected on January 11, 2010, and became the University’s first female president on August 1, 2010. However, on June 10, 2012, it was announced to the University that Sullivan would step down from her position on August 15, 2012, after serving only two years of a five-year contract. Leaders of the university’s governing board decided to remove Sullivan, “largely because of her unwillingness to consider dramatic program cuts in the face of dwindling resources and for her perceived reluctance to approach the school with the bottom-line mentality of a corporate chief executive”. Other sources presented the dispute as being more about differing view of the academic culture and future direction of the university than immediate financial concerns; whether less popular traditional-classical academic studies should be cut, with funding refocussed on more profitable and business-oriented courses and programs. Later news reports presented the resignation as an “ouster” organized by Helen Dragas, rector of the university’s Board of Visitors; with strong suggestions of Dragas’ conflicting views of the future of the university, and personal ambitions playing a role in her actions.[5] Although a formal meeting and vote of the full board was not held at the time, Sullivan was presented with the news of her loss of majority support within the board, and given the ‘opportunity’ to resign.
The announcement of Sullivan’s resignation was communicated via an email by Dragas on behalf of the Board of Visitors. The message quoted from Sullivan’s resignation letter and cited “philosophical differences” on how the University was to be run.[2] Large-scale protest against the action, and support for Sullivan from students, faculty, alumni, as well as the national academic community, resulted, including a faculty senate demand for the removal of the Board of Visitors leaders – Rector Helen Dragas and Vice Rector Mark J. Kington – and demands from the student government for an explanation for the ouster. In the face of this pressure, including a statement from Virginia Governor Robert McDonnell that he would remove the entire board if they failed to resolve the issue at their June 26 meeting, the board unanimously voted to reinstate Sullivan as president.

Can’t say Jones was very charitable toward Sullivan, now, can we?

Posted by Chris08 | Report as abusive
 

Philanthropy has always been self-serving in large part.i agree with that ,but it is better than done nothing at all.

Posted by starrystarry | Report as abusive
 

Dear Felix,

I am a young journalist and placed in London and I do very much agree with your opinion that volunteering is often seen as too time consuming by the rich; and that donating money is easier and linked with less effort for them. By working more they think that earning money, which they donate later, is the greater beneficial deed.

However, in my opinion volunteering is not only highly valuable for the person receiving help; but even more for the donator who is helping with his own hands, as it enriches one’s view of the world, and enhances one’s personality. To see what it means to be good.

This year, I am spending new year’s eve in a “soup kitchen”, handing out food for people in need. I will invest a couple of hours of my day, but I will earn a high premium. Namely, the knowledge of how it feels to be there if someone needs you – and not your money.

Posted by investmeartlisa | Report as abusive
 

Felix, great article!

just one small correction. very minor here, and I wouldn’t bother to take the pedantic effort, but you do post a lot about goings on in New York, so I figured it was worth the 75 words or so: in New York, the state “Supreme Court” is actually (in almost all types of cases) the lowest court in the New York court system. The highest is known as The Court of Appeals. Middle level is Appellate Division.

Posted by DazeofHaven | Report as abusive
 

We spend far too much time answering questions or entertaining people who want to give us what we don’t want and don’t need. We need money to survive and we need competent caring long-term volunteers with appropriate skills. And like all charities we need lots of money! But good volunteers are often better than money. How hard is that for the public to understand? And we will NOT sell our souls for the cardboard cheque photo opportunity. But giving away useless items that we have been given can easily take ten per cent of our time. We can’t afford to be a second hand goods redistribution agency when we need every minute to focus on the welfare of severely burned children. Great article.

Posted by ChildrenOfFire | Report as abusive
 

I am sure philanthropists have nothing better to do than read a blog and seek consul from a journalist who has no experience in the advice he is promoting. Have you ever worked on a board? Have you been a consultant for non-profits? Have you ever worked for a non-profit? Is this a study? According to your linkedin profile you’ve only worked as a journalist.

Also affluent indviduals often do volunteer by giving away their time or expertise. They often donate their time to be on boards of charities, provide at cost or free services or provide their expertise in whatever field they’re in. This article does not seem to be interested in offering in an honest assessment and is instead interested in demonizing an entire group of people because of their wealth.

Posted by jonnyd1 | Report as abusive
 

I am sure philanthropists have nothing better to do than read a blog and seek consul from a journalist who has no experience in the advice he is promoting. Have you ever worked on a board? Have you been a consultant for non-profits? Have you ever worked for a non-profit? Is this a study? According to your linkedin profile you’ve only worked as a journalist.

Also affluent indviduals often do volunteer by giving away their time or expertise. They often donate their time to be on boards of charities, provide at cost or free services or provide their expertise in whatever field they’re in. This article does not seem to be interested in offering in an honest assessment and is instead interested in demonizing an entire group of people because of their wealth.

Posted by jonnyd1 | Report as abusive
 

All of the total benefits offered by every charity that’s ever been in existence can’t offer citizens the benefit of teaching them to demand fair media, that conscience of nations!

Posted by donee | Report as abusive
 

Nice job Felix.

I don’t have money to give. Thus, I volunteer at my humane society. Over the past 10 years, I have donated 10,000 hours of time. The organization ‘values’ this time donation at $10 per hour. There is no way I could have given that much money; so my time it shall be.

Posted by V73C | Report as abusive
 

What we really need to do, in this period of Impact Investing and multi-bottom line love affairs, is to figure out how to build in enough weight on the charitable side of the teeter-totter of balance between Profit & Purpose (which I write about on Rant Finance dot com) so that charitable intentions are built in to business transactions. This is why I developed a new kind of thinking that I offer in a proposal for turning Burgers Against Obesity, which uses a nickel-a-meal from the money transfer systems (ATM, credit card processing) to give voice to food empowerment. This kind of system should likewise favor those who are most comfortable with business models — if we can get them to stop thinking that large donations solve all the systemic problems. I look forward to other posts of yours. Nice, cynical attitude!

Allan

Posted by OnePageWriter | Report as abusive
 

Very well written article. You have raised some very important points – particularly on volunteering. If every philanthropist spent at least one hour each month with his sleeves rolled up and hands outstretched to serve the people who benefit from the charity, we would see the meaningful changes to which you refer in the article. Far too many corporate executives use charitable organizations and boards to raise their profile and not the true cause of the organization.

Posted by cisaacsmorell | Report as abusive
 

Salmon for President. Amazing.

Posted by DrHans | Report as abusive
 

What is funny about this article is that no “philanthropist” who is doing it ‘wrong’ will read these words, and, if they do, they will give a haughty snort and move on to comments and prose they adore and that tickles them.

Brought to you most cynically, not by Alphawood Foundation (but if it really was by Alphawood Foundation, we would insist on our message being inscribed into the internet forever, because we have a lot of money we are avoiding paying taxes on and when we give it away we want some bang for our buck, and we always give it with lots of strings attached because it’s way better than paying taxes), but by an American who works really hard and pays a LOT of taxes.

Posted by redflicker | Report as abusive
 

What is funny about this article is that no “philanthropist” who is doing it ‘wrong’ will read these words, and, if they do, they will give a haughty snort and move on to comments and prose they adore and that tickles them.

Brought to you most cynically, not by Alphawood Foundation (but if it really was by Alphawood Foundation, we would insist on our message being inscribed into the internet forever, because we have a lot of money we are avoiding paying taxes on and when we give it away we want some bang for our buck, and we always give it with lots of strings attached because it’s way better than paying taxes), but by an American who works really hard and pays a LOT of taxes.

Posted by redflicker | Report as abusive
 

Great post, thank you! Just received some charitable gifts for the holidays — “I made a donation on your behalf.” I would love your view on this type of donation/giving. Is it worthwhile and should we all be doing more of this?

Posted by teresaalp | Report as abusive
 

Thank you for this excellent article!

I’m sure you must already know this, but:
http://www.lds.org/scriptures/nt/matt/6. 1-4?lang=eng#0
— (Matthew 6:1-4) Anonymous giving is a Christian principle as well as a Jewish one!

A leader of one organisation I worked for recounted a tale from his time as a fund-raising activist for a university. They wanted their target donor (who had previously given much smaller sums) to give a very large sum of money, to fund the construction of a new facility. They met with him and told him the plan.
“I don’t like it.” He said.
“What don’t you like about it?”
“The name.” — The university was offering to name the facility after their proposed benefactor. When the university agreed to change the name of the facility and to make the donation anonymous, this man willingly agreed to donate the required amount of money.

Most of us have no idea of the degree to which our lives depend on, or are supported by, the hard work and donations of anonymous benefactors. Perhaps this is no more true, than when we think of God…
http://www.lds.org/scriptures/nt/matt/5. 43-48?lang=eng#42
— (Matthew 5:43-48)

Posted by matthewslyman | Report as abusive
 

I recall a plaque in a courtyard at my university that reads: “This bench donated by John and Jane Schmuckatelli in honor of their parents.”

The names of the honored parents, of course, were nowhere to be found.

Posted by SomeGuyInVA | Report as abusive
 

A very interesting article and some very good points. But I think you’re making the mistake of thinking that most people want to do good and as a side benefit want to get some ego-gratification for it. It seems that it’s the opposite. Most people want to benefit themselves and the fund-raisers have figured out that they can tap into this desire to raise money. Yes, it’s wasteful for Paul Tudor Jones to endow a Yoga Center at the University of Virginia, but the realistic alternative was not for him to endow something more useful there, but to build a Yoga Center at some other school that would have been glad to accept his money. The Charity industry has grown around rich egotistical donors and it seems the way to change it wouldn’t be to downsize the egos of donors (those egos are part of what made them rich) but to discipline the charity industry to incentivize better behavior from donors.

Posted by sethblink | Report as abusive
 

Felix could have been blunter. Foundations (with individuals’ names) and Ivy League contributions (with named professorial chairs) are very ego driven.

Plus, a lot of what the rich do, per the likes of Bruce Bartlett, is **non-profit** but not charity in the non-legalistic sense. Donations to arts and classical music support groups aren’t *charitable.*

Posted by SocraticGadfly | Report as abusive
 

In response to Mitts insensitivity…..He’s not. As a bottom 1 percenter I spend most of my resources on ways to give even more help to impoverished people…giving international jobs as I can afford….one of my sideline jobs to earn money is cleaning out the houses of the “poor in America”….I would love to be as “poor” as our subsidized masses…I could provide a livelihood for 30 families!…the houses stink, they are filthy, they packed with gaming and entertainment refuse….seriously, Mitt is flat out right…Very few people produce jobs…and the people I clean up after have ZERO skin in the game….Is Mitt stingy?…no…he gives his own money…like I do..And I would appreciate it if idiots like you would stop voting for government “compassion” and let US get the money where its needed..(.Oh and by the way..when I do reach that top 5% pay grade…I will STILL not volunteer and I will take my tax dollars to a less greedy country….because I am well aware of where those “charity” dollars go..).you can vote to do with your own money as you wish…but every penny taxed out of me is stealing directly from the poor…that includes sales tax property tax, school taxes, gasoline tax and the thousands of other fees and taxes that are imposed on Americans…even if they pay no federal tax…..I WANT TO HELP THE actual POOR!…and the government, and people like you are the impediments……Stop looking at what others have….or what their responsibilities are…You feel bad for the obese poor? give them a job….at least you will spare their dignity.

Posted by ghii | Report as abusive
 

I would mostly agree with this except for the part on the value of nonprofit board membership. Yes, the value *is* the money that one can give to the organization, as well as the money that one can raise. However, people often *do* give because people that they know, like, and respect have given (this is why a symphony can raise more money than a homeless shelter, for better or worse).
Furthermore, someone’s service on the board *does* count as volunteering, and is a way for people whose time is very valuable to volunteer and create a situation where everyone wins. Obviously the key here is good organizational governance. The board needs to oversee the organization’s executives, not micromanage the staff (that’s the job of the execs). The board can set broad policy, but the real question they should be asking is: do we have confidence in the CEO of the nonprofit?

Posted by philapa | Report as abusive
 

I’ve been a foundation grant writer for almost four years and I can say with total authority that you, Felix, have it right.

Foundations are ego-centric cash-vacuums where no two conversations are ever the same. Each grant pursued requires the organization to engage a new learning curve for that group’s particular formats, reporting structure, documentation requirements, etc.

Sometimes the requirements are reasonable and the reward substantial – as in the case of a recent $200,000 grant I secured with a four page proposal.

Sometimes, they are unreasonable – as in the case of a $10,000 grant I secured with a 16 page proposal and 8 yearly reports.

Frequently, foundations give against their stated guidelines, are impossible to communicate with, and almost universally refuse to support administrative costs, even though they have very little if any understanding of what those costs are.

The hoops I am put through to secure meaningless grants that barely fill 5% of programmatic budgets never fail to amaze me.

But there’s plenty more blame to go around – let’s not forget “corporate philanthropy,” which is a perfect storm created by the occlusion of useless, underhanded marketing tactics (buy this salad dressing and help disabled veterans today!) and the soul-crushing bureaucracy of foundations (fill out this sixteen page application and lace it with promises of press releases and public acknowledgement opportunities for our chairman and CEO).

Posted by RyanW | Report as abusive
 

re: the example of john paulson giving $100 million to central park,

the CP conservancy will just take that enormous gift, inflate its already oversized salaries for its top executives and increase all the perks, new expensive furniture for its offices, etc. it’s like a middleman taking a cut.

meanwhile, dozens of other parks in the city are neglected and left to rot (mostly in poor neighborhoods, of course).

Posted by instgiv | Report as abusive
 

Well last week I got a call about a temp job doing cleaning.
I accepted and spent the next two days worrying about it and doing mental exercises so I wouldn’t worry about it. I went off to work on the first day. The company cleans a lot of local buildings but this job was a fire restoration. Cleaning the inside of an office building that was next door to a major fire. They failed to mention we would be there for 12 hours a day. I made it through one day and that’s all I could do. Physically, I’m about as fit as the next couch potato and 12 hours of nonstop heavy physical labor just about killed me. But I tried. I went and I tried. i get some help full tips here BITTERBANANAS Thanks

Posted by JohnDavid | Report as abusive
 

A big thank-you for writing this article. When I read the title it made me sad, because I think that generosity is sorely lacking in our culture, and so it seemed weird to be critical of philanthropy. But I agreed with almost everything you said. It sounds like you’re not against philanthropy at all, you just have some good concerns for how it could be done a lot better. Thank you!

Posted by danielbigham | Report as abusive
 

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