The gift that keeps on giving
The original act of philanthropy, by all accounts, was a crime.
According to Greek myth, Titan Prometheus stole fire from the forges of Mount Olympus, defying the will of Zeus, and gifted humanity the flames hidden within a hollow stalk of fennel—an act of altruism that gave rise to human civilization.
But it was titans of industry, not titans of legend, that shaped modern forms of philanthropy. During the Gilded Age, a period of dramatic economic growth in the US during the last four decades of the 19th century, steel tycoon Andrew Carnegie pioneered a new philosophy around the age-old practice of charity, allowing him to both cement his image as an altruist while also cannily dispensing his vast fortune.
A similar pattern of giving can be seen today among the uber-wealthy of Silicon Valley and Wall Street, with the likes of Elon Musk, Bill Gates, and Mark Zuckerberg signing pledges to donate a chunk of their wealth to charitable causes.
From a divine act of rebellion, to a material act of tax avoidance, philanthropy has contentious origins. Toss a coin to your writer, and let’s turn our focus to the act of giving (we’ll do our best to be charitable).
Department of jargon
The word “philanthropy” comes from a combination of two Greek words: philein and anthropos. The former means “to love” and the latter, “humankind.” Together, “philanthropy” can be taken to mean “love of humanity.”
The first known use of the word appears in Aeschylus’s play Prometheus Bound (c. 479 BC) as an adjective (pdf), describing the demigod’s act of fiery theft as “human-loving.” It later appears as a noun (pdf) in Plato’s The Euthyphro (c. 400 BC), in which the philosopher records his teacher explaining that he educates his students, for free, out of philanthrôpía.
The term crops up in the English language in the 14th century, and was originally used in a botanical context, describing plants whose seeds adhere easily to humans as “phylantropos.” In 1612, British philosopher and statesman Francis Bacon used the term in a close approximation to its modern meaning in his essay, Of Goodness and Goodness of Nature.
What gives?
Giver knows best
If you want to understand the thinking behind modern-day philanthropy, look no further than its urtext: Andrew Carnegie’s essay, “The Gospel of Wealth” (1889) (pdf). The Scottish-American industrialist penned the paper when he was 54 years old and had very nearly, if not already, reached the pinnacle of his wealth, accruing an estimated $309 billion in today’s dollars.
“The Gospel of Wealth” lays out not only Carnegie’s views on wealth distribution, but also on why he thinks deciding who gets what is best left to the plutocrats—not the government and certainly not the general public.
Professor Kathleen Davis from the University of Rhode Island has termed his philanthropic philosophy “tycoon medievalism” given its feudalistic and paternalistic nature. Carnegie, who employed thousands of laborers, believed the wealth they generated was best returned, not through wages, but through libraries and other monuments built in his own name.
Here are some ideas key to Carnegie’s conception of philanthropy.
🏃♂️ People become rich because they have the “ability and energy” to accumulate wealth.
👐 Surplus wealth is best distributed personally to address economic inequality and help the masses.
😌 It is the duty of the wealthy to bring their “superior wisdom, experience and ability to administer” their fortunes to the poor in the way they best see fit.
💸 To help the poor is to “dignify” one’s own life, whereas, “The man who dies thus rich dies disgraced.”
Carnegie himself distributed $350 million of his wealth (over $6 billion in today’s dollars) at the time of his death, but still had $30 million (over $516 million today) remaining, all of which went into the Carnegie Corporation endowment.
Quotable
Big philanthropy—more than ordinary small donations that most people make—is an exercise of power. It’s an attempt to direct your private assets for some public influence, often with a naked aspiration to change public policy. And in a democratic setting, wherever power is exerted, it deserves our scrutiny, in order to understand whether it’s serving democratic purposes or undermining them. And philanthropy shouldn’t be exempt from that examination.
—Rob Reich, professor of political science at Stanford University and author of Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better
Explain it to me like I’m 5!
Philanthropy provides greater tax benefits to the rich who donate than it does to the poor. Let’s do the math.
Imagine there are two US individuals, Albert and Barbara. Let’s say Albert is in the top tax bracket and subject to a 40% income tax, and Barbara is in a lower tax bracket and subject to 10%.
Now, imagine that both decide to donate $10,000 to a charity. And both receive tax exemptions for their donation. Albert, the richer of the two, will avoid $4,000 in tax following the donation. Meanwhile, Barbara, despite being in a lower income bracket, will avoid just $1,000.
The policy incentive here is clear: Equal acts of giving across tax brackets will produce unequal benefits that favor the wealthy. That is, Albert stands to gain more by giving the same amount of money as Barbara. On a systemic level, one could say there’s a preference to subsidize the spending choices of the wealthy, over those of the poor.
By the digits
22: OECD countries that provide tax deductions for individual donations
$485 billion: Amount of money that individuals, bequests, foundations, and corporations donated to US charities in 2021
236: Number of billionaires that have signed the Giving Pledge from across 28 countries
27%: Share of 2021 donations in the US that went to religious causes
11%: Share of 2021 donations in the US that went to societal benefit causes
$44 billion: Estimated US federal government revenue loss in 2020 due to charitable giving tax deductions
62%: Growth in American billionaire wealth during the pandemic, according to Oxfam
$2.4 billion: Estimated amount Jeff Bezos has given away in his lifetime, or about 2% of his wealth
2 billion: Number of people who could be lifted out of poverty if there was a 5% tax on the world’s multimillionaires, according to Oxfam
$53.3 billion: The Bill & Melinda Gates Foundation trust endowment as of 2021
Case study 🔍
Bill and Melinda Gates—the former Microsoft power couple (the two divorced in 2021)— have spent billions of their foundation’s dollars, and federal government coffers, to shape education policy in the US. Their efforts raise ethical and political concerns, especially as the Foundation is able to bypass democratic forums for decision-making, and is often shielded from meaningful scrutiny and accountability. It hasn’t helped that their initiatives have often failed.
From 2009 to 2015, Bill and Melinda Gates funded a $1 billion project to improve the quality of teaching in several poor school districts in the US. Intensive Partnerships for Effective Teaching, as it was called, also drew upon local taxes and federal money. American think tank RAND found that the project failed to improve teaching quality or student results, doing “more harm than good.”
The Foundation also bankrolled the now-ubiquitous Common Core, a set of education standards adopted by states across the US intended to improve students’ academic achievement. Over a decade after its implementation, there is little evidence that the system has improved student performance.
In 2020, Melinda Gates appeared to acknowledge public backlash towards their education reform efforts in the Foundation’s annual letter. Still, the institution remains involved in education policy-making. In 2020, former New York governor Andrew Cuomo tapped Gates to “reimagine” the K-12 school system amid the ongoing covid pandemic, joining a coalition of two other tech billionaires tasked with shaping other aspects of state policy.
Pop quiz
Who was the most charitable billionaire in 2022?
A. Warren Buffet
B. George Soros
C. Bill and Melinda Gates
D. MacKenzie Scott
Find the correct answer at the bottom!
Fun fact!
Last year, CEO of Patagonia Yvon Chouinard announced that 98% of his stake in his $3 billion outdoor apparel empire would go to a non-profit organization to fight climate change. Because Chouinard was gifting the money to a 501(c)(4) organization, he was also able to avoid an estimated $1.2 billion in taxes. Ultimately, he paid just $17 million in gift taxes on the remaining 2% of Patagonia shares that went into a family trust.
Watch this!
Rockefeller’s charm campaign
Smithsonian explains how John D. Rockefeller, the world’s first billionaire, used philanthropy to change his public image from that of a ruthless businessman to good Samaritan.
Poll
If you were heir to a vast fortune, what would you do with your money?
A. Have a library built in my name, wherein students will toil for ETERNITY
B. Make like Keanu Reeves: feel embarrassed about my wealth and give it away
C. I’m hoarding it like a dragon, and I better see my name on Forbes’ stingiest billionaires list
Tell us your answer! It’s for a good cause.
💬 Let’s talk!
In last week’s poll about Allen wrenches, a stunning 43% of you reported that you had 37 or more of the ubiquitous hex keys lying around your home. Perhaps one day, there will be a use for all of the Allen excess.
🤔 What did you think of today’s email?
💡 What should we obsess over next?
Today’s email was written by Julia Malleck (former zoo tycoon) and edited by Morgan Haefner (thought this was about philodendrons) and Susan Howson (gives free advice).
The correct answer is A., Warren Buffet. According to Forbes, in 2022 the CEO of Berkshire Hathaway had donated $46.1 billion of his $115.6 billion in wealth. Bill and Melinda Gates came in second on the list, George Soros third, and MacKenzie Scott, fifth.