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Partners and Senior Advisors use the firm's blog to write on current ethics and leadership topics.

Philanthropy = Charity ?

Philanthropy may become an unexpected casualty of the increasing inequality in wealth and income.  This sounds counterintuitive, but there seems to be a growing tendency to test the merits of philanthropy by whether it is a truly charitable act.  Charity generally refers to the relief of suffering.  Philanthropy is focused on achieving a public good; even addressing the root causes suffering.  Charity and philanthropy can overlap, but not all charity is philanthropy and vice versa.

Robert Reich, a prominent leader in the Clinton White House and now a professor at the University of California at Berkeley, recently wrote a blog posting:  “What ‘charity’ should really mean.” He concludes that America’s wealthy are making investments in life-style when they contribute to “elite schools and fancy museums,” and he decries the tax deductibility of these contributions.  Ordinary people also join this chorus.  In October an heir to a real estate fortune announced a $100 million gift to a private boarding school, prompting reactions that the gift was not truly “philanthropic,” when most commenters meant that it was not truly “charitable.”

Conflating philanthropy and charitable giving into the single category “charity” diminishes the value of both generous acts.  Certainly, art museums and symphonies, to say nothing of elite universities, play an important role in addressing the causes of social ills and uplift us all, including the poor.

On the other hand, it may be understandable why people don’t see the public merits of contributions to universities and symphonies.  Our elite institutions often do a miserable job of explaining to the public how they impact the public good.  Many of the investments in universities over the past 3-4 decades appear to have made them more luxurious, not necessarily more effective in providing a public good.  And their communications are nearly always tailored to appeal to the wealthy.  When Stanford University reported at the 10th anniversary of the Hewlett Foundation’s $400 million matching gift, it was largely self-congratulatory, applauding the 700 additional gifts it generated – another $400 million.  The general public would probably have trouble finding $800 million of public good in this news release.

The wealthy will continue to invest in America’s elite institutions, and no doubt with increasingly large gifts.  But pressures to relieve the suffering of the poor plus the chance that philanthropic contributions might receive less favorable tax treatment if they do not overlap with charity make me concerned that philanthropy from the rest of us may become an unexpected casualty of the growing wealth and income inequality.  If so, the public good will suffer.


Eric C. Johnson is the former vice president for development at Carnegie Mellon University, former vice president for resource development for Rice University, and former chief advancement officer for the National Academies.  He is now a consultant to nonprofit institutions.


Posted in Philanthropy
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