Why the Rich Aren’t Good at Giving

Three quarters of mega gifts go to charities that do comparatively little good and are laced with personal benefits, one expert finds.

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Philanthropy can be a difficult subject. The simple view is that any giving is a laudable sacrifice. But there is a more complex view that weighs a charity’s mission and the giver’s self-interest before assigning praise or gratitude.

It’s this more complex view that leads Eric Friedman, author of Reinventing Philanthropy: A Framework for More Effective Giving, to take issue with how the rich tend to donate. By his reckoning, three quarters of wealthy people give to causes that do comparatively little good and are laced with personal benefits.

The Chronicle of Philanthropy publishes an annual list of charitable gifts of $1 million or more. In 2012, there were 95 such gifts and 73 fell into a dubious category. The 2013 list is due in February and is expected to reflect the same trends. On the most recent list:

  • 21 gifts of $1 million or more (22%) went to the arts, museums, sports, or historic preservation, or to foundations with a significant emphasis on these areas.
  • 37 gifts of $1 million or more (39%) went to colleges and universities.
  • 15 gifts of $1 million or more (16%) went to health-related charities and hospitals in the developed world.

Where are the mega gifts for mosquito nets to prevent malaria in the less developed world, or to provide clean water, or to perform basic and yet life altering medical procedures?  Where are the mega gifts to prevent disease, promote sustainability and fund small businesses in poverty-stricken regions?

As Friedman notes: billionaire David Koch donated $65 million to the New York Metropolitan Museum of Art, financing a renovation of the outdoor plaza around the museum; he gave $35 million to the National Museum of Natural History for a dinosaur exhibit hall. “It goes way back,” Koch told The Washington Post. “I went to my first dinosaur hall with my father and twin brother…I was blown away by the dinosaurs.”

Well, great. That’s generous, for sure, and many people will enjoy the space that such gifts create. But they don’t solve or even address any big important problems. Friedman finds similar fault with gifts to universities, which fund wings with donor names on them or programs that have special meaning to the benefactor. With a $30 billion endowment, does Harvard really need more donations while so many young people are stuck with student loans they cannot repay?

Likewise, he notes, the health issues and hospitals that get mega donations are for developed-world treatments and cures, and causes close to the giver’s heart. Most people in the world have no insurance or access to such treatments and will never benefit.

This is an interesting take on philanthropy. Certainly, the world’s most pressing problems do not afflict people who have the most money to give. It’s possible they need to widen their scope to feel a palpable sense of need. But, as I have written in the past, without an emotional response or a name on a building, would people give as generously? Shouldn’t giving bring us joy, even if it comes at the cost of some efficiency? Should we really abandon the arts, and Harvard, until everyone has a mosquito net? In my simple view, all giving is good regardless of motive. But a little more attention to what matters most probably makes sense.