Would We Be Better Off Without Philanthropists?

Organized philanthropy, like most things, looks different on the inside than it does from the outside. “Philanthropy” comes from the Greek for “love of humanity,” and public perceptions of it have usually centered on donors and how humanity-loving they really are. The good guys are generous rich people who give to causes we all approve of, like combatting climate change; the bad guys give in order to launder their reputations (like the opioid-promoting Sackler family) or to advance unsavory goals (like the anti-environmentalist Kochs). Either way, the salient questions about philanthropy, for most people, have to do with the size and the quality of a donor’s heart and soul.

In real life, the interaction between big-money philanthropy and philanthropy-reliant institutions like universities, charities, and museums is more of a business negotiation than a morality play. Philanthropists rarely make the large, unrestricted gifts that the receiving institutions really want, and so the two parties bargain: over the purpose and the control of a gift, over the form of credit, over how much the institution has to raise from other sources as a condition of the gift’s being made. In the world of philanthropy, all this is just another day at the office. Yale recently formed a committee to study its relations with donors. That came after the director of its celebrated “grand strategy” program resigned in protest when two major donors tried to exercise what appeared to be a contractual right to create an advisory board for the program. It would be a mistake to view this case as evidence that such requests are rare, or that universities rarely agree to them.

If you give modestly to your alma mater, you might get to check a box that indicates generally how you’d like your gift to be used—or you might not. If you give five million dollars, you can be much more specific, possibly creating an entirely new center or an endowed chair devoted to a subject of particular interest to you. If you’re thinking of giving fifty million dollars, you can have as much of the time of the president of your alma mater as you’d like, and the two of you might talk about redirecting the future of the whole institution.

In the contemporary world, philanthropy is distinctively American. We give about four hundred and seventy billion dollars a year—more if you count donations of time, physical labor, and material. America’s total is ahead of any other country’s, even as a percentage of G.D.P., because, in part, we’re more market-friendly than most affluent countries, with more private wealth and less government provision. The past four decades have generated an especially large number of fortunes, and bigger, bolder philanthropy as a consequence. Philanthropy calls to mind Freud’s maxim “Where there was id, there ego shall be”: how you made your money shapes how you give it away. The robber-baron-era founders of vast industrial corporations like General Motors, U.S. Steel, and Standard Oil often created vast new institutions—hospitals, universities, museums. Today’s technology and finance billionaires, in keeping with their business careers, use terms like “strategic philanthropy” and “venture philanthropy” to describe attempts to disrupt traditional arrangements.

During any gilded age, there’s a dance between politics and capital. Rich people depend on favorable political conditions to build and preserve their wealth. Mega-philanthropists use that wealth to influence government far more than they’d be able to merely by voting on Election Day. They can set up think tanks that promote policies they approve of, and they can enlist public resources for their endeavors. The charter-school movement is an obvious example of philanthropy creating a large-scale alternative to a traditional government function which remains part of government, with taxpayer support. The tech mogul Eric Schmidt, through his foundation Schmidt Futures, paid salaries for members of the White House Office of Science and Technology Policy, which is staffed with a number of past and present Schmidt employees.

Aggressive and self-confident philanthropic activity has, inevitably, generated a backlash.