Billionaire Philanthropy is a Scam

[barbaraann]

A new study describes in grotesque detail the extent to which the ultrarich have perverted the charitable giving industry.
Jason Linkins November 18, 2023/3:00 a.m. ET
...
According to the report, those who are making the effort to give aren’t handing their ducats over to normal charities. Instead, they are increasingly putting their money into intermediaries, such as private foundations or Donor Advised Funds, or DAFs. As the IPS notes, donations to “working charities appear to be declining” as foundations and DAFs become the preferred warehouses for philanthropic funds. (As TNR reported recently, DAFs are a favorite vehicle for anonymous donors to fund hate groups—while also pocketing a nice tax break.) This also has spurred some self-serving innovations among the philanthropic class, “such as taking out loans from their foundations or paying themselves hefty trustee salaries.” More and more of the pledgers are conflating their for-profit investments with their philanthropy as well. And wherever large pools of money are allowed to accrue, outsize political influence follows.
...
As the IPS study notes, perhaps the worst aspect of all of this is that ordinary taxpayers essentially subsidize these endeavors: According to their report, “$73.34 billion in tax revenue was lost to the public in 2022 due to personal and corporate charitable deductions,” a number that goes up to $111 billion once you include what “little data we have about charitable bequests and the investments of charities themselves,” and balloons to several hundreds of billions of dollars each year “if we also include the capital gains revenue lost from the donation of appreciated assets.”

The IPS offers a number of ideas for reforming the world of billionaire philanthropy to better serve the public interest. There are changes to the current regime of private foundations and Donor Advised Funds that would ensure that money flows to worthy recipients with greater speed and transparency. Regulations could ensure that such organizations aren’t just another means by which billionaires shower favors on board members—and that would give foundation board members greater independence to act on their own ideas and prevent the organization from being used as one rich person’s influence-peddling machine. But for my money, the one way we could solve this problem is to institute one of the most popular policy positions in the history of the United States, and tax the rich to the hilt.

https://newrepublic.com/post/177019/billionaire-philanthropy-scam-bill-gates

IMHO, the wealthy should just pay their fair share of taxes and let democratic governments allocate the spending.

[The_Casual_Observer]

1. Irsay contributes to a charity called collectors items

For billionaires with huge egos - Sotheby's. They all do it.

[justaprogressive]

2. Flash: Billionaires are only interested in themselves

dozens surprised...

(It's a good article)

[brooklynite]

3. You want the Government to decide which charities should get funds?

[barbaraann]

4. No, which social needs should get funds.

[brooklynite]

6. So you're saying we wouldn't need charities at all?

Or alternatively, you want the Government to expand spending into hundreds of activities they don't fund now?

[barbaraann]

9. Charities are organizations set up to provide help and raise money for those in need.

If I had to give a simple answer it would be that we shouldn't need charities to assist with basic human needs of citizens, but we should have non-profits for such things as culture and the arts. I remember from a long time ago a food assistance organization in Canada said that their plan was to go out of business in five years because hunger and the need for food assistance should be eliminated. That stuck in my brain.

First of all, I believe that it is the job of government to prevent poverty. Norway has a poverty rate of .50% because of government policies and spending while it has a high tax burden. I think that is a good thing. The rate of poverty in our country is 12.4% and the tax burden on the wealthy is much lower. I think that is a bad thing.

The Nordic social and economic model is not perfect, but I believe it offers many good ideas:
https://en.wikipedia.org/wiki/Nordic_model#:~:text=The%20Nordic%20model%20of%20welfare,use%20of%20expansionary%20fiscal%20policy.

I have worked with many charity organizations/programs and one of them that I started has been going for more than 30 years and raised millions of dollars in donations and cash for tens of thousands of needy people. Nothing would make me happier than to hear that the program was shutting down due to a lack of desperate families.

The best anti-poverty program ever created was Social Security. No charity program ever came close to achieving what that program has achieved.

[Farmer-Rick]

13. Well said

Religious and private charities have been trying to help the poor for centuries. And they have yet to have half the success that Social Security and Medicare (before the premium increase) has had.

I'm with you. Government, especially democracies, should be actively improving the majority of their citizens lives, not just the filthy rich.

Charity should be a government responsibility.

[brooklynite]

15. Some of them are; some of them aren't

[barbaraann]

17. That's exactly what I got when I Googled for the definition of charity.

https://languages.oup.com/google-dictionary-en/

[brooklynite]

22. That is a colloquial phrase...

From a tax standpoint, any 501C3 entity (including Churches) are considered charities. And a number of them support international groups, which again is a major extension of government funding.

[barbaraann]

25. Ah, then we disagree on the definition of charity.

I know a lot of people might go with the colloquial meaning, but I go with the dictionary meaning because I have worked extensively in that area and the difference means a lot to me. I have always worked to meet immediate needs AND eliminate the need for that help.

[brooklynite]

29. Can I suggest that no Democracy, no matter how progressive, does not have private charities (your definition)?

[barbaraann]

33. In theory, yes; in practice, no.

No human endeavor is ever perfect.

Today I donated a rolling cooler to a gleaner group, for example.

[mahatmakanejeeves]

31. Your argument and $4 will buy you a cup of coffee at Starbucks, which

you can drink before your hearing at the United States Tax Court.

{Edited to get the name of the court right.}

[barbaraann]

36. Good point about deductibility.

Almost none of the money I donate to the Dems is tax-deductible but I consider it a good way to help the needy and potentially needy. (Oregon allows a tiny political contribution deduction.)

Sorry to repeat myself, but I really do have a lot of experience helping needy people and care deeply about eliminating suffering, not just alleviating it. By "a lot" I mean decades, starting in college; and now I am in my seventies. If relying on charity worked to eliminated hunger, Phil Knight could eliminate it here in Oregon with a tiny, tax-deductible piece of his vast wealth ($42 billion).

[EX500rider]

16. Norway is not really a good comparison to a country of 332 million people

Norway, pop 5 million

Also:
Norway's total export value of crude oil, natural gas, NGL and condensate in 2022 was about NOK 1 900 billion, or 73 % of the total value of Norway’s exports of goods.

https://www.norskpetroleum.no/en/production-and-exports/exports-of-oil-and-gas/#:~:text=The%20total%20export%20value%20of,of%20Norway's%20exports%20of%20goods.

[barbaraann]

18. Well, Canada's poverty rate is 7.4% and they have universal health care. A better comparison?

I just looked up Australia and am surprised that their poverty rate is 13.6!

[MyNameIsJonas]

30. No. Canada has fewer people than the state of California.

There just isn't a comparable country to the US that anyone would want to use as an example.

[Eugene]

11. How about better enforcement of tax codes to weed out abusive tax shelters.

Charities are exempted from taxes as they are supposed to serve the public good primarily.
That should be an enforceable standard.

[druidity33]

48. I'd rather they decide...

which ones are total scams. Lots of them out there. Same thing with some new religions. If it's a money funnel... probably should shut them down, no?

[JanMichael]

5. MacKenzie Scott is an exception.

She is funding hundreds of nonprofits and other organizations that work to alleviate poverty.

Best thing Bezos ever did was to divorce MacKenzie Scott who has unleashed who knows how much money into the normal person economy.

[barbaraann]

10. Yes, indeed.

[Celerity]

7. K & R

According to their report, “$73.34 billion in tax revenue was lost to the public in 2022 due to personal and corporate charitable deductions,” a number that goes up to $111 billion once you include what “little data we have about charitable bequests and the investments of charities themselves,” and balloons to several hundreds of billions of dollars each year “if we also include the capital gains revenue lost from the donation of appreciated assets.”

[2naSalit]

8. K&R

[JI7]

12. A lot of ot is scams . Even the lower level stuff

There are some things like Clinton foundation. Bill Gates and others where you can see the actual things the money was used for.

If we had effective governments that would take care of the actual needs. And "charity" can be more used for things like Disney trips, wedding/ prom dresses, and other things which are more about enjoyment than a life need.

[paleotn]

14. Time for Congress to decide what's a charity

and what's just a tax cheat for self aggrandizement and additional profit. DAFs are the later.

[onenote]

42. My wife and I both have created DAFs that specifically are directed to environmental causes.

In the past we gave year end contributions to those entities. We created the DAFs as part of our estate planning.

Didn't realize that made me a tax cheat.

[paleotn]

44. Depends on how it's used.

If it's meant to puff yourself up as some great humanitarian while not really doing a hell of a lot and / or .....

This also has spurred some self-serving innovations among the philanthropic class, “such as taking out loans from their foundations or paying themselves hefty trustee salaries.”

....then you might be a tax cheat. You tell me if any of the above apply.

I stand by my statement. Congress needs to enact better controls on what is and what is not a charity. You shouldn't get a tax break simply for financial manipulation.

[mahatmakanejeeves]

19. Be sure to call Goodwill the first thing Monday morning and tell them

that you want their support in your quest to rewrite the tax code so that charitable giving is disfavored.

… let democratic governments allocate the spending.

That will end up like the CFC (Combined Federal Campaign). Focus on the Family and groups opposed to reproductive rights will be on the receiving end of collected tax revenues.

https://www.focusonthefamily.com/giving/combined-federal-campaign/

https://www.feministsforlife.org/cfc-giving/

There are loads more of these.

I prefer that my tax dollars not be handed to groups that hate my guts, if that’s okay with you.

Please rethink your proposition.

And good evening.

{Edited to be a bit more polite.}

[barbaraann]

20. Our area Goodwill is notorious for its top exec pay levels.

Scroll down to Compensation and then Michael Miller.

https://projects.propublica.org/nonprofits/organizations/930386840

[mahatmakanejeeves]

21. Then choose to donate to someone else, rather than have

the government make that choice for you, which is what you’re proposing.

[barbaraann]

32. I'm not advocating for the government to make charity decisions.

I'm advocating for government to have policies and programs that prevent the need for "charity" (or at least as much as possible) and for everyone to pay their fair share of taxes in support of that goal.

I see my donations to the Democratic Party as going toward this goal. Here in Oregon our Dem legislature is really trying to prevent homelessness, for example, among many other excellent initiatives.
https://www.kezi.com/news/oregon-legislature-passes-homelessness-response-package/article_5b08be10-c8f2-11ed-b931-c79a3a142ac4.html

(Oh, god, what did we Oregonians do to deserve that hideous capitol building!!??!!)

[mahatmakanejeeves]

34. Choose one.

I'm not advocating for the government to make charity decisions.

… let democratic governments allocate the spending.

[barbaraann]

37. I meant the spending of tax dollars on government programs.

Sorry I wasn't clear.

[Polybius]

46. More government isn't always the solution

This is how Republicans are born, let's not contribute to it.

[barbaraann]

23. Sorry, I didn't completely answer the post.

I really don't want government handing out money to charities. I want government to prevent the need for charities such as food banks. I don't want ANY homeless or hungry people, and I am someone who has worked, volunteered, and donated to help people in need and I am still doing what I can. I once even won a Golden Rule award for my charity work.

Here's an article that highlights what happens when conservatives eliminate government programs to help the needy:
https://shelterforce.org/2004/05/01/reagans-legacy-homelessness-in-america/

[swong19104]

27. So, so, so exactly right

There really never need to be charities. Charities are an indication that the government is not working as it should. A functioning government should be able to provide all the basic necessities for those who are indigent, sick, or malnourished.

[barbaraann]

41. That is indeed the ideal, IMHO.

In the meantime, we must donate our time and money as wisely as possible to help those in need. I don't think anyone would disagree that some charities are better than others at helping and some are downright scams!

[OldBaldy1701E]

24. And, here is the main issue right here.

And wherever large pools of money are allowed to accrue, outsize political influence follows.

We change this, we change our government. We don't change this, nothing ever changes and in fact will get worse.

[swong19104]

26. Set a maximum of tax deductible philanthropic donations

Say, $1M/year in donations can be written off as a tax deduction. All other giving cannot be deducted against taxes owed. In other words, any amount over $1M can still be donated. But that's just a normal expense that cannot be offset against taxes owed.

And the $1M has to be given to third-party 501(c)3s (or similar non-profits) that were not created or controlled in any capacity by the donor. So if the donor sits on the board of a legitimate 501(c)3, say, the local chapter of the Leukemia & Lymphoma Society -- a totally aboveboard, legit non-profit -- that LLS chapter (or the national LLS organization itself) cannot receive money from this donor. The role of this donor on such a board is to call on his or her fellow wealthy folks to drop their $1M into this organization. These other fellow wealthy folks will ask this donor to drop his or her $1M into their pet organizations.

At the end of the day, it's best to just have them pay their fair share of taxes and let the decisions on how to spend and allocate the tax revenue be done by the government.

[barbaraann]

39. Good ideas and I totally agree with "fair share."

The alternative is "Taxes are for the little people."

[onenote]

43. There are limits on the deductibility of charitable donations.

Deductions for donations to public charities, including donor-advised funds, are generally limited to 50% of adjusted gross income (AGI). The limit increases to 60% of AGI for cash gifts, while the limit on donating appreciated non-cash assets held more than one year is 30% of AGI.

[LiberalFighter]

28. There should be strict requirements to qualify for charity.

Personally, ultra rich should be taxed so more can be done for those in need that is not decided by them.

[markodochartaigh]

35. Exactly. The 0.01% should not

be in charge of deciding what causes to fund, at what rate, and when with the money that they squeeze out of the rest of us. I think that it is better for public health officials to decide what research to fund, how much, and when rather than have disease research funded because some billionaire's wife happened to come down with a particular disease.

[mahatmakanejeeves]

38. Right, like Roosevelt and the National Foundation for Infantile Paralysis.

Exactly. The 0.01% should not be in charge of deciding what causes to fund, at what rate, and when with the money that they squeeze out of the rest of us. I think that it is better for public health officials to decide what research to fund, how much, and when rather than have disease research funded because some billionaire's wife happened to come down with a particular disease.

March of Dimes

March of Dimes is a United States nonprofit organization that works to improve the health of mothers and babies. The organization was founded by President Franklin D. Roosevelt in 1938, as the National Foundation for Infantile Paralysis, to combat polio. The name "March of Dimes" was coined by Eddie Cantor. After funding Jonas Salk's polio vaccine, the organization expanded its focus to the prevention of birth defects and infant mortality. In 2005, as preterm birth emerged as the leading cause of death for children worldwide, research and prevention of premature birth became the organization's primary focus.

{snip}

The group was founded by President Franklin D. Roosevelt on January 3, 1938, as a response to U.S. epidemics of polio, a condition that can leave people with permanent physical disabilities. Roosevelt was himself diagnosed with polio in 1921, although his symptoms are postulated to be more consistent with Guillain–Barré syndrome – an autoimmune neuropathy which Roosevelt's doctors failed to consider as a diagnostic possibility. The foundation was an alliance between scientists and volunteers, with volunteers raising money to support research and education efforts.

The National Foundation for Infantile Paralysis was a reconstitution of the Georgia Warm Springs Foundation, which Roosevelt and his friend Basil O'Connor founded with other friends in 1927. O'Connor became the foundation's president, a position he held for more than three decades. His first task was to create a network of local chapters that could raise money and deliver aid; more than 3,100 county chapters were established during his tenure.

{snip}

[barbaraann]

40. And Jimmy Carter's work has almost eliminated guinea worm disease.

There are rich/wealthy people who do good with their money and there are rich/wealthy people who do evil. IMHO, and perhaps I'm wrong, but I don't think there are enough good ones to outweigh the evil ones and justify the current philanthropic situation.

If the wealthy people (including Putin) funding Trump and the Republicans win in 2024, this discussion will be moot. Charity is not designed to fight fascism.

[aocommunalpunch]

45. A small edit:

IMHO, the wealthy should just pay their fair share of taxes and let democratic governments allocate the spending.

It’s easier to not split hairs, I think.

[barbaraann]

47. Works for me!