A new report focuses on an under-the-radar trend—charitable giving increasingly dominated by the uber-wealthy—and reveals how this concentration of philanthropic power poses a threat to democracy.
Co-authored by Chuck Collins, Josh Hoxie, and Helen Flannery of the Institute for Policy Studies (ISP), the latest edition of Gilded Giving (pdf) shows how there has been an increase in charitable giving over the past 15 years. A closer look, however, shows that there's been a decline in those giving at the low- and mid-dollar amount while there's been an increase in giving by a high-dollar donors.
"The rate of decline in the number of low-dollar donors has an extremely strong correlation with indicators of economic inequality and insecurity in the United States," the report notes.
Moreover, "a few individual gifts given in the past two years have blown all previous concepts of mega-giving out of the water," the authors write.
For example, Bill and Melinda Gates gave a $4.8 billion gift in 2017 to the Gates Foundation, and Mark Zuckerberg and Priscilla Chan gave a whopping $1.8 billion to their own Chan Zuckerberg Foundation. Gifts like these, "while generous and visionary," stated lead author Collins, "mask a very disturbing trend.”
"Over the last three decades, private wealth in the United States has become concentrated in fewer and fewer hands," Collins, who is also director of IPS's Program on Inequality and co-editor of Inequality.org, added. "We're now seeing this same trend in the charitable sector as a growing amount of philanthropic power is being held in fewer hands."
Among the key findings, as noted in the report:
- In the past two decades, the number of households that give to charity has declined significantly. From 2000 to 2014, the proportion of households giving to charity dropped from 66 percent to 55 percent.
- The number of donors giving at typical donation levels has been steadily declining. Low-dollar and mid-level donors have declined by about two percent each year for more than fifteen years. These donors traditionally have made up the vast majority of donor files and solicitation lists for most national nonprofits since their inception.
- Charitable contributions from donors at the top of the income and wealth ladder have increased significantly over the past decade. In the early 2000s, households earning $200,000 or more made up only 30 percent of all charitable deductions. But by 2017, this group accounted for 52 percent. And the percent of charitable deductions from households making over one million dollars grew from 12 percent in 1995 to 30 percent in 2015.
To be sure, the findings have an impact on fundraising by charities and nonprofits. For example, the groups may face greater instability because they are relying on a smaller donor base. In addition, deep-pocketed donors often earmark the funds towards specific projects rather than general operating costs. But there are in fact major threats to democracy as a result of the top-heavy giving, as the gifts can be used "as an extension of power and privilege protection."
The authors put it thusly:
Perhaps the greatest risks of a top-heavy philanthropic sector are those for our civil society: that charity will cease to be used a vehicle to benefit society as a whole, and will be used instead as a means to protect and preserve individual private wealth and power. This includes an increasingly unaccountable and undemocratic philanthropic sector; the rise of tax avoidance philanthropy; the warehousing of wealth in the face of urgent needs; self-dealing philanthropy; and the increasing use of philanthropy as an extension of private power and privilege protection.
Takckling the problem means taking measures like "establishing a universal charitable deduction to encourage giving by low and middle-income givers" as well as "banning gifts from private foundations to [donor-advised funds] and vice-versa" and "setting a lifetime cap on tax-deductible charitable giving."
Broader reforms, however, are needed, the report stresses, as "policymakers will need to not only reform the rules of charitable giving, but also establish policies to reduce, over time, concentrations of wealth."