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Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better

Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better

by Rob Reich
Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better

Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better

by Rob Reich


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The troubling ethics and politics of philanthropy

Is philanthropy, by its very nature, a threat to today’s democracy? Though we may laud wealthy individuals who give away their money for society’s benefit, Just Giving shows how such generosity not only isn’t the unassailable good we think it to be but might also undermine democratic values and set back aspirations of justice. Big philanthropy is often an exercise of power, the conversion of private assets into public influence. And it is a form of power that is largely unaccountable, often perpetual, and lavishly tax-advantaged. The affluent—and their foundations—reap vast benefits even as they influence policy without accountability. And small philanthropy, or ordinary charitable giving, can be problematic as well. Charity, it turns out, does surprisingly little to provide for those in need and sometimes worsens inequality.

These outcomes are shaped by the policies that define and structure philanthropy. When, how much, and to whom people give is influenced by laws governing everything from the creation of foundations and nonprofits to generous tax exemptions for donations of money and property. Rob Reich asks: What attitude and what policies should democracies have concerning individuals who give money away for public purposes? Philanthropy currently fails democracy in many ways, but Reich argues that it can be redeemed. Differentiating between individual philanthropy and private foundations, the aims of mass giving should be the decentralization of power in the production of public goods, such as the arts, education, and science. For foundations, the goal should be what Reich terms “discovery,” or long-time-horizon innovations that enhance democratic experimentalism. Philanthropy, when properly structured, can play a crucial role in supporting a strong liberal democracy.

Just Giving investigates the ethical and political dimensions of philanthropy and considers how giving might better support democratic values and promote justice.

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Product Details

ISBN-13: 9780691183497
Publisher: Princeton University Press
Publication date: 11/20/2018
Pages: 256
Product dimensions: 5.70(w) x 8.50(h) x 1.00(d)

About the Author

Rob Reich is professor of political science and faculty codirector for the Stanford Center on Philanthropy and Civil Society at Stanford University. His recent books include Education, Justice, and Democracy.

Read an Excerpt


Philanthropy as an Artifact of the State


The practice of philanthropy is as old as humanity. People have been giving away their money, property, and time to others for millennia.

The classic work of French sociologist Marcel Mauss illuminated the ubiquity of gift giving in archaic or primitive societies. Mauss identified what he called the gift exchange, a form of exchange contrasted with market exchange. Gift exchange was not merely ubiquitous; Mauss argued that gift giving revealed the deeper structure of social relations and that gifts were embedded within a morality of obligation and reciprocity. Moral norms about giving, receiving, and reciprocating informed gift economies, which in turn helped to establish social order and hierarchy. Gift giving was frequently, perhaps always, competitive and strategic. Gift exchange in this sense does not directly map onto the idea of charity or philanthropy, though of course philanthropy can also be understood as competitive and strategic and also as an exercise of power that reveals underlying social structures and hierarchies.

In a brief and tantalizing passage, Mauss suggested that during times of surplus, expectations about generosity shift and the wealthy come to be seen as obligated to the poor. Here begins, he says, a theory of alms, in which the "ancient morality of the gift" is changed into a "principle of justice." We shall pursue this idea — the distinction between charity and justice — in the next chapter.

In this chapter, our aim is to examine how social norms are always at work in the activity of philanthropy. Philanthropy has an ineliminable moral and political undercurrent. And there is a rich tradition of scholarship, partly stimulated by Mauss, on the gift and its relationship to charity and justice. As I mentioned at the outset, however, my aim in this book is not an exploration of the morality of giving as such — whether, when, where, and to whom individuals should give, and how gifts should be received and reciprocated, if at all. My aim is to develop a political theory of philanthropy, to explore what kind of institutional arrangements should define and structure philanthropy. My particular interest is the fit between philanthropy and contemporary theories of justice that involve commitments to liberal democracy, which is to say commitments to the values of liberty and equality. One might say that I aim to examine the norms, drawn from the independent standing of liberal democratic justice, that ought to inform the institutional setting in which philanthropy takes place.

Seen this way, philanthropy is more than the sum total of individual philanthropic acts. It is also an institutionalized practice of privately funding the production of goods that have prosocial or public benefits. In this respect, philanthropy is not an invention of the state but ought to be viewed as an artifact of the state. We can be certain that philanthropy would not have the form it takes in the absence of the various norms, laws, and policies that help to define and structure it. In the modern-day United States and most other developed countries, this much should seem obvious. The contemporary practice of philanthropy involves tax incentives to give money away. More generally, laws govern the creation of nonprofit organizations and foundations, and they spell out the rules under which these organizations may operate. The legal codification, for example, of the nonprofit corporation, as distinct from the for-profit corporation, is a relatively recent phenomenon. In the United States, laws for incorporation as a notfor-profit corporate entity began in the late nineteenth century.

Tax incentives for making philanthropic gifts are also relatively new — dating back in the United States to 1917 and the institution of a federal income tax. Yet states of all different kinds have long done more than simply respect the liberty of individuals to make philanthropic donations. Philanthropy should not be understood in the simplistic manner of an array of activities that take place within a framework of nonintervention by the state: philanthropy as nothing more than the aggregation of private individual decisions to give money away. Instead, philanthropic behavior, both individually and collectively, must be understood as embedded in political institutions, laws, and public policies, the sum total of which help to give shape, structure, and social meaning to philanthropy.

That this is so should seem obvious. Philanthropy is hard to imagine, for instance, without political arrangements concerning property and lawful transfer of property. Such arrangements are necessary, after all, to understand when something can be donated, treated as one person's legitimate possession in order to give to another person or entity. Even if the political attitude toward the philanthropic inclinations of individuals is simple governmental forbearance, such an attitude depends on a background legal infrastructure about property and, quite frequently, much more, such as taxation, a legal codification of recognized charitable purposes, and institutional arrangements concerning bequests, trusts, and endowments and their permissible size and duration.

Typical histories of philanthropy often begin by making reference to the Greek origin of the word "philanthropy" (love for humanity) and the religious, specifically Judeo-Christian, roots of charity, referring to a spiritual calling to assist the poor and sick. Think here of the biblical commitment to tithing or of the passage "it is more blessed to give than to receive" (Acts 20:35). And standard histories virtually always make mention of the passage in medieval England of the Elizabethan Statute of Charitable Uses in 1601. This law was among the first to define what would be recognized as official, that is, politically sanctioned and supported, charitable purposes, with the aim of assigning the state some authority over the creation and expenditure of the many private charitable trusts that had been created, lodged most frequently within a church, and directed at many different purposes. Here we see quite plainly the interaction between the state and the practice of philanthropy.

In this chapter, I provide a short tour of different political arrangements that have organized the phenomenon of philanthropy. Philanthropy may be a universal and time-immemorial activity, but because its practice is embedded within different social norms and structured by different institutional arrangements, it takes on different forms in different places at different times. This is what I mean by the idea that philanthropy is not an invention but an artifact of the state.

My purpose is threefold. First, I demonstrate the deep and underappreciated history of the different attitudes or approaches, as encapsulated in laws and social norms, toward philanthropy. Philanthropy has long been embedded within political systems, and so its practice must be understood in relation to the state. I give examples of how states have organized and codified philanthropy through law, calling attention to a variety of institutional design mechanisms for its practice. Second, I refute an idea that is too frequently assumed today, namely that philanthropy is just the expression of the liberty of individuals, a freely and voluntarily undertaken activity in which the state plays no role at all. This is false; philanthropy depends on laws about, among other things, property, transfer, trusts, donor intent, and taxation and, quite frequently, on codifications of state-sanctioned charitable purposes. Third, I use these historical episodes as a springboard for what follows in the next chapter: an examination of the laws and policies that structure giving in the contemporary era, focusing primarily on the United States. This will provide the backdrop for my development, in chapter 3, of a political theory of philanthropy for modern liberal democratic states.

What follows therefore is not a concise history of philanthropy. It is a selective tour of three different episodes in the history of philanthropy that illustrate the relationship between philanthropy and the state or the public rather than private morality of philanthropy. These are the liturgical system and antidosis procedure in ancient democratic Athens, the creation of the waqf, a forerunner to the private foundation, in Islamic societies, and the surprising attitudes of a French enlightenment thinker, Anne-Robert Turgot, and of British philosopher John Stuart Mill, about laws concerning foundations. I have chosen examples that I find interesting rather than merely familiar — there are ample accounts of the religious roots of charity and the etymological roots of philanthropy. And I have chosen examples that demonstrate both institutional support for as well as resistance to philanthropy.

The Liturgical System and the Amazing Antidosis Procedure in Democratic Athens

One of the most remarkable episodes in the history of the relationship between philanthropy and democracy dates back to ancient democratic Athens. Ancient Greek city-states, as in any society, contained different economic classes or social strata. Athens developed a system whereby wealthy citizens were expected to make voluntary contributions to various state projects that were of benefit to the entire citizenry, or demos. It developed a system, in other words, in which private donations for the production of public benefits were routine.

This is known as the liturgical system. A liturgy is the private funding by wealthy citizens of state services and activities, and it was one of the principal mechanisms through which the state funded itself and the public services it provided. According to some estimates, the sum total of liturgies accounted for more than half of all state revenue in fourth-century Athens. The central role of liturgies demonstrates how the wealthy were expected to return part of their wealth in service to the community.

The Greek liturgy was, as one scholar describes it, "compulsory philanthropy." It generally fell into one of two categories: festival liturgies, the underwriting of civic plays or choral dramas, known as choregia, or athletic competitions, known as gymnasiarchia; and military liturgies, the funding of defense and war needs. Military liturgies primarily involved the funding of naval warships, called triremes, and the donor who outfitted and maintained the ship and its crew usually became its captain, or trierarch. This latter arrangement was known as the trierarchy.

The liturgical system in Athens cannot be understood apart from deeply seated social norms in ancient Greece that prized competition, honor, and virtue. Wealthy citizens sometimes competed for the privilege of liturgical service, expecting in return for their donations both honor and gratitude for their status as a civic benefactor. Motive in providing the liturgy was important; to receive honor and gratitude, gifts had to be provided in the spirit of benefitting the body politic, or demos, rather than for personal gain or status maintenance. In the absence of the appropriate civic spirit, benefactors could fail to receive favor from their fellow citizens and, more threateningly, by jurors in any court appearances. They could even be punished by courts. In this respect, liturgies can be seen as an instance of what Mauss observed about gift giving: the gift represents and reflects norms of obligation and reciprocity. Ober comments, for instance, "Gifts to the state in the form of liturgies and the sense of gratitude jurors would feel for the good done the state can therefore be seen as an elaboration at a national level of a giver/recipient relationship between individuals, a relationship that continued to function alongside the system of state liturgies."

Yet, as Ober's final clause suggests, the liturgical system was also given particular expression by democratic Athens in its laws and institutions. The liturgy took on special form and meaning within the democratic polis. Gabrielsen observes in his masterly Financing the Athenian Fleet, for instance, that "the Athenian liturgical system in the classical period was firmly attached to democracy." Significant democratic reforms came to Athens around 480 BC — the creation of election to public offices by lottery, for example. During this period, what was once the voluntary prerogative of the wealthy under oligarchy to undertake liturgies became regulated by law. "In addition to its principal intention, which was to reduce (but not completely eliminate) aristocratic influence, the democratic constitution embodied the requirement that affluent households expend part of their wealth on the city through the fiscal conduits of the liturgy system."

New democratic laws provided that liturgical service for the funding of festivals could be assigned to wealthy citizens rather than performed voluntarily. Reliance on civic norms that wealthy individuals would make donations, in the proper spirit, in return for honor and gratitude was eclipsed, and liturgies more frequently were allocated to particular citizens by democratic rulers. Honor and gratitude would still attach to liturgical service, but the element of voluntary provision receded, even if never eliminated completely. Liturgies in democratic Athens became a system of public finance via private contribution, something akin to a system of taxation. According to Ober, by the fourth century voluntary liturgical service continued for some civic benefactions but the state also began to assign liturgical service to wealthy individuals on some kind of rotating schedule.

Nowhere was this more visible than in the funding mechanism for military liturgies, in particular the construction and outfitting of Athenian warships, known as the trierarchy, and in the antidosis procedure, the latter of which comes as an astonishment to any contemporary observer of philanthropy.

Festival liturgies happened on a regular schedule; athletic competitions and dramatic performances were held during different seasons and at predetermined intervals. But the financial demands of military liturgies such as the trierarchy were less predictable because the need for certain numbers of warships was not constant, growing or diminishing depending on whether Athens found itself at war. With limited alternative mechanisms for taxation and public finance, democratic Athens developed a complicated system of philanthropic funding for military needs, involving elements of voluntarism and compulsion.

Funding a warship (trireme) and becoming its captain (trierarch) could occur in a number of different ways. First, a wealthy citizen could volunteer for the public service, privately funding the warship itself and volunteering as the captain of the ship. Undertaking this burden was a source of honor and civic status. But wealthy individuals could also be appointed to the trierarchy. The Athenian state kept registers of wealthy people, and if one had not performed a liturgy recently, which typically qualified a person for temporary exemption, the state could select that person to donate for the provision of a warship and perform the needed service. If appointed, the wealthy individual could accept and would then donate for the liturgy and serve as captain. However, the appointed wealthy person was not obligated to accept by law. He had other options and could not immediately be coerced by the state to serve.

Instead of accepting the appointment, one option was the antidosis, in which the appointed person could attempt to resist liturgical service by pointing out the fact that other citizens with even greater resources were not volunteering and had not performed any significant liturgy recently. One could seek, in other words, to transfer responsibility for the liturgy to a fellow citizen of greater means. But simply pointing out that other citizens were wealthier and therefore presumably more able to afford the donation was not enough. The appointed person had to name a particular individual as a potential replacement. At this point in the process, the wealthier person so named could accept the liturgy, gaining public recognition both for his superior wealth and as a civic benefactor, and then the initial person would be exempt and the liturgical service would proceed with the newly named person as the funder. Or the wealthier person could refuse.

And here is where things become especially interesting. If the challenger refused, the initially appointed person could offer to exchange estates with the wealthier person and, with that person's estate now in his possession, carry out the liturgy. If the challenger refused to swap estates, the matter would then be referred to a court hearing with peers serving as jurors. The court would then decide which of the two disputants would carry forth the liturgy.


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Table of Contents

Acknowledgments, xi,
Introduction, 1,
Philanthropy Today, 7,
Philosophers on Philanthropy, 11,
On the Terms "Philanthropy" and "Charity", 19,
Plan of the Book, 20,
1 Philanthropy as an Artifact of the State: Institutional Forms of Philanthropy, 24,
2 Philanthropy and Its Uneasy Relation to Equality, 65,
3 A Political Theory of Philanthropy, 106,
4 Repugnant to the Whole Idea of a Democratic Society?: On the Role of Foundations, 135,
5 Philanthropy in Time: Future Generations and Intergenerational Justice, 169,
Notes, 201,
Bibliography, 223,
Index, 233,

What People are Saying About This

From the Publisher

"Brilliantly argued. . . . Essential reading for anyone worried about money in politics."—Larissa MacFarquhar

"Reich judiciously weighs the philosophical pros and cons of tax-subsidised philanthropy."—Edward Luce, Financial Times

"[Reich] treats readers to rich insights from enlightenment philosophers onwards who have criticised the assumption that mega-giving from the mega-rich is something to celebrate."—Linsey McGoey, Times Higher Education

"An instant classic."—David Callahan, Inside Philanthropy

"Anyone engaged in serious philanthropy needs to wrestle with Reich’s analysis."—Larry Kramer, president of the William and Flora Hewlett Foundation

"An essential treatise on the role of philanthropy in our democracy. . . . Reich challenges us to wield the power of giving for justice."—Darren Walker, president of the Ford Foundation

"A welcome reflection on the public morality of the not-for-profit sector."—Glyn Davis, Inside Story

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