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Has Philanthropy Abandoned the Needy?

By Tom Watson on May 9, 2007No Comment

Has Philanthropy Abandoned the Needy?
By Susan Raymond, Ph.D.  |  5/9/07

A recent study, commissioned by and conducted by the Center on Philanthropy at Indiana University, claims that less than a third of tax-deductible donations are targeted at those in need.  The resulting “charity gap” reflects a propensity for Americans to disconnect their giving from true charity.  The conclusion is that, while all giving is to be admired, American philanthropy is not positioned to make a real difference on the societal commons.

It is good to see that resources are at last being allocated to try to understand empirically what, in fact, is taking place on the philanthropic and nonprofit landscape in the United States.  We have long argued that this sector is so data-arid that little of analytic value can take root and grow.

However, one must look with some alarm at the premise that underpins the analysis and therefore take issue with the conclusions.

The premise appears to be that the philanthropic expression of concern for the “needy” is measured by dollars allocated to immediate services.  The charitable dollar that is allocated to education but not to scholarships is not, therefore, a dollar to the needy.  A dollar allocated to an art museum is not charity because it is not allocated to art lessons for the poor.  A dollar allocated to global cultural understanding is not adequate because it is not allocated to existing relief needs in Darfur.

To be fair, the report does not claim that museums and international understanding do not have value, only that philanthropic support to such efforts, because they are broad based and not targeted, is not part of an effective method for addressing the critical issues of those most in need.

This is a dangerously slippery slope.  There are two errors here.

First, it assumes that one can conclude anything about those most in need from the way in which philanthropic dollars are counted, or even that philanthropic dollars that are countable reflect all philanthropy.  A donation to a category called “hospital” may, indeed, be for the needy if it underwrites uncompensated care.  Because a donor has not explicitly restricted the gift to the Fund for Uncompensated Care does not mean that the dollar does not flow to uncompensated care.  It may not, or it may.  In most instances, it is not possible to know with any specificity.  Because we cannot clearly trace the dollar to its final use in a multi-use organization does not mean that it does not reach programs for the needy.  If, alternatively, we are to urge donors to restrict every gift to a multi-use organization to ensure that it reaches a finite end, we are undercutting nonprofit finance itself and threatening the existence of multi-use organizations whose very existence is essential for meeting the multiple needs of the “needy.”

This is not to say that donors should not be more discriminating in how they allocate their philanthropy.  Indeed, they should.  Nor is it to say that donors, perhaps especially major donors, should not be more attuned to ensuring that their philanthropic strategies keep the needy firmly on their financial radar screen.  Indeed, they should.

It is to say, however, that ever more granular restrictions on support to multi-use, multi-purpose organizations will have a potentially dangerous consequence for institutional viability.  And eroding the financial base of multi-purpose nonprofit organizations is hardly in the interests of the needy.

The second error, however, is more disturbing.  The analysis ignores the importance of time.  Philanthropic investment in resolving root causes of problems will often not show up on measures of services to the needy.  But, if we truly do not understand a problem, if we truly do not know what is wrong, let alone how to fix it, how is investing in the knowledge not helping the needy? 

Let us take an example, and the point will be obvious.  If a philanthropist supports a biochemistry laboratory in a biomedical research institute and the science there develops a means for blocking the toxic effects of cocaine in the brain of a developing fetus, how is this not helping the needy?  Let us make the case even more removed from the needy.  Let us say that the donor gave to the laboratory and the laboratory did not set out to discover that blocking mechanism.  Let us say that the discovery was a byproduct of other research.  Therefore, neither the donor nor the institute consciously sought to prevent disability in the infants of drug-dependent mothers. (This is, after all, what happens in much of science.)  Does that donation not help the needy, even if it took a decade to result in an (unintentional) innovation that provided a future to thousands of poor babies?  If I am counting philanthropy for the needy, how can I not count the result of that philanthropy?

Few persistent problems are simple.  Most persistent problems are poorly understood.  Almost none can be trapped in the finite time limits (year-by-year) used to measure philanthropic trends.  If we are to use a metric of philanthropy for the “needy” that focuses on the immediate transfer of goods or services, what shall we do with time?  What shall we do with dollars invested in complexity, uncertainty, and necessary expansion of our own understanding of such problems?  What shall we do with the philanthropic attention to fundamental flaws (religious and cultural ignorance) that gives rise to immediate problems of the needy (flawed services to immigrants)?

And if we are to discourage people from funding complex, long-term problems with uncertain outcomes, then how will we ever innovate?  How will we ever come to fundamental understandings and fundamental solutions?

And how will the needy ever become anything but needy?

The Wall Street Journal (“The Charity Gap,” April 4, 2007; paid registration required).

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