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wundayatta's avatar

What are the social implications of using either private philanthropy or public programs to help people?

Asked by wundayatta (58367 points ) November 2nd, 2010

I find it ironic that very wealthy people set up foundations and then start giving their money back to those they may have earned it off of in the first place. Why? Why does it happen this way? I don’t mean why in the sense of how it works. I know how it works. I’m wondering why we choose to do it this way?

A private philanthropists gets to decide on his or her own what they want to support with their philanthropy. They might support the fight against this or that cancer, or support research into better teacher training, or support for housing (Habitat for Humanity) or whatever piques their interest.

What is of crucial importance here is that the philanthropist gets to decide how much money to spend on charity and what charity to spend it on.

The other form of “philanthropy” is public. It might be useful to think of taxes as a form of tithing. Churches tithe and then use that money to run the church and to provide services, usually for free.

The government does the same thing except the “tithe” is not voluntary. It is then called taxes, and we all have to pay them. The government turns around and spends the money on services for us. Most of the money helps the middle class and upper classes, but some also goes to the poor in an effort to help them get out of poverty.

What I want to know is what are the implications of using private philanthropy to provide services to the poor vs using public “philanthropy.” What is the difference between having individuals make the choice of what to support vs having the collective group decide what to spend money on? Do you trust private philanthropists? How about public philanthropy?

Which way do you think is better? Why? Should we cut government services and let private philanthropists do the work? Or should we tax wealthy folks so we can all play a role in the decision about what to do? Or is the balance just fine right now, thank you very much?

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13 Answers

iamthemob's avatar

I can’t comment on what is objectively better – but I think that the benefit of private philanthropy is twofold: (1) you have a sense of personal achievement as you can see the results of what you’ve done, and it connects you to people, and (2) it promotes personal accountability in relation to the well-being of others.

The problem of public programs is that because you have already given money, you don’t feel as clearly accountable for how it’s used. This is compounded in the government scenario because, since it is compulsory, when the system fails you feel more inclined to take back or decline to help more because if they can’t do it with the help you’ve already given, why should you give more. Ironically, it can inspire more selfish behavior.

TexasDude's avatar

I find it ironic that very wealthy people set up foundations and then start giving their money back to those they may have earned it off of in the first place.

What does this mean?

Hawaii_Jake's avatar

Just off the top of my head: private philanthropic programs mostly come with strings attached and are targetted rather than broadly aimed at solving certain problems. Public programs on the other hand are aimed at fighting large societal problems.

wundayatta's avatar

@Fiddle_Playing_Creole_Bastard I think people earn money in order to use it. They need it or want it.

Well, it appears as if people who are very wealthy may not want it after-all. So they give it away. I think that there are other ways of benefiting folks in the community. They could pay their employees more. They could hire more people. I’m sure there are other ways.

But instead they earn all that money, throw it in a vault, and then once they’ve rolled around in it, they give it away. Huh? Why do you earn money to give it away? It just seems ironic to me.

TexasDude's avatar

@wundayatta, maybe they are just decent people and they want to give away part of their profits they choose not to use? Or maybe they feel morally obligated?

gorillapaws's avatar

One problem with philanthropy as a means of providing assistance to those that need it, is that they need to spend a fair amount of resources to “advertise” and gain mindshare with the public, this is money that theoretically could have been spent solving whatever issue they are trying to tackle.

Another is that there could be real needs in areas that aren’t as interesting as far as the public may be concerned, but may actually merit more attention than is given. In other words, issue x may cause more total suffering and negative impacts on society, but issue y may be more “sexy” in terms of the press it gets, and the donations that are given.

This may sound terrible, but for example, let’s say the money spent on children in the make-a-wish foundation might be better spent finding cures for the terminal illnesses the children are suffering from. I think most parents would rather their child not die of leukemia than to have a really special dream come true for them before they die. Obviously, this mindset doesn’t help children who are already terminally ill, but ultimately this approach would net more happiness in the long run once a cure for leukemia has been found. I’m not saying that make-a-wish foundation is a bad thing at all, just that it may be siphoning off philanthropic resources from the very thing they’re ultimately trying to solve.

Another in this category is the special olympics. It’s a wonderful charity, but if those dollars were invested in trying to find ways to prevent or cure certain developmental disabilities, perhaps some of those disorders could become preventable (I don’t mean to imply that people with special needs are bad or anything).

CyanoticWasp's avatar

My own opinion is that all forms of ‘philanthropy’ are morally wrong and ultimately un-helpful.

I’m not talking about the Red Cross / Crescent and certain other such programs that aid disaster relief and true emergencies; those are necessary and important to fund. Maybe the Salvation Army and some other such programs perform ‘rescues’ as well, in their way.

But I think the best use of capital is… to create more capital. That is not done, is never done, by theft and only “exploits” people as they agree to be, want to be, and need to be “exploited” in the form of employment and trade. People rail against “trickle-down” economics as fraudulent or unworkable when they don’t understand how it really does work, and expect it to work as philanthropy does, as gifts and grants. Trickle-down economics works because it creates employment opportunities, creates businesses and whole markets that didn’t even exist in earlier times… and feeds off the businesses and markets that don’t work and will fail anyway if given a chance to.

This is why, for example, we have such thriving and booming “entertainment”, “sports” and “software” industries in the USA, for example, and export the products of those markets worldwide… and we have no more “textiles” and “shoe” industries to speak of, where we once led the world in the production of those goods. Yes, it’s disruptive for people to find their jobs in “the textiles industry” going south (literally), and there isn’t always a place for them in every new market—and no guarantee that a new industry will take the place of the old one in their neighborhood—and that is painful.

I’d rather have a good or better job than a handout, from anyone, any day. Philanthropy ain’t making a lot of jobs these days, and government is wrecking them.

wundayatta's avatar

@CyanoticWasp That’s all well and good, but it doesn’t address issues where employment may not be the answer, such as providing an effective public education. Or look at the issues @gorillapaws raised.

And on a side not, it’s kind of interesting to me to find out where people are on the trickle down/trickle-up cycle. Does demand drive the economy, or does supply drive it?

CyanoticWasp's avatar

Actually, @wundayatta, I think it addresses nearly everything except what we treat as “free commons”, such as air and water and certain resources (such as wild fish and game, for example) that are not subject to private ownership. You don’t think of your corner grocery store as a philanthropic venture, but the food you eat daily is far more important on a daily basis than any amount of education, even though education is important.

I have less of a problem with taxes extracted to pay for “public education of everyone” except to the extent that governments typically herd the pupils into the chutes of their own “education lots”, when alternatives (whether “better” or not, though they usually are) can be available if we only allow them.

The real problems that @gorillapaws raised are still problems in government-funded and special philanthropy: governments need (and seem to only respond effectively to) lobbyists who promote the need for programs. But really, how much of a problem is it these days to find a supplier for widgets, if you really need a widget? Businesses arise to satisfy needs, and when the needs go away so does the business, generally, as opposed to government programs. We still have a wool lobby (and price supports) in Congress to promote woolen military uniforms, and how long has it been since we needed wool for military uniforms? Is it still so vital?

YARNLADY's avatar

If you are referring to the Gates/Buffet type wealth, they didn’t get their money off of anyone. It was created by stock investments.
Most private philanthropists give their money to organizations to benefit the greatest number of people, rather than support individual causes, and are therefore far more effective in providing for social progress and the betterment of mankind as a whole.

SharingUSA's avatar

My feeling is that both sources are needed…especially with this economy. I have written a response to the WSJ posting on this. In full it is on my blog and facebook.

In short:
“For some reason we are trained to associate charity and philanthropy with “goodness”, but “jobs” with business and the public sector. I’d like all to remember, funds to nonprofits support good works plus good jobs. The National Council of Nonprofits tells us, “The nonprofit workforce outnumbers the combined workforces of the utility, wholesale trade, and construction industries.”

As you can read…I get confused as to why giving to charity is not also considered a path to economic growth. And to keep the balance…those that do give to charity get to choose where the money goes. When we give to the government (taxes et al), we don’t.

wundayatta's avatar

@SharingUSA I think you are correct that giving to charity can create jobs.

If we had to rely 100% on voluntary charity, I think we’d have a big problem. The place people chose to give might not match up very well with the needs people have. In fact, it probably wouldn’t match up. Thus government would end up helping the folks that private charity leaves out.

gorillapaws's avatar

@wundayatta not to mention some charities have alternative agendas: i.e. religious indoctrination (hi starving boy, do you want the bread? Say you love Jesus and you can have it…).

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