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‘Big Philanthropy Is an Exercise of Power’

Stanford ethicist Rob Reich on why philanthropy perpetuates inequality, accountability as a negative, and the problem with praising big donors.

 

This is "Think Tank," an occasional series of conversations with Bay Area power players, conducted by San Francisco editors. Interviews have been condensed and edited for clarity.  


Name:
Rob Reich
Occupation: Professor of political science, Stanford
Age: 49
Residence: Redwood City

San Francisco: In your new book, Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better, you put philanthropy’s role in a liberal democratic society under the microscope. Why do we need to take a hard look at this right now?
Rob Reich: We live in a second great age of American philanthropy. Especially in the Bay Area, we have seen a boom of millionaires and billionaires and a boom in the number of philanthropists as well. The social norm about philanthropists seems to be mainly that we owe them our gratitude because they are deciding voluntarily to give their money away rather than keep it for themselves. But I want to set aside that social norm, because big philanthropy is an exercise of power. It’s an attempt to convert one’s private wealth into some form of public influence. And whenever there’s power exercised in a democratic society, it deserves scrutiny.

So when Marc Benioff announces that he wants to raise $200 million to end homelessness in San Francisco, how should we think about that?
Will public agencies be involved in the solution to the problem or not? If he has a solution to homelessness, will he pledge to fund that solution forever or just as long as he feels like doing it? Will he be engaging the work of local nonprofits and the voices of the beneficiaries in developing the plan? That’s what I mean when I say we should scrutinize what it is that philanthropists want to do, because there are ways of undertaking philanthropy that are paternalistic, that are insulting to the people that you mean to help, and that bypass existing public infrastructures or responsibilities.

So philanthropy and good intentions can weaken public infrastructure?
Yes. An example is the completely understandable desire of wealthy parents to give money to support their own [children’s] public schools. The effect of that is to worsen funding inequalities between wealthy districts and poor districts. And it misses the source of the problem, which is Sacramento and the state budget. It papers over the root source of the problem, which is the finance system for schools in general, and it does nothing to help people outside [their districts].

How do we change this? Should we give different tax breaks for different types of donations?
That’s a plausible path, but that’s not my preferred solution. There are many ways in which tax policies favor the giving preferences of the wealthy—the “upside down” tax subsidy through which wealthy people [who are taxed at a higher rate] get a systematically greater benefit than poor people—and that is the problem. If you change the tax incentive to one that benefits all donors equally, and then people decide to give to a soup kitchen or Stanford or the museum, that’s fine, because it generates this pluralistic and diverse civil society, which is a good thing for democracy.

You argue that in some ways, foundations’ lack of accountability can be a good thing. Why is that?
Philanthropy, and large foundations in particular, are really well situated for discovery or innovation in social policy that other actors in society, such as businesses and government, are not well positioned to undertake, in part because of the accountability mechanisms that bind them. The very unaccountability of foundations can be turned into a sort of virtue if they act in a way that brings about this discovery mode. If all you do in a foundation is give money to the local soup kitchen, you don’t need a foundation to do that. But if you want to run a professional foundation with a lot of money, take the long view and try a whole bunch of experimental and risky things to bring about long-time-horizon social change.

What are examples of that within Bay Area philanthropy?
Take the Chan Zuckerberg Initiative, whose aim is to eliminate all disease within 100 years. There’s an enormous undertaking that would be of huge benefit to humanity if it were to come to pass. I’m sure that a lot of the research they fund will fail along the way, so that’s a good example of something that philanthropy might be especially well suited to attempt.

How often do you get confused with Robert Reich, the former secretary of labor who teaches at UC Berkeley?
I do occasionally get confused with Berkeley’s Robert Reich. He and I once did an event together, in 2016, called Reich and Reich, where I shared some stories about that. But I go by Rob; he goes by Bob.

 

Originally published in the November issue of San Francisco 

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