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Pablo Eisenberg

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The Rich Are Getting Richer, but They Still Don't Do Enough for the Poor

Posted: 11/17/2013 5:57 pm

Where have all the billionaires gone?

Their philanthropy is now needed more than ever, yet their giving, especially to needy constituencies, remains paltry, often nowhere to be found.

When the New York City Opera was on the verge of financial collapse, it might have seemed like a great opportunity for Mayor Michael Bloomberg to step in with a significant donation from his personal fortune. Instead, he said he was frustrated that the organization's business model wasn't working and wouldn't give a cent.

Neither did any of New York City's other billionaires, and now a cultural icon has died after providing the metropolitan area with 70 years of great performances.

While the number of million-dollar gifts is on the rise, according to Chronicle data, and showing the first real signs of topping pre-recession levels, America's very rich have yet to do much to meet the needs of so many struggling organizations.

The cutbacks in government aid caused by the automatic spending cuts now in place have taken their toll, and donations by middle-class and poor people aren't growing fast enough for nonprofits to meet growing demands.

While no one expects private philanthropy to substitute its support for what are essentially federal public responsibilities, it is reasonable to ask why multimillionaires and billionaires have not used more of their own resources to supplement public money for nonprofits that assist poor and low-income people or provide cultural sustenance to their communities.

The fortunes of America's wealthiest citizens have grown exponentially over the past 20 years, making them even more capable of providing larger sums to a wider range of nonprofits. Yet they continue to spend most of their philanthropic support on universities and buildings with their names on them and very little on social services, the homeless, the hungry, and social-change groups.

It's not just in New York but also in other communities where the wealthy are failing to do their share.

In the Washington metropolitan area, for example, where wealth is growing so fast that The Wall Street Journal this spring declared it was enjoying a Gilded Age filled with mansions and lavish spending sprees, some of the best social-service organizations say they are facing serious financial problems and have been forced to cut back services. Local organizations say that wealthy donors have done very little to alleviate their problems.

In Cleveland, anti-poverty groups and social-service organizations are hurting, but Peter Lewis, the billionaire insurance entrepreneur who built his company there, prefers to give his money to university institutions and arts programs. In Los Angeles, the billionaire Frank McCourt just gave his alma mater, Georgetown University, $100-million for a public-policy school while ignoring local grass-roots organizations.

It could be that these billionaires don't have the information they need to figure out which nonprofits are worthy of support. But it could also be that supporting a nonprofit social-service group doesn't attract headlines, and rarely can those organizations put a big patron's name on the door.

It would not be wise to urge billionaires to provide philanthropic money to replace programs that are normally supported by government.

If they did that, it would take the pressure off legislators to allocate reasonable amounts of money to services that are the responsibility of government.

What's more, efforts to supplement federal, state, and municipal funds for local public schools with private money often leads to inequities in school financing; wealthy school districts can raise lots of money for their students, while poorer districts cannot. Just as worrisome, overly heavy reliance on philanthropy tends to undermine the political process and public accountability, as well as lessen program transparency.

Still, even when government aid for social services, the arts, science, research, and economic development were at reasonable levels, nonprofits always needed extra help to carry out this kind of work.

The decline in social and economic safety-net programs that are publicly financed doesn't seem to have increased billionaires' commitment to helping those who are most in need in our society. Many of the rich probably received assistance from our federal system of government on their way up the economic ladder, making this even more puzzling.

Looking at the percentage of either income or wealth that multimillionaires give to philanthropy, one can't help but notice that it is just a small drip from their big buckets. They are capable of much, much more.

So why are they sitting on their growing fortunes? It seems that the more they make, the more they want to acquire. More attuned to greed than the needs in their communities and country, they are failing the generosity test.

Today's billionaires need to rethink their priorities and giving patterns to keep their end of the social contract working and to ensure nonprofits can meet their commitment to society.

Cross-posted from the Chronicle of Philanthropy.

Pablo Eisenberg, a regular Chronicle of Philanthropy contributor, is a senior fellow at the Center for Public and Nonprofit Leadership at the Georgetown Public Policy Institute. His e-mail address is pseisenberg@verizon.net.

 
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