In January, wealthy California venture capitalist Tom Perkins caused a stir when he likened criticism of U.S. economic inequality to Nazi persecution of Jews leading up to Kristallnacht in a January letter to the Wall Street Journal. Perkins has since gone on a bit of a media blitz in defense of America’s wealthiest citizens. The crux of Perkins’ argument: The rich create jobs via “trickle-down” economics, and besides, the rich help the poor all the time through philanthropy. Perkins himself has given away millions of dollars, he says in a Bloomberg interview, to medical institutions, universities, and the San Francisco Ballet. Perkins also points out that he has been knighted in Norway for his remarkable humanitarian feats.
Setting aside, for the purposes of this post, the economic merits of “trickle-down” theory in an era of record U.S. income inequality and offshore bank accounts, I was curious about Perkins’ contentions regarding the role his fellow one-percenters play in global do-gooderism. As wealth becomes concentrated in the hands of fewer people, and the United States embraces deficit reduction over policies explicitly designed for poverty alleviation, exactly how much are the nation’s billionaires and multi-millionaires filling in global service gaps through charitable expenditures?
The data suggest: Not nearly enough.
This week, the Chronicle of Philanthropy released its annual “Philanthropy 50,” a list of the more generous donors in the United States. The Chronicle reports that with more than $7.7 billion in giving in 2013, a four percent increase from 2012, our nation’s philanthropists are saving the U.S. government money, improving the environment, and promoting sustainable economic development.
Indeed, $7.7 billion is a lot of money going toward charitable efforts. From the point of view of grantees, more philanthropic funding is a good thing, because it means there’s a larger pool of resources from which to draw support.
But there’s a problem with leaving charitable work to billionaires. As they get richer, the wealthiest Americans tend to give a diminishing percentage of their assets to philanthropy. And as income inequality rises (30 Americans control as much wealth as the bottom half of the U.S. population), there are fewer Americans able to sustain the rest of the country’s philanthropic giving, which has historically constituted the majority of U.S. charitable expenditures. (Annual charitable giving by all Americans stands at about $230 billion.)
Moreover, the wealthiest individual philanthropists give more to religious institutions and cultural programming than they do to poverty alleviation. America’s increasingly cash-strapped ranks of non-wealthy citizens, meanwhile, have a greater tendency to give to causes that explicitly support poverty reduction. And finally, the richest Americans’ charitable contributions are not growing in tandem with their increasing wealth. In contrast to the four percent increase in philanthropic giving the Chronicle of Philanthropy noted from 2012 to 2013, the net worth of the richest 400 Americans grew more than 19 percent over the same one-year period.
It’s nice that our country’s super-rich are giving more dollars to global philanthropic efforts. We need that. But in a broader economic sense, it’s problematic that, as a small number of Americans become wealthier, a lower percentage of their giving goes toward global poverty alleviation. And it’s also problematic that, while the non-super-rich are inclined to give money to the poor (the middle class spend more of their earnings on charity than the rich do, overall), they are losing their economic foothold in the United States, threatening their ability to be generous into the future.
American philanthropy remains robust. Its influence spreads to the remotest parts of the world. But Tom Perkins is missing the point when he lauds the generosity of the one percent without offering additional economic context. The one percent do not account for anything close to the majority of U.S. philanthropic expenditures, and they are proportionately less likely to invest in charitable efforts that benefit the poor.
Of course, there are some notable, wealthy, anti-poverty crusaders, like Bill Gates and Warren Buffett, who devote billions of their wealth to fight poverty the world over. But it’s important not to let exceptional anecdotes distract students of global philanthropy from surrounding American economic trends. The United States populace in general has a diminished capacity to be charitable, and indicators suggest that philanthropy by the super-rich does not counter the deleterious charitable effects of U.S. income inequality.