Charitable Giving and the Fabric of America

Karl Zinsmeister
The Philanthropy Roundtable

Karl ZinsmeisterKarl Zinsmeister is vice president for publications at the Philanthropy Roundtable. A graduate of Yale University, he also studied at Trinity College Dublin. For almost 13 years he was editor-in-chief of The American Enterprise, and from 2006 to 2009 he served as chief domestic policy advisor to the president and director of the White House Domestic Policy Council. He has written for several newspapers and magazines, including the Wall Street Journal, the New York Times, and The Atlantic, and he is the author or co-author of eleven books, including The Almanac of American Philanthropy.

The topic of medical research brings to mind the question of how private philanthropy compares to government funding. The former is superior in its ability to be individualized and pluralistic. What do I mean by this? Many of the most successful causes in the charitable world—causes like micro lending, Alcoholics Anonymous, mentoring programs, and college dropout programs—rely heavily on one-to-one accountability, taking advantage of the information available when you know who you’re working with. By creating personal transactions, they use the power of relationships to change behavior. As Mother Teresa used to say, “I never think in terms of a crowd, but of individual persons.”

Government programs, by necessity, focus on the crowd. Far from having different approaches and rules for different kinds of people, they are about being strictly the same for all participants. They are praised for being consistent, but one-size-fits-all standardization is not really how humans thrive. Individualized services, hard to come by in government programs, are a hallmark of philanthropic work.

Which leads us to a fancy word that every American ought to know: polyarchy—referring to a society in which there are many independent sources of power (the opposite of monarchy). The United States has a notably polyarchic culture, and independent philanthropy is a big part of this. As Yale Law Professor Stephen Carter points out, different people measure community needs with “different calipers,” and millions of individual philanthropic decisions lead to more variety in giving, and more protection for non-mainstream points of view, than government programs.

Still, partly because so much of private charity takes place out of the public eye—on the local level, private, often anonymous—many grossly underestimate its power and insist that major concerns can only be addressed through government action. They seem to have three major criticisms of private philanthropy: one, it’s a drop in the bucket; two, it’s amateurish, chaotic, and lacks expert coordination; and three, private donors act from impure motives.

Drop in the bucket? The Gates Foundation alone distributes more overseas assistance than the entire Italian government. Over its first two decades, its overseas vaccine program is projected to save the lives of almost eight million children. And the Gates Foundation represents only a tiny sliver of American philanthropy directed overseas. Members of American churches and synagogues send four-and-a-half times as much to foreigners in need each year as Gates does, and total private American philanthropic aid sent overseas substantially exceeds the foreign aid budget of the U.S. government. The latest totals are about $39 billion and $31 billion, respectively.

What about the charge that private philanthropy is amateurish and lacks expert coordination?

Consider Lizzie Kander, who ran a settlement house in the early 1900s that assimilated Russian Jewish immigrants. She used funds donated by Milwaukee businessmen to teach the immigrants nutrition, sanitation, child development, and employable skills. Needing additional money, she compiled a cookbook and housekeeping guide to sell as a fundraiser, covering the cost of production by selling ads. It was titled The Settlement Cook Book—with the politically incorrect subtitle, The Way to a Man’s Heart—and eventually sold two million copies. The revenue stream from this effort benefited Jewish immigrants in the Upper Midwest for 75 years, in addition to other charitable projects.

I worked for three years in the West Wing of the White House, and I can tell you that so-called expert coordination isn’t all it’s cracked up to be. The healthiest forms of societal improvement result from lots of little experiments. Some will fail, but others will succeed and be copied. This is the method by which private philanthropy proceeds.

Think about what happens every autumn weekend at hundreds of stadiums around our country. What is involved when you move a crowd of 50,000 from the stadium to their cars to their homes? If you tried to plan or direct that from a central perch, it would be a mess. There are too many variables. The average fan may not realize that he’s exhibiting what scientists call large-scale adaptive intelligence in the absence of central direction, but that’s what he’s doing. There are lots of less trivial examples of this. Essential human tasks like food distribution are managed without any central organization. There’s no agency in charge of making sure that Fort Worth doesn’t run out of milk, but it never does. That’s what happens in a free society. Lack of uniformity and coordination is more often than not a blessing.

What of the third alleged weakness of private charity—the idea that private donors have impure motives? Although typical donors are not more interested in getting a tax break or their name on a building than in altruism, it’s true that philanthropists are not always angels. But is this a persuasive argument against private charitable giving?

J. Paul Getty was a cheapskate who made visitors to his estate use a pay phone, even though he was one of the richest men in the world. When his grandson was kidnapped in Italy and held for a $17 million ransom, he dickered over the amount until the kidnappers mailed him his grandson’s ear. Even then, Getty was only willing to lend the ransom to his son at a rate of four percent interest. Yet J. Paul Getty also bequeathed to us one of the most sublime collections of Greek and Roman art, a gift that will elevate souls for centuries to come.

Russell Sage, a notorious miser and a convicted usurer, cheated his wife’s father when they were in business together. When a mad extortionist blew up his Wall Street office with dynamite, Sage used one of his clerks as a human shield and then refused to pay compensation for the man’s injuries. Yet Sage’s fortunes eventually created one of the most influential early charitable foundations in the country.

There are foolish givers and dumb projects. But charitable programs that don’t produce results soon die or are remade into something different.

The genius of the philanthropic mechanism is that it is able to take people just as they are, imperfections and all, and help them do wondrously useful things. Adam Smith noted that freely conducted commerce can turn normal human behaviors, including mercenary ones, into something valuable. This is as true in the world of philanthropy as it is in business.

Part of the magic of America’s charitable structure is that it is able to convert commonplace private impulses into tremendous uplift for all of society.

We humans are social animals, and we naturally become disturbed and want to help when we see fellow creatures in trouble. Early on, Americans discovered that voluntary action to lift others up is not only possible, it is superior to the kind of state paternalism that diminishes freedom. Private charitable giving and the spirit of volunteerism have been essential bulwarks of the American character, and they remain indispensable to our national success.