Philanthropy & Democratic Societies

democracy.jpgPerpetual Ltd presented a session on Philanthropy and Democratic Societies at the State Library of Victoria with a panel comprised of Krystian Seibert from Philanthropy Australia, Lucy Bernholz, philanthropy and data expert, Bill Birnbauer, investigative journalist and Rob Reich, Faculty Co-Director, Stanford Centre on Philanthropy and Civil Society – hosted by Caitriona Fay, National Manager, Philanthropy and Non-profit Services, Perpetual.

Lucy and Rob are two of the co-editors of a new publication: Philanthropy in Democratic Societies: History, Institutions, Values.

Caitriona introduced the session with the story of Perpetual’s oldest charitable trust – coming in at 128 years – the Edith Campbell-Walker Trust – which was set up to provide housing for women – especially those who had been in “house service” and which now supports women moving away from domestic violence.  With a nod towards the dead hand from the grave, she noted that this Trust had a deed  which enabled it to adapt to the needs of the times, while still honouring the intent of the donor.  That said Caitriona acknowledged that there can be a difference between “good philanthropy” and “bad philanthropy”, especially given the power imbalance which exists between donors, bequestors and grant applicants/supplicants.

Rob commenced the session started with a “provocation” around what he considers “bad philanthropy”, and for me, raised more questions than answers – though in a good way.

Rob gave a couple of different definitions of philanthropy.

a) the direction of private resources for some public benefit (ie money, time, blood, organs, data) and referred to Peter Singer’s moral argument that what most people give is far less than they should (see The Most Good You can Do: How Effective Altruism is changing ideas about Living Ethically).

b) considering the array of public policies which champion or hinder philanthropy from contributing to healthy democratic societies such as tax incentivisation of a liberty we are already free to take with our own money, and the legal codification of private foundations.

Rob then put forward several arguments as to why we should be very skeptical and suspicious of private foundations (in the spirit of provocation).


The Rockefeller Foundation – which in order to be established, required its own Bill from Congress, which was variously described as a “menace to democracy“, in its desire to use private wealth of influence public affairs.  Rob noted – large philanthropy is an exercise of power and deserves our scrutiny – not our gratitude.

The Gates Foundation – in funding schools – Bill Gates has been called the unelected “nation’s schools’ superintendent“.  Rob notes – large philanthropy is an exercise of unaccountable power (and deserves our scrutiny – not our gratitude).

George Soros’ Open Society Foundations – on an anecdote where staff couldn’t set priorities for the Foundation, it is said that George Soros said – “it’s my money, so we’ll do it my way”.  He was not happy to be reminded that but for the tax concessions available, 40% of the funds would belong to Treasury.  Rob calls this tax subsidised unaccountable power (and deserves our scrutiny – not our gratitude).

So his question is – why do democratic societies think that big philanthropy is a good idea?

Given this rather devastating critique of institutionalised generosity, Caitriona attempted to seek a view from the panel that would redeem philanthropy.

Rob noted that if philanthropy takes a long-term view with risks which were presented to the public for evaluation and approval (such as Carnegie’s experiment with public libraries), then the vice of big philanthropy can become a virtue.  He also suggested that perhaps there should be a minimum size for foundations – if one wants to put away an endowment of $500,000 – why not just write cheques to one’s charities of choice.

Another question – how does data fit into the future of philanthropy?

Lucy talked about how when you give money away – you have given it away, but that if you give data away, you still have it.  She mentioned the Digital Public Library of America and how being surrounded by digital data is a new resource which can affect our understanding of philanthropy in civil society.  However, despite the benefits of the digital space creating an opportunity to share information, Lucy seemed to be giving a warning about the platforms and infrastructure on which the information depends – which is held in private hands (of corporations) and subject to government scrutiny and monitoring.  Her question in relation to this is – where is the independent space for philanthropy?  She reminded  us of the ubiquitous park bench in spy movies where the protagonist meets someone for the purpose of an unmonitored, private conversation and noted that there are no park benches on the internet. Lucy tells us that today, the only unmonitored spaces in the digital world are public libraries.  (Net neutrality is not an area I have any understanding of, so I will leave it to you to look into this).

Moving from the park bench to the fourth estate, Caitriona asked about the role of philanthropy in journalism.  Bill talked about the move of mainstream journalists to work in the nonprofit sector following the market failure of journalism and its devastation by the internet, and wondered why journalism doesn’t fall under the Charities Act.

This led to a  reflection and a question about the current Treasury discussion paper on DGR and the government’s view of activist nonprofit organisations as disruptive, and its suggestion that advocacy should be limited.

Krystian noted that we haven’t really had a discussion about the power and influence of nonprofit organisations and recommended David Callahan’s The Givers: Wealth, Power & Philanthropy in a New Gilded Age.  Krystian noted the rather cynical view presented by the Treasury discussion paper, that environmental charities should limit themselves to work “downstream” – such as cleaning up environmental spills and damage to wildlife and plants, rather than addressing the causes of pollution to a river, which may relate to legislation, emissions guidelines and disposal of waste regulations.  He reminded us of the Aidwatch decision in 2010 which protects the rights of charitable organisations to undertake advocacy activities.

While democracy is a sign of a healthy civil society, Krystian also raised the tension between democractically elected government and organisations which may be encouraging democracy (even if they themselves are not democratically elected).  The example of LGBTQI rights in some countries, where the government and the general public wish to support the status quo (ie lack of rights) but foundations (such as Open Society) wish to challenge the democratic will of the people (for their own good, perhaps).  Thus demonstrating that philanthropy in a democratic society is a complicated issue.

A question from the audience on the ability of corporations to act as lobbyists without limitations, contrasted with the scope available for nonprofits.  Rob responded with “is expressing a political position a philanthropic act?”  He noted the work of Civicus which tracks the health of civil societies – particularly noting then there are changes in tax privileges and reporting requirements for nonprofits – and banning of international funding.

A question on the power of crowdfunding – the response is that the jury is still out – it is insecure and voluntary.  Rob suggests that people having to crowdfund in order to meet their own medical expenses is unacceptable (our taxes should pay for this) – but that raising funds towards arts projects is ok. (I think that this borders on a market deciding what is valuable argument which is always problematic because I don’t believe the market knows best).

Krystian cited Getup  which is not charitable but successful, and the Climate Council (abolished by the government, but reborn and refunded by the people) as examples of successful crowdfunding and demonstrating powerful case studies of what crowdfunding can achieve – the converse (cynical) argument is that if the Climate Council can be funded by crowdfunding – why did the government need to fund it in the first place?

An ethical dilemma question from the audience – if a donor for a particular charity could have solved the problem in question by not engaging in particular corporate action – and thus the donor is part of the problem – how can we work with them when we consider them to be responsible?  Rob talked about how people can make money legally, but perhaps not ethically and that charities should be aiming to make themselves redundant by preventing issues, rather than remediating them (as has been charity’s traditional role).

This is a long post – but I think that it was all worth recording.  It would be great to have feedback, comments, corrections and refutations to any positions taken as all too often many of us working in the philanthropy area carry on with our doing good – without stopping to look at the bigger picture.

About ozphilanthropy

#Philanthropy. #arts Posts by Sharon Nathani, PhD candidate at the Centre for Social Impact, Swinburne focussing on philanthropic funders of the arts. Sharon's study is supported through an Australian Government Research Training Program Scholarship.
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