• printing money

“Philanthropy, is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice that make philanthropy necessary.” – – Reverend Martin Luther King Jr.

Philanthropy in the United States is not just the voluntary activity of a donor. Philanthropy in general, including the work of foundations, is generously tax-subsidized. The assets transferred to a foundation by a donor are left untaxed in two respects: the donor makes the donation more or less tax-free, diminishing the tax burden she would face in the absence of the donation; and the assets that constitute a foundation’s endowment, invested in the marketplace, are also mostly tax-free.” “(F)oundations are partly the product of public subsidies. They are created voluntarily, but they result in a loss of funds that would otherwise be tax revenue. In 2011 tax subsidies for charitable giving cost the U.S. Treasury an estimated $53.7 billion. So foundations do not simply express the individual liberty of wealthy people. We all pay, in lost tax revenue, for foundations, and, by extension, for giving public expression to the preferences of rich people.”. “[F]oundations are the voice of plutocracy.” – – Rob Reich, Boston Review

“We had a once-in-a-generation opportunity to advance universal health care, benefitting many millions of uninsured Americans, saving lives, staving off bankruptcies, and indeed saving public dollars that would otherwise be devoted to emergency-room care. We had a means of helping to pay for it by a slight alteration in a tax break used by the most well-off—and, undoubtedly, the most generously insured—members of society. Yet the collective leadership of American philanthropy—a leadership, by the way, that had been with few exceptions silent about the redistribution of wealth upward through the Bush tax cuts, silent about cuts in social programs, silent about the billions of dollars spent on the wars of the last decade—found its voice only when its tax exemption was threatened, and preferred to let the government go begging for revenue elsewhere, jeopardizing the prospects for health-care reform, in order to let rich, well-insured people go on shielding as much of their money as possible from taxation.” “The question is not whether many good things are accomplished with the money excluded from taxation for philanthropy. The standard is whether the record of philanthropy justifies the foregone tax revenue that in our current dire fiscal state could be used to keep senior centers and libraries and after-school programs open, hold tuition within reach at public colleges and universities, expand Internet access in rural communities, and on and on.” – – Gara Lamarche, The Atlantic

“When one foundation has amassed over $30 billion, it has the financial power to shape the policies of government to its liking. The Gates Foundation has more than $30 billion, and when Warren Buffet’s gift of another $30 billion is added to the Gates fund, the Gates Foundation will have the power to direct global policy on almost any issue of its choosing.”

“I am puzzled by the Gates Foundation’s persistent funding of groups that want to privatize public education.” “I am puzzled by their funding of groups that are promoting an anti-teacher, anti-public education agenda in state after state. And I am puzzled by the hundreds of millions they have poured into the quixotic search to guarantee that every single classroom has a teacher that knows how to raise test scores. Sometimes I wonder if anyone at the Gates Foundation has any vision of what good education is, or whether they think that getting higher test scores is the same as getting a good education. I wonder if they ever think about their role in demoralizing and destabilizing the education profession.” – – Diane Ravitch, Education Historian, Professor New York University

It is not the point of this article to pass judgement on philanthropists. Most probably have good motives if questionable agendas. The concern is whether philanthropy is worth the price we the public are paying for it. And it is not just the loss of tax revenue resulting from foundations that is problematic. The Gates foundation alone has altered the course of public education in America. As Diane Ravitch stated it: “Who elected them? Why should they have the power to shape American education?” It is nothing short of U.S. education policy oligarchy and, given that strong public education is the very heart and soul of democracy, it is the antithesis of that democracy. But the threat goes far beyond education.

Since the onset of “trickledown economics” taxes on wealthy individuals and corporations have fallen dramatically. Along with the Clinton administration’s deregulation of the financial sector, this has resulted in gross inequality with the number of philanthropists growing rapidly. A vicious circle has been created. With fewer and fewer tax dollars coming in, government is stressed and austerity is imposed. The philanthropists, who lobby for preferential tax treatment and are the beneficiaries of this theft from government, gain ever more power to determine what is – or is not – funded in a society. Financial decision making is taken out of the public sphere, government is further defunded, and oligarchy continues to grow.

We must begin to understand. In an age of historic inequality philanthropists are not the solution to the problem, they are the problem. If Microsoft, Berkshire Hathaway, Gates, Buffet and many others paid fair taxes, we wouldn’t need their foundations and the money would be democratically distributed.

Part XV will discuss: An Empire in Decline