By Derek Barnes–
Throughout the year, amid a health crisis and ongoing social unrest, some nonprofits, not all, saw record increases in their development fundraising. Donors who had the means and the will to contribute generously found ways to help address the increasing demands from all segments of our society.
One area really caught my attention. I began noticing enormous pledges and charitable commitments from some of the world’s largest companies—marquee brands we all know. Part of this is just good corporate citizenship and individual altruism.
I wondered what else could be fueling this activity, why is it so important now, and who’s ultimately holding people accountable in fulfilling these commitments. More importantly, what names didn’t I see in the headlines?
Mega-philanthropy isn’t well defined. However, most have adopted the definition as a sizable multi-million-dollar gift (tens or even hundreds of millions) by a large, well-established organization or wealthy individual (top 1%) to fund a worthy cause. Let’s call them our mega-donors.
Recently I asked one mega-donor, “What helps to determine who gets the big checks from you?” The answer surprised me. A donation rarely occurred if there was a direct ask or even if the mega-donor had a relationship with someone in the organization making the ask. Instead, this particular mega-donor was motivated to give to organizations or individuals who provided a service to remedy a specific issue/problem or life challenge they had. The response definitely challenged my personal view of philanthropy, but I understood why using this logic is rational to some people.
I don’t want to resurrect a loaded phrase from our recent political discourse, but a kind of “quid pro quo” (something for something) came to mind when I heard the mega-donor’s response. It seemed a bit utilitarian and self-serving. Then it occurred to me that there are many donors with a similar mindset—especially mega-donors. One’s personal experience and set of values primarily drive where they direct their philanthropic funding and support. And personal relationships do matter, especially when determining the size of the gift.
Here’s a great example of mega-philanthropy with a more subtle quid pro quo. Michael Bloomberg committed $1.8B to John Hopkins University in late 2018. Bloomberg wanted the institution to offer more generous financial aid packages, replace loans for many students with scholarship grants, and make the campus more socioeconomically diverse. Why John Hopkins and why this explicit use? Bloomberg attended the university and struggled with the “problems of money” when pursuing his education, as stated in a 2018 New York Times article.
A few challenged Bloomberg’s decision and his use of funds to make tuition affordable and accessible for more people because it didn’t get to the root cause of the problem or address other systemic issues. But John Hopkins provided the foundation (the “quo”) that Bloomberg leveraged to open doors that would have otherwise been closed and ultimately build his empire. He also had a profoundly personal experience at the school that he knew was shared by many students today. His donation (the “quid”) would help remove the financial burden and high cost of education as a barrier to entry for deserving students.
Another challenge with some companies, their executives, and board members who also engage in mega-philanthropy is that they’re not always good corporate citizens—living wage issues, working conditions, environment, etc. Some may not pay their share of state or federal corporate taxes, although the current tax code and system may make this permissible. For companies that rely on our consumer dollars, a moral obligation to serve, protect, and equitably invest in our communities should be preserved in an innate set of corporate values.
The bottom line is that a company may generate billions in revenue and pay little to no income tax. Inevitably, appropriate levels of tax revenue can’t be collected and redistributed to fund community resources and needs (like education, infrastructure, and other social programs). The revenue shortfalls create significant gaps in municipal budgets for investments in people, safety, and community services.
Often, a business’ decisions and practices can promote unfavorable social conditions: a class of working-poor people, lack of housing, access to affordable healthcare, and environmental stress. Corporate mega-donors often donate to promote a positive image, assuage some guilt for things they’re doing and not doing, or neutralize a reputational threat.
Pre Covid, there seemed to be a steady increase in philanthropic giving in the U.S. Tax-exempt organizations gave over $400B in 2017, according to the Giving USA’s annual report. This is primarily due to mega-philanthropy, while smaller individual donations are decreasing. A growing gap between the top 1% and the lower-income households is the primary driver, explaining this trend. I recently spoke to the Chief Strategy Officer at PRC in San Francisco, Katherine Bella, who confirmed this continued and escalating trend in 2020. Individual giving can be the lifeblood for many nonprofits and be a tool for cultivating the future’s next mega-donors.
If capitalism is perpetuating these long-standing societal conditions and widening the socio-economic gap, what greater responsibility do companies and the wealthy 1% have to do more? It’s good that mega-philanthropy is on the rise if a more equitable distribution of those funds to a broader and diverse portfolio of needs can be achieved.
Let’s put all this into perspective. At an estimated net worth of almost $200B, Jeff Bezos became the wealthiest person in history during a pandemic that devastated world economies—not to mention what Amazon was already doing to competing businesses before COVID-19. On June 30, 2020, Amazon reported over $320B in revenue for the fiscal year.
Imagine the impact if Bezos stepped up philanthropy personally and through his company by annually committing at least 5% of his total net worth and Amazon’s gross profit. He and other corporate leaders could direct funding to nonprofit foundations like Horizons, Stonewall Community, Gill, Ford, and Arcus. With proper accountability and governance, these foundations could more effectively interpret community need and strategically target funding to realize the greatest impact.
The other part of this equation is to focus on micro-philanthropy or everyday giving. The trend for this type of giving has declined. We have to find ways to activate and engage younger people who have the time and resources to provide, and mid-tier donors who have a track record of giving to participate more.
We should challenge companies we do business with to do more too and check out their historical philanthropy. With annual revenues of $270B and a gross profit of almost $100B, firms like Apple can also do much more to serve its consumers’ communities. In addition to major gifts to respond to national and international emergencies or causes, Apple uses an employee donor match (up to $10K) as part of its “Giving Program” to guide its charitable donations, according to one executive I contacted.
In 2018, Apple reported that it raised over $365M worldwide through its “Giving Program” and donated more than $125M. These numbers sound impressive. However, Apple has a global workforce of almost 140K people, and I’m sure most don’t participate in the match program. What is the company doing to change this? When you do the math, it just doesn’t add up to the philanthropic leadership and full potential that this company can achieve. Imagine the impact if Apple committed only 5% of its annual gross profit to more philanthropic endeavors.
Social justice, equality, education, and security have always been aspirations for most donors and even more so today in 2020. Many find that charitable contributions help to level the playing field and offset some of the appalling conditions created by capitalism. Philanthropy is the great equalizer to extreme forms of capitalism, and we should challenge ourselves and others to give more—especially mega-philanthropists. It shouldn’t be a binary choice between paying taxes or philanthropic giving. Let’s engineer the right mix of the two because they are both required to sustain civilization and maintain our humanity.
Derek Barnes is a Co-founder at g-dii Enterprises ( www.g-dii.com ) and a Senior Consultant at Ignition Point Consulting. He currently serves on the boards of Horizons Foundation and Homebridge CA. Follow him on Twitter @DerekBarnesSF and on Instagram at DerekBarnes.SF.
Published on October 8, 2020
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