Author David Callahan talks about the surge in political philanthropy by the wealthy.
The number of billionaires has increased sharply in recent years — and they are using their charitable giving to influence the direction of a host of issues, such as education, the environment, science, among others, according to a new book, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age. Author David Callahan, founder and editor of the website Inside Philanthropy, leads a team whose goal is to shed light on the intentions of foundations and donors. He recently joined the [email protected] show, which airs on SiriusXM channel 111, to talk about his book.
The Givers: Wealth, Power, and Philanthropy in a New Gilded Age by David Callahan
An edited transcript of the conversation follows.
[email protected]: What do you see as the state of philanthropy right now?
David Callahan: There’s a lot of it going on. It’s the next chapter, what I call this new gilded age, that got going in the 1980s when Forbes first published that list of the wealthiest Americans. It had only 13 billionaires, but you could get on the list if you had $80 million. Now you need $1.7 billion to get on that list. A lot of billionaires don’t even make it onto the Forbes 400. Many of those people who are on the list are turning to philanthropy. They have a lot of extra money. They want to solve problems, and they’re charging forward with their giving.
[email protected]: You noted an estimated $27 trillion is expected to be given to charities in the next five years. That’s a lot. We should be able to cure every cancer and everything else in the world with that kind of money.
Callahan: Just to keep it in perspective, the federal government spends about $4 trillion a year. But the portion of government money that can go for discretionary spending — to cure diseases, to engage in environmental protection, to send a man to Mars, whatever — is shrinking. So, philanthropists are stepping forward to do things that often government can’t.
[email protected]: Is it more a of private-public partnership than ever before?
Callahan: Yes. We see this a lot with public parks, for example. In New York City, billionaire Barry Diller stepped forward to put a little island park off the west side of Manhattan. It caused a lot of controversy. The Highline in New York City [a park converted from an old railroad line] was built with private money.
[email protected]: Another statistic you bring up is that the number of foundations is soaring as well.
Callahan: In the last 15 years, wealthy people created about 30,000 new private foundations. The numbers of people who have extra money to give away is staggering. Here’s a statistic that blew my mind: 70,000 of U.S. households have assets of $30 million or more, not including their real estate. That’s some serious liquid money. If you want to try to do some good in the world, you have that spare change to do it.
“Philanthropists are stepping forward to do things that often government can’t.”
[email protected]: People expect certain things to be done with their money when they are giving it to charity. How much of it is always done for good, and how much of it is causing angst in other areas, like public policy?
Callahan: It depends upon your point of view. Michael Bloomberg, for example, has given $130 million, working with the Sierra Club, to shut down coal-fired power plants. If you’re worried about climate change, if you’re worried about coal pollution, that’s great. If you’re a coal miner or you work in the coal industry, that’s not so great.
If you like charter schools, these billionaires have put a lot of money behind that. That’s fantastic if your kid goes to a charter school. If you feel like public education shouldn’t be run by billionaires, you may have more of a problem.
[email protected]: Cities such as Philadelphia, Chicago and others certainly could use more funding for their public school systems. Yet charter schools are seen as the next step beyond public education to provide kids with what they need for academic success. It’s a tough push and pull.
Callahan: Absolutely, yes. And there are no simple answers or analysis. My book is pretty rich in nuance about the pros and cons of this. Philadelphia is a great example. This is a city that’s been hurt by fiscal cuts, budgets for education have gotten whacked, many private donors have stepped forward to help out. But they have done so with strings attached.
They want the schools to change in certain ways. They want more charters, more teacher accountability. You have to ask, is that any way to run a city education system that you give power to billionaires in exchange for money that the taxpayers won’t put forward themselves?
[email protected]: There was a lot made in the last couple of years about The Giving Pledge. Bill Gates and Warren Buffett put together the group of the uber-wealthy to give away a majority of their wealth towards charity. When that came out, many jumped on board. What’s its impact?
Callahan: It’s still too early to say. But about 150 billionaires in the United States and around the world have now signed that giving pledge, committing themselves to give away at least half their wealth. Among them is Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, who committed to giving away 99% of his Facebook stock to try to solve problems. What’s not to like, right? This is a solution to economic inequality to have the rich give it back. Except who is Mark Zuckerberg to have that kind of power as a private citizen?
“Who would have thought … that the big cause of hedge fund billionaires would be poor kids in the inner cities?”
It does raise troubling questions about who’s in the driver’s seat of American life because government as an agent for change to solve problems is going to continue to be on the downward trajectory as those budget cuts kick in. That’s not just at the federal level with what we’re seeing with the Trump administration, but at the state and local level. All those Giving Pledge billionaires are coming in, and government is on the decline.
[email protected]: What does that mean for a democratic government going forward?
Callahan: It’s starting to look a little like a benign plutocracy with a lot of these really well-meaning, wealthy people having growing influence. It’s hard to say how that will play out, but it’s important to have the conversation now to bring attention to this. I think most Americans don’t pay much attention to philanthropy. When they think about philanthropy or charity, they think about donations to universities, to hospitals, to museums. They don’t think about people using their money to push a public policy agenda, to have a lot of say in what government does.
Another good example of how private philanthropy has had a big impact is in LGBT rights. In my book, I talk about Tim Gill, who made his money in tech and created a foundation. He put all of the money in the foundation dedicated to one cause, which is