Giving Well ... who's giving, who's getting and who needs your help. Are charitable foundations a good thing, and/or a symptom of the social ill - massive inequality?
Thom Hartmann interviews Sandra Swirski, December 23, 2008
[Thom Hartmann]: Welcome back to our program! Thom Hartmann here with you, six minutes past the hour. Last week Nick Kristof had an editorial in the New York Times - I would say actually it was this week, December 20--he said that “this holiday season it's time to examine who's been naughty and who's been nice, and I'm not happy about my findings.” He says we liberals are personally stingy. When they separated out, at least according to some studies, when they separated out people giving to religious organizations, particularly organizations--you know-- the Mormons are very, very aggressive about tithing, for example--when they separated that sort of thing out then it became a little bit more of an even playing field. But that's an interesting question, you know, what are the consequences of giving?
Carrie Lukas, who is a regular guest on this program, a conservative from the Independent Women's Forum, writes about how a study done by the Philanthropy Cooperative, philanthropycooperative.org the website, points out that for every dollar of grants provided by foundations, $8.58 of economic benefit accrues to the United States. That this is actually a useful and important part of what's going on in the United States so I wanted to dig into this just a little deeper. Sandra Swirski is with us. She is the president of the Philanthropy Collaborative, philanthropycooperative.org the website.
Sandra, welcome to the show!
[Sandra Swirski]: Thank you very much for having me, Thom. Nice to be here.
[Thom Hartmann]: Thank you, and happy holidays to you. What is the nature of charitable giving in the United States? What is the state of foundation giving? I'm hearing all these dire stories about particularly larger foundations that were invested in the stock market not having what they have had in the past to give. What is the consequence of this giving and how does this relate to individual giving in the United States?
[Sandra Swirski]: Sure, thank you. Let's talk about foundation giving first, because I probably know more about that. For the past decade we've seen enormous growth in the dollar for dollar amount of foundation giving across the spectrum, whether it's to soup kitchens or to education programs, or to museums. Just across the board increases.
[Thom Hartmann]: Was that a function of the fact that most of these organizations, endowments were invested in the market which have been going up like a rocket over the last 10 years?
[Sandra Swirski]: Sure. And I also think it's a function of personal wealth, that there are a lot of folks out there who have used their own personal resources and developed businesses and have become wealthy and decided they wanted to give back as well so it's not just the growth of endowments, but many more people realizing the power of philanthropy and wanting to do more and so they have gone ahead and set up their own foundations as well. So it's both of those things.
[Thom Hartmann]: Okay. And you were continuing with some of the other pieces of that question that I asked you.
[Sandra Swirski]: Sure. Obviously the economic meltdown is going to have a dramatic effect on foundation giving and on giving generally by the American public. However there have been a number of studies done that show that even in times of economic despair that Americans are by far the most generous people on the planet. That even when folks have less they tend to give the same. They don't dial back and, just anecdotally, I have had a number of conversations with folks across the country and what I've heard is that some of these foundations that have had dramatic drops in their endowment, instead of cutting across the board all of their giving to the local charities, what they're doing is they're focusing on what the core charities are, and they're actually giving more.
[Thom Hartmann]: Hmmm.
[Sandra Swirski]: Because they know a number of the charities are going get cut, their resources are going to get cut from other sources. So foundations are using a variety of different tools and strategies to make sure that those charities that they deem critical to the social fabric of the community that they’re in are fully funded. But I won't say that every charity is going to come out a winner in this--absolutely not.
[Thom Hartmann]: The charitable foundation is a relatively recent phenomenon in the United States. Before the 1880s, it was pretty much unknown. As the robber barons came to power, Jay Gould created a foundation, Andrew Carnegie created a foundation, Rockefeller created a foundation. Many of these were--Huntington created a foundation--many of these were ways of sheltering income. Many of them were ways of burnishing their reputation.
The laws that controlled the behavior of corporations prior to the 1880s in every state in the Union--it was illegal for a corporation to exist for more than 40 years, for example. They always had to be dissolved at the end of 40 years so they could be the equivalent of subject to probate. And so we didn't have dynastic wealth in this country. None of the founders were particularly all that rich and none of them left riches. None of them left foundations and in fact, all the early generations of Americans up and to and through the Civil War -- until really the railroad barons came along -- nobody had the kind of wealth necessary to create a foundation.
What about the concept that--and in some of the more, shall we say “democratic-socialist” nations, foundations play a much smaller role than does government--what about the concept that this whole notion of very, very wealthy families creating foundations that then do social good, for example the Bill Gates--the Bill and Melinda Gates foundation, which has done enormous good in this world, are actually symptoms of a social ill which is the massive inequality, the massively unequal distribution of wealth in a society, the ability of a small number of people to accumulative massive dynastic wealth which was something that many of the founders decried, Jefferson probably most loudly. He felt that multigenerational wealth, that could threaten, that could change democracy, “change the nature of government” was his phrase, was a “threat to the state.” The “state” being the United States.
That this is actually -- you know, back to Kristof's point. He’s like, “Why don't liberals give as much as conservatives do?” and I think that one of the reasons may be that liberals actually believe that foundations and charitable giving by wealthy people, there is almost something evocative of the nobility of Europe in that, you know, of "oh ,yeah, we'll throw a few bones to the poor", whereas, which may reflect, to put a political edge on this, and I don't know if you want to go there, but it may reflect a more conservative viewpoint, at least economically, whereas the more liberal viewpoint would be, "Isn't this the job of all of us? Isn't this a job of society?" And might not these foundations actually be symptomatic of a cultural evil?
[Sandra Swirski]: You know, Thom, I find that line of reasoning just plain crazy.
[Thom Hartmann]: Okay--why?
[Sandra Swirski]: Well, to think that or to articulate that wealthy people who seek to give away their money is somehow a symptom of an illness in this country is crazy. Many foundations give away their money with or without any type of tax planning strategy, or charitable reductions, they do it because it's part of who they are. They want to pass on the spirit of philanthropy and giving to their children, and they hope they will catch it as well. America is far different--and people who give in America are far different--than any other nation in the ... world. We have a very proud history of taking care of our neighbors. From the landing of the Mayflower onward, a very proud history, and to suggest that proud history is somehow ill-advised because members of our community have amassed great wealth and seek to give it away--again, it’s just plain crazy.
[Thom Hartmann]: Well here, for example--we're talking with Sandra Swirski, at the Philanthropy Collaborative, PhilanthropyCollaborative.org, during the period from 1935 until 1980 when the top marginal tax rate was between 74% and 91%, and I used to write foundation grants -- from 1978 until 1984, I wrote a lot of grants, going to foundations looking for money. There were virtually no dynastic families, families with dynastic wealth that emerged in the United States because the top marginal tax rate was so high. Virtually all of the really, really well-funded foundations came before 1935 or after 1980. Because that was when people, because of changes in tax law, could become dynastically wealthy. You don't see that as a social evil? Or a social ill?
[Sandra Swirski]: No. I don't see it as a social evil or a social ill as well, particularly when these are the folks who are turning around and giving away vast sums of their wealth. What is so interesting about today, if I can pivot for a moment, is that we are seeing a growing number of wealthy individuals creating foundations. But what is so interesting to me is that we're also seeing a growing number of children, high-schoolers, college-age, graduates, getting much more interested in philanthropy, and much more interested in giving back.
[Thom Hartmann]: Yeah. Well that's a fine thing.
[Sandra Swirski]: I don't think it's just the old white wealthy folks giving any more. It's really philanthropy and what some of the... (Music is very loud.)
[Thom Hartmann]: Sandra--I'm sorry. We're out of time.
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[Thom Hartmann]: 21 minutes pass the hour. I think that this is a very real issue that is not discussed in America. And thanks, by the way, to Sandra Swirski of the Philanthropy Collaborative coming on the program and my apologies to her for her not realizing that we have hard breaks on the show and that once the music starts, nothing is going to stop it, including me. So, but in any case, that there are these, I think, two world views and I think that Nick Kristof in his op-ed missed it as well, because he didn't talk about it either.
And the one world view is that it's a fine thing if you have massive social inequality, if you have the very, very wealthy people and very poor people, and the consequence of that is that the wealthy people will take care of us. Not to worry. They will set up some charities and everything will be fine. And then we have a society in which at least the social decisions, who gets health care, who gets a meal when they're unemployed, are being made by the very rich.
Versus a world view that I would say is more prevalent, or very common, particularly in Northern Europe, particularly among the Scandinavian countries, but the French share this perspective, the British, and I would say it's one of the reasons why you don't have so much charitable giving in those countries, that it is the job of society to care for those who can't care for themselves. That when Franklin Roosevelt passed this revolutionary thing called the Social Security old-age survivors--I forget the whole title of it--but it had the word in insurance act in it--the original name of the Social Security program [Old-Age, Survivors, and Disability Insurance - ed.]--that we collectively were saying, "You know? We are all going to care for all of us".
And in fact a third of Social Security payments, while all of the revenue that goes into Social Security comes from working people and none of it comes from income over a hundred thousand dollars a year, so very wealthy people pay not a penny after the first hundred thousand--not a penny of the rest of their wealth-- if somebody makes $10 million, on $9.9 million they don’t pay a penny of Social Security ... tax. If they make $40 million, on $39.9 million they don't pay a penny of Social Security tax. If they make a billion dollars -- William McGuire, the former chairman and president of United Healthcare, the company that collaborates with the AARP and makes so much money out of Medicare part B, William Maguire $1.78 billion was his compensation. On 1.78, what would it be, 999,000? of those dollars [$1,799,900,000 - ed.] he did not pay a single penny of Social Security taxes, and yet a third of Social Security payments go literally to disabled people, widows and orphans, in some cases widowers. The people who can't care for themselves. People like my friend Michael Hutchison, the author. A brilliant guy, who broke his neck, jogging, tripped in the ice, fell into a river in Santa Fe and is disabled. And he’s living on Social Security. Thank God for Social Security.
So the--I hesitate to use the word but I think maybe we should--the democrat-socialist perspective, the perspective that is prevalent in European countries is that this is the obligation of all of us, that we are our brother's keeper, and that this is one of the appropriate functions of government. Whereas the conservative and libertarian perspective is that it’s entirely inappropriate for government to get associated with this. This is why George Herbert Walker Bush came up with his Thousand Points of Light, that it should be entirely up to us, and the fact of the matter is, I think a synthesis of the two makes a certain amount of sense, that the “us,” those among us, and this is the interesting thing, that those among us who don't make so much money tend to be as a percentage of income the most generous.
And you know there is a small number of very wealthy people who give a small, in some cases significant portion of their wealth away. Warren Buffett is giving away most of his wealth. Of course he's a liberal—I guess that flies in the face of Nick Kristof's theory. But, in any case, that we really should be taking care of ourselves as a society, and as a culture. In those countries, like when we did our show from Denmark last summer, the taxes are higher but the benefits are more widely distributed. There is an absolute social safety net. You are not devastated if you lose your job. There’s two years of unemployment benefits plus everybody has free health care, whether they're employed or not.
And so there's not so much of a need for the wealthy to help out, and there are not so many wealthy, because the top tax rate is so high. Just like prior to 1880 and during that period from 1913 to 1920 and from 1937 until 1981, there were very, very, very, very few dynastic families, very, very wealthy families that emerged and thus foundations that they controlled.
Your thoughts. 27 minutes past the hour.
Transcribed by Caleb Burns.
