James Pierson Responds to – Robert Wilson & Bill Gates Philanthropy Differences

philanthropyWe recently posted about how Robert Wilson and Bill Gates differ on philanthropy.  Here’s an article by

James Pierson, president of the William E. Simon Foundation that goes a step further: 

Donate to causes you care about, think long term, and remember it’s your money.

As is clear from the exchange (between Wilson and Gates), Wilson did not care whether his giving made him popular. But it is becoming harder and harder for philanthropists to take the kind of stand that he did. There are various pressures being placed on philanthropists to join the herd. The arm-twisting comes not only from Bill Gates and Warren Buffett, but from state and local governments, professional staffs of various foundations and, of course, academics.

So here are a few things that people starting out in philanthropy might want to keep in mind, especially if they can’t wait until middle age to start:

• When it comes time to donate, don’t think that you are “giving back,” because you haven’t taken anything in the first place. The vast majority of Americans who become wealthy have not done so by exploiting the poor. Nor have they simply lived off their family’s fortune.

Two-hundred seventy-three people on the 2013 Forbes 400 list earned their wealth through businesses they started or invested in. And making all that money had many positive benefits for society. Thanks to the technology developed by Bill Gates or the inexpensive goods available to people who shop at Wal-MartWMT -0.12% or the salaries paid by Facebook, FB +3.14% America benefits from the contributions of wealthy individuals before they give away a dime.

• Find a cause that interests you, learn more about it, and then give. This may sound obvious, but the fashionable advice in philanthropic circles is to give to charities that don’t interest you. Princeton’s bioethicist Peter Singer argues that donors should not give to higher education or arts institutions until every poor or handicapped person has been given needed assistance. A recent article in the Chronicle of Philanthropy, “Donors Should Give Based on Need, Not on Personal Interests or Whims,” makes the same point.

By that logic, Andrew Carnegie should have spent his funds on the needy instead of building libraries and Carnegie Hall. Stripped of subtleties, the point is that philanthropy should become an adjunct of the welfare state, a thoroughly mindless injunction.

• Think about the long term. Of course, philanthropists should measure results like businesses do. But unlike profit-making enterprises, foundations can wait to see the effects of their giving 10, 20 or 30 years into the future. Philanthropy conferences are filled with people who want to help you “benchmark” the effects of your charitable dollars. But donors can have more patience to find out where their interests lie and what strategies might offer the best results.

• It’s your money, not public money. Many advocates say that because of the charitable tax deduction, government has a right to direct donations to politically-favored causes. In their view, charitable gifts are a form of public money because otherwise (absent the deduction) the charity money would have been used to pay taxes. In New York City, newly installed mayor Bill de Blasio wants to force the Central Park Conservancy to redistribute its charitable funds to other public parks, even though these gifts were made for the sole purpose of maintaining Central Park.

Beginning in the 1960s, some foundations began to take on the role of a shadow government working with public officials to promote new programs such as urban renewal, the expansion of welfare, and race and gender preferences in higher education. But as government expanded it also became beholden to interest groups.

The great advantage of private philanthropy is that it is independent and not beholden to the interests that have turned government into an inflexible behemoth. Why would anyone think it is a good idea to turn philanthropy into a mirror image of the federal government? Some of the most important contributions of philanthropists, such as privately funded school vouchers, have come about by challenging government monopolies or circumventing inefficient governments.

• Find people you trust to help give away your money. There have been moves across the country to get philanthropists to “diversify” their boards and staffs. Groups like Philanthropy New York, a professional group of foundations, release reports about the lack of racial, ethnic, gender or sexual-orientation diversity on philanthropic boards. Other groups want to find ways for the government to exert more pressure and make philanthropy more “representative” of the nation as a whole. They are especially critical of family-oriented foundations with family members, friends and associates on their boards.

This is but another version of the same bad idea: Let’s turn foundations into political institutions in which funds are allocated by some representative formula. Young philanthropists are better off picking people they know and trust rather than taking orders from the philanthropic elite.

There is a world of people in government and the nonprofit sector who see philanthropists as fools easily parted from their money. Robert Wilson may have been right that it is prudent to wait till one is older to become a philanthropist. It may make you better able to resist such pressures. But don’t wait too long.

As Sir John Templeton, one of the wisest philanthropists of the 20th century once said, “If you’re giving while you’re living, you’re knowing where it’s going.”

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

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