12 Common Criticisms of Philanthropy—and Some Answers

Since January, I’ve been traveling around the United States talking to audiences about my new book, The Almanac of American Philanthropy, and how private giving affects our nation. During these sessions I’ve collected 12 broad criticisms of charitable action that people sometimes raise. From the lessons of my Almanac research, I offer responses below.

1. Charitable aid should focus on the poor; too much giving today goes to other causes!

This increasingly common argument is supported by the so-called “effective altruism” movement, which complains that a dollar spent on a university or park or music school could instead have headed off a dire problem such as, say, river blindness for an impoverished African.

The most specious part of this criticism is the suggestion that donors can’t do both things. Philanthropists are currently producing good results across a vast spectrum of causes, including many efforts to help the poor. In fact, the fastest-growing sector of US private philanthropy in recent years has been overseas aid to poor people. Indeed, the poor in foreign countries now get more help from US donors ($39 billion per year) than from official US government aid ($31 billion).

Moreover, it’s shortsighted and often inhumane to suggest that donating to causes other than poverty reduction is somehow immoral. Yes, places like MIT and Johns Hopkins are wealthy institutions, but voluntary gifts to them ultimately result in things like portable x-ray machines, new vaccines, and inexpensive cell phones that are valuable to all people, especially the poor.

Part of what makes philanthropy powerful and beautiful is its riotous variety. Allowing donors to follow their passions has proven, over generations, to be an effective way of inspiring powerful commitments and getting big results. Cramped definitions of philanthropy that limit donors to approved areas would suffocate many valuable social inventions.

2. Charity is an artifact no longer necessary in a modern welfare state!

Some view private giving and problem-solving as vestiges of simpler times, with which we can now dispense. The public, however, disagrees. In a nationally representative survey of likely US voters in 2015, respondents chose philanthropy over government as their “first choice for solving a social problem in America”—by 47 percent to 32 percent. Asked whether they most trusted entrepreneurial companies, nonprofit charities, or government agencies, 43 percent of respondents chose charities, 28 percent selected entrepreneurial companies, and just 14 percent chose government agencies.

Philanthropy solves problems differently than government. It tends to be more inventive and experimental, quicker, nimbler, more efficient, more varied, more personalized, more interested in transformation than treatment, and more efficient. The public sees this and values it.

3. Charitable donations are just a drop in the bucket!

America’s nonprofit sector now commands 11 percent of our workforce and 6 percent of GDP—not including volunteer time, which, if we attached a reasonable hourly wage to it, nearly equals the $360 billion we donate in cash every year.

The Gates Foundation alone now distributes more overseas assistance than the entire Italian government. It is estimated that in just its first two decades, its overseas vaccine program alone will save the lives of 8 million preschool children. Then consider that members of US churches and synagogues—just one division of America’s larger philanthropic army—send four and a half times as much money overseas to poor people every year as the Gates Foundation does!

The fact that most philanthropy takes place out of the public eye—in small doses, and often in private or even anonymous ways—makes it easy to overlook its size and power. But getting seduced by the giantism of official aid is an egregious mistake. Small actions can and do converge into mighty rivers of cumulative effort.

4. There are too many amateur efforts in philanthropy!

It’s easy to write off “homemade” solutions as amateurish, but grassroots efforts accomplish many great things. Consider the the ALS Association’s Ice Bucket Challenge, which raised money for Lou Gehrig’s Disease research. The initiative occasioned snickers and sniping from some professional philanthropists, but donations it generated led to a major scientific breakthrough at Johns Hopkins University and pre-funding of clinical trials for new therapies.

There are many more examples. Crusades against autism by Bernie Marcus, against prostate cancer by Michael Milken, and against breast cancer by Nancy Brinker were all thought quixotic when they kicked off, yet each paid huge dividends. The Stowers Institute for Medical Research, the Howard Hughes Medical Institute, and Markey fellowships would never have seen the light of day if many professionals had had their way. And it was support from the Guggenheim family that allowed physicist Robert Goddard to overcome scorn from other scientists and ridicule by the New York Times to become the genius of rocketry and father of America’s success in space.

America’s strong system of decentralized giving and homegrown problem-solving supports wide experimentation and avoids putting all of our eggs in one national basket.

5. Philanthropic aid lacks standardization! It’s a chaotic patchwork!

The lesson of the Internet is the accumulated power of millions of small actions. The story of today’s hacker culture is that one individual with a laptop can do astonishing things. Small-scale action that lacks uniformity should not be considered a failing. It’s not chaos, it’s crowdsourcing—hordes of everyday people taking lots of small bites at a problem and eventually chewing through even very big issues.

There are rich examples of the power of dispersed decision-making throughout biology and across human history. Many of our most effective charities discovered the power of decentralization generations ago. Each of the 1,400 local chapters of Habitat for Humanity, for example, are independent entities with their own rules, practices, and funding. All of the 164 regional branches of Goodwill have their own boards of directors, and are autonomous in policy and funding; the central office is tiny compared to working affiliates in cities like Milwaukee and Houston. And the Appalachian Mountain Club efficiently maintains thousands of miles of hiking trails through a network of local branches.

This same principle of accomplishing important tasks through loosely coupled teams or networks of independent actors is also a powerful trend in many of today’s most successful private businesses. Every Uber city in America has different fares, different products, different practices. Philanthropy can be proud of having been a pioneer in solving problems via a flexible ecosystem of participants, rather than by following standardized formulas.

6. Charity may work for individuals, but what we really need are solutions that benefit entire groups!

Ambitious people may look at the “one soul at a time” model prevalent in philanthropy and conclude that it’s just too slow. But that perspective misunderstands what social reclamation usually requires. For tough problems like addiction and recidivism, the most successful solutions rely heavily on one-to-one human accountability. They take advantage of the useful information available when we actually know someone, instead of dealing with a stranger. By creating personal instead of impersonal transactions, we can wield the power of relationships to teach and change behavior.

It’s easy to romanticize the “consistency” of government programs, and contrast it favorably to the crazy-quilt of individualized variations in charitable aid, but consistency is not really how humans work. If you have one child who needs a very structured environment and another who blooms when left to navigate on her own, you don’t want one-size-fits-all schools; you want individualized services that recognize and work with intimate differences of personality. You’ll have a hard time finding that in government-run programs, but it’s a hallmark of philanthropic efforts.

Ben Franklin was one of the first donors to argue that philanthropy shouldn’t just transfer funds in an attempt to relieve men in their misfortune. It should help build up individuals into a healthier state. The goal of charitable aid in the United States has always been individual competence and independence—not just social quiet. And this often requires a personal touch, real mentoring, and one-on-one aid of the sort many philanthropic efforts emphasize.

7. Philanthropy is undemocratic!

Some critics, especially from the left, complain that donors accumulate too much power, and that their money lets them impose their point of view on society. But it’s important to note how radically decentralized US giving is. Only 14 percent of total giving today comes from foundations started by the wealthy. The vast majority of annual donations come from individuals, dominated by everyday donors who give at a rate of about $2,500 per household. The very largest single giver in the United States—the Gates Foundation—grants out about $4 billion per year. Measured against the $360 billion of cash that Americans donate annually, and nearly that much more in the value of volunteered time, Gates Foundation commands less than 1 percent of our annual philanthropy. That is not an unhealthy concentration of power.

American philanthropy is also diverse and diffuse. Its millions of givers and hundreds of thousands of charitable organizations compose a kind of huge matrix of private legislatures that define social ills, set goals and priorities, and methodically marshal resources to attack problems near at hand—without asking the state’s permission. Admirers of participatory democracy ought to be excited by these mass actions. As Yale law professor Stephen Carter points out, individuals who give to charity often “measure the needs of the community by different calipers than centralized policy makers, and will therefore contribute to a different set of causes. These millions of individual decisions lead to a diversity in spending that would be impossible if we adopted the theory that the only money spent for the public good is the money spent by the state.” For this reason Carter refers to philanthropy as “democracy in action.”

Alexis de Tocqueville said in Democracy in America that what impressed him about America’s voluntary activity was not just the practical problems it solved, but the way the country’s hyperactive giving and volunteering builds up the social muscles needed for a people to be self-governing. Philanthropy is not just a sign of self-rule, but also a source of it—a kind of nursery for broader loyalties to one’s fellow citizens. A healthy democracy should encourage, not discourage, people from acting on their own to improve what they judge to be the common good.

8. Only government can lead important social change in a fair way!

History tells a different story. Private donors and volunteers created the first schools, missions, colleges, and apprenticeships for Indians and African Americans, often in the face of state resistance. At the same time government was enforcing Jim Crow laws, philanthropist Julius Rosenwald erected 4,977 rural schools across America’s black belt. At the time of his death, 27 percent of all African American children in the United States were educated in one of the schools he built.

Those who view such examples as ancient history and believe that all necessary reforms now flow from government are gravely mistaken. According to the UCLA Civil Rights Project, America’s most segregated and often most inadequate government-run schools are all in northern cities with activist governments: Detroit, Milwaukee, New York, Newark, Chicago, and Philadelphia. In fact, the country’s most segregated schools are in New York state, thanks to New York City, where the proportion of schools in which at least 90 percent of the students are black or Hispanic rose sharply from 1989 to 2010.

It is private philanthropy that is shaking up New York City’s complacent educational establishment today by launching charter schools. There are currently 95,000 New York City children in charters, nearly all of them minorities and low-income, and another 42,600 on waiting lists. Stanford researchers and other investigators find that these children are receiving significantly better educations than counterparts in conventional government-run schools, in some cases even outscoring comfortable suburban schools in annual testing.

9. Some donors are mean, vainly seek their name on things, or take part in charity for all the wrong reasons!

It’s true that philanthropists aren't always pretty. Prominent donors like J. Paul Getty, Leland Stanford, Russell Sage, and John MacArthur were known to exhibit shabby behavior. (Stanford, for example, employed stock watering, kickbacks, bribery, and collusion.) Nonetheless, each ultimately managed to be very helpful to others.

The genius of the philanthropic mechanism is that it accepts people just as they are—kind impulses, selfish impulses, confusions and vanities, wishes of all sorts swirling together in the usual human jumble—and helps them do wondrous things, even when they’re not saints. Adam Smith taught us that freely conducted commerce can take normal human behaviors—including ugly and mercenary ones—and turn them to broadly productive uses. The same is true in the world of philanthropy. Part of the magic of America's charitable structure is that it can convert common human impulses into truth, uplift, and beauty for all of society.

10. Philanthropy distracts people who ought to focus on business!

The right side of the political spectrum sometimes complains that philanthropy drags too many productive business people into do-gooding, distracting them from creating the commercial bounty that society counts on. But there are reasons to think that philanthropy actually strengthens capitalism.

Economists Zoltan Acs and Ronnie Phillips have observed that the United States has a distinctive means of “reconstituting” wealth via philanthropy. “Philanthropy is part of the implicit social contract that continuously nurtures and revitalizes economic prosperity,” they write. Researchers Tino and Nima Sanandaji agree that the “legitimacy of American capitalism has in part been upheld through voluntary donations.” They note that “much of the new wealth created historically has been given back to society. This has had several feedback effects on capitalism. For one, the practice has limited the rise of new dynasties. Another positive feedback mechanism is that the donations to research and higher education have allowed new generations to become wealthy.”

11. Philanthropy encourages collective thinking, collective responsibility, and collective action—ultimately leading to more government!

This is another concern sometimes launched from the libertarian right, where observers argue that what American society really needs is more individual responsibility, not more giveaways. However, we can just as plausibly turn that argument around, because there is evidence that philanthropy helps limit government sprawl.

When some members of a society become needy, it is a fact that many citizens will insist, “Something must be done!” Most times and places, the responsibility for picking up those in trouble has fallen to the state. America’s energetic voluntary sector, however, allows Americans to meet humanitarian and Judeo-Christian responsibilities to their fellow humans without setting up large government apparatuses and regimenting rules that suffocate individual sovereignty.

By solving basic security hungers and stretching multiple safety nets among the general populace, philanthropy has made Americans much more tolerant of the creative destruction that’s part of a dynamic economy, leaving us with a freer and faster-growing economy than comparable industrial nations. Philanthropy has thus been crucial in allowing America to grow up as an exceedingly rare society where average people can steer their own lives without the state lurking over their shoulder.

12. Donating money is sometimes too much about the giver’s needs!

Giving is a two-way transaction, and the satisfactions of helping are just as real and just as good for human flourishing as the satisfactions of having someone come to your aid. That’s why even people with little disposable income are eager to give, and feel good when they do.

Social science research supports this. In a 2008 paper, three investigators gave study participants money, and then asked half of them to spend it on themselves, and the other half to give it to some person or charity. Those who donated the money showed a significant uptick in happiness; those who spent it on themselves did not.

Other academic work has shown that offering aid can actually make the giver healthier—lowering blood pressure, stress, illness, and mortality. Americans who make gifts of money and time are more likely to prosper and be satisfied with life than non-givers who are demographically identical. A 2014 book by two University of Notre Dame researchers concludes, “The more generous Americans are, the more happiness, health, and purpose in life they enjoy. This association ... is strong and highly consistent. ... Generous practices actually create enhanced personal well-being.”

We shouldn’t overlook—or discount—the good effects of giving on the giver.

Read more stories by Karl Zinsmeister.