Philanthropy vs. Charity

Charity, Philanthropy, and Trusteeship

Editors’ Note: Emma Saunders-Hastings continues the site’s forum on philanthropy vs. charity. She argues that contemporary charitable programs such as GiveDirectly “represent an important advance, and a useful baseline against which to assess other kinds of philanthropy.”

Since 2011, GiveDirectly has offered donors a new way to direct their charitable dollars: they can transfer money to poor households in Kenya and let the recipients decide what to do with it. Advocates of these unconditional cash transfers stress their efficiency (over 90 cents on every dollar reaches poor households) as well as evidence from randomized control trials suggesting that the transfers lead to longer-term improvements in recipients’ lives.

GiveDirectly and other programs for unconditional cash transfers have been celebrated as innovative, even revolutionary. In a sense, this is puzzling: as models of charity go, what could be less innovative than just giving money to the poor? Indeed, one way of understanding the direct-giving movement is as a regression from more ambitious philanthropic models to “mere” charity.

A regression from philanthropy to charity might seem like a bad thing. In the eyes of some critics, charity is short-sighted and palliative at best; at worst, it is patronizing and encourages dependence. These negative connotations are so familiar that many celebrated donors routinely deny that they are engaging in “charity.” They would prefer to describe themselves as philanthropists or entrepreneurs: philanthropy distinguishes itself from charity by taking a long view and aiming at the production of public goods.

This understanding of the distinction between charity and philanthropy became common in the late 19th and early 20th centuries, with the advent of “scientific philanthropy.” After making his fortune in the steel industry, Andrew Carnegie sought to set an example of generosity to his fellow millionaires and warned that the “man who dies rich dies disgraced.” But disgrace could not be averted simply by giving money away. In his “Gospel of Wealth,” Carnegie holds that “one of the serious obstacles to the improvement of our race is indiscriminate charity. It were better for mankind that the millions of the rich were thrown into the sea than so spent as to encourage the slothful, the drunken, the unworthy.” The “true reformer,” Carnegie writes, is “as careful and anxious not to aid the unworthy as he is to aid the worthy, and, perhaps, even more so, for in almsgiving more injury is probably done by rewarding vice than by relieving virtue.”

Carnegie explicitly denies that the poor can be trusted with unconditional transfers, and so he promotes a model of giving in which “the millionaire will be but a trustee for the poor, intrusted [sic] for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself.” The rich know better than the poor, and this should inform the design of philanthropic interventions. Carnegie’s is a paternalist model of philanthropy: a version of noblesse oblige, reinterpreted by a self-made man.

We can identify two distinct prescriptions in Carnegie’s preferred model of philanthropy. The first is that philanthropists should exercise discrimination and refuse to lavish benefits on the unworthy. The goal of distinguishing between worthy and unworthy recipients did not originate with Carnegie. For almost as long as ethical and religious traditions have celebrated charity as a virtue, people have worried about indiscriminate charity as a vice. (And public welfare agencies as well as philanthropists have sought to channel aid toward the “deserving” and away from the “undeserving” poor.) But Carnegie—like many American capitalists of his generation—enthusiastically embraced the ideas of Herbert Spencer, whose evolutionary social theory added new color to old preoccupations. Traditional almsgiving not only rewarded the undeserving; it also bred and sustained dependent poor people. These are still familiar allegations in political debates around public welfare benefits, but they are becoming less common among philanthropists. Contemporary philanthropists are much less likely to pronounce on the moral worth of their beneficiaries, except insofar as they insist (as the Gates Foundation motto holds) that every life has equal value.

Carnegie’s second prescription is that charitable resources should remain under the control of the donor rather than the recipient: altruistic millionaires should exercise a fiduciary duty on behalf of their intended beneficiaries. This second prescription enjoys longer-term influence among people who prize effective philanthropy: donors continue to seek more direct, intensive, and sustained involvement in how grant money is spent. For people who want to design and implement ambitious welfare-improving projects, this impulse is understandable. And in many cases, donors (like Carnegie himself) have good reason to be confident in their own managerial acumen.

What we should recognize, though, is that Carnegie’s second prescription follows from his first: promoting donor involvement and focusing on the production of long-term public benefits began as strategies for keeping charitable money out of the hands of people who could not be trusted with it.

Of course, donors today could find alternative ways of defending the choice to invest in “philanthropy” rather than “charity” – in long-term public benefits rather than cash transfers to individuals. And giving “indirectly” might produce good effects, even when the donor’s reasons for that choice reflect a suspicious or contemptuous attitude toward poor people. Carnegie and other philanthropists have supplied large-scale public benefits that are unlikely to be replicated by the effects of cash transfers to individuals: we should not expect that recipients of cash transfers will pool their money to create libraries and endow research centers.

Nevertheless, programs like GiveDirectly should be celebrated for their forthright anti-paternalism: they treat recipients as competent to decide how to spend charitable funds, without the tutelage of millionaire “trustees.” In that sense, these programs represent an important advance, and a useful baseline against which to assess other kinds of philanthropy. What is wanted today, from donors who prefer to retain long-term control over their philanthropic capital, is a justification for doing so that does not rest on distrust or disrespect for the beneficiaries of their largesse.

-Emma Saunders-Hastings

Emma Saunders-Hastings is a Harper Fellow in the Society of Fellows and Collegiate Assistant Professor in the Social Sciences Division at the University of Chicago. She holds a PhD in political theory from Harvard University and is completing a book manuscript on philanthropy, inequality, and paternalism.

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