As members of the nonprofit community, we've all borne witness to the many changes that have influenced our sector, from the rise of digital technology to the increasing influence of billionaire donors. Because of their wealth and position, billionaires generally get what they want, while society at large must adjust. Various changes to tax law over recent decades, including the 2003 Jobs and Growth Tax Relief Reconciliation Act, the 2017 Tax Cuts and Jobs Act, cuts to the budget of the Internal Revenue Service, and other fiscal revisions, were enacted largely to please the billionaire and corporate class but had major impacts upon the charitable sector.
A recent Institute of Policy Studies report by Helen Flannery, Chuck Collins, and Bella DeVaan titled The True Cost of Billionaire Philanthropy focuses on the effects policy in favor of the wealthy have on charitable giving. It reveals that subsidies for billionaire philanthropy reached $73.43 billion in 2022 (i.e. $73.43 billion that previously would have been collected as taxes and destined to benefit the general public stayed in the hands of billionaires to be used for charitable purposes at their discretion.) That's a sizable chunk of money, but the report cautions that the figure is “almost certainly a severe undercount,” and suggests that the total is more in the neighborhood of $111 billion. But a caveat follows: “And if we also include the capital gains revenue lost from the donation of appreciated assets by individuals, estates, and bequests, the full taxpayer subsidy for charity likely adds up to several hundreds of billions of dollars each year.”
The report also notes that a substantial percentage of the money being donated, even by those who have publicly promised to give large amounts, goes not to immediate social needs but is instead warehoused with intermediary entities such as donor-advised funds, where it's often underutilized or languishes completely.
Those who do give don't always use their money to work toward a better world for everyone, so much as a better world for themselves. According to the Center for Media and Democracy, billionaire Charles Koch, whose Charles Koch Institute partners with the Ayn Rand Institute, spent more than $1.8 billion on charitable causes from 2019 to 2021, but 93% went to groups focused on influencing American policy and politics—i.e. groups the Center considers to be “overtly supportive of Charles Koch’s own political or financial goals.”
One of those goals is to strip power from regulatory agencies that monitor safety, education, the environment, and business activities. Koch lobbyists were responsible for the 2015 change in tax law that partly exempted 501(c)(4) social welfare organizations from gift taxes, making it possible to give a 501(c)(4) highly appreciated stock without paying either gift or capital gains tax. The 501(c)(4) can subsequently sell the stock without paying capital gains tax, or hold it indefinitely, earning dividends the entire time. These organizations can legally influence political legislation with no requirement to disclose their involvement.
For the most part, the holders of great wealth say their good fortune is society's good fortune. Indeed, some have promised to give portions of their money away, and such announcements generate glowing press under the assumption that a sacrifice for the greater good is being made. However, of the 250 signatories to Bill Gates' and Warren Buffet's Giving Pledge who promised to distribute half their money to charity in their lifetime or when they die, 73 who were billionaires in 2010 saw their wealth grow by 224% by 2022 when adjusted for inflation, from $348 billion to $828 billion. In other words, their sacrifice can be argued to amount to effectively nothing because they're accumulating wealth so fast that they don't have the capacity to give it away fast enough to match the parameters of the Pledge.
Meanwhile, amongst the ranks of less generous billionaires the idea that the act of making money itself constitutes a form of philanthropy has gained a foothold. Some of the world's most prominent billionaires have embraced and promoted the notion, but it was venture capitalist Marc Andreessen who recently crystallized its tenets when he published a manifesto last October. In it he wrote, “Technological innovation in a market system is inherently philanthropic by a 50:1 ratio. Who gets more value from a new technology, the single company that makes it, or the millions or billions of people who use it to improve their lives?”
While this thinking has been written about in some outlets as though it's innovative, the idea began to gain traction after a 2007 Wall Street Journal article, but in fact should sound familiar to anyone who was of adult age during the 1980s:
The point is, ladies and gentleman, that greed—for lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms—greed for life, for money, for love, knowledge—has marked the upward surge of mankind. And greed—you mark my words—will not only save [this company], but that other malfunctioning corporation called the USA.”
The speech is from the film Wall Street, directed and co-written by Oliver Stone. Released in 1987 during what is now labeled an era of self indulgence marked by the rise of billionaire celebrities, it was meant as a warning. But to Stone's chagrin it inspired legions of young people to study finance. Putting a stamp of approval—however cautionary—on the pursuit of wealth will tend to play well with a large percentage of the audience, whether they're high schoolers or billionaires. The core message of Wall Street was lost amidst its dazzling portrayals of bounteous wealth.
In Andreessen's October manifesto, he went on to explain that, in his opinion, modern society has been the victim of a mass demoralization campaign “against technology and against life” that has gone on for six decades. This campaign has had various names, including “existential risk,” “sustainability,” “ESG,” “Sustainable Development Goals,” “social responsibility,” “stakeholder capitalism,” “Precautionary Principle,” “trust and safety,” “tech ethics,” “risk management,” “de-growth,” and “the limits of growth.” “We believe technology is a lever on the world,” Andreessen wrote (italics his), “the way to make more with less.”
The Sustainable Development Goals were the product of wide-ranging expertise, and are considered by climate scientists a matter of civilizational survival. Calling them part of a campaign to harm humanity is alarming—as well as ironic, considering the typical billionaire emits literally a million times more carbon than a normal person. Andreessen's phrase, “lever on the world,” is similar in essence to the phrase “motor of the world,” from the novel Atlas Shrugged, Ayn Rand's thousand-page epic written as a celebration of wealthy industrialists occupying the commanding heights of the economic pyramid. Rand laid out an ethos that has been embraced by figures ranging from former Federal Reserve Chairman Alan Greenspan to ex-Apple head Steve Jobs. Clearly, then, the idea that making money is itself virtuous isn't obscure. It's only rebranded on occasion.
But the evidence suggests that no matter how much money is made, not enough will be donated. While there are outstanding benefactors such as MacKenzie Scott, who has given away $14 billion in the last three years, and Ruth Gottesman, who recently donated $1 billion to Albert Einstein College of Medicine for use exclusively as student tuitions, most of the ultra-wealthy haven't been that generous. As of 2023, there were 735 billionaires and 22 million millionaires in the United States, yet the amount of money given to charity from all sources was $499.3 billion. That figure isn't a level of giving that can be called plentiful, and of course billionaires and millionaires can take credit for only a percentage of what was donated.
It's true that philanthropy as a whole would collapse without the contributions of the rich, but that fact is a bug not a feature of the modern economic system. With 63% of new wealth created since 2020 going to the top 1% of the income distribution, according to an Oxfam study, it's no surprise that giving by the wealthy is inching upward. But the bug that has created such unequal income allocation is likely to worsen due to future tax cuts, continued wage stagnation, job losses due to AI, and other factors. The ability to track and assess data is eroding. The True Cost of Billionaire Philanthropy notes that, “[It's possible] to estimate the costs of charitable giving related to the estate and gift tax, but those costs are no longer calculated due to changes in reporting requirements at the federal level.”
The whims and desires of members of the one-percent have even taken a turn toward the bizarre. Oscar Meyer heir Chuck Collins, another outstanding benefactor who at age twenty-six gave away his inheritance, commented in a recent interview with Salon, “The ultra-wealthy are in a quest for immortality. They want to live forever. What they are doing is creating trusts that will allow them to keep their money if they are reanimated in the far future. Ideally, for them that money will keep growing for hundreds of years into the future and they will have even more when they are revived. It really is science fiction made real.”
It sounds incredible at first pass, but a bit of research reveals that what Collins said is true. Sam Altman, Jeff Bezos, Larry Ellison, and Peter Thiel are all investing in cryonics. Law and accounting firms are increasingly creating financial instruments such as “revival trusts” and “cryonic suspension trusts.” Inheriting one's own money isn't legal at the moment because of how the IRS defines death, but laws that impact on cryonics and possible reanimation are being eyed by lobbyists. If it becomes legal for billionaires to bequeath money to themselves, the effect on philanthropy will likely be catastrophic.
It's strange, to be sure, but that's where we are. If the Altmans and Thiels of the world take it seriously, we might want to do the same. In the meantime, until a future of thawed overlords actually arrives, the influence of billionaires on fiscal policy continues to grow. It seems irrefutable now that charity is an area where many of the rich are more interested in seeking financial advantage than giving. The changes wrought to federal policy on their behalf are having deleterious effects to which the rest of us are forced to adapt. What bends, and how far it bends before it's broken, is a question that more observers are asking every day.