Common Criticisms of Philanthropy


It’s very easy to underestimate philanthropy. After all, it is carried out in radically decentralized ways, and most of us rarely see anything other than small fragments in operation. Most philanthropy takes place on a local level. It is often private, anonymous, or simply happening out of the public eye.

Even most donors and nonprofits grossly underestimate the ­problem-solving power of charitable action and how crucial it is to our national flourishing. So not surprisingly there are plenty of out-and-out critics who discount or even mock the idea that major concerns can be addressed via private responses. Philanthropy can be cute, but if you’re serious, they suggest, get big and governmental or go home.

You’ve all heard the complaints: Philanthropy is a drop in the bucket!  Philanthropy is amateurish! Philanthropy is chaotic and uncoordinated! Its programs are a crazy patchwork! Some donors are mean, or vain, or in it for all the wrong reasons!

Let’s look at a few of those claims.


It’s a drop in the bucket!

The next time you hear the gibe above, recall the numbers at the very beginning of this Introduction: The U.S. nonprofit sector now totals to 11 percent of our workforce and 6 percent of GDP, making it much bigger than the “­military-industrial complex” and many other important sectors of our society. Let me add one more number: Nonprofits currently control total assets of about $3.5 trillion. That’s trillion with a “t.”

And here’s a little perspective: The Gates Foundation alone (which is just a tiny sliver of our entire philanthropic apparatus) distributes more overseas assistance than the entire Italian government. It is estimated that in just its first two decades, the Gates Foundation’s overseas vaccine and medical program (only one element of its total giving) will directly and immediately save the lives of 8 million preschool children. Is that a drop in the bucket?

Then absorb this: Members of U.S. churches and synagogues (who are, in turn, just one part of America’s philanthropic army) send four and a half times as much money overseas to needy people every year as the Gates Foundation does! Indeed, private U.S. philanthropic aid of all sorts sent overseas now substantially exceeds the official foreign aid of the U.S. government. As of 2014, the annual totals were $44 billion of philanthropy versus $33 billion from government. (And on top of that, individual Americans, mostly immigrants, sent an additional $109 billion abroad to support relatives and friends in foreign lands.)

When Tocqueville made his classic visits across America he wrote, “In the United States I am even more struck by the innumerable multitude of little undertakings than by the extraordinary size of some of their ­enterprises…. One is therefore in daily astonishment at the immense works carried through without difficulty by a nation which, one may say, has no rich men.” The power of innumerable little undertakings is even clearer today—when wealth and power are spread all across our sprawling continental nation.

Getting seduced by giantism is easy, but it’s an egregious mistake. Just because something is big and shiny and official doesn’t mean it is effective. And just because certain actions are small doesn’t mean they can’t accumulate into mighty rivers of joined effort. When private citizens in every community take care of little things, nearby things, civic needs in their own towns, the net result will often be mightier than any bureaucratic mobilization.

The best metaphors for the achievements of philanthropy are not marching armies or triumphant grand-slam home runs. Think instead of the gradual changes wrought by nature. “For many years a tree might wage a slow and silent warfare against an encumbering wall, without making any visible progress,” writes Lloyd Douglas in his novel The Robe. Then one day the wall topples over. “The patient work of self-defense…had reached fulfillment.”

In one of his poems, Arthur Clough offers a similar image of the power of subtle, gradual action:

…while the tired waves, vainly breaking,
seem here no painful inch to gain,
far back, through creeks and inlets making,
comes silent, flooding in, the main.

These descriptions capture well the way that philanthropy works. Drop by drop, yes. But inexorable, omnipresent, and adding up forcefully.


It’s amateurish!

It’s easy to caricature grassroots solutions. You’ve probably seen the wise-guy bumper stickers saying things like “It’ll be a great day when social issues get strong public funding and the Pentagon has to hold bake sales to buy bombers.” Well, I’m here to tell you that bake sales, and other small-scale acts like them, can do great things.

Lizzie Kander was working as a truant officer in Milwaukee in the 1890s when she discovered that the home conditions of Russian immigrant families were “deplorable…threatening the moral and physical health of the people.” Believing that women were the keys to household success and acculturation, she devoted herself to charitable initiatives teaching cleanliness, child education, good nutrition, household skills, and economically useful trades to Russian women. By 1900 she was deeply involved in running a settlement house that assimilated Jewish immigrants using funds donated by Milwaukee businessmen.

Settlement Ck Bk 1901When additional money was needed, Kander compiled a 174-page cookbook-cum-housekeeping-guide to sell as a fundraiser. The board of directors would not pay the $18 needed to print the book, so she paid for production by selling ads. It became known as the Settlement Cook Book, with the very politically incorrect subtitle, “The Way to a Man’s Heart.” Goofy little ­bake-sale project, right? Well, the book eventually sold two million copies. And the revenue stream from this idiosyncratic effort paid for the mainstreaming of Jewish immigrants in the upper Midwest for 75 years, along with many other charitable projects.

Let me extend the point with another example from the same era and a similar cause. Amid the turmoil of World War I and pogroms breaking out in Eastern Europe and the Near East, many American Jews became concerned for the safety of co-religionists abroad. So, in classic American fashion, a charitable fundraising committee was formed to help resettle refugees, and a goal of $5 million was announced. To kick things off, four anonymous donors pledged $100,000 each if another $600,000 could be raised in New York at a single event. A gala was scheduled at Carnegie Hall for December of 1915. Very soon, requests for tickets were triple the hall’s capacity. On the day of the fundraiser more than 3,000 people congregated outside the building in the hope of being admitted at the last minute.

The event featured a string of speakers describing the dangers Jews faced abroad. Then people began walking to the stage one by one to drop off donations. In addition to cash, slips of paper pledging monthly gifts piled up. The New York Times reported that some in attendance left rings, necklaces, and earrings. When the event ended, the gifts exceeded $1 million. This inspired major donors like Julius Rosenwald, Jacob Schiff, Nathan Straus, and Felix Warburg to make big pledges. Throughout the next few years an estimated 3 million Americans donated, raising many millions for this urgent cause.

Even when they don’t make a big wave like the Carnegie Hall fundraiser, or Lizzie Kander’s cookbook-fed-charity, quirky human-scale projects can do lovely things. There is a little $5 million foundation in Baltimore called the Anna Emory Warfield Fund that has one simple mission: help elderly women who want to stay in their homes do so “in the style to which they are accustomed.” Grants can be as little as a few hundred dollars to pay for a handyman to repair overflowing gutters, or a few thousand dollars to catch up on mortgage payments or weather a temporary health crisis. No one has any illusions that these grants are changing the world. But for a widow at risk of outliving her savings, or a retired teacher who doesn’t have the means or inclination to enter a nursing home, this quiet support can be a godsend that prevents life from spiraling out of control.

Programs that grow naturally from the bottom up rather than the top down not only collect together into larger actions, but have overlapping qualities that can magnify their effect. Piece together a handyman grant here, a meal-delivery service there, and a volunteer program for driving people to doctor’s appointments, and independent life remains possible. Add a video-medicine program that lets you consult with out-of-town specialists, and a hospice when the end draws near. A family-building effort down the street, an alternative school across town, and a ­county-wide college scholarship program might make all the difference to a young person. Take an inspiring donor-funded museum nearby, and a devoted effort to get local kids out of foster care, and your community feels different. Cumulate these kinds of philanthropic projects and soon you have a gorgeous, continually regenerating, transcontinental quilt that covers millions of local needs and longings.

Amateur webs of giving and volunteering make every one of our home towns more livable, richer, safer, more charming, more interesting. The varied and sometimes underappreciated gifts that donors offer their fellow citizens fill human hungers that would otherwise be ignored or foisted on impersonal and less effective state agencies. This work is a great strength of our country.


It’s uncoordinated!

Even loyal donors will sometimes complain that the factor limiting philanthropy is that it’s not coordinated. Rules vary all over the place. It lacks uniformity. There are holes. Everybody gets to make their own decisions. People go off in many different directions. No one’s in control. Chaos! The Wild West! Some observers are really bothered by a lack of standardizing forces that get everyone marching in the same direction (as government programs do).

There’s one problem with that rather authoritarian critique: Non-­coordination can just as easily be considered an advantage as a problem. Recent decades have taught us that in economics, technology, social practice, and community life, decentralized multiplicity can be a saving grace. That is even truer in philanthropy than in many other areas.

I worked for three years in the West Wing, overseeing domestic policy for the President, and one of the deepest impressions that work made on me was how heavy the tread of the federal government is. We’d take up a problem and I’d realize, “whatever we do, however well-considered our reforms, we are going to discombobulate millions of people.” Since the entire federal apparatus swings in one direction with any rule change, it is very hard to test competing policies, to turn faucets on slowly, or to allow differing solutions in different places. Almost every new federal policy turns over the apple carts of many completely innocent parties and disrupts the settled expectations of large numbers of families and communities. I left the White House hungry for less monolithic, less uniform, more decentralized ways of attacking problems. 

Humans are not predictable robots, so the healthiest forms of ­society-building often proceed in an empirical way: test, experiment, undertake lots of trials, recognizing that many—perhaps most—will fail. But so long as our whole society isn’t swerving in unison in one direction, the errors will generally cancel each other out, the failures will be exposed, and the successful ventures will become visible and then be copied.

This is an argument for dispersal of resources. For divided attacks. For independent assessment. Exactly the things that private philanthropy provides. 

Yes, you will be told that breaking the responsibility for social ­problem-solving into hundreds of pieces and then handing these off to thousands of charities and foundations and private doers of good is medieval, and will never be effective in our modern world. Critics will portray it as mere dabbling in the face of giant pressures. Such criticism, however, seriously misunderstands the power of the human anthill, at least under American organization. 

A wonderful new word was coined in 2003 to describe a reliance on dispersed authority to fix things: crowdsourcing. The effectiveness of chewing through big issues via lots of small bites by dispersed participants is a fundamental reality understood by wise humans for millennia. But it has been brought into high relief by aspects of the computer revolution.

In the early years of computing (not very long ago), the largest supercomputers were extraordinarily complex centralized devices, where all the wires led to one extremely expensive custom-made processing chip. Today, there is no king processor in a supercomputer. The latest versions are made with around 40,000 plebeian, everyday chips just like the one in your Dell, all working in democratic parallel. And this so-called “distributed intelligence” has turned out to be vastly more potent than the elegant genius of the old centralized Cray supercomputers that worked from the top down.

Forms of distributed computing are being applied to many of today’s most difficult problems. For instance, the vast amounts of astronomical data that need to be sifted through in order to discover a possible planet transiting a distant sun, or a possible radio signal from another civilization, are being processed by hundreds of thousands of volunteers on their home computers.

Or take the Linux computer operating system—the computer code which has become the backbone of the digital business world. There is no master control over what goes into Linux. Software drafts are passed around over the Internet, where thousands of informal contributors just add and subtract and tinker with the code and then put the result out there in the marketplace. If that sounds like chaos, you haven’t been paying attention. This so-called open-source method of creating software solutions has turned out to be remarkably orderly and powerful, and the result is that Linux quickly turned into the most flexible and effective computer operating system available.

The pattern of complex problems being solved by small actors working locally and independently without heavy central direction is not just the story of the Internet, it is a phenomenon common to much of technology, and biology, and human history.

Some years ago, I read a book called Ants at Work, written by a ­Stanford entomologist who spent 17 years studying a large colony of harvester ants. The author’s goal was to learn how these tens of thousands of tiny creatures coordinate the specialized tasks essential to colony health—food harvest and storage, care of offspring, tunnel digging, garbage toting, war fighting, etc. Who’s directing the show to make sure the right work gets done at the right time?

The answer, she discovered, is that nobody is in charge. No insect issues commands to another. The colony operates without any central or hierarchical control. These complex societies are instead built, she reports, on thousands of simple decisions made by individual creatures based on what they see around them, with those many microdecisions melding together to yield an efficient macro-result. I suggest the right term for this is self-organization, and it’s something of an iron rule throughout the natural world, not only among bugs, but also at the very top of nature’s pyramid—in human society.

As a simple example of the general superiority of decentralized ­problem-solving, consider what happens every fall weekend in football stadiums. Even a boozy crowd can drain itself from a packed oval in a matter of minutes. Yet emptying that stadium by commanding each person from some master perch, as readers with some background in ­mathematics or statistics will know, is an almost insoluble problem. You could cover the field from goal post to goal post with computers and programmers, and you’d end up frustrated. There are just too many ­variables—80,000 people, 25 exits, scores of stairways, thousands of stairs, pillars that block certain routes, backups in specific aisles; it’s just too much to orchestrate.

Yet leave each Joe to himself and he’ll be opening the door to his Chevy before the scoreboard lights are cool. He may not realize that he’s exhibiting what scientists call “large-scale adaptive intelligence in the absence of central direction.” But he is. Less trivial examples abound: vast and absolutely crucial human tasks like food distribution, for instance, are managed in the U.S. without any central organization. This is not just acceptable, it is an advantage, increasing variety and innovation and customization to meet specific circumstances.

Thanks to technology making the mechanics easier, crowd-based ­problem-solving is on a sharp upswing today, including in philanthropy. Did you know that way back in 2012, Kickstarter roared past the National Endowment for the Arts in providing money for arts and culture projects? Charities like ­­ offer remarkable opportunities for Americans to fund grassroots educational help. The fascinating philanthropy ­ collects ideas from U.S. Special Forces operators in poor, dangerous countries on ways to enhance stability and reduce the temptation to violence and radicalism by making small improvements in community life. Donors view choices online and sign up to send sewing machines to Iraqi women, or educational supplies to a school destroyed by terrorists in the Philippines, or handheld spotlights for police working the Pakistan-­Afghanistan border. Even the Smithsonian launched a crowdfunding campaign in 2015, seeking $500,000 to restore the space suit worn by Neil Armstrong on the moon. The effort quickly exceeded $720,000, given by 9,500 people.

Dispersed authority and funding may be new to military work, or to the Smithsonian. But it is the longstanding backbone of philanthropy. I’ll plant my little seeds over here, and you till your garden over there, and soon the world turns green and lovely.

This is not a matter of ideology, or of sweet-breathed philanthropists trumping wicked government officials. It is a simple matter of practicality and surrender to the facts about how humans accomplish things most effectively. Local citizens tend to have better information than remote authorities on the optimal ways to solve their problems. Trying to separate good schools or good doctors from poor ones is a very hard task from Washington, but people in the neighborhood can usually steer you right away to either. Nearby helpers are also likelier to tailor solutions to specific circumstances and to create varied answers instead of just one template for everybody. Decentralized solutions tend also to be more respectful of individual sovereignty and personal preferences.

So lack of coordination and uniformity needn’t be considered a problem. Indeed, it is often helpful. To take just one example, philanthropists can take much bigger risks than a government program creator would dare because the philanthropist knows he’s not betting the entire national farm. He can try something new, retune as it unfolds, and expand or walk away depending on how it succeeds.

What do you suppose ran through the minds of the foundation officials who were first pitched on the idea of a bank built on $27 loans to rag pickers and fruit-cart pushers in Bangladesh? Probably that it sounded wildly improbable. Thank goodness they gave it a shot anyway. And thus was microfinance born, which grew quickly into a strapping poverty-squashing grownup.


It’s a patchwork!

Our society has rapidly moved beyond the old industrial-revolution paradigm of the one big factory. We now rely much more on networks and ecosystems of smaller providers working in loose synchronization. A perfect example of this is one of the great philanthropic creations of the last generation—charter schooling.

The very largest charter-school chain in the nation, KIPP, operates a total of 183 schools. Meanwhile, there are now more than 7,000 charter schools in total. So this is a radically decentralized sector. Most schools are solo operations or part of a very small group running just a handful of campuses.

And this allows a riot of choices. There are math and science schools. Schools built around the Great Books. Hippie schools without walls, doors, or other controlling features! Work oriented schools! Quasi-­military schools where the all-male student body wears uniforms and has ranks! Academies that only assign books by gentle left-handed poets! The charter movement is built on the idea that there is no single definition of what constitutes a good school, that education is an exercise in matching each child’s temperament and gifts with an institution that can bring out his or her best self.

Part of this bubbling variety is churn. Every year now, about 650 new charter schools open their doors and offer their new neighborhood some fresh approach. And in that same year, more than 200 schools will close down, because their offerings were not well embraced.

Here’s a Rorschach test: Are those wildly different schools, and that annual churn, signs of inconsistency, patchwork, and trouble? Or are they healthy signs of adaptation to what people want? If you prize stability and predictability, the conventional public school (which is basically impossible to close down even when it’s abysmal!) may be your preference (at least for other people’s children). But if it seems humane to offer citizens more of what they prize, and less of what they are choosing to walk away from, then the constant gurgling and gap-filling may be a reflection of the very kindest and gentlest sort of philanthropy.

Within the charitable sector itself there are even further levels of customization and “inconsistency.” The KIPP schools are an example. While they have a few bedrock principles and uniform high standards, schools in various regions are given a wide degree of independence and autonomy for coping with their own particular needs.

Goodwill Industries, another extraordinarily successful charity, is likewise more interested in results than in uniform rules and operations. Goodwill’s operation is vast: workforce training provided to 26 million persons annually in a great variety of fields; over $5 billion in revenues; more than 3,000 stores in the U.S., Canada, and 13 other countries. Yet each of the 165 Goodwill regional branches is autonomous in policy and funding, and has its own board of directors. Local branches can assist each other, and can request advice or aid from the world headquarters. But the central office’s budget is dwarfed by those of affiliates in cities like Milwaukee and Houston.

This same lack of monolithic uniformity can be seen across the philanthropic sector—in everything from the 1,400 independent local chapters of Habitat for Humanity, to the very different regional branches of the ­Appalachian Mountain Club that maintain thousands of miles of hiking trails in their own distinctive ways. This locally varying “nicheification” of service provision is also a strong trend in private business today. The Netflix company actually has a catchphrase for the way it puts this principle to work inside the firm. It wants its various corporate teams to be “highly aligned, yet loosely coupled.” The vision, in other words, needs to be shared, but the execution should be decentralized.

That’s how the Marriott company now does hotels, for instance. Instead of one big company offering one standardized service, they offer customers more than 30 different kinds of lodging choices, depending on where you are and what you need. Someone staying put for a while can pick a Residence Inn or Fairfield Suites. If you want a luxury experience, Marriott has its Ritz-Carlton and St. Regis subsidiaries. Aloft or W are for people wanting a boutique experience.

These aren’t just fake nameplates on the same company. Each of these spinoffs of Marriott has its own rules, its own managers, a separate budget, and special ways of serving different needs. Even further out on the spectrum of decentralized, personalized solutions in business today you have Airbnb. It is a loose network of tens of thousands of independent local service providers, and is incredibly varied, efficient, and helpful to people in need.

This is the direction in which American businesses are racing at high speed. The charitable world has operated that way for generations.


Some donors aren’t nice!

Another reality which sometimes gets critics fulminating and makes philanthropists defensive is the fact that certain donors are mean, or selfish, or seem more interested in getting their name on a building, or a tax break, than in altruism. In my experience, human kindness and empathy are commoner among loyal donors than among an average cross-section of the population. And while journalists love to mock “philanthro-me” and “egonomics,” the truth is that vain, peacock donors are not the norm. “Humility is far more common in the top tiers of philanthropy than egotism,” agrees philanthropy writer David Callahan. “Our writers at Inside Philanthropy have come across innumerable donors who are engaged in high-level giving, with barely a peep. They issue no press releases about their gifts, maintain no website, turn down all media inquiries, and otherwise stay mum about great acts of generosity.”

That said, it is unquestionably true that there are some philanthropists who do their good for not-so-good reasons. Indeed, certain of these men and women are laughably far from angelic in their motivations.

J. Paul Getty was a cheapskate who made visitors to his estate use a pay phone at a time when he was one of the richest men in the world. He was a serial womanizer whose own father didn’t trust him. When his grandson was kidnapped for a $17 million ransom he kept dickering for a lower payment until the criminals cut off the boy’s ear and mailed it to grandpa. Even then, Getty only put up as much of the ransom as was tax-deductible ($2.2 million), and gave his son the rest as a loan—at 4 percent interest. Yet Getty gave the world one of its most sublime collections of Greek and Roman art, a gift that will elevate souls for centuries to come.

Russell Sage was a notorious miser and convicted usurer. He cheated his wife’s father in business. When a mad extortionist dynamited his office, he used a clerk as a human shield, then refused to pay compensation for the man’s injuries. Yet Sage’s fortune created one of the most influential early charitable foundations in the country.

There is no denying that corruption made Leland Stanford rich. To build his railroad fortune he employed kickbacks, bribes, stock watering, collusion, monopolization, and political manipulation. Yet genuine grief over the death of his son motivated Stanford to use his ill-gotten lucre to benefit the children of California (and ultimately all of humanity) by ­creating Stanford University.

George Eastman could be as cold-blooded as he was brilliant and generous. He asked his doctor to outline the exact location of his heart on his chest. Later he reclined on his bed, centered a pistol where the doctor had drawn, and committed suicide rather than face old age.

So philanthropists are not always pretty. And even when they do bring the best of motives to the task, their efforts can disappoint. As Andrew ­Carnegie established the Carnegie Endowment for International Peace with a $10 million grant, he optimistically included a stipulation on what the group should do after it ended all armed conflict: “When the establishment of universal peace is attained, the donor provides that the revenue shall be devoted to the banishment of the next most degrading evil.” He wrote that in 1910. Oops.

Are there stupid or cruel givers? Are there dumb projects launched by donors? Of course. But charitable programs that don’t produce results soon die or transform into something more useful. When was the last time you saw a dumb government program die?

And here’s the fascinating secret of philanthropy: Charity doesn’t have to come from people who are charitable. You don’t need to be an angel to participate. In fact, motivations of any sort aren’t that important. The genius of the philanthropic mechanism is that it takes people just as they are—kind impulses, selfish impulses, confusions and wishes and vanities of all sorts swirling together in the usual human jumble—and it helps them do wondrous things, even when they’re not saints.

Philanthropy is a machine that is able to convert the instincts and actions of even the meanest of men into truth, uplift, and beauty. 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. This is as true in the world of philanthropy as in business. Base impulses like greed, insecurity, image-laundering, and egotism can become gold, or at least good useful brass.

Happily, most philanthropy is the work of decent and earnest men and women. Even the worst misanthropes, however, are regularly redirected into doing useful, and even great, things for all of society. That is part of the power of America’s charitable structure.


Continue to Big-Picture Benefits of Philanthropy