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Into the Classroom: A Lesson on Philanthropy and Economic Inequality

By Guest Blogger — May 27, 2016 11 min read
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Note: Our guest-blogger this week will be Megan Tompkins-Stange, an Assistant Professor at the Gerald R. Ford School of Public Policy at the University of Michigan. Her first book, Policy Patrons: Philanthropy, Education Reform, and the Politics of Influence, will be released June 1 by Harvard Education Press.

“So long as I confine my activities to social service and the blind, they compliment me extravagantly...But when it comes to a discussion of poverty, and I maintain that it is the result of wrong economicsthat the industrial system under which we live is at the root of much of the physical deafness and blindness in the world—that is a different matter!” (Helen Keller)

As a Rob Reich acolyte, I thought it only fitting to end my brief tenure at #RHSU with a few reflections on key normative challenges in education philanthropy. Also in honor of Rob, who is by far the best teacher I’ve ever known (though apparently he didn’t start out that way), I’ll ask these questions as I would in my undergraduate seminar on philanthropy. The course is funded by the Once Upon A Time Foundation, which makes grants of $50,000 or more annually to classes that engage an experiential philanthropy component, wherein students are given responsibility to re-grant the money to nonprofit organizations as they see fit.

PUBPOL 475: Philanthropic Foundations in the Public Arena, 2016 cohort. Best students ever (plus my dog)

So, imagine you’re in the classroom and, as Rob would say, “Let the dilemma grip you.” (As a caveat, I make it a point to never let the students know what I think about a particular issue, until the last day of class, so that I don’t bias their thinking in any way.)

You have $50 million—to give away in a philanthropic manner. You’ve decided, as a loyal reader of RHSU, that you’ll focus solely on the field of education. Take 60 seconds to brainstorm about how will you spend it. What will you do?

Will you make larger gifts to a small handful of organizations, or smaller ones to many? Will you give to areas of the highest need, or organizations that pursue causes that resonate with your own values and interests? Will you seek out large established organizations that are professionally managed and have robust fundraising infrastructures, or smaller grassroots organizations that are run by volunteers? How much do you value the ability to measure impact, and what do you seek to hold the grantees accountable to?

Is your head spinning yet? The questions are so challenging as to be overwhelming. Aristotle wrote, “To give away money is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man’s power nor an easy matter.” As societies become more complex and social welfare needs grow, giving away money becomes much harder. In fact, institutional foundations emerged a century ago to address ballooning challenges due to mass immigration, urban relocation and industrialization, whereas in the 1700s and 1800s, the church and local almsgiving were the primary providers of social welfare. Since their origins, mainstream foundations have consistently attempted a rationalized approach to giving, attempting to assess where and how to give via the tools of empiricism - a shift, at its core, from a reliance on the sentiment of church-based religious ties to a value on more dispassionate science. This desire has continued to the present day, with the recent rise of “effective altruism,” the idea that money should be put where it can produce the biggest impact for the most people (which is often described using words such as “rigorous”, “reason,” “nonsentimental”, “rational”, “effective”, “efficient”, and “maximizing”).

But outside of algorithms, emotionally unbiased calculations and objective assessment, we often forget that the answers to these questions are determined by value judgments—where we put our money reflects what we hold to be important based on our core beliefs, as the Bible says: “Where your heart is, there your treasure will be.” And philanthropists—my students included—have competing values. What one person sees as a highly ethical course of action may be unethical to another. So how do we determine what the “best” course of action is? In short, to quote highly influential ethicist Peter Singer, what’s the most good we could do?

To frame these discussions in class, we consider the idea of instrumental vs. expressive grant making— wherein instrumental approaches advocate giving to organizations that provide critical needs, and expressive approaches emphasize that people should use giving as a mechanism to express their values and cultivate emotional ties with causes. With apologies to the UM Office of University Development, our class discusses the example of University of Michigan alum Steven Ross, a long-time benefactor who recently gave $200 million to the university‘s Athletic Department and to the Ross School of Business to construct a new building (which, as an aside, also required a controversial donation of $400,000 to move a massive oak tree in order to build in its place).

The $400,000 move of the 200-year old oak tree.

The question we debate: Is the $200 million gift to the Business School and Athletic departments a justified one, given that these are already well-resourced departments in the university, or should the money have been given to less wealthy parts of the university—or better yet, to any of the myriad nonprofits working in the southeastern Michigan region? Instead of $200 million to the University of Michigan, should Ross have given $500,000 to 400 nonprofits, or $50,000 to 4,000 nonprofits?

The instrumental approach would argue for the latter—that $200 million would be much “better spent” outside of the university, in high-need contexts such as Detroit, where 30% of citizens live in poverty. The expressive approach, conversely, would argue in favor of Mr. Ross—that the $200 million to Business and Athletics aligns with his deeply held values and experiences at Michigan, and gives him an opportunity to give back to the institutions that shaped his life. Furthermore, if he gave money to causes he didn’t necessarily have a personal tie to, such as Detroit schools or local hunger charities, his overall giving might be less generous.

The instrumental approach is typically appealing to students early in the semester. But then we push further. If we were to decide on an instrumental approach, how will we determine which organizations have the highest need? Is Detroit the best place to spend the money, or should it be invested internationally, where abject poverty is much more extensive? Should we target the money to refugee camps in South Sudan or efforts to provide basic medical care for rape victims in the Congo?

Furthermore, given that our class is part of an elite university with a student population that is predominantly white and of high socioeconomic status, what are the implications of giving money to contexts that students are not a part of? Detroit as a city has been shaped historically by racial discrimination against black residents, and distrust of being used as a “lab” for university students. Similarly, in the global South, palpable ethical issues exist about paternalism and the harm done from external philanthropy, which Teju Cole describes as the “white savior industrial complex.” Given these issues, should we invest the money in Ann Arbor, a community that we know well and could potentially form relationships with grantees? Or is an investment in Ann Arbor a more expressive gift within a relatively affluent community that does not maximize our giving per dollar in terms of ameliorating human suffering?

Finally, and most provocatively, should we be giving philanthropically at all if we want to create lasting change? We discuss the very role of philanthropy itself in unintentionally perpetuating this human suffering. Currently, 50% of the world’s wealth belongs to 62 people, while 51% of American children live below the poverty line. Various studies have found that foundations give less than 30% annually to nonprofit organizations that directly serve the poor, and less than 3% annually to organizations that attempt to address the roots of economic inequality. Given these facts, we ask, does a cultural celebration of philanthropy actually keep the economic structures in place that cause poverty to persist?

This question confounds my students to their cores, who typically are highly engaged student leaders with experience leading charitable endeavors, volunteering, and being part of social justice efforts on campus. They have entered class believing that philanthropy is by nature a source of “good,” and generally do not connect it to deeper economic systems. We tackle these questions by discussing two positions: one, that achieving more equitable economic distribution is unrealistic, and that philanthropy has an important, if not dominant, role to play in alleviating poverty; and two, that equitable economic distribution is an important goal, and that philanthropy is a second-best response. Essentially, students are asked to argue the costs and benefits of living in a capitalist society with great wealth inequality that is redistributed through voluntary means, or living in a socialist society where no one person could accumulate massive wealth. Should we attempt to reduce economic injustice on a structural level through redistribution? Or should we look to more aggressive philanthropic giving as a way to alleviate the consequences of economic injustice?

The students hear voices from across the spectrum on these issues. Peter Singer agrees with the latter statement, praising a young Wall Street trader who intends to give away half his money to charity; Singer also calculates that the Millennium Development Goals could be addressed by private philanthropists alone if they gave greater percentages of their wealth. But, as Peter Buffett argues, does this approach simply attempt to correct with the left hand what the right hand is doing? In other words, does philanthropy by the most affluent correct or amplify the negative consequences of economic injustice?

As I write in Policy Patrons, even three to five years ago, these thought exercises would have been impossible to engage in beyond a purely academic perspective. To a mainstream audience, this discussion would have been dismissed as radical, and any mention of possibility of economic injustice was stigmatic (to quote Dom Helder Camara, “When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist”). For example, in 2011, one of my interviewees said: “There’s worse ways for rich people to spend their money than trying to improve public education; we’re lucky that Bill Gates thinks education is important.” Another argued: “I don’t know that the concentration of influence in an institution like a foundation is any better or worse than the vast accumulation of individual wealth, and I don’t see Americans looking to take that on.”

But in 2015, economic inequality became a major campaign issue, the Ford Foundation and others announced that their grants would entirely be focused on addressing economic inequality, and in a development that shocked me, my interview subjects began to discuss the idea that the system of philanthropy is predicated on the existence of income inequality: that is, people can’t give away money to others unless some people are wealthier and some people are poorer. In the words of one former Gates official, the field should begin critiquing “the game” itself and recognize the institution of philanthropy as intertwined with broader concerns about inequality.

Ultimately, my students emerge from class with a fundamentally altered view about philanthropy and the complexities of “doing good.” Their own ethical values are changed and developed—students who come into class wanting to give in a highly instrumental fashion often come out on the other side, and vice versa. Students who are headed for Wall Street develop alter egos as “social justice warriors,” in the words of one of my students. And it is this process of challenging assumptions that generates the real impact of the $180,000 investment the Once Upon A Time Foundation has made in the class over the three years I’ve taught it. While the money will benefit nine organizations that the students have elected to fund, the foundation’s real long-term impact is the students themselves, who achieve a kind of praxis —their eyes are opened to the depth and nuance of these fundamental challenges, and will use these insights towards more thoughtful engagement in philanthropy in the future, and ultimately, hopefully, to do even more good.

Thank you so much for reading my ruminations over the last four days. I’d like to take this opportunity to endorse several of my friends and fellow junior scholars who I think are doing the most amazing work in the field of education and philanthropy: Sarah Reckhow, at Michigan State University; Erica Kohl-Arenas, at the New School; Jeff Snyder, at Cleveland State University; and Maribel Morey, at Clemson University. I’ve really appreciated the exchanges I’ve had with Rick’s readers and look forward to continuing them in the future. Anyone in Michigan or the surrounding areas is invited to attend my book launch at Literati Bookstore in Ann Arbor on June 15 at 7:00 PM; details at http://www.literatibookstore.com/event/megan-tompkins-stange-policy-patrons.

--Megan Tompkins-Stange

The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.