A recent Vox Article, “Why is there so much secrecy in philanthropy? Annual top donor lists don’t always include the top donors. A philanthropy expert explains why,” has an interesting discussion of major philanthropy (perhaps more mega-philanthropy) and the lack of transparency. There are some very good quotes from US expert Benjamin Soskis.
Here are some of my quick comments after reading the article.
This article and the discussion of anonymity remind me that there are two types of anonymous gifts. The first type is one where the donor really wanted to be anonymous. The second type is where the donor wants the gift to be labelled as anonymous, but the donor wants everyone and their dog to know that you gave the funds!
Clearly not much need for the first type of anonymity. Major donors almost always want recognition even if they are “forced” to publicly discuss the donation. It is funny to see some donors who are obsessed with recognition and include pages in their agreement on recognition, saying that they were adamant with the institution that there would be no recognition, but they were “convinced” by the institution for the benefit of the institution to discuss the donation!
Major donors definitely don’t want the actual details of the donations made public. Very few will disclose the donor agreements. Or side agreements. Just in case you are wondering it is not that hard to post publicly a word document or an executed version in PDF! Even if the donor does not know how to do that, I am sure the institution has someone who can help.
Some of the more obvious issues with a large gift are sometimes only a tiny percentage can actually be used in the short term or very significant restrictions on the use of the funds which correlate with donor interest and benefits, but not necessarily institutional benefits. Also, how much is actually coming from the donor versus friends or business partners of the donor? We will never know because this level of detail is often omitted from the press release.
Less overtly, how much institutional resources goes into maintaining these relationships in some cases over decades. Also how much can the soft pressure of alienating a donor and/or not receiving more funds or not receiving the initial gift affect the direction the institution takes or its public communications?
Legislation should be brought in that all major gifts that include restrictions on the use of the gift, be publicly disclosed. If that is not going to happen then regulators should at least insist that they are provided with copies of all major gifts. There would be nothing like “CRA is going to read the gift agreement” to result in a lot fewer questionable requirements in a gift agreement.
Not much discussion of the huge tax benefits that major donors get. Also, in some cases they receive significant leverage and recognition. It depends on the institution, but sometimes they are getting an obscene amount with some institutions.
There should be a real discussion about when are tax benefits merited when it comes to donations. Perhaps government should not provide tax benefits if, for example, the person is going to be receiving recognition for more than 20 or 40 years? Perhaps less tax benefit if it’s a restricted gift? Perhaps less tax benefits, if an institution has a certain amount of assets that will allow it to operate without any external funding for, say, two years?
Perhaps wealthy people should get the same tax benefit as middle-class people. Oh crap, in the US that means no tax benefit. But in some countries like Canada, there are significant tax benefits that could be worth 75 or 80%. When the donor is only really contributing 20% – who then is the real donor – it seems like it is often other taxpayers who are the real donors.
I always love the references to Donald Trump and the polite mention that he is a “real outlier in certain respects”. Would be nice to know when where the other respects that he was not an outlier. Also please do let me know what Donald Trump did that no other philanthropists have done. Also, we know so little about some of the philanthropists that he might not be such an outlier. Certainly, his sexual harassment of people, is not that different than some of the allegations out there about some philanthropists and how they treat fundraisers!
The lack of transparency is bad for society, bad for charities, and also bad for donors, especially major donors, as increasingly, people will be questioning some of their motives and actions.