http://www.theatlantic.com/politics/archive/2014/10/is-philanthropy-good-for-democracy/381996/
A pretty long article but I think he does a pretty good job of making the case the large foundations, especially ones that are able to affect government policy changes, should be better monitored to make sure they aren't doing more harm than good.
Their hearts may be in the right place, may be, but when you have an organization that is almost as powerful as a government and not accountable to anyone but a handpicked board then the public has the right, or even the responsibility, to keep a close eye on them.
There are credible arguments on both sides about how much effect a change in the deduction would have on charitable giving in the United States. I tend to believe the studies—such as those by the Center on Philanthropy at Indiana University—that assert that there would be a modest effect, if any. But let’s assume for the sake of discussion that the effect would be more than modest—that wealthy Americans in particular would open their checkbooks for causes dear to them a bit less often without the incentive of a tax break. Is that a price worth paying?
I think so. We had a once-in-a-generation opportunity to advance universal health care, benefitting many millions of uninsured Americans, saving lives, staving off bankruptcies, and indeed saving public dollars that would otherwise be devoted to emergency-room care. We had a means of helping to pay for it by a slight alteration in a tax break used by the most well-off—and, undoubtedly, the most generously insured—members of society. Yet the collective leadership of American philanthropy—a leadership, by the way, that had been with few exceptions silent about the redistribution of wealth upward through the Bush tax cuts, silent about cuts in social programs, silent about the billions of dollars spent on the wars of the last decade—found its voice only when its tax exemption was threatened, and preferred to let the government go begging for revenue elsewhere, jeopardizing the prospects for health-care reform, in order to let rich, well-insured people go on shielding as much of their money as possible from taxation.
As you can tell, this steamed me up a lot, and it did again later when the same script played out during the fiscal cliff crisis. What that situation made plain to me was not just that philanthropy is quite capable of acting like agribusiness, oil, banks, or any other special-interest pleader when it thinks its interests are jeopardized. It helped me to see that however many well-intentioned and high-minded impulses animate philanthropy, the favorable tax treatment that supports it is a form of privatization. Money that would otherwise be available for tax revenue that could be democratically directed is shielded from public control for private use.
As Rob Reich, co-director of the Stanford University Center on Philanthropy and Civil Society, wrote in a 2013 cover article in Boston Review, “What Are Foundations For?”:
Philanthropy in the United States is not just the voluntary activity of a donor. Philanthropy in general, including the work of foundations, is generously tax-subsidized. The assets transferred to a foundation by a donor are left untaxed in two respects: the donor makes the donation more or less tax-free, diminishing the tax burden she would face in the absence of the donation; and the assets that constitute a foundation’s endowment, invested in the marketplace, are also mostly tax-free. …[F]oundations are partly the product of public subsidies. They are created voluntarily, but they result in a loss of funds that would otherwise be tax revenue. In 2011 tax subsidies for charitable giving cost the U.S. Treasury an estimated $53.7 billion. So foundations do not simply express the individual liberty of wealthy people. We all pay, in lost tax revenue, for foundations, and, by extension, for giving public expression to the preferences of rich people.
A pretty long article but I think he does a pretty good job of making the case the large foundations, especially ones that are able to affect government policy changes, should be better monitored to make sure they aren't doing more harm than good.
Their hearts may be in the right place, may be, but when you have an organization that is almost as powerful as a government and not accountable to anyone but a handpicked board then the public has the right, or even the responsibility, to keep a close eye on them.