One reason for this change is the huge increase in the number of multi-billionaires. Another is the impotence of governments who have limited their options by spending their treasure on entitlements. Lastly, the ineffectiveness of charities in measurably improving the human condition has spawned a whole new industry of consultants to improve their effectiveness.
The very rich can bypass the impotence of government and the ineffectiveness of charities by becoming change agents themselves. The best-known examples are Bill Gates and Warren Buffett, whose foundations spend $4 billion annually, but there are many others. However, they give far more than mere money. They give management expertise, connections, and — most importantly — accountability. Efforts or charities that don’t produce the desired results stop receiving funds immediately, without asking any bureaucrats or taking any votes. Makers get rewarded, and takers get cut off.
While I applaud this and hope it accelerates, especially with the merely-rich at the local level, I have been trying to fit that concept into the Ayn Rand philosophy of no monetary contributions to charity. She even wrote a book entitled The Virtue of Selfishness. Self-interest, she said, is a person’s only interest.
Basic Austrian economics states “if you want more of something, subsidize it — if you want less, tax it.” It is the same concept as not feeding stray cats. The more money you give to charity, the more poor people you create. Is that true?
On page 271, there is an interesting anecdote about how Gates has been praised for his generosity and, at the same time, condemned for still keeping billions for himself, while living in a 66,000 square foot mansion worth $100 million. (The notion that the rich should give away everything must surely cause Rand to turn over in her grave.) If one will be criticized for the largest charitable contribution in history, what is the point?
One of the problems with financial planning and tax policy discussion is that it assumes everything revolves around financial decisions. There really is more to life than taxes or financial planning. I know the pittance I drop in the offering plate at church makes me feel good, with the knowledge that the church will be there for people who need spiritual help. I know the time I spend at Rotary, painting houses for the poor or elderly is time well-spent. Or, delivering Meals-On-Wheels each month. On October 27th, I will spend the day providing financial counselling pro bono for the poor. Ayn Rand would not approve of my church donation and probably would not approve of the rest either, but she would accept the fact that I do it for the right reasons — it simply feels right to me, and I sleep better, which is definitely in my self-interest!
At any rate, for a thoughtful analysis of the latest evolutionary step in charitable giving, I highly recommend this book. I suspect the next evolutionary step will be philanthrocapitalism at the local level by the merely-rich . . . or at least, I hope so!
