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It’s time for philanthropic billionaires to share power
One of those critics, Anand Giridharadas, has pointed out that many billionaires use their philanthropy to deflect potential criticism about their harmful business practices in the hopes of avoiding tighter government regulation of their companies.
Other commentators, such as David Callahan, Rob Reich and Gara LaMarche, have expressed concerns about the outsized influence billionaire philanthropy facilitates on our democracy. These critiques of billionaire philanthropy are also part of the prickly milieu that has prompted professionals to seek my advice.
If you’re a billionaire or even a multimillionaire, there are three things you can do to protect yourself from criticism of your philanthropic giving:
1. Avoid causing harm with your business practices.
If you engage in practices that could potentially harm the environment or exploit workers, your philanthropy can’t save you in the court of public opinion. It may have been true in the past that the wealthy could buy goodwill by making the right charitable donations, but that ship has sailed. There are too many savvy critics, empowered by a myriad of campaign tactics and media outlets, for that to work any longer.
It’s a good thing for society that Jeff Bezos (net worth of $112 billion) has started to become active philanthropically. I’m particularly pleased that he seems to have a passion to end homelessness and that he has pledged millions to help the Dreamers go to college. But no matter how much he gives, it’s not likely to succeed in deflecting criticism of Amazon’s business practices.
Just before Thanksgiving, activists announced that they had formed a new coalition, Athena, in an effort to encourage Amazon to treat workers and communities better. But Athena isn’t likely to tone down its criticism just because Bezos is doing great things philanthropically.
2. Don’t use your philanthropy to circumvent the democratic process.
Sometimes wealthy elites think they know what is best for society, and they use their philanthropy to get what they want.
Let me be clear: I’m not critical of billionaire philanthropists engaging in the policy process or supporting advocacy for important causes. In fact, such giving is smart and strategic. Good social-change philanthropy empowers communities and helps bring unheard voices into the policy-making process. What’s problematic is when donors operate in the shadows and circumvent the role of the public and their elected representatives.
Laura and John Arnold (net worth of $3.3 billion), for example, have become major players in philanthropy over the past decade. Much of their giving is admirable and is of great benefit to society. But the Arnolds took some heat in 2016 for funding an aerial surveillance program in Baltimore that the mayor didn’t know about. They directed money to a private contractor who then worked with the police department to test out the new technology. The funding trail was challenging to unravel in part because the Arnolds made the gift through the local community foundation, not directly. But decisions like these are best made through the democratic process.
3. Share power with those you want to help.
Many billionaires tend to keep most of the power for themselves when it comes to their philanthropy. If they have a foundation, the trustees are usually the donor and their family or closest advisors. The foundation might have staff or advisors who bring other perspectives, but the donor’s opinion is really the one that matters. But that approach is limiting. Good philanthropy is collaborative, and being effective when giving away millions is incredibly different than being effective as an entrepreneur.
Amos and Barbara Hostetter (net worth of $3.6 billion) are a shining example of how to share power in philanthropy. The board of their foundation is now majority nonfamily. The Hostetters are convinced that sharing power at the governance level has helped them make smarter decisions and make more of a difference in society than if they had continued to hold all the power themselves.
Barbara wrote an essay recently that explains how and why they decided to share power. It’s a must-read for any billionaire who is thinking about how to respond to the new environment. In it, she wrote, “At the Barr Foundation, we are convinced our work is more effective and impactful with a large and broadly representative board. Indeed, sharing power at the governance level is imperative to advancing our mission of ensuring that everyone can reach their full potential.”
Wealth inequality is greater than it’s ever been, and scrutiny of the ultra-rich has never been so intense. Billionaires have a responsibility to give back to society, and they can make a tremendous difference. But charitable giving doesn’t make up for harmful business practices, and it must be done in ways that enhance our democracy, not undermine it. Sharing power is a smart move in response to the current environment.
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