America’s Philanthropic Values
Last week, I had the privilege of participating in the Fourth Annual Family Office Conference sponsored by the New York State Society of CPA’s (NYSSCPA). While the entire concept of a family office is, at best, amorphous, I think it is safe to say that the one common bond they all share is money – and money in all its forms. Money means investment, which implies tax, which impacts spending, which necessitates tracking and budgeting, which causes family feuds, which arise from sinister motives, which then inspire more pure motives which, of course, leads to philanthropy. (You knew we would get there sooner or later!) So it was fitting at the conference for us to consider some aspect of philanthropy during lunchtime as we munched on our catered sandwiches and salads. We chose to frame the discussion by first viewing a TED talk posted last March: Dan Pallotta’s “The Way We Think About Charity Is Dead Wrong.” I was very excited when we chose this foundational video because I had actually blogged about it back in March. It was both interesting and provocative and I encourage you to watch it if you can. Back then I blogged about not confusing frugality with morality. While still a good topic, I want to focus today on something else Dan said but didn’t really catch my ear at that time:
Businessweek did a survey, looked at the compensation packages for MBAs 10 years out of business school, and the median compensation for a Stanford MBA, with bonus, at the age of 38, was $400,000. Meanwhile, for the same year, the average salary for the CEO of a $5 million+ medical charity in the U.S. was $232,000 and for a hunger charity, $84,000. Now, there’s no way you’re going to get a lot of people with $400,000 talent to make a $316,000 sacrifice every year to become the CEO of a hunger charity.
Some people say, “Well, that’s just because those MBA types are greedy.” Not necessarily. They might be smart. It’s cheaper for that person to donate $100,000 every year to the hunger charity, save $50,000 on their taxes, so still be roughly $270,000 a year ahead of the game, now be called a philanthropist because they donated $100,000 to charity, probably sit on the board of the hunger charity, indeed, probably supervise the poor SOB who decided to become the CEO of the hunger charity, and have a lifetime of this kind of power and influence and popular praise still ahead of them.
Whoa! Tough stuff! Those greedy MBA’s! All kidding aside, this observation does makes you think, but not about the money per se. It makes you think about values, philanthropic and otherwise.
I think it is safe to say that none of us should presume to have answers about values for anyone other than, perhaps, ourselves. Is earning a high salary at (some would say) a socially questionable job right or wrong? Then again, who is to say that a particular job is socially questionable? Is making substantial contributions to charity a “good thing” or is it “penance” for working in that socially questionable job? Take, as an example, John D. Rockefeller who, in his day, was one of the most vilified of the robber barron set, but also a most accomplished philanthropist. (University of Chicago, Rockefeller University, and the Rockefeller Foundation, among others). Did Rockefeller’s philanthropic accomplishments arise from noble intentions or did they represent more of a justification of the rough and tumble way he earned his money?
IMHO – I applaud the Rockefeller philanthropic results but am troubled by the source of the funds. But frankly, that is neither here nor there. In reality, this is not one but two questions, the answers to which have, or should have, nothing to do with each other. Whether one’s vocation is good, honorable, honest, and socially desirable is the first question. Barring illegal activity, this decision is determinable only by the individual in question based on a whole host of personal considerations. The second question regarding philanthropy is also quite opaque – we might agree with the statement that “philanthropy is good” but really, how do we define philanthropy? I have argued repeatedly that the “marketplace of philanthropic impulses” will drive charitable capital into areas that the market deems worthy but that such results are neither “good” nor “bad” – they just “are”. That being the case, we know that a lot of money ends up in religious organizations. Good? Bad? Whom do these organizations really help – and how? What about cultural institutions like the symphony or opera? Is it worthwhile to support them when millions of people the world over are starving? What about higher education? Personally, I argue for the support of public higher education, but does that mean that the rich Ivy League universities are not worthy? The list goes on and on.
Bottom line – this is a question of values – your values – how you make your money, how you spend it, and yes, the institution and causes you choose to support. The imperative from my vantage point is that all of us should constantly reflect on our own values, let them thoughtfully evolve as we challenge our personal ways of thinking, and promote those causes we believe in by putting our money where our mouths are.
