Tuesday, October 25, 2022
Steven Dean (Brooklyn) presents a chapter from For-Profit Philanthropy: Elite Power & the Threat of Limited Liability Companies, Donor-Advised Funds, & Strategic Corporate Giving (Jan. 2023) (with Dana Brakman Reiser (Brooklyn; Google Scholar)) at UC-Hastings today as part of its Tax Speaker Series hosted by Heather Field and Manoj Viswanathan:
This is the way the world ends
Not with a bang but a whimper.
— The Hollow Men by T.S. Eliot
The size of the US philanthropic sector hints at the pivotal role it has long played in American society. Americans gave almost $485 billion to charities in 2021 alone, a record-breaking outpouring of generosity sparked by the global pandemic but not out of step with typical annual totals. The nonprofit sector employs well over 10 percent of US private workers, and grantmaking foundations hold more than $1 trillion in assets, with billions more held by operating charities.
Disasters like the COVID-19 pandemic bring the contributions of this sector—to research, public health, job training, and community support—into sharp relief. Philanthropic institutions have the power to change lives and shape policy, fueled by a combination of private funding, government subsidies, and public goodwill. It has been a hallmark of American society since Alexis de Tocqueville identified it as unique in the 1830s. Yet, for all its power, a crisis now looms over the future of the philanthropic sector itself.
Practices, players, and norms native to the business sector are migrating into philanthropy, muddying the distinction between commerce and charity and eliding the regulatory framework designed to keep them separate. Philanthropies organized as limited liability companies (LLCs) like the Chan Zuckerberg Initiative (CZI), donor-advised funds sponsored by investment company giants like the nearly $50 billion Fidelity Charitable, and strategic corporate philanthropy programs that align charitable giving by multinationals as diverse as Citigroup, Google, and General Motors to their business objectives reveal a transformation of this cornerstone of American society. Their for-profit philanthropy shatters the long- standing divide regulation has maintained between business and charitable activities.
For-profit philanthropy represents a threat the scale of which has, until now, gone unrecognized. Experts have unearthed compelling evidence of its broad impact but have failed to appreciate that they have described one conflagration rather than many. Accordingly, they have tailored solutions to what they see as discrete regulatory failures, not realizing that each merely represents an isolated front in a broader struggle. All the while, the unraveling of a pact between elites and the public that fueled half a century of philanthropic achievement has accelerated unnoticed.