A CLOSER LOOK: Failures of philanthropy

By Trey Thoelcke Updated Dec 2, 9:45AM EST · Published Dec 2, 7:10AM EST

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A CLOSER LOOK: Failures of philanthropy — © vladans / iStock

OP-ED

Hi Friends of the Patriotic Millionaires,

After the sky-high consumer spending of Black Friday and Cyber Monday, Giving Tuesday is a day for folks to direct some of their money toward charitable causes instead. While we believe the work we do at the Patriotic Millionaires is certainly a great cause, don’t worry – we won’t be asking for your money today.

As rich people in this country, we’ve certainly got enough money to fund this critical work, so we want to take this Giving Tuesday to instead talk about what our fellow wealthy folks are – and aren’t – doing to make philanthropy work.

First of all, rich people in America need to be giving more, period. We need to be paying higher taxes of course, but changes to the tax code could take years to achieve any meaningful effect, and people are suffering as a result of the worst economic depression in decades right now. America’s 600 or so billionaires have seen their collective wealth skyrocket by over $637 billion since the COVID-19 pandemic began, while 26 million people in this country don’t have enough food to eat. No matter how hard someone might have worked to earn their fortune, it’s hard to justify that level of hoarding.

But wait, you might say, didn’t Bill Gates or Jeff Bezos make lots of donations that are supposed to help people? Aren’t rich people the most generous in terms of dollars donated to charitable causes? That’s technically true – but you have to look at the bigger picture.

In the US, most people have by and large swallowed the complete lie that rich people are more generous than anyone else. That’s not entirely their fault, because us wealthy people have done a great job of using philanthropy to make us look good while dodging the real question underneath: is it really fair for so few people to be in charge of so much money?

Let’s take Bill Gates as an example. Earlier this year, Gates announced he would be donating $300 million to COVID-19 relief. That’s a massive number, but it’s pocket change to the second richest person in the world. According to his estimated wealth, it’s a measly 0.3% of his overall net worth, and Mr. Gates earned back that $300 million within just two weeks of donating it based on what he earns off of passive investments. Gates has long been lauded for his charitable giving and his infamous pledge to donate half of his fortune by the end of his life – and yet, year after year, his net worth never decreases enough to stop him from being one of the richest people on the planet. Is that real philanthropy, then, or is it just a way to launder his reputation?

Gates, to his credit, has openly stated that he should be paying more taxes on his vast fortune than he currently does, but he hasn’t put any real financial support behind efforts to make that actually happen – and Gates is likely the least greedy of a mind-blowingly greedy lot in America’s billionaire community, which is a bad sign for our rapidly growing inequality and for our country’s current dire fiscal situation. Despite becoming wealthier than ever before, American billionaires have barely increased their giving during the worst human crisis in a century.

Lower-income people, by contrast, tend to be more generous in relative terms than these ultra-rich folks. For years, study after study has shown that poor people are far more likely than high-net worth individuals to share their wealth. Many poor and middle-class families give away a larger percentage of their net worth every year than most billionaires do. So while the super-rich might be contributing the most to charity in terms of actual dollars, they aren’t nearly as charitable as they’d like you to believe. Add in the fact that rich folks can deduct as much as 70% of those charitable contributions from their tax bill, and it becomes clear that most rich people just aren’t really generous at all.

We need to stop congratulating billionaire philanthropists for giving increasingly small fractions of their wealth to charity. They can afford to give much more, and they should be expected to, especially at times like these when our country is facing so many grave challenges.

It’s important to remember philanthropy can be wielded as a weapon just as much as it can provide needed relief, and that it can never solve our country’s many, many problems on its own. Rich people, quite frankly, just aren’t interested in doing that – so we have to elect leaders that will tax them and do it instead.

Warmly,
The Patriotic Millionaires

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.