The Lessons of Philanthropy Leverage: Bloomberg, GiveWell, and Walmart

Citizen Wealth Financial Justice

New Orleans  There were three pieces about philanthropy oddly found together in the New York Times recently, that though they came from surprising sources, in some instances made very interesting, and amazingly accurate, even if sometimes depressing, points.

            One was an interview with billionaire, former New York City Mayor, Michael Bloomberg, about his notions of philanthropy having given out over $3 billion already with plenty of more where that comes from.  Ironically, of all people, he was quoted telling a story about the arrogance and ignorance of wealth.  Seems a hedge fund guy cornered him behind a cactus plant a couple of years ago when he was Mayor and with a mixture of enthusiasm and intrigue told him he and his buddies would raise a billion to totally change the city’s school system over the coming couple of years, so “How about that, Mr. Mayor?”  Bloomberg seems to have said, “Great,” but also mentioned to him that the school system spent $22 billion per year in New York City.  He says he never heard from the guy again.  These guys know numbers, so the cactus schools’ conspirator could easily tell that Bloomberg was math shaming him that essentially one penny on a dollar, $220 million per year on $22 billion, was not going to be enough to leverage change.  The morale of his story:  the people through their collective contributions, otherwise known as taxes, have way more money than the richest billionaires combined.  The reminder for the rest of us, is that this is why they try so hard to use their little to leverage our lot in the direction they want to go.

            Unfortunately, that morale and lesson was presented elsewhere as a case study for how the Walmart Family Foundation has spent $1 billion over recent years to try to twist public schools in their more conservative, ideological direction.  Their spokesperson was less self-aware than Bloomberg, simply spouting a sophomoric rationality about it being better to help somebody, even if you couldn’t help everyone, rather than dealing with an honest analysis of their impact and investment.  The irony that a family that has made billions from its low price appeal to low-and-moderate income families, spends money to attempt to create elite alternatives to mass education, often in the name of minorities and the poor, was lost on him, the family, and the foundation.

            The third, and most refreshingly honest, appraisal was a piece on something called GiveWell, that had promoted a pristine kind of view of philanthropy on the premise that if they collected sufficient data on charitable organizations and their efforts, they could create trust from donors and make a difference.  Unsaid was that the premise that drives such an outfit is in equal measure a profound distrust of charities rooted in a belief that they are mismanaged and handled money and operations poorly, and a belief that data is pure and objective.  After pursuing this data-driven strategy for some years, GiveWell seems to have stepped back from its claim in making recommendations that its chosen charities are “proven, cost-effective and underfunded,” to now simply saying they are “evidence-backed, thoroughly vetted and underfunded,” recognizing that the only true reality in the work may not have been GiveWell’s initial prejudices, but the fact that the charities were underfunded.  In a refreshing piece of honesty, they seem to have even concluded that “the cost to seek the data may outweigh the benefits and that the data might not be all that reliable anyway.”  Actually organizing in more than a dozen countries, I won’t bore you with how hard it is for me to get monthly reports, much less something that would look like something to the data crunchers!

            The lessons the GiveWell boss has learned though only go so far.  He still believes that somehow more “transparency…will unlock an unbelievable amount of money if only people have trust in where it is going,” proving mainly that either his initial prejudices remain profound or that his naiveté about how much philanthropy is driven simply by tax policy rather than the desire to do good remains unblemished, even while the percentage of charitable giving by the rich continues to drop while their wealth soars to unbelievable heights.