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Friday, January 19, 2018

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Creative philanthropy in unsettled times
Amir Pasic, Eugene R. Tempel Dean of Indiana-Purdue University

February, 2017

As we face a particularly unsettled time in our public life it is good to remember Winston Churchill’s advice never to let a good crisis go to waste. Taking advantage of developments that upend the usual norms and habits is best done with solid knowledge of context that leads to useful perspectives on changes that seem unprecedented. This takes us beyond best practices to more fundamental questions about the role of philanthropy in society.

Helpful in this regard is a pithy essay written by Elizabeth Lynn, director of the Institute for Leadership and Service at Valparaiso University, and Susan Wisely, retired director of evaluation at Lilly Endowment Inc., on the four traditions of American philanthropy. These include philanthropy as relief that operates on the principle of compassion and works to relieve suffering, philanthropy as improvement that espouses the principle of progress and seeks to maximize human potential, philanthropy as social reform that honors justice in searching for solutions to social problems, and philanthropy as civic engagement that believes in participation and aims to build community.

To pursue any of these great traditions we rely on financial resources, and many commentators worry how the new administration will affect the availability of funds to do philanthropy.

There is intense discussion of possibly big changes in the regulatory structure that governs the legal organization of philanthropy. There is anticipation of what will happen to our tax regime that favors giving, not to mention what will happen to government funding, which is a much larger source of revenue for the charitable sector than is philanthropy. And then there is health care, the Supreme Court, trade, immigration, and the full range of governmental policies that affect us all and where philanthropy and civil society play a substantial role in delivering services, providing education, generating research, and engaging in advocacy.

We know that the financial side of philanthropy is significantly influenced by wealth. The more wealth there is the more resources are available for distribution. Most economists who work on philanthropy believe that decreasing the tax incentives for giving, including the estate tax, will have a bigger negative effect on the level of giving than the increases in wealth that are predicted to result from lower taxes, at least in the first year or so.

But this discussion mostly sees philanthropy as dependent on economic largesse. What about the role of philanthropy in making economic growth possible? Philanthropy helps create trust and social connections within a community so its members can innovate and forge novel, productive arrangements. Our faculty are conducting a research project with colleagues from the University of California San Diego to test just such a proposition – that a robust philanthropic ecosystem creates favorable conditions for business entrepreneurship to flourish.

Clearly the distributive side of philanthropy is not the entire story. There is much more to philanthropy than moving money around. There is a creative element to how the recipients of money deploy it to create value and impact beyond the dollars involved. Caregivers provide friendship in addition to sustenance, teachers inspire beyond the skills they convey, social reforms remove barriers for future generations, and research and advocacy can fundamentally rearrange social and economic relations.

However, attempts at adding this creative element are not always successful. In a recent piece in The Atlantic the historian of philanthropy, Benjamin Soskis, showcases direct cash transfers to the poor, now often favored by experts in lieu of development aid delivered through formal organizations. And yet even this counter-reformation in the poverty arena reveals the expectation that those who work in philanthropy will, when they succeed, add greater value through their efforts than what the money alone can accomplish.

Philanthropy is often about distributing a variety of resources, but it does so best when it happens through a creative process that generates entirely new kinds of possibilities for how we thrive as individuals and as communities.

So as we begin an era that is likely to be fraught with provocation and contention, including about the flow of resources, we should remember the power of philanthropy as a creative force.


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