The Page Family Foundation, funded by Google co-founder and philanthropist Larry Page and his wife Lucy, recently announced that it would cover flu shots for all 4- to 18-year-olds in the San Francisco Bay Area. “For some children, the cost of a flu shot could be prohibitive, so Larry and Lucy want to remove that obstacle,” said a Foundation representative.
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This is a generous act of Christian …. er, sorry, Larry … of tzedakah in this Holiday Season. The Page gift is an example of what is so wonderfully charitable about America. And it is, at the very same time, also an example of what is so frustratingly inequitable about America.
The Practicalities
To an extent far greater than in other affluent societies, the United States has historically relied on free will offerings, on Americans’ charitable impulses, to deal with those in need. This season, in particular, brings out the Salvation Army bell-ringers, the Thanksgiving turkeys donated to soup kitchens, newspapers’ annual campaigns for the destitute, canned food collections, and the like. In contrast, elsewhere in the western world national churches and, more recently, national welfare states handled the needy, making private charity less critical.
A system to aid the needy that relies so much on private giving is not nearly as efficient as the welfare state. As a simple illustration, let’s run some rough calculations on Larry Page. According to Wikipedia, he is worth about $20 billion. Assuming even a low rate of return on this wealth, were the Federal tax on those returns raised from the official 15% today to the 28% some are asking for, the extra federal taxes would probably cover two to three times as many flu shots as the Foundation gift is covering. (This is not a slam on Page. He is doing good within the system we have.)
More than the numbers, consider the inefficiencies of relying on what moves particular donors to give to particular recipients. Perhaps children in rural Texas need the flu shots a lot more than kids in the San Francisco Bay Area do, but there is no Brownsville Google. Or perhaps there is a greater need than flu shots, maybe dental or vision care. There is little strategic planning when helping the disadvantaged is a do-it-yourself project.
Moreover, doling out charitable gifts in small bits, like diapers and blankets after a disaster, is highly inefficient compared to aggregating money through taxes and using, say, FEMA. Also, much charitable giving is, as fund-raisers know, fickle – depending on fads (think colored wristbands), heart-tugging visuals, moral judgments, celebrity sponsors, and tax regulations. On the last point, consider that the tax subsidy for giving to the opera is the same as for giving to a homeless shelter. Are the two givings of equal moral value?, asks one philosopher.
Indeed, the traditional American reliance on personal, voluntary, targeted charity to particular people who are needy never did work that well – see these earlier posts: here, here, and here.
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(And, for the record, according to one international survey, Americans are in the top ten among western nations in the percentage of people who give to charity – but not at the top. See here for 2010 and here for 2011 [pdf].)
The Principles
Of even deeper concern than the practicalities are the lasting principles brought to mind by the Page Foundation’s generosity.
A recent foreign legal scholar visiting Berkeley remarked that she had trouble understanding the term, “entitlements,” as used in American debates over such things as Social Security, Medicare, and food stamps, until she grasped that “entitlements” were what other nations called “rights.” Although the two terms are literally synonymous, in the U.S. “entitlement” has gained a distasteful connotation: The term implies government “handouts” given grudgingly — and often to people who do not deserve it.
Americans have not adopted the notion accepted just about everywhere else in the western world: That citizens have positive rights they can claim from the state – for safety, health, and education, for example – and not just negative rights against the state – such as liberty, privacy, and due process. To be sure, Americans have made many practical compromises with their anti-state principles. For instance, most accept the idea that all children have a right to an education and that elderly people have a right to medical care, even if both are “entitlements.” But the resistance to the principle of basic survival rights runs deep. As long as that is so, we will have to continue to hope for the beneficence of the Pages of our country.
(Cross-posted on The Berkeley Blog on December 11, 2012.)
UPDATE, December 28, 2012
A news story about the town of Newton, CT, drowning in teddy bear gifts provides another perspective on American giving. Newton is, of course, where a shooter murdered 20 small children. So many teddy bear (and similar) gifts poured into the town that just managing the stock is straining the local government and citizenry. What, we can ask, are the givers thinking? True, they are expressing their sincere grief and sympathy. But their gifts are doing little for the town or its survivors. They could have also expressed their support by equivalent financial gifts to, say, grief counseling services, to mental health clinics, or perhaps to organizations seeking to control gun violence. The U.S. depends so much on private philanthropy — the point of the blog post — and so much of that philanthropy is about the giver feeling good instead of doing good.
UPDATE, March 27, 2014
This article by Mike Konczal describes in detail how reliance on private charity to deal with deprivation never really worked in the U.S. and is a problematic approach.
UPDATE, February 6, 2015
Another local-angle example: Facebook’s Mark Zuckerberg and wife give record $75 million to San Francisco’s public General Hospital. Wonderful. But that $75m was generated by users around the U.S. (and the world). Why does only San Francisco benefit? And is this best social welfare use of the money?
UPDATE, May 13, 2015
And then there is this column by Dylan Mathews that asks why a billionaire’s $150,000,000 gift to Yale should get a tax deduction.
UPDATE, November 15, 2015
And this Vox column which argues that “David Geffen’s $100 million gift to UCLA is philanthropy at its absolute worst.” It is a gift “to set up a private middle and high school on its campus. You see, the UCLA Lab School only serves students — many of them faculty brats — up to the sixth grade, and poor old UCLA has “not been able to attract certain talent because of the costs of educating their children.” In particular, Geffen worries that UCLA’s medical school — excuse me, the David Geffen School of Medicine at UCLA — isn’t able to compete with Harvard and Johns Hopkins because of the lack of a nearby private high school.”
Update, December 4, 2015
And this commentary on Mark Zuckerberg’s pledge to give 99% of his Facebook shares to a philanthropic cause. Less critical than the charge about this being a tax-avoidance move is the later sections in which the author questions why Zuckerberg should be able to direct so much national wealth to his own choices of worthiness.
Update, August 23, 2018
New Yorker writer Elizabeth Kolbert reviews three books that make similar points: Our system of low taxation on the wealthy and tax breaks for their philanthropy means that large amounts of the national wealth are directed at the one-percent’s favorite causes (perhaps, opera or elite colleges) rather than at what may have greater cost-benefit returns (perhaps, pre-school programs, health care outreach in rural America)–and that the rest of us subsidize, through the tax breaks, the causes that the wealthy cherish.
MADE IN AMERICA 
