‘Tis the season for gift giving, not just to our friends and loved ones, but also to our favorite charities. Studies show that many charities receive half their donations in the final months of the year.
Sadly, thanks to our still struggling economy, many private foundations, corporations, and everyday citizens are once again finding themselves with less to give this holiday season. This situation reflects a truth that some non-profit leaders and their allies in government may find rather inconvenient: free enterprise and philanthropy are inexorably intertwined.
Virtually every source of funding for charitable work around the world hinges on the free market and the wealth it creates. The direct involvement of free enterprise in charity can be seen in the remarkable philanthropy of such American capitalist icons as Ford, Rockefeller, Carnegie, and MacArthur.
The Corporate Giving Survey, based on the data of 184 companies including over half of the Fortune 100, found that those businesses gave over $15.5 billion in 2010. Indirectly, businesses create jobs which allow individual citizens to give, and many private foundations have their charitable assets heavily invested in corporate America.
It is therefore hard to understand why hostility towards free enterprise is so pervasive in large parts of the philanthropic community. Foundations created by capitalists like those mentioned above, who believed passionately in self-reliance and entrepreneurship, have been hijacked by special interests to fund professional activism contrary to their donors’ original intent.
Foundation-funded activists have demonized, sued, and successfully agitated for greater regulation of America’s most charitably generous industries, such as food, pharmaceutical, oil, and retail. When “Occupy Wall Street” and others of their ilk cheer for the death of capitalism, in addition to undermining their own job opportunities, they are cheering for the death of philanthropy.
Professional activists constantly agitate for policy changes that would allow government to dictate or steer charitable donations to “preferred” causes and organizations. They argue that the tax deductibility of charitable donations converts such funds into “public money.”
And if the money is public, the government can then impose requirements such as who should sit on private foundations’ boards and what percentage of yearly donations must go to serve the “underserved.”
Activists’ disdain for businesses’ involvement in philanthropy has even influenced federal regulators. A set of draft guidelines issued last April which “helps” food and beverage companies determine when to refrain from advertising to children defined philanthropic giving as “marketing.”
Compliance with the guidelines would likely require McDonald’s abandonment of the “Ronald McDonald House,” and put an end to the Hershey’s Track and Field Games which have introduced more than 10 million children in 3,000 communities to the rewards of physical fitness.
The agencies responsible for the proposed guidelines have recently backed away from this aspect of their draft, and it may ultimately be dropped. The fact that it was in any federal proposal, however, shows how deeply the hostility towards business’s philanthropy has penetrated our government.
The enmity some in the non-profit community feel toward free enterprise has also surfaced in debates over how some struggling private foundations should take a more business-like approach to their operations. In a November 28 debate on this topic in The Wall Street Journal, a senior fellow in a New York City-based non-profit bemoaned the “colonization of philanthropy by business,” and argued that “philanthropy should build the demand for [public investment, law, and regulation] instead of substituting for government action.”
It is a tough reality for that commentator and other like-minded activists to swallow, but only new entrepreneurs, new businesses, and new wealth can sustain philanthropy. Laws and regulations which shackle free enterprise, attack philanthropic freedom, and chill corporations’ charitable activities will do nothing but deepen the non-profit recession.
Examiner contributor Daniel J. Popeo is chairman and general counsel of the Washington Legal Foundation.
