Pros And Cons Of Philanthropy

Prue Hyman

Should others pay when the Govt shirks its duty?

By Prue Hyman 

How can one be anything but pleased on hearing that Mark Dunajtschik is giving $50 million for a new children’s hospital in Wellington – and organizing it to be built himself. It’s much needed and it’s an incredibly generous gift and I don’t doubt his motives – he’s quoted as saying that he likes Wellington, which has been good to him and he wants to repay some of that.

And yet I can’t help having some uncomfortable feelings about this and many other philanthropic gifts.

The hospital itself should surely be a priority for central government funding from budget health which is not keeping pace with the needs of a growing and ageing population.

It’s not easy to stretch our tax dollars to all the worthy demands. But government talks of tax cuts when we are not that heavily taxed on income – by international standards. Remember when the top tax rate was 66% under Muldoon (and a National Government!)

Few taxes on accumulated wealth

And of course we have no comprehensive capital gains tax, nor any wealth or inheritance taxes – and are very rare among developed countries on that.

Hence those who have accumulated wealth, as Mr Dunajtchik has done (from property development) have even more to spare to give away than

Mark Dunajtschik and nurse at the site of the new children’s hospital in Wellington (Health Minister Jonathon Coleman,rear).
Photo by Collette Devlin, Stuff

they would in many parts of the world.

And of course with our crazy house and other property prices, no doubt it was relatively easy to acquire such wealth. With better fairer tax policies, we could all collectively fund the hospital – and many of us would want to reprioritize spending even without changed tax policies to ease the plight of sick children.

It’s great that this donor is prepared to make such a generous gesture but I also worry about the decisions on spending being entirely up to rich individuals rather than agreed by the democratic processes – not that I have much faith in them either in the current political climate.

The rich donate..to their favourites. But democracy misses out

I shouldn’t single out unfairly just this donor. I feel much the same about large donors to political parties, and many others. Some put their funds into trusts and keep at arms length from the decisions on funding, which is probably best – although the criteria will often reflect their preferences.

Of course charitable giving is desirable and indeed essential when social needs are ever growing and the public purse will not stretch.

But government makes charities go through ever harder hoops to win contracts to do important work which would cost far more when done by government departments – and also threatens with removal of charitable status groups which are critical of government policies, however relevant their submissions are to their core work.

And all these charities have to compete like mad for dollars from the public, spending a bigger proportion of their income on marketing than I think would be desirable in a less competitive world.

Philanthropy in the age of social media

And now of course we also have the many give a little campaigns which social media make possible. These campaigns are essentially by themarketingheaven.com. Many of them are totally worthy and I give to lots of them but with some misgivings about where the world is going in this area.

And yet I believe in our interdependence and those who can afford it giving what they can so I’m totally muddled on what I think about all of this! Maybe my problem is that it’s those who can succeed in the game of public attention that win and many deserving causes and people in poverty who miss out.

Philanthropy NZ

Philanthropy is pretty well organized these days. Philanthropy NZ looks like a useful organisation.

It defines philanthropy as “the act of giving financial resources to a cause that is intended to improve general human well-being, and where the giver expects no direct reciprocation.”

It is professional with paying members and purpose “to promote effective philanthropy and grantmaking by supporting our members, and providing leadership and a facilitative environment.”

Established in 1990 to mark the 50th anniversary of the J R McKenzie Trust, it has gone from 20 to 130 members – private philanthropists, family, community and corporate foundations, and iwi and community trusts. And it also includes some 110 not-for-profit organisations that receive grants.

Philanthropy NZ refers to huge changes in the sector since 1990, including “the growth of family philanthropy, the growth of the trustee savings bank and energy trusts, an increase in corporate philanthropy, the emergence of Maori philanthropy and significant changes in the trustee company sector.”

Surveys on philanthropic giving

They also sponsor surveys on philanthropic giving. In 2014 total giving in New Zealand was estimated at $2.788 billion, 55% from individuals, 42% from trusts and foundations (including the Lotteries Board) and only 3% from business – although the latter is also involved in sponsorship and giving in-kinds goods and services, not included in the figures. The report at http://philanthropy.org.nz/wp-content/uploads/2016/03/Giving-New-Zealand-2014-1.pdf includes much interesting material on the sector.

So I’m still unsure what I think needs to change in philanthropy. I guess my feelings relate to my concerns about the appallingly unequal distribution of wealth and income that lead to the need for a huge charity and philanthropy sector. But that’s for another day.

We kind of do have a tax on property in the form of local government rates, and in fact in America they are called property taxes. The central government adds GST to them, but registered businesses including property investors can claim it back, individuals can’t. In Kapiti of course a lot of the take from rates is used to give a small number of bureaucrats enormous salaries, but that’s another issue.