The myth of big philanthropy 2


By Christian Schreiber

At the end of May, Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, announced a $120 million donation to California public schools.  This donation comes nearly four years after Zuckerberg appeared on Oprah to announce his initiation into the Philanthropic Billionaires Club, touting a $100 million commitment to the Newark, New Jersey public school system.  The gift was hailed as a good-government, bipartisan victory that put children over politics – having been orchestrated by Newark’s Democratic Mayor, Cory Booker, and blessed by New Jersey’s Republican Governor, Chris Christie.

The four tumultuous years that have followed are the subject of a fantastic piece in a recent New Yorker about the difficulties of displacing the entrenched interests and changing the institutional habits of the city’s underperforming schools.  Like others with school-age kids in an urban public school system, I read the story with an eye toward the charter-school-versus-teachers-union narrative that is typically advanced to explain why urban schools turn into “failure factories.”

Then I reconsidered the narrative.  Maybe the problem isn’t the schools.  Maybe the problem is that Mark Zuckerberg has $100 million to give to the Newark public schools in the first place.

The media clearly believe that these types of public-private partnerships have more than a little feel-good appeal. But the scripted “rich-guy-gives-back” moments rarely maintain their luster for very long.  After Oprah finished fawning over Zuckerberg and his largess, she failed to ask Booker or Christie the more obvious questions, such as what kinds of jobs do the parents of Newark’s public school students have? Or can they hope to have?

For years the conventional wisdom has been that good jobs were the consequence of a good education – but maybe it is time we turned the equation around.  How can we expect children to get a good public school education when their parents don’t have a good job? What is the culture of professional achievement parents can model for their kids’ academic achievement?  Maybe no matter how much money is thrown at it, public schools can’t be “fixed” for the kids unless and until we improve the job prospects of the parents.

Ironically, the same Silicon Valley businesses spawning schools of “venture philanthropists” bent on fixing society’s ills oppose increasing the minimum wage, which promises to fix its biggest ill.  One in five children in the U.S. has a parent who is a minimum wage worker, and that number is no doubt higher in places like Newark, where decades of academic failures have left many residents with few choices but a minimum wage job.  And it’s not just minimum wage workers who are suffering. While middle class incomes languish, millionaires sprout, only to abandon the very middle class institutions that need fixing.  We have reached the point where $1,000,000 donations are celebrated, but $1/hour increases in the minimum wage are excoriated as class warfare.

This bizarre world leaves our elected officials with an unenviable choice: address the problem of income inequality (and alienate the donor base), or nibble around the edges of society’s employment problems and ignore the larger and far more important issue of concentrated wealth.  Case in point: the same week Zuckerberg announced his California public school donation, SB 1372, a bill that would have tied a company’s corporate tax deductions to CEO-to-worker pay ratios (the higher the ratio, the lower the allowable deduction), died on the Senate floor with little fanfare.  Because big ideas like this go nowhere, advocates find themselves locked in smaller-issue fights just to hold onto the relatively paltry wages they manage to earn.

The dynamic Booker (now a U.S. Senator) illustrates the problem.  He has become a favorite of the Left and the Right, in large part because he has proven the most adept at “bridging the gap” between the resources of the rich and the needs of the poor.  Though he was the mayor of a small eastern city, he crisscrossed the country to seek audiences with the wealthy (many here in California), his hand out “on behalf of” the underclass that had come to define his city.

Senator Booker’s motives appear to be genuine; but his rise symbolizes an emergent symbiosis between uber-monied interests and New Left politicians.  Senator Booker is handsome and Stanford-educated, and the child of successful, professional parents. His presence on Silicon Valley sofas does nothing to disrupt the cultural feng shui of its tony enclaves.  In exchange for his righteous ask, he offers the bona fides that come with “doing good” for those “less fortunate.”  The poor get venture philanthropy.  The rich get to meddle in other people’s neighborhoods. And his profile (and donor rolodex) grows.

Nothing is likely to change until we recognize that $100 million gifts are a symptom of a problem, not a solution. And you don’t need to go to Newark, New Jersey to find examples.  Just 12 miles east of Facebook’s Menlo Park headquarters is Newark, California, where the second-largest employer in the city is Logitech.  Logitech’s CEO made more than $6.6 million last year, while a teacher earning the median salary in the Newark Unified School District (the City’s largest employer) made less than 1% of that, or $63,445.   If we hope to fix our public institutions, we first need to understand that they will not be cured by the philanthropic whimsy of the tinkering class.


Christian Schreiber

About Christian Schreiber

Christian Schreiber is a partner at Chavez & Gertler, where he works primarily on class actions involving employment and consumer rights, civil rights, and financial services matters.

2 thoughts on “The myth of big philanthropy

  1. Reply Christopher Hayes Jun 10,2014 11:10 am

    What an excellent, well-written, thoughtful and thought-provoking piece, Christian.

  2. Reply Robert Bostick Jun 11,2014 12:40 pm

    Excellent observations.

    It strikes me that historically, philanthropy has been the salve for a trouble conscience since 99.9% of the super rich with great fortunes were made thus through great thievery.

    Today, in our post gold standard world, the Federal government should be the fund manager for all needs which serve public purposes. When philanthropy fills a void, it’s an admittance that government has failed on a number of levels.

    After 1971 all the funds to pay taxes and buy Treasury securities comes first from government spending. That’s one of the functions of a monetarily sovereign government.

    Spend first then tax.

    Because 99.9% of Americans fail to grasp this sequence they fear the government will run out of money and ,therefore, won’t let the Federal government provide for needed public services. These fears open the door for philanthropists to do their thing. Those “givers” are also driven by tax code provisions which favor such private largess. The direct and indirect benefits to “givers” often exceeds or equals market rates of return.

    What’s worse is that Federal government and elected fiscal policy makers are off the hook a little. They don’t have to appropriate as much which makes them look good depending on program and its constituencies. They misguidedly think they’re saving dollars which is impossible in a monetarily sovereign economy. What they’re doing is depriving the private sector of net financial assets, forcing the private sector to go deeper into debt.

    Carried to its logical conclusion a monetarily sovereign government could fund all public sector needs from Federal to all other subordinate political subdivisions and do so at no cost to citizens. Legislation exists and Constitutional authority clearly allows doing so.

    We need modern leaders who understand modern economics and can move in the direction of eliminating philanthropy which allows today’s government to pass the buck.

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