MHP   |  December 15, 2013

Can philanthropy alone close the income gap?

Jennifer Jones Austin, Stacy Palmer, Igor Volsky and Aurora Zepeda discuss the complications around charitable giving and the notion of redistributing money through philanthropy versus legal obligation.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> this sunday morning, i would like to ask the congregation of nerdland to turn your books to the gospel of biggy, second album, disk one, and met at a time upon the wisdom of one of our greatest hip hop disciples, mo money , mo problems. when the notorious b.i.g. made the change from common thief, he discovered thing that wealthy americans have long understood. it isn't easy to be stuck with all that green. '80s babies might remember, that was exactly the dilemma facing montgomery brewster , the washed up baseball player portrayed by richard pryor in " brewster 's millions." he discovered he has a wealthy uncle who's prepared to make him the sole beneficiary if he can satisfy one simple request.

>> you have 30 days to spend 30 million bucks. if you can do it, you get 300 million, but if you fail, you don't get diddly.

>> why can't i tell my friends?

>> because i don't want anybody helping you out.

>> but when brewster finds out, when you have millions, getting rid of that money is a lot harder than it sounds. the complications from giving away money may be why. according to a recent article in "business insider," only 5% of the world's billionaires have been persuaded to join the giving pledge, a campaign where the world's richest people pledge to give away at least half of their wealth to clarity. it leaves a lot of convincing to do by the three people who started it in 2010 , bill and melinda gates and warren buffett buffett . but even though most of the world's big spenders are doing their own thing, 5% of all the billionaires on the planet is by no means small change . that's 128 people, according to "business insider," who are each worth billions. that's billions, with a "b," of dollars. and their combined assets estimated to be worth more than $600 billion. meaning their commitments to the giving pledge amount to at least $300 billion of those billions, all to philanthropic causes. the vast majority of those taking the pledge are from the country with more billionaires than any other, us, the united states . which is probably why most of his billionaire buddies are still being stingy with their charity cash, warren's having a lot more success with that plan than to get wealthy americans to turn over their money than this other one. you remember the buffett rule? it was part of president obama 's tax plan in 2010 based on buffett 's rule that the very rich should pay their fair share of taxes. maybe you don't remember because it died fast in the senate last year. which means if we want to rich to pay mo money , getting them to get out of charity instead of federal obligations may be our only option. joining me now, the stacy palmer, the editor of "chronicle of flophilanthropy," and aurora cepeda, so nice to have you all here. so let's talk about this notion of flont ro philanthropy versus redistribution of income through taxes. how effective is it to say the wealthy have these assets, they've earn eed these assets or inherited these assets and now we want to ask them to redistribute them based on their own beliefs, values, goals by giving to charity.

>> i think there's a great partnership between private philanthropy and the government. and the reason why we have so much need, the reason why we have such a big income gap is because of government policy . and it's going to in part take a government solution to get us out of there. so building up the safety net investing in infrastructure, providing people with affordable health care , making sure the rich pay their fair share in taxes. you need those kinds of policies to close that income gap , to move forward, because flont philanthropy is not going to do it on its own.

>> and part of the reason philanthropy is not going to do it on its own, and looking at the numbers, this is what i want you to weigh in on, they tend to give to things like private schools , colleges, operahouses, all really valuable and important things, but also things that may benefit them more than what they think of as traditional charitable giving .

>> what often happens, the wealthy are disconnected from the issues of the real people that are struggling day to day . they know the schools from which they came, that they believe helped them make it in the world. they know of the opera and other theatrical events that they enjoy. they're removed from what is happening and the people who need it. they don't see it. if you were in a car moving from one place to the next, not in the subway or walking the streets of poverty, you're not going to see it so you're to the going to feel compelled to give.

>> this is a great point that seems to be born out empirically, because the wealthy who live in zip codes that are economically diverse tend to give more to things like the united way or salvation army . those who live in zip codes that are economically homogenous tend to give more to their alma maters . and again, no one's suggesting one should not give to their alma mater , but there is a funny tax thing that happens, right? so i'm not taxed and i give to a 501 c-3, and then i get a tax break for having given to that, but that still doesn't move down to the folks who are on the bottom.

>> yes, you know, there's nothing wrong with having these private priorities, individual priorities, but our collective needs and our collective priorities, often, as jennifer's saying, kind of fly below the radar screen. things like poverty are visible in our city, in our country, if nobody brings a spotlight to it. so while it's important that the wealthy give money, i think it's important that the wealthy open the doors to dialogue on these issues. it's important they bring their influence to bear. if they see it and provide some resources to it, that's great. but more is to make it known that this is a public issue that we have to contend with.

>> this is an interesting idea. and we see it -- so let me take an example of the koch brothers who often get critiqued for the political giving that they give on the right, but if you spend any time in new york, if you have a cancer treatment, it happens in a koch , you know, cancer center. if you go see a play, it happens in a koch theater, right? so there are huge philanthropists across things that don't have any particular ideological divide, but their political giving does have an effect that is quite specifically towards an ideologically conservative viewpoint.

>> that, i think, is the danger of exporting too much of the duty of carrying it for low-income americans , of building an education system that works for everyone, for exporting that job to a small group of private people, because some of those people are driven by very ideological agendas, whether it be denying climate change or making sure there are fewer regulations on business across the board. so, again, we need a balance. we need to strike a plabalance to really make this work.

>> and i would just add that very often what happens is people are removed from touching and feeling at a very early point in life. so that community social responsibility is not really taught and reinforced, so when you acquire wealth, you know, or you inherit wealth, if that is not what is within you to begin, your inclination is not necessarily going to be to give --

>> and i would to suggest in a way -- because to the extent that it does get developed, it is sometimes kind of the largess giving back as opposed to a sense of collective identity . i want to talk a little bit about that when we come back. up next, a discussion of a farewell to alms. the hottest trend in giving is taking a page from the business community . this may or may not be a good thing. [