When rich people donate to help fix social inequalities, it usually only benefits them

BATH, United Kingdom — Do charitable acts and donations from the super wealthy actually help remedy societal inequalities? Not so much. In fact, a new study finds the people who benefit the most from all this giving are the “philanthropists” themselves. Researchers from the University of Bath say philanthropy by the elite actually prolongs these problems instead of reversing them.

Moreover, their study suggests charitable actions often provide the rich with more power and influence over politics and society overall.

The Bath team collaborated with scientists from the Newcastle University Business School during this project. Their research also concludes philanthropy by the super rich is failing to significantly help poor countries in the developing world.

“This is a difficult area for many to come to terms with – it can be argued that any philanthropy is a good thing and that holds true if it is genuinely altruistic. But what we have identified is that elite philanthropy may actually be perpetuating inequality by favoring elite causes, by increasing the influence and power of the super-rich, and by increasing tolerance of inequalities by ordinary people,” says Professor Mairi Maclean from Bath’s School of Management in a university release.

Donating just for the recognition?

In many cases, elite philanthropy ends up benefitting the super wealthy more than anyone else, researchers say. When such individuals make big donations, the public tends to shower them with honors, distinctions, and favorable media coverage. Furthermore, most rich philanthropists donate to elite causes and institutions. These are groups, study authors say, which may be actually playing a role in those worsening inequalities.

Choosing to focus on such institutions is a great way to get your name on the side of a building or another plaque for the office, but the study finds it isn’t going to decrease societal disparities. Researchers note a small number of super wealthy individuals have indeed donated a significant portion of their fortunes to charity. However, such cases are few and far between.

“The fact is most super-wealthy people give very little relative to their means,” Maclean explains.

“The greater part of funding stays at home in developed countries. The Bill and Melinda Gates Foundation is one of a handful of foundations to embrace international development, but even in this case much of the spend is on research and development in developed countries. Development funding by philanthropic foundations is in fact dwarfed by taxpayer funded spending on overseas development assistance,” adds co-researcher Professor Charles Harvey from the Newcastle University Business School.

Buying their way to fame

When the elite make donations, researchers find they often attach strings to their good deeds. Something along the lines of “you scratch my back, I’ll scratch yours.”

The super rich tend to use their charity to pursue personal and political agendas. In some cases, the rich are able to influence entire governments or prestigious educational institutions in this way.

“Universities like Harvard and Yale in the United States, and Oxford and Cambridge in the UK gobble up the lion’s share of philanthropic funding, conferring on them a significant competitive advantage and arguably sustaining social inequality,” Maclean notes.

In the United Kingdom, a number of wealthy individuals have donated their way to knighthood. Philanthropy also provides numerous tax advantages for the rich.

“In both the US and UK, philanthropists have their giving power boosted by being able to offset their donations against their tax bills. This looks, on the face of it, like a good thing to encourage giving. But it means those funds can be diverted into areas in which they have an interest or wish to exert influence or gain prestige. They, rather than governments, are effectively deciding how and where their taxes should be spent,” Harvey reports.

“It is easy to be cynical about this. We do accept that many elite philanthropists act sincerely to improve the lives of others and that there are many generous and outstanding philanthropists, but we suggest that altruism alone does not explain their actions. It is far more likely that philanthropy yields substantive rewards beyond the emotional satisfactions of beneficence – and our research bears this out,” Maclean concludes.

The study is published in the International Journal of Management Reviews.

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