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Illustration: Aïda Amer/Axios

If charity is giving alms to the needy, then philanthropy is charity's more high-minded and strategic relation.

The big picture: Philanthropists don't want to give a man a fish; instead they want to take credit for building a proof-of-concept that will persuade governments around the world to invest in large-scale programs of fishing pedagogy.

As Michael Bloomberg puts it: “It’s philanthropy’s job to take risks — and government’s job to scale solutions.”

  • Philanthropy is a central part of how the very rich turn their money into power. The extremely rich, by their nature, tend to be extremely ambitious: They want to change the world in certain ways, and are happy to use their wealth to do so.
  • That's sparked a backlash from anti-plutocrat gadflies like Anand Giridharadas. Extreme wealth creation has spurred giving among the nouveau riche, which in turn has conflated philanthropy and inequality in the public's mind.
  • Trump's tax cuts have removed philanthropic incentives for many Americans. That's because the standard deduction is so large that the middle class no longer sees any benefit from itemizing charitable deductions.

Philanthropy is increasingly looking to supplant or replace government.

  • Swiss bank UBS, in its fifth annual report on billionaires, says that many "are seeking new ways to engineer far-reaching environmental and social change."
  • Within our lifetime, we will see “the reemergence of a benevolent aristocracy," UBS's head of Ultra High Net Worth, Josef Stadler, told Forbes.

How it works: Individuals like Charles Koch, Mike Bloomberg and Bill Gates use their philanthropies to advocate for societal changes and interventions that they would like to see enacted by governments. Often they engage in explicit lobbying, and often that lobbying is successful, both domestically and internationally.

  • Older philanthropies may no longer be controlled by their founders, but care just as much about changing global public policy. The Ford Foundation, for instance, has focused on combating inequality around the world — something that can only be done if it gets governments on board.

What they're saying:

Foundations are an unaccountable, nontransparent, perpetual, and lavishly tax-advantaged exercise of power."
Rob Reich, Stanford University

Why it matters: Politicians are accountable to the electorate. Charitable foundations and the billionaires who fund them, on the other hand, are accountable to no one. As Reich says, their actions therefore deserve more scrutiny than gratitude.

The bottom line: Insofar as philanthropy has a positive effect, it does so via deeply undemocratic means.

Go deeper:

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