Philanthropy

By E. Deane Kanaly

In spite of some short-term bumps and dips, the US market economy has been a generally reliable engine for creating wealth and affording people the opportunity to make a good living. And despite some of their own challenges, Federal, state and local governments have generally been similarly effective at providing for the national defense, police and fire protection, highway and public street construction and maintenance and a systems of laws and justice that ensure our society remains operational. 

In the middle of these two forces lie issues such as welfare, the environment, housing, retirement security, medical care, education and the arts.  These issues have been controversial and difficult for government and the private sector to agree upon. In fact, the distance between the two major political parties in this country can largely be measured by their differing approaches to these issues.

The Saving Grace

A huge trump card is about to be played in this game. A very effective third player, outside of government and business, will play it.  The trump card is philanthropy.  The players? You and I. The tide of giving has already begun, and it is transforming every element of the issues and institutions it touches. Private yearly giving by individuals is equal to one-third of the domestic discretionary budget number.  It is over 50% of what the Federal government will spend on all means-tested programs. Estates valued at over $20 million already allocate more to charity (41%) than to their heirs (24%) – but that’s just the tip of the iceberg.

Recent changes in estate taxes (10-year phase-out), along with surging foundation endowments (up 100% since 1994) and more people owning assets like stocks and bonds, means that in the next 25-50 years, the wealth transfer will dwarf anything we have ever seen in any country, at any time in history.  

Astounding Results

The result will be a massive redistribution of wealth. This will happen in areas determined by millions of private philanthropic foundations and individuals, with people in hundreds of thousands of different locations making independent judgments as to how best to meet human needs.

Could this really replace government redistribution?  Absolutely. The Social Welfare Institute at Boston College estimates that by 2052, between $41 trillion and $136 trillion will have been transferred.  In other words, about $1 trillion a year or more will be passed on. That’s three times the annual rate of the current annual Federal budget for Agriculture, Community Development, Consumer Protection, Education, Environment, Housing and Transportation.

Healing Power

The healing power of this amount of resources for solving human problems is astounding. Programs to help those in need will be funded at levels never before available and centralized governmental control will be reduced, both leading to a potentially dramatic reduction in the tax burden.

It seems inevitable that while solving many of society’s problems, government and business will both be eclipsed by this powerful ally.  Along with financial self-sufficiency, these changes in our society’s holdings of wealth will provide for a healthy, educated citizenry free to determine their own needs without dependency.

The new American Dream will provide a higher standard of living through a market economy, and will be compassionate and understanding of human need.