Sunday, August 7, 2011

Foundation/Philanthropy Scamming re "Bloomberg donating $30M to minority youth"

Updated: Thurs, Aug. 11, 10pm
Add this link from Democracy in Education blog.

Why Michael Bloomberg’s Plan to ‘Aid Minority Youth’ Is a Terrible Idea

I got a call from a 4th year ATR yesterday. We talked about a lot of things - mostly Yankee baseball - but I was taken aback a bit given the destruction his career suffered under Bloomberg, when he praised Bloomberg for his recent philanthropy towards students of color. I don't give robber barons credit for anything, esp since Bloomberg ties his giving to political favors.

Here is a piece of a discussion going on on list serves to put some of that into perspective - aside from some of the openly racist remarks Bloomberg made.

This conversation on the ednews listserve (related to Bloomberg's "30 million dollar gift to minority youth") was really valuable (below, begin at the bottom with Paola's comments and work your way up).  Many of us understand that philanthropy, particularly in regards to education, has a dark side, but it is hard) to articulate exactly why on a deeper level.  We know it is about control, we know it is about isolating and controlling wealth; the conversation below explains how foundations and charities both use the tax code to protect and shelter the wealth of some while giving the appearance of "giving" to others.  If everyone paid their fair share, if there weren't major loop-holes and benefits for corporations and wealthy individuals, such as those described below, would we need wealthy folks to give to those who are not, or could our government have the resources to provide equitable systems and services for ALL?  Most or all of you probably already know this stuff, but what they wrote below helped me understand the fundamentals and specifics better.

In Chicago they have begun to "follow the money" and educate on these issues, when some of us were there last month we did a march from the Board of Trade to the Banks to the DOE and CORE had informational materials highlighting the financial injustices between these three groups.  We heard from parents in Florida who are doing this across their state in a myriad of ways in a workshop at SOS.  I spoke with a woman from St. Louis yesterday, they are beginning to do this (including a rally to encourage folks to withdraw their money from Bank of America this weekend).   I know some of this is happening here - Wall Street actions and Bloombergville.

The issue of corporate, foundation, and charity tax loop-holes and benefits, as well as campaign finance reform, are issues that directly and negatively impact our public education system, and collectively these foundations, wealthy individuals and corporations are what/who are driving the DEforms our kids and our schools are facing, but it is not something we have spent any/significant time on in terms of the education and organizing work we have done because we have been so focused on the local and immediate attacks such as co-locations, charters, closings, budgets etc. 


From Leonie: 
Besides the obvious tax advantages (and the political  PR gains) this sort of campaign may yield, we should remember that the Bloomberg Foundation has parked its investments in tax havens throughout the world – in Cayman Islands and elsewhere:

By the end of 2008, the Bloomberg Family Foundation had transferred almost $300 million into various offshore destinations—some of them notorious tax-dodge hideouts. The Caymans and Cyprus. Bermuda and Brazil. Even Mauritius, a speck of an island in the Indian Ocean, off the coast of Madagascar. Other investments were spread around disparate locations, from Japan to Luxembourg to Romania. ‘I’ve never seen anything like it. It’s about as opaque set of investments as you can find,’ said Rich Cohen, who covers foundations and charities for Nonprofit Quarterly.
From Richard:
a related aspect of what Paola writes below: 
A billionaire like David Koch -- who has poured funding into the organizations which got the anti-tax tea party movement going -- chooses to give $100 million for a vanity project, the renovation of the N.Y. State Theater at Lincoln Center, and
-gets the theater re-named after him (when probably far more City and State taxpayer funds were expended on it over the years) and
--gets to avoid all taxes on that $100 million.  This deprives the federal, state and local governments of any access to collecting a portion of  the money, which they might have elected to use for more pressing societal needs, if they had it to use.
From Paola:

Bloomberg’s  (and Gates’ and Zuckerberg’s and the donors who rescued the January regents) “generosity” is partly funded by the taxpayers—through forgone federal, state and local tax revenue to the tune of about 40 cents  on every donated dollar.     

The inefficiency of carrying out social policy through charitable giving excites only extreme wonks, and only once in a while at that.  For example, a Harvard Business Review article, nicely discussed here, made a splash 10 years ago—but changed nothing.  The authors took aim specifically at foundation giving: "When a donor gives money to a social enterprise, all of the money goes to work creating social benefits. When a donor gives money to a foundation, most of the gift sits on the sidelines. On average, foundations donate only 5.5 percent of their assets to charity each year, a number slightly above the legal minimum of 5 percent. The rest is invested to create financial, not social, returns.”  They argued that because foundations pay out a small portion of their total assets each year, their contributions to society do not equal the taxes forgone: "When an individual contributes $100 to a charity, the nation loses about $40 in tax revenue, but the charity gets $100, which it uses to provide services to society. The immediate social benefit, then, is 250 percent of the lost tax revenue. When $100 is contributed to a foundation, the nation loses the same $40. But the immediate social benefit is only the $5.50 per year that the foundation gives away — that is, less than 14 percent of the forgone tax revenue.”   Actually, as the GIA Reader article points out, public charities (aka 501(c)3’s) do not create as much social benefit as the HBR authors give them credit for since they don’t re-distribute anywhere near 100% of donations in social benefits once operating expenses, including salaries, are taken into account (see, e.g., the recent NY Times  expose of the Young Adult Institute Network)
            If all this makes your eyes glaze over, think of the bottom line: we (the voters, who elect the legislators who ultimately write the tax code) allow obscenely rich people to opt out of paying taxes—already relatively low--on large chunks of their income so that they can then turn around, fund whatever projects tickle their fancy, and be praised by all for their “generous giving.”.  To put it another way, what is the difference between Bloomberg et al. and the Ancien Régime nobleman who paid no taxes but gave coppers to the poor to save his soul?
Paola de Kock

Added link at Democracy in Education: 

Why Michael Bloomberg’s Plan to ‘Aid Minority Youth’ Is a Terrible Idea


Check out Norms Notes for a variety of articles of interest: And make sure to check out the side panel on right for news bits.


  1. Norm, I met you at the graduate center showing of AITAWFS. I blogged about Bloomberg's plan here.


  2. These hedge fund investors can get blatant:
    The RICE Fund: Returns Invested in Children and Education


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