Billionaires and Philanthropy: The New Gilded Age

Where charity, public relations, and wealth accumulation intersect

The Gilded Age was the era where the United States was rapidly industrializing, expanding railroads, and colonizing the western part of the country, roughly from the late 1870s to the early 1900s. It is this time that capitalists with names we still recognize — like Andrew Carnegie, John D. Rockefeller, Cornelius Vanderbilt, and J.P. Morgan — made their fortunes.

These men were simultaneously admired and reviled in their time depending on what point of view one held, much like today’s billionaires — Elon Musk, Mark Zuckerberg, Jeff Bezos, and Michael Bloomberg for example — are. The Gilded Age fortunes were built on exploiting labor systems of the time, creating monopolies to control prices, and using their wealth and power to influence the political system. Today, you can visit some of the lavish mansions and extravagant properties their families inherited to get a sense of the immense wealth they possessed.

They also contributed immensely as philanthropists and established charitable organizations, which still bear their names today. The deep irony is, if society were more equitable and did not allow for such immense wealth accumulation, there would not be as much of a need for charity as there is.

The United States lacks the social safety nets that comparable nations across the globe possess. Consequently, Americans commonly look to wealthy individuals, businesses, and religious institutions for their philanthropy to help those in need. This leads to a charitable culture and an expectation of giving but can also leave gaps in actually addressing need.

Relying on philanthropy removes democracy from the process of distributing resources in our society. The general public cannot vote on what a philanthropist decides to do. They certainly can “vote with their money” and decide what organizations to donate to, but if money equals a vote, the ultra wealthy wield more political power. The growing wealth gap, record corporate profits, high-profile strikes, and an increase in racial tensions all harken back to the Gilded Age, where America’s original billionaires amassed their fortunes. The ability for individuals to accumulate so much wealth while others live in abject poverty has striking moral implications, especially given that the wealthiest individuals also wield the most power in directing philanthropic efforts.

It can also lead to a disproportionate reliance on ultra-wealthy donors — whether they are individuals or businesses. This means those at the very highest echelon of society, Bernie Sander’s famous “Billionaire Class,” have the largest influence where money is spent trying to help the poorest and most dire of our citizens.

There is also the moral question of when it becomes obligatory to give back to your community and the ethical question of the existence of billionaires as a whole. It may be time to rethink this model of philanthropy — and how much we rely on it — and look to alternate ways of how a society can take care of its most vulnerable people.

Business and Charity, Here vs. Abroad

“I had the opportunity to work for an international company based in Europe, and it was very illuminating for me to experience the difference in attitudes around philanthropy in a European context versus the U.S.,” John Tayer, president of the Boulder Chamber of Commerce shared.

“The distinction between Europe and the United States is that in the United States, there is more of a community expectation of philanthropy by businesses and individuals,” Tayer explained. Europeans, especially Western Europeans, tend to rely more on government programs rather than philanthropic organizations. That is not to say charity does not exist, it just takes on a different role when society also expects and funds the government to provide help. Places like France, the U.K., and Germany rely on social support systems funded by higher taxes rather than generosity. Those societies have made the trade off of a higher tax rate for a more robust social support system, therefore reducing the need for private philanthropy.

John D. Rockefeller gave his fortune to his son to avoid taxes, one early example.

Shifting the burden of philanthropy from private businesses to the government also democratizes the process and reduces the influence of billionaires on where that money is spent. Tayer shared, “I am not so sure that’s the best thing for society, that businesses that are responsible for something that is so broad, socially. It’s potentially a question of morality and a question of, you know, applied civic duty for an individual to contribute their profits or their economic benefits to philanthropic causes. Is that necessarily the most efficient way to address broader community needs?”

Unfortunately, those in a position to do so have been known to hide their money, use loopholes to avoid taxes, and influence legislation that lowers their rates. According to OxFam, “Elon Musk, one of the world’s richest men, paid a ‘true tax rate’ of about 3 percent between 2014 and 2018.” This creates a burden on society and a great irony where the people taking the most are obligated to contribute the least. We then rely on their charity to fill the gaps.

Panama and Pandora

Raising taxes is not the only answer. Those with enough wealth often hide their money in untaxed offshore accounts — money that would have been taxed to help fund existing programs. Tax evasion schemes are nothing new. John D. Rockefeller gave his fortune to his son to avoid taxes, one early example, but the scope, amount of people, and international connectedness of recent revelations is stunning.

The Panama Papers were a collaborative investigation by the International Consortium of Investigative Journalists and numerous other media organizations that exposed in 2016 a worldwide network of offshore bank accounts that the mega wealthy used to hide money from taxation. The same organization of journalists also uncovered a second vast network of offshore accounts in 2021 that the wealthy elite used to store over $11 trillion dollars offshore called the Pandora Papers.

the wealthy elite used to store over $11 trillion dollars offshore called the Pandora Papers revealed.

Not all of that is illegal, according to the ICIJ. “Because of the complexity and secrecy of the offshore system, it’s not possible to know how much of that wealth is tied to tax evasion and other crimes and how much of it involves funds that come from legitimate sources and have been reported to proper authorities.”

A massive portion of this money would have been taxed at various amounts which would have provided increased revenue for  governments. Talking with politicians and city employees, one of the main complaints for promoting new programs and increasing the efficiency of existing ones are budget constraints. One Colorado-specific example is the free preschool program which simply did not have the budget to meet the need. Money sitting in illegal accounts overseas would have helped fund additional early childhood education.

The ICIJ’s exposure has helped funnel over $1 billion back into legal banking systems across the globe.

The reverberations of these investigations were widespread. Politicians in a wide spectrum of nations including Iceland, Spain, Pakistan, Malta, and Peru resigned, were removed, or charged in the wake.

Journalism matters deeply. Daphne Caruana Galizia, a journalist in Malta, was killed by a car bomb in 2017, likely for using the Panama Papers as a source on corruption. The ICIJ’s exposure has helped funnel over $1 billion back into legal banking systems across the globe to be properly taxed and accounted for, but the problem is not solved as long as similar schemes exist for the very wealthy to exploit.

Wealth and Morality

One of the most disturbing moral implications of the Panama and Pandora Papers is that people who were already incredibly successful, like Emma Watson, Elton John, and Shakira were hoarding money offshore while also living lavish lives. What is the point of continuing to accumulate so much wealth past the point that you and the next generations could already live comfortably in financial peace? Certainly people should be able to attain vast wealth and never work a day again if they so choose, but there is a point when continuing to amass a fortune becomes immoral.

At some point, a moral obligation to return wealth to communities must exist. “We’ve just felt it was kind of an obligation. Our money comes from this community … we feel this definitely is a ‘what goes around comes around’ type of an attitude,” one of the major philanthropists in Boulder shared privately.

They touched on the idea of returning wealth to the communities that fostered their success in the first place. “We just feel it’s inherent, with the position we are in the community, and that our money comes from here, that we need to keep the whole circle going,” they said.

Herbert J. Solomon, a philanthropist in San Diego, CA, shared his philosophy with SDSU Magazine. “Good fortune has been bestowed upon me, and therefore, I want to assist others who are less fortunate than I am.” Solomon touched on the importance of funding historically marginalized communities. He is a donor to the Jewish studies programs and recently funded the new Black Resources Center at San Diego State University.

This type of community-based giving contrasts with performative philanthropy where an ultra-wealthy individual may donate to an organization but not be integrated within or in tune with community needs. However, in the end, “It’s all a positive benefit for society, and, you know, I don’t judge the motivations. I think of them all as positive for society,” Tayer explained. Even today, the organizations like the Rockefeller Foundation and Carnegie Foundation live on and fund important programs.

Charity as a PR Move

The motivation behind philanthropy is not always pure. True, giving away wealth is inherently a selfless act, but ulterior motives can still be motivating factors. Those external factors can lead to decisions that are ultimately not about what is best for the communities in need but what benefits the organization or individuals behind it.

“Even in Europe, there are folks and families that have seen significant wealth and make decisions about, you know, building an art museum. Well is that the greatest need in Europe? But it’s certainly not a bad thing,” Tayer explained.

“There’s nothing nefarious about, you know, the way businesses and individuals try to target their own generous giving

Tayer shared that he has seen the decision-making process firsthand. “I have seen this in action [decisions on giving] to build a positive image around the company. So it’s a form of marketing associated with their general generosity, seeking recognition for being a positive community contributor. They sometimes will couple that with a targeted form of philanthropy,” he elaborated.

Tayer also explained that he sees this as an inherent good — wealth is still being returned to a community, and positive effects still come from charitable decisions even when influenced by marketing and image analysis. “There’s nothing nefarious about, you know, the way businesses and individuals try to target their own generous giving,” he said.

Giving Gone Bad

Ray Holgado wrote that the online posts “stood in stark contrast to the reality of working at CZI, which had revealed itself to be an extractive and exploitative environment for me and numerous Black employees.” Instead of making any substantial changes, Black employees were reportedly ignored by leadership.

This also highlights the problem of inclusivity at the highest levels. Involving numerous voices in decision making at the highest level has still been lacking — most CEOs and board members are still white men. An article by Charter in partnership with TIME argued that we have not seen major change in leadership diversity since the BLM movement brought systemic racism to the forefront of discussion in 2020.

The importance of partnering with established, recognized charities and philanthropic organizations can also not be overstated. There are numerous examples of celebrities setting up their own charities and promising things that never materialize, like Madonna’s school in Malawi or misusing the funds, like The Trump Foundation. Famously, Wyclef Jean used funds from his charity for Haiti to pay concert expenses among other things. Making sure organizations are open about their expenses and focus on providing services is a start.

Some charities are also more about image and marketing with little support or follow up to the communities they purport to serve. One example is the Three Cups of Tea scandal where schools were physically built but many sat empty, providing no actual services. Engaging with the communities and understanding what they actually need rather than deciding ahead of time what the charity will provide is also a critical component of truly successful giving.

Democratizing Wealth

• If there weren’t so much wealth accumulated in the hands of so few, we wouldn’t have such a need for charity that we see today. Of course philanthropic giving is a good thing, but when certain individuals accumulate to the detriment of society, them donating back to help solve the problem is not the best solution. A more equitable distribution of resources is the answer. People absolutely should be able to attain a level of wealth that allows them to live lavishly and support their families for the next generation. Hard work and ingenuity should absolutely be rewarded. This is not a call for a utopia. However, no one ever earned a billion dollars through hard work. To put numbers in perspective, if you earned $5,000 a day for the last 500 years, you would still not have amassed a billion dollars.
• Relying on wealthy individuals to choose where to focus their philanthropy is not a democratic process. “Relying on it is that, you know, means businesses and individuals have their pet interests and in certain instances, that means that great community need isn’t addressed because it just doesn’t align with the particular philanthropic goals of an individual or business,” Tayer shared. “Personally, I believe that our society should collectively make decisions about the investments that we want to make and put less of a burden on businesses specifically to address those needs,” he said.
• “I am not going to pass judgment specifically on, you know, that outlier of the significant wealthy in our community and how much they should be taxed. I mean, that’s a broader community, society question. You know, in terms of being able to make sure that we are helping to lift all elements of our society and workforce in order for them to benefit from our broader economic vitality, that’s what’s important,” Tayer elaborated.
• Not every solution is government oriented. One philanthropist shared that sometimes the problem is there are many overlapping charities with similar goals, but with varying reach, budget, and internal structure. “I think there should be some type of a clearinghouse where you tell people what your nonprofit is doing, because I think there’s six or eight other people doing the same thing. They’re asking the same people for money to support exactly the same thing, and it’d be really nice to have a thorough analysis of ‘Here’s what we’re doing. Who can we partner up with?’”

Ultimately, democratizing charity by allowing citizens to vote on programs and platforms — and reducing the need for charity by fairly taxing the wealthiest citizens so programs can be funded — will help address some of the deepest issues we face today. Mental health programs are lacking. The need for solutions for the growing unhoused population is apparent. Colorado voters made it clear they support free early childhood education. None of this can be addressed without proper funding. That funding should mostly come from billionaires.

Charity Guide

Choosing the correct charity to support can be intimidating for those that want to give back money to the community. Luckily there are some telltale signs of what to look for and what to avoid when it comes to supporting those in need. Even if you aren’t a multi-millionaire there are still great ways to help. Here are some signs to ensure your dollar goes to those in need, not in someone else’s pocket.

Signs to support:

Established organizations

Charities that have been established for a longer time have a higher chance of being credible. Of course that is not a guarantee, make sure to research organizations on sites like CharityNavigator.org or other similar resources.

Specific Claims & Goals

Some charities may claim that there are a certain number of unhoused children, but how many of those children will the charity be able to reach? Specific claims, goals in line with community need, and financial transparency are all key components to a successful charity. Finances Charities should spend a large amount of their money on helping the populations they purport to serve. If the higher ups are receiving triple digit salaries, or if staffing and fundraising seem to be the priority, that could be a sign that your money will not go towards someone in need but in keeping the organization funded.

Signs to watch out for:

New celebrity charities

Plenty of celebrities have well run, well established charities… but many do not. It can be tempting to donate to your favorite celeb’s cause but be sure they are not going at it alone. The most successful celebrity efforts often partner with established organizations to address need rather than founding their own and slapping their name on it.

Pop-up charities

Emotion can play a huge role in determining where to give. Watching a disaster unfold and finding new links to donate on social media can be a way to feel involved, but may not be the best way to help those who need it most. Unfortunately, there are those who take advantage of moments like natural disasters to set up fake organizations and pocket the money.

Low Direct Aid

The purpose of a charity is to put help in the hands of those who need it. Evaluating a charity needs to include finding out what percent of money is sent directly to help those in need. Experts recommend more than 1/3 of an organization’s money should be sent to communities in need. There is a line between including a marketing perspective in decision making and engaging in performative philanthropy purely for increasing brand awareness and profit. Ray Holgado shared his experience with the Chan Zuckerberg Initiative in an article detailing Mark Zuckerberg’s and Priscilla Chan’s performative public posts regarding Black Lives Matter while simultaneously upholding systemic inequality within the organization.