"How bleak were communist societies with no charitable tradition, no volunteering, no civil society. "

From the Guardian:

"Thank goodness the poor don't rely on philanthropy

Donations are drying up as the recession bites - exposing the nonsense of the Tory belief in charity replacing the welfare state

Comments (119)

• 
• • Polly Toynbee
  • The Guardian, Saturday 10 January 2009
  • Article history

At the height of the boom the BBC led with the good news that the businessman Sir Tom Hunter was pledging to give away £1bn. "With great wealth comes great responsibility," he said. "I am not going to hide it under a bushel."

This heralded, many said, the new age of philanthropy, when the mega-rich would redistribute their wealth voluntarily( A GOOD THING ). No need for higher taxes: once they had every mansion, super-yacht and jet they could ever use, their excess wealth would buy glory with patronage to match the Rockefellers, Carnegies and Medicis. There was much pressure on the Treasury to give even bigger tax breaks for donations to charity.( A GOOD IDEA )

But that was then. This week Sir Tom Hunter said he would not be giving away £1bn, following losses in his investment empire. Last year Hunter was 68th in the Sunday Times rich list: this year he is expected to have dropped a few places, but not to drop out altogether. He has given over £35m for business enterprise lesson in schools and to projects in Africa.

Charity can expect a hard knock in the recession, with 52% in a recent poll expecting to cut back giving. A PriceWaterhouseCoopers survey expects charity incomes to fall by £2.3bn in 2009 - a sizable chunk out of last year's total of £10.6bn. One in three charities was laying off staff by the end of last year. Half of them say they are unable to meet increasing demands for their services. The British Red Cross cancelled its 2008 winter gala ball - an event that usually raises £500,000 - for lack of a corporate sponsor. Shelter lost £400,000 at the end of 2008 when corporate sponsors cancelled donations. "Giving from rich individuals, which had been flagged up as the next big thing, has gone down the pan," said the director of fundraising at British Red Cross.

A Response column in yesterday's Guardian from the ESRC Centre for Charitable Giving and Philanthropy said that these reports were alarmist and risked becoming self-fulfilling. It's certainly true that much giving continues; the BBC's Children in Need did well on the day (though badly in follow-up fundraising). However, Stephen Bubb, the head of the Association of Chief Executives of Voluntary Organisations, paints a pretty grim picture from where he sits, as do others overseeing the sector. The Charities Aid Foundation warns that in the last recession giving dropped by 64% - while demand rose by 90%. ( WOW )

Charity is the battle cry of the Conservatives, the answer to everything, the gentle face of their shrink-the-state rhetoric. Last June David Cameron launched a policy on the voluntary sector that "will provide many of the solutions to tomorrow's problems". The document on cities by the Tory MP Chris Grayling stresses that the "potential of our voluntary sector to tackle the difficult social problems in our most deprived areas is huge". Iain Duncan Smith concludes that small, local voluntary organisations are the best answer to his "broken Britain", lavishing praise on amateur community voluntarism.( IT IS A GOOD THING )

But in this mish-mash, they confuse two very different sectors - Duncan Smith's romantic Victorian vision of little battalions and the burgeoning third sector that increasingly takes on government contracts. Locally and nationally, those contracts are an arm of the welfare state, paid for out of taxation, not donations. Stephen Bubb points out that it's the huge increase in government support that has doubled the size and success of the voluntary sector in the last decade, delivering employment, social care and children's services. State funds to the voluntary sector now exceed public donations.( REALLY? )

This is just as well, as donations dry up in recession. And consider where charitable money from the public flows. This year, for the first time, religious institutions received most money - churches, mosques, synagogues and the like. Although only 7% of donors give to the religions, it is the small number of big donors who raise so much for religion. Next comes medical research - cancer mostly - and then children, followed by hospitals/hospices, overseas aid and animals. Looking at those priorities, it's worth remembering that every time someone gives to charity, the taxpayer is obliged to donate too. When, for instance, someone gives to the tiny Odinist Fellowship (which seems to take five times more money than it spends on Odin worship), we taxpayers put in up to another 28%, willy-nilly.( A BIT SILLY. YES. )

The randomness of charity is part of its charm, adding to the rich texture of society. How bleak were communist societies with no charitable tradition, no volunteering, no civil society. How desolate life would be without the impulse to give and volunteer - from raffles to sponsored runs, fetes to balls, tin-rattling poppy sellers to hospital friends' trolleys - for good or eccentric causes( I AGREE ).

Charity is mostly a social good in itself, but it is no substitute for the state( NOT IN RESPECT TO HELPING THE TRULY NEEDY. NO. ). It's an add-on: free-wheeling, often innovative, sometimes a beacon showing how to do things better, with ideas to lead the state sector( YES ). But it is minute compared to the welfare state( YES. AND WE HAVE ONE IN THE US ). Rightwing thinktanks that claim the welfare state has stunted Victorian voluntarism conveniently forget how little health, welfare or education charities ever delivered( TRUE. IT WAS INADEQUATE. ). The voluntary sector has only become more important by taking welfare state contracts to do things a democratically elected government chooses. The money is accountable - whereas random funds from philanthropists take a taxpayers' subsidy unaccountably.

As donors turn off the taps in a recession, what a disaster if the welfare state were seriously dependent on haphazard generosity. In the boom time, when I researched attitudes of high earners for the book Unjust Rewards, time and again the rich justified their extreme pay by citing philanthropy( SILLY ). It was a thin excuse as the top 10% give proportionally less of their income than the bottom 10% - so philanthropy should be a reason to pay more to low earners and less to the rich( I AGREE ). But imagine if all those powerful philanthropists devoted their energy to persuading fellow plutocrats to pay all their due taxes without resorting to avoidance. That would raise billions more - and do immense civic good.( I AGREE. I DO NOT BELIEVE IN VIOLATING THE LAW, EVEN WHEN IT COMES TO TAXES. SILLY VICTORIAN ME. )

• Polly Toynbee is the author, with David Walker, of Unjust Rewards polly.toynbee@guardian.co.uk"

Private Sector Philanthropy is very desirable, admirable, and important, but we cannot allow the truly needy to suffer. A Robust Social Safety Net is needed to ensure that we not allow needless human suffering on a theory. Human Suffering is all too real.

"Around the country, the nonprofit community is reeling from the Madoff scandal. "

Here's another post about Madoff's effect on Charities. From Stephanie Strom on the NY Times:

"When Jeanne Levy-Church created the JEHT Foundation in 2002 to promote justice, equality, human dignity and tolerance, she tapped into investments run by Bernard L. Madoff.

Those investments were initially made more than three decades ago by her father, Norman Levy, who entrusted his real estate fortune to Mr. Madoff. Financed solely by regular contributions from Ms. Levy-Church, the foundation gave away more than $75 million over the next few years.

But on Monday, the young foundation announced that it would cease operations by the end of January — a victim of the same investments that made it a star in liberal philanthropic circles. “The returns had been steady and strong for all these years,” said Robert Crane, the foundation’s chief executive. “It was shocking.”

Unbelievable.

"Mr. Madoff’s investment firm, Bernard L Madoff Investment Securities, collapsed last Thursday when federal regulators arrested him on charges that he had masterminded a scheme defrauding investors of $50 billion by his own estimate.

Elite Swiss banks, prominent billionaires, asset management companies and wealthy retirees have lost billions in the scandal."

Doesn't anyone do research?

"Around the country, the nonprofit community is reeling from the Madoff scandal. At least two other foundations have been forced to close their doors, having lost virtually all their assets to what authorities describe as a Ponzi scheme that depended on new investment money to pay off on earlier investments."

This shows the importance of Private Charity.

"Charities that depended on those foundations for financing, like the Innocence Project and the UJA Federation, and wealthy donors like Norman Braman, Mort Zuckerman and J. Ezra Merkin have now added the Madoff scandal to the list of reasons that fund-raising has been crimped this fall. In some cases, the foundations had placed their money with Mr. Madoff directly; others had invested with funds that turned assets over to him. And some nonprofits relied on a steady stream of money from donors, like Ms. Levy-Church, with now vanishing fortunes.

“It’s not catastrophic, but it does hurt us,” said Madeline deLone, executive director of the Innocence Project, which was supported by JEHT in its work to use DNA evidence to exonerate improperly convicted criminals and to reform criminal justice.

The Elie Wiesel Foundation for Humanity, the Ramaz School and Yeshiva University are among the charities that invested in the Madoff funds, often on the advice of wealthy donors on their boards, and are now grappling with the fallout.

“We are just waiting to understand exactly what’s going on,” Marc Winkelman, the chief of the Texas-based chain of Calendar Club stores and the treasurer of the Wiesel organization, said on Friday. “It’s of course an upsetting thing.”

According to its 2006 tax form, the most recent available, the Wiesel Foundation realized a $310,520 gain that year on some $37 million of securities traded on its behalf by Mr. Madoff. It is unclear what portion of the organization’s endowment that $37 million represents. Mr. Winkelman did not return a call seeking clarification.

The tax forms show trading of well-known stocks like Johnson & Johnson, PepsiCo and I.B.M., as well as government bonds, all of which may have led the Wiesel organization to believe that its portfolio was well diversified.

Yeshiva University lost $100 million to $110 million on investments in Madoff’s funds, having already seen its endowment drop to $1.4 billion, from $1.8 billion, after turmoil in the markets.

In a letter to donors, the Jewish Federation of Greater Washington said it had $10 million invested with Mr. Madoff, about 8 percent of its endowment as of Nov. 30. The organization said it would work to recover the money."

Good for them.

"The North Shore-Long Island Jewish Health System reported that it had a $5.7 million exposure to Madoff Securities in the form of a gift from a donor who insisted that it be invested that way. “The donor who contributed the funds has graciously agreed to reimburse the health system for any financial loss,” the organization said in a statement.

The Ramaz School, where Mr. Merkin was on the investment committee, lost some $6 million invested with Mr. Madoff, according to a letter sent to board members and two parents whose children attend the school.

“It is a small part of our endowment," said Rabbi Haskel Lookstein, the Ramaz principal. “We will be able to continue functioning normally.”

Miriam Rinn, a spokeswoman for the Jewish Community Centers Association of North America, the umbrella organization for J.C.C. organizations in the United States and Canada, said it was still working to determine how much it might have lost in the Madoff scandal.

“We’re shocked,” Ms. Rinn said. But “we’re still going ahead with all of our services.”

The Carl and Ruth Shapiro Family Foundation, which supports organizations like the Brigham and Women’s Hospital in Boston and the Jewish Federation of Palm Beach in Florida, said it lost $145 million, or 45 percent of its assets at the end of last year, because of investments with Mr. Madoff.

“I was stunned and saddened to learn about the allegations against Bernie Madoff,” Carl Shapiro said in a statement. “It is devastating to think that so many charities, individuals and institutions that had put their trust in Mr. Madoff have had their lives so negatively impacted.”

He said his foundation would work to recover its investment and would honor all its commitments.

The SAR Academy, a Jewish school in the Bronx, had roughly a third of its $3.7 million in assets invested with Mr. Madoff, according to an e-mail message it sent to donors and parents. That exposure was through the Ascot Fund, a charity to provide wigs for people with the baldness disease alopecia, which is run by Mr. Merkin, the chairman of GMAC.

And Steven Spielberg’s Wunderkinder Foundation, which supports organizations like the Cedars-Sinai Medical Center and the Chabad charity Children of Chernobyl, had investments with Mr. Madoff, although a spokesman said he did not know how much.

The Chais Family Foundation in Encino, Calif., announced over the weekend that its losses had forced it to stop operating, according to the Jewish Telegraphic Agency. The foundation had $178 million in assets in May 2007, according to its tax form.

The Robert I. Lappin Charitable Foundation of Salem, Mass., had about $7 million at the end of 2006, but was forced to shut down at the end of last week.

Ms. Levy-Church and her husband, Ken Levy-Church, supported JEHT each year with a contribution from their Madoff funds. There will be no more.

“Our programming is totally dependent on the ongoing funding, so for all intents and purposes it has ceased,” said Mr. Crane, JEHT’s chief executive. “People with grants currently in hand will keep that money, of course, but we can’t make good on pledges and grants that are for multiple years.”

The foundation’s 24 employees are losing their jobs, and organizations like Human Rights First, the Center for Investigative Reporting and the Juvenile Law Center are losing revenue.

Elisa Massimino, the executive director and chief executive of Human Rights First, said JEHT had been a “significant” supporter of the organization, particularly its work on national security and civil liberties."

The fallout of one man's Fraud is astonishing. However, this scandal, once again, needs to teach people to do serious Due Diligence on every investment.