When Generosity Harms Health Care and Public Health

As many Americans struggle to make ends meet, the persistent and ever-increasing gaps in wealth seem obscene.¹ Forty percent of the American public has less than $400 to cover an emergency expense, whereas others have more wealth than they could ever use during a lifetime.² Philanthropy is an increasingly popular mechanism for wealthy individuals to show generosity to others.

Philanthropy is defined as an “act or gift done or made for humanitarian purposes.”³ We believe that this definition is misleading. In this editorial, we examine the unintended consequences and ethical issues raised when trying to remedy the redistribution of wealth by an ostensibly philanthropic approach and propose that health care institutions that accept donations should do so with care. We also propose that philanthropy may not be for “humanitarian purposes” and can cause harm.

WHAT MOTIVATES PHILANTHROPY?

Rich individuals have several incentives to share their wealth through philanthropic giving. They may resist paying taxes to federal or state governments that they view as unworthy or incompetent. They may enjoy being recognized for their generosity rather than making anonymous tax payments or seek to promote their “brand.” They may have a strong commitment to a specific cause that they know will benefit far more from a direct donation than from tax-funded public expenditures. Playwright George Bernard Shaw offered one of his typically cynical commentaries on this: “A rich man does not really care whether his money does good or not, provided he finds his conscience eased and his social status improved by giving it away.”^4,5 Many philanthropists are motivated by a strong desire to better the world; however, their focused generosity can have negative consequences that should be highlighted.

WHY RELY ON PHILANTHROPY?

For historical reasons, the United States relies more heavily on private citizens and groups to develop and fund medical institutions and research than do other Western democracies. Americans’ innate and pervasive distrust of government favors private-sector control of entities often controlled by the government in other Western democracies.⁶ This attitude encourages individualism ahead of the “collective good,” with a strong belief that individuals are entitled to maintain control of their “hard-earned” money and can choose how and when to spend it, without the government’s input or influence.

CONCERNS AND UNINTENDED CONSEQUENCES

Michael Bloomberg recently donated $1.8 billion to Johns Hopkins University.⁷ This was a boon for students who will leave school debt-free. Although generous, was this the best use for the money? Bloomberg’s donation saved him $600 million in federal taxes, leaving the burden of maintaining public spending on others, many of whom are already finding it hard to survive. What public good could the $600 million have been spent on? Are Americans better off overall because of Bloomberg’s action? Mayo Clinic also received $200 million from Jay Alix, a Michigan businessman, for its medical school, generating a tax savings of $67 million for him. Philanthropy on such a large scale distorts public spending policies by reducing tax collections, so policymakers’ ability to improve society for everyone and achieve the long-term vision of federal and state governments is diminished. Philanthropy for specific causes detracts from other important issues that deserve attention and would provide broader societal benefit. Other unintended consequences from private donations include exacerbation of disparities. We believe that when tax law encourages philanthropic donations for specific causes, this contributes directly to widening inequality that is difficult to redress even with generous donations. Specifically within health care, when institutions that do not serve the public or society in general accept large contributions from donors, disparities between private and public health care are amplified. When select individuals determine spending at institutions that have increasingly come to dominate health care, the public’s role in decision-making through elected officials or public activism and protest is diminished. Large donations send a message that financially successful individuals can use their wealth to put their preferences into effect, whereas those who are less well-off cannot exert influence. Donations may be guided by passion rather than best practices and carefully thought-out policy. Extreme philanthropy also distorts institutional policies because it may direct funds from institutional needs and the mission to support areas for which the donor has a passion.

OTHER ETHICAL CONCERNS

Other ethical concerns exist beyond the broader implications of redistribution of wealth via philanthropic means. Philanthropic arrangements may lack transparency. Do institutions and donors define in ways that governments and the public can understand what a generous donation is supposed to do and what, if anything, the donor receives for the donation? Conflicts of interest that are not financial but more ethereal may arise that are difficult to measure and document but potentially cause undue influence on day-to-day operations. Do billion-dollar donations give the donor an inordinate voice in the institution’s decision-making process? Do institutions make decisions that cater to a donor’s preferences rather than to their or the public’s needs even without an explicit signal from the donor? Are health care institutions at a particular risk for losing sight of their mission and vision if they become overreliant on benefactors and philanthropists? The potential symbolic harm to institutions from the increasingly common practice of naming buildings and programs after wealthy donors should be considered carefully. Promoting the names of donors who acquired their wealth through dubious practices or unethical means may decrease faith in an institution and appear to lend credence to the notion that the end justifies the means.

ALTERNATIVE FUNDING MECHANISMS

Other approaches to be charitable might include the following. Anonymizing donations could encourage giving to unglamorous programs that have high need but lack the appeal of potentially ill-advised visions for solving a problem identified by the philanthropist. True altruists often do donate anonymously. Limiting the tax-deductible amount of a donation would reduce the enormous tax savings associated with mega-donations and leave more money to be spent by governments on what they see as the public’s needs. Limiting the amount that can be donated to individual causes or institutions would help spread the wealth wider and so allow a broader range of problems to be addressed. Donations could be made to health care trusts in which the donor is acknowledged but in which funds are pooled to allow experts to distribute funds to areas of greatest need, such as improving health care delivery or increasing access to care for those with high medical needs or for vulnerable populations.

Wealthy people contemplating large donations who truly have a “love of humanity” must consider whether the donation is more self-aggrandizing than helpful to the public. Hoping that their preferences and ideas will transform health care or related areas is not sufficient. Although there is an intellectual undercurrent, especially in the United States, that financial success is a marker of superior intellect and judgment facilitating a larger say in public policy, this is inconsistent with US political ethics. This belief ignores the increasingly acknowledged wisdom that contemporary philanthropy may dramatically help some but silently and significantly hurts others.