Altruism is regarded as worth encouragement by public policy. However, altruism is rarely universal, directed at people in general or to the needy in particular. The vast majority of donors give most of the money to organizations that serve people like them in terms of religion, ethnicity, class, culture, etc. Only about one-third of donations go to the needy. This giving pattern: (1) deepens in-group loyalty and out-group enmity and (2) strengthens economically organizations that are in-group oriented. This has a negative effect on intergroup relations, exacerbates fractionalization and polarization in society, and reduces the level of useful cooperation and trust among individuals who belong to different groups, which in turn has negative economic, political and social consequences. Public financial support in the form of tax advantages for charitable donations and the tax advantages enjoyed by nonprofit organizations supported by these donations should be reconsidered.
Many societies admire philanthropy and the nonprofit sector through which most philanthropic activity is carried out. This is expressed through laws and policies that favor them financially and provide them with legal protections not afforded to other institutions.
Why should government support giving and nonprofit organizations? Scholars provide two classes of explanations. First, the nonprofit sector helps with the provision of semi-public goods such as aid for the needy, culture, education and health, thus relieving the government from a financial burden (Weisbrod, 1974; Hansmann, 1981). Second, the sector enhances pluralism and diversity in society (Simon, 1978, Douglas, 1987, Brennen, 2006/7). The present paper asks questions related to both explanations but does not address them directly. It examines philanthropic giving in the United States and finds that the majority of money donated by the great majority of donors goes towards organizations that serve in-group members rather than the poor.
The paper argues that in an era of growing poverty and inequality as well as increased fractionalization and polarization, the charitable sector provides too little aid to the poor and too much support for in-group organizations – too much pluralism and diversity.
The nonprofit sector (and the social economy, more broadly) is where groups representing diverse perspectives and interests are most active; more so than in the for-profit sector, where actors are driven by a similar goal (profit) or the public sector, where the governing principle is provision of universal and nondiscriminatory services. Indeed, the nonprofit sector and philanthropy thrive on diversity, be it cultural, economic, ethnic or religious (e.g., James, 1993, Ben-Ner and Van Hoomissen, 1992, Wiepking, Bekkers and Osily, 2014).[i] Cultural, economic, ethnic, political and religious diversity generates heterogeneity in demand for semi-public services; satisfaction of demand requires provision that is specific to the needs of particular groups. In many cases, governments provide universal services, not tailored to particular groups, and for-profit firms are often unable to garner the trust of various groups to enable provision. Hence provision falls to the members of diverse groups themselves (Hansmann, 1980; Ben-Ner and Van Hoomissen, 1991). Altruistic giving is strongest when it is directed at members of one’s in-group. Giving is predominantly directed not to the poor or to society in general but to groups based on culture, socio-economic status, religion and so on.
The nonprofit sector has made important contributions to society. At the same time, from a perspective relevant to the challenge of facilitating a more harmonious society, we must acknowledge some facts that are not well known and not widely discussed by the general public or among scholars: (1) most philanthropy is not directed at meeting the needs of the needy, and (2) that most giving by the vast majority of donors is directed to members of donors’ in-group defined in terms of religion, ethnicity or cultural preferences.
In-group giving and adherence to in-group organizations affirm, reproduce and deepen extant divisions across different groups. The nonprofit sector’s organizations are probably the most important venues for articulation of group identity, through religious organizations, cultural institutions, ethnic associations, etc. Public policies that encourage these organizations unavoidably support the maintenance and deepening of divisions among groups.
Diversity has numerous benefits, but negative consequences arise from deepening differences among groups; this lead to hostility, less cooperation, and more conflict. The paper proposes to enhance organizations that support the poor, the needy and universal goals, and reduce support for in-group oriented organizations.
9. Social and solidarity economy, civil society and social movements
