Billionaires, Philanthropy And Politics: A Toxic, Deadly Mix

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Hi there. It's me again, writing about the billionaires. I know we all know the billionaires are out there throwing zillions of dollars at this election because they can. We all know how they buy politicians, but the real problem is how they buy policy and public opinion. These two articles highlight how they use their billions to influence via philanthropy, at our expense, and they're both must-reads.

First, via Zaid Jailani at Republic Report, a report on how billionaire money is pushing for millions to be redirected from state funds to private schools in North Carolina:

In addition to PEFNC (which is largely funded by the founders of Wal-Mart), another group called NC Citizens for Freedom in Education (NCCFE) has been formed to do political accountability work to directly target politicians who opposed to the privatization scheme. Facing South notes that “ all of NCCFE’s funding in the current election cycle so far – $52,900 – came from the American Federation for Children [AFC], a national organization that promotes privatization of public schools and has played a key role in the creation of neovoucher programs in other states.”

AFC is mostly funded by the DeVos family, who are the heirs to the Amway fortune. This family not only has funded school privatization efforts in North Carolina, but it has formed countless “school choice” groups all over the country, pouring millions of dollars of their fortune into the cause of school vouchers.

While the DeVos family and Wal-Mart heirs may be funding groups with friendly-sounding names to push their agenda, the public should know that the effect of this heavily-financed rush to privatization could eventually be the destruction of America’s public education system. They should also be aware that numerous for-profit businesses stand to reap millions or billions from this shift, and are behind much of the lobbying efforts to make this happen.

Here's something else they should know: Because organizations like Parents For Education Freedom in NC (PEFNC) are classified as tax-exempt organizations under section 501(c)(3) of the Internal Revenue Code, all contributions to them are tax-deductible. As a tradeoff for that tax-exemption, lobbying activities of that organization are limited to a small percentage of revenue. But in the case of PEFNC, they deny any lobbying at all. Their stated purpose is to "educate the public concerning educational opportunities in North Carolina", but here's what their revenues paid for, according to their 2010 990 (PDF):

  1. Organizing visits for state lawmakers to five charter schools. They spent nearly $458,000 on that.
  2. Meeting with state lawmakers to "question the state's direction in charter school policy" for the state's Race to the Top efforts. The bill for that was $74,400.
  3. Holding advance screenings of "Waiting for Superman", the Philip Anschutz-funded movie intended to inspire parents to love charters and hate traditional public schools for parents, community leaders and educators from universities, public schools, charter schools and private schools.

Tell me how the first and second activities are not lobbying?

Further, those grants received from the DeVos and Walton foundations came via tax-exempt organizations. Their foundations will not give grants to any organization that is not tax-exempt. So the flow of money goes like this:

  • Billionaires donate millions to their own foundations, moving money from one pocket (the taxable one) to the other pocket (the tax-exempt one). Of course, they take their tax deduction along the way.
  • The billionaires' tax-exempt organizations then grant funds to other tax-exempt organizations at state and local levels to advance policy agendas and lobby lawmakers while steering clear of lobbying disclosure laws.
  • When their stated goals have been met; e.g. privatizing education, they make more billions!

Let's call this the Billionaires' Circle of Life, and it comes at our expense. The revenue cost for charitable deductions alone is estimated at $315 billion over a five-year period. That does not include the lost revenues on the income earned on the assets of these foundations, which is also exempt from taxation, with a few exceptions for unrelated business investments. Billionaires get three for the price of one: Policy influence, tax-deductible contributions, and tax-exempt trust income.

You and I who are not billionaires, on the other hand, toss our $25 contributions into PACs or other organizations that are not tax-exempt, and have the option of making our policy desires known by getting out in the street and protesting or getting to the ballot box and voting. That is, assuming the billionaires throwing heavy money at Voter ID via organizations like ALEC and the State Policy Network don't make it impossible for us to vote.

To me, the abuse of charitable status is a big major issue that we should be making a lot of noise over. If you're not convinced, then I would suggest reading this long, well-written and extremely informative article about our billionaire philanthropists and how they are creating oligarchy through abuse of tax preferences while not really doing all that much good for those most in need.

"Philanthrocapitalism" is an especially curious coinage, giving rise to a hitherto unarticulated contrast—namely, with the kind of capitalism that is not-philanthro-. Not devoted to loving our fellow-man. And yet most of us grew up hearing that capitalism (the ordinary kind) was supposed to improve our lives. What gives? I asked Robin Rogers."The hope is that philanthrocapitalism and capitalism are mutually transforming," she said.

It’s not clear how this transformation will come about. Since the 1970s, the radical right has steadily stoked up the tension between business and the rest of society; the influential neoconservative Irving Kristol emerged as a key advocate, Judis writes, of the notion that business and government are natural enemies—a condition that practically mandates corporate bodies to purchase ideological influence. Kristol argued in a widely heeded 1977 essay [PDF] that "corporate philanthropy should not be, cannot be, disinterested."

Today’s right wing continues to push these familiar, if questionable, ideas: that business is good at measuring and achieving set results and goals, while government mysteriously lacks such abilities; that business is pragmatic, efficient and uninterested in ideological point-scoring; that every institution would benefit from being "run like a business," as George W. Bush, a notoriously failed businessman (and president) described how he intended to govern the nation.

Although this particular section of the article singles out right wing philanthrocapitalists, they exist on the left side, too and are not exempt from the author's scrutiny. Bill Gates is widely lauded for his contributions to the eradication of malaria in Africa and education in the United States, but in fact routinely joins with right-wing organizations to undermine public institutions and compacts in the United States, especially when it comes to education reform. Gates, driven by his mechanistic metrics-driven outlook, sees everything in shades of data, and so to him there exists a deep need for high-stakes testing of students as the only metric that determines whether a school is succeeding or not.

Of course, Gates also stands to benefit through his ownership of Microsoft for these enterprise-driven endeavors to measure achievement by mechanical, one-size-fits-all means. Philanthrocapitalism.

Read the entire article. It's rare that you'll find one so well-researched, written, or comprehensive. I recommend bookmarking it for future reference.

As you hear debates over issues like budget cuts where wingnut lawmakers are shaving a little off here and there from benefits that actually help people, remember that there has been no discussion of the $31.5 billion per year that stays in billionaires' pockets while they fund initiatives that are not in the best interests of the majority of Americans. Think of what that $31.5 billion could have saved in budget cuts. Full funding for the SNAP program. ACA subsidies. School funding for the arts. More teachers. More firemen. More policemen. Improved infrastructure.

All of those things could have been funded by phasing out that tax benefit for billionaires only while preserving it for anyone earning less than $250,000 per year. Instead, those billionaire dollars not only don't help reduce debt or improve life for all Americans, they are also used to work against our better, common interest.

At the very least, it is high time for an IRS project targeting organizations which claim to be tax-exempt but engage routinely in lobbying activities. At best, there will be a policy change which limits how much billionaires can take out of our revenue stream while working to make even more billions.

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