Over the past 30 years, as the gap between wealthy and poor grew ever wider, total philanthropic giving almost tripled, according to annual estimates published by the Giving USA Foundation and the Center on Philanthropy at Indiana University. In an age of widening partisanship and plummeting trust in government, this outpouring of philanthropy has produced a distinct breed of philanthropist: The policy-making billionaire.

Bill Gates, the Microsoft co-founder, has invested more than $13 billion in public health initiatives around the world through his foundation. William E. Conway Jr., a founder of the Carlyle Group investment company, is planning to give away $1 billion of his personal fortune, and is said to be considering how his money can aid in financing major infrastructure projects.

“What’s going on at a broader level is a sense of, ‘Hey, we can be much more effective and efficient than government in doing things,’ ” said Leslie Lenkowsky, a professor of philanthropic studies and public affairs at Indiana. “And it’s become more pervasive in recent years.”

In keeping with the anti-government spirit of the times, the new philanthropists — some with roots in the loosely libertarian milieu of Silicon Valley or Wall Street — share a disdain for established politics and an impatience with the slow churn of old-fashioned policy making. Last month, the Starbucks executive Howard Schultz, whose net worth approaches $750 million, proposed using Starbucks’ corporate foundation and customer donations to create an economic development and job training program for the unemployed, one that he hopes can generate tens of millions of dollars in loans to small business.

“As corporate citizens of the world, it is our responsibility — our duty — to serve the communities where we do business,” Mr. Schultz wrote, “by helping to improve, for example, the quality of citizens’ education, employment, health care, safety, and overall daily life, plus future prospects.”

But the very loftiness of such ambitions raises a significant question: Can even the very wealthiest philanthropists finance public services on the scale necessary to achieve social change — that is, on the scale of government itself?

One way to make that happen: Instead of seeking to supplant what government does, philanthropists can finance advocacy to change it. When philanthropic dollars are applied to lobbying for programs, they can have an enormous leveraging effect on public dollars.

A coming study by the National Committee for Responsive Philanthropy, which advocates giving that aids the poor, looked at 100 social welfare organizations in 13 states. The groups spent about $230 million on advocacy and organizing for minimum wage laws, expanding tax credits for the working poor, and other programs. Those efforts, the study found, produced more than $26 billion in direct and indirect benefits to individuals, a “return on investment” of about 115 to one.

“I get it — there’s frustration when there’s gridlock, and sometimes people want to give money where government won’t,” said Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy. “But most philanthropists realize that good philanthropy can never be a substitute for government spending.”

A version of this thinking has long guided conservative political philanthropists, whose distaste for government has not blinded them to the value of influencing it, and whose money helped create an entire infrastructure of research organizations in Washington in the 1980s and ’90s dedicated to shrinking government. In the last decade or so, it has also become received wisdom on the political left, as some major liberal donors began to shift money out of traditional charity and into political advocacy.

Increasingly, the same spirit is animating some of the largest philanthropies in the country. After early experiments with directly financing new experimental schools around the country, for example, some of the biggest advocates for charter schools, including the Gates Foundation and the Broad Foundation of Eli and Edythe Broad, shifted gears several years ago and began pouring billions of dollars into advocacy at the federal, state and local levels. One result: The Obama administration’s $4.3 billion “Race to the Top” grant program, whose rules prohibited states from limiting the number of charter schools.

Of course, depending on the beholder, such philanthropy can seem either extraordinarily benevolent or extraordinarily undemocratic. The education scholar Diane Ravitch, in her book “The Death and Life of the Great American School System,” criticized the charter advocates as a “billionaire boys’ club,” exerting enormous influence over education policy with little accountability.

“It’s sort of influence-peddling writ large,” said Richard L. Brodsky, a senior fellow at the liberal-leaning research organization Demos and a former New York State assemblyman. “The notion that the society is better served by the super-rich exercising their charitable instincts is in the end anti-democratic.”

A middle path may be suggested by two other recent philanthropic efforts. Last fall, Mark Zuckerberg, a founder of Facebook, volunteered to contribute $100 million in seed money to Newark’s troubled public schools. The city hopes to match this with other private money in an effort that would pump about $200 million over five years into a school system with an annual budget of about a billion dollars. And in August, Mayor Michael R. Bloomberg of New York said he would pump $30 million of his own fortune into initiatives aimed at helping young black and Hispanic men, matched by $30 million from a fellow billionaire, George Soros, and about $68 million in city funds.

The new effort, dubbed the Young Men’s Initiative, will funnel money through an array of programs, from social services to alternatives to incarceration for juvenile offenders, that affect a group of New Yorkers who are disproportionately incarcerated and unemployed. How the money is spent will be determined by government.

Linda I. Gibbs, the city’s deputy mayor for health and human services, said, “Nobody in this conversation, whether from the Bloomberg Philanthropies or the Soros Foundation, is saying, ‘No, that’s not a good idea, we think you should be doing this, instead.’ ”

Officials in New York and Newark say the money from private sources will not replace existing public programs, but will instead allow rapid experimentation with new approaches to old and seemingly intractable problems, at no cost to taxpayers. Whatever proves most effective can then be rolled out on a larger scale, they argue, using public dollars.

“We’re not thinking about philanthropic dollars as a replacement for public dollars,” Cami Anderson, the Newark schools superintendent, said in an e-mail. “We are thinking about using it for things that need to be accelerated — where only private dollars can uniquely facilitate innovation because of the restrictions in government money sources.”

For example, some of Mr. Zuckerberg’s grant is going toward gathering reams of data to pilot a new grading system.

“It’s very expensive to do it, but once it is done, the cost goes way down,” Ms. Anderson said. “Do I need a huge data team at Newark Public Schools in perpetuity? No — but I need one now to ensure we have fair systems of accountability.” Part of the appeal is that the money comes with less red tape. This could also mean less transparency: The private foundation that controls the Zuckerberg grant refused to divulge how the money would be spent — until a group of parents sued the city. The Zuckerberg grant, Ms. Anderson said, will lead to more experimentation, and it is school officials who will be deciding where to experiment.

Source: http://www.truth-out.org/policy-making-billionaires-privatizing-public-policy/1322410134