Democracy, in its ideal form, gives every citizen an equal say in governing, which on the surface is an inherently just and fair approach. We want a strong democracy because it achieves good outcomes or, if it falls short of achieving them, at least pursues worthy ideals as valued by voters in the day (e.g., justice, freedom, equality, prosperity, and human dignity).
However, democracy is not perfect. Winston Churchill famously said,
"Democracy is the worst form of Government except for all those other forms that have been tried from time to time.”[i]
One major concern is imbalance: democratic governments' and charities' missions can be tilted to favour wealthy supporters. Those with large funding to advocate for their preferred vision may shift the focus of institutions’ activities. Small donors to political parties or charities do not garner such power even though their contributions may exceed the large donations in aggregate.
This article asks: How will successfully deploying the long-term funding infrastructure offered by Ben’s Way Funds Generators improve or aggravate this imbalance? [ii]
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Ben’s Way Funds Generator services will be new to the world, so the actual results cannot be predicted based on history. However, using certain design parameters, we may skew the likely results in favour of a stronger democracy in these ways:
By boosting resources for both charities (directly) and governments (indirectly[iii]), the society of the future is better poised to reduce social tensions. A more contented public is easier to govern than an angry, disillusioned population. This supports any form of governing but helps reduce the opportunity for would-be dictators to prey on public dissatisfaction.
Ben’s Way’s service design will set a maximum portfolio size per individual, ensuring that over time, each seed fund contributor is given the same economic sway.
Ben’s Way’s service design will ensure that communities and charities of the future will have complete freedom to spend as they see fit by providing unrestricted gifts. This will ensure that charity leaders have less reliance on individual large donors in the future and are free to address their missions as they wish.
Philanthropy today may hinder or assist democracy in several ways, which we will outline below. We use an excellent article by Rhodri Davies (2019) [iv] to describe his definitions of pros and cons relative to the present as ‘Issues.” We then imagine how paying large sums to charities decades and centuries in future allows us to estimate the possible impact on democracy of the Ben’s Way Funds Generators plan. These thoughts are discussed under the heading “Opinion.”
How philanthropy may help democracy.
Issue: Overcoming the “Tyranny of the Majority.” Members of minority groups or those with minority views are prevented from expressing their choices in any meaningful way through standard democratic means. Civil society can be seen as an important mechanism for counterbalancing this problem by offering people a means to associate and thereby pool their power to the point where they are able to exert influence on public discourse, public policy and spending decisions even though they may remain firmly in the minority within society as a whole. Opinion: Ben’s Way Fund Generators would fund specific charities or purposes as selected by seed fund contributors. Their choices would enable minority views of chosen charities to be better addressed, whether by the government or, eventually, as funds reach huge proportions, by the charity itself.
Issue: Discovery and Innovation. Endowments should be acceptable within a democracy because they allow for experimentation in delivering public goods that can benefit society in the long term. This supports the continued existence of foundations, which can serve as a democratic society’s risk capital, a potent discovery mechanism for experimentation in social policy with uncertain long-term results. Opinion: Ben’s Way Fund Generators would boost the relative proportion of funds in charitable foundations and hence propel experimentation, finding better solutions and contributing to society’s improved conditions. Better social conditions, specifically less economic inequities, enable stronger democracies.[v]
Issue: Holding the state to account. Philanthropy provides a means to hold the state to account for the services it delivers by highlighting gaps in provision and failures or demonstrating better ways of doing things. Civil society organizations continue to play a vital role in this regard. Through campaigning and advocacy work, they highlight new challenges and unmet needs, bring issues to public attention, and challenge governments when they fail to meet the requirements and expectations of citizens. Opinion: Ben’s Way Fund Generators would support charities with the objective of holding the state accountable and would be an important source of funding for campaigns and the remedies sought.
Issue: Democracy as a cause. Some organizations might explicitly aim to strengthen democracy, not by representing the interests of a particular group but by promoting general democratic ideals or civic skills as their core mission. Opinion: Ben’s Way Fund Generators funding could support organizations with a mission to strengthen democracy. Seed fund donors must identify that objective by choosing appropriate charities to fund. Note that Ben's Way would not be a gatekeeper of deciding certain registered charities are not supportable. Seed fund contributors must decide.
Issue: Teaching democratic skills and demonstrating models. Charities have historically played an important role in equipping their supporters and those they work with the skills they need to engage in wider democratic processes. Civil society organizations still play a vital role in equipping people with democratic engagement skills, and by supporting such organizations, philanthropy can clearly strengthen democracy. Opinion: Ben’s Way Fund Generators would help fund those charities and thus sustain the teaching of democratic skills. The choice of approach would be that of the charity, which may vary over time.
Issue: Overcoming political and social division.
Civil society organizations and philanthropic funding can potentially play an invaluable role. By bringing people from different walks of life, with different viewpoints, together in such ways that they can find commonalities (or at least disagree more constructively and positively!), we might be able to overcome some of the divisions within society at a local or national level and thereby reinvigorate democracy. Opinion: Ben’s Way Fund Generators could reduce political and social division by broadly funding charities and, indirectly, governments, reducing inequities and permitting a more just and fair society. [v]
How philanthropy may hinder democracy.
Issue: Plutocratic bias One key charge levelled against philanthropy is that it bypasses the machinery of representative democracy to shape public opinion and public policy. Those with large amounts of wealth are disproportionately able to exert influence, which introduces a “plutocratic bias” into our society. Furthermore, unlike elected officials or politicians, these philanthropists are not accountable to anyone but themselves. Opinion: Ben’s Way Fund Generators would reduce plutocracy bias. Small donations can eventually grow to any size, and larger donors will eventually have equal standing as smaller donors. To make this happen, a cap on the growth of funds per individual is needed, as suggested in my earlier articles (possibly at $1 billion per individual). A cap limits the further growth of larger donors' influence but ensures the ability of smaller donors to eventually reach equal status. Starting with small individual seed fund contributions, charities would only begin to receive significant, unrestricted amounts after 100 years. Such payouts given so far away in time would have little to do with the funder’s bias and more to do with the charity of the day’s choices to use the money. As funding grows to even more significance, the bias becomes even less due to the time distance between the philanthropic gift and the original seed funding.
Issue: Perpetuity and the Dead Hand The fundamental problem with perpetual gifts is that donors can dictate exactly how money should be spent to benefit society at the time of giving rather than making it responsive to society's needs on a continually evolving basis. The further out in time that a directed spending approach perpetuates, the less likely the current needs are reflected or addressed. Opinion: Ben’s Way Fund Generators would not payout on a restricted basis to any charity. Thus, no power exists that is exerted by the seed fund contributors, save their donor intent statement, indicating the contributor’s desired goals for the use of the funds. We will address more fully how donors would express their intent for several centuries in a later article. Charities would use funds as they see fit for their times, but should in essence support the seed funders' wishes. If the receiving charity’s mission varied to the point it no longer substantially met the seed funder's intent, the community charity holding the client's Donor Advised Fund could redirect the funds to another better fitting charity.
Issue: Allowing factions or associations US President George Washington’s farewell speech in 1796 warned that establishing factions or associations, i.e., political parties or charities, could harm democracy: “…factions or associations …give an artificial and extraordinary force; to put in the place of the delegated will of the Nation, the will of a party; often a small but artful and enterprising minority of the Community.” Charities sometimes give a bigger voice to minorities beyond their general population representation. This issue is the opposite of the above-mentioned ‘tyranny of the majority,’ potentially resulting in the ‘tyranny of a minority.’ Opinion: This is the current state of society in which better-funded minorities have power beyond their numbers. Ben’s Way Fund Generators would generate future funds to build more opportunities for the many contributors’ chosen areas of support, such as the arts, health, and education. Over time, the fund should grow large enough to represent relatively considerable power but would be used in a broadly distributed way. Because more support is eventually given by funds generators to all areas charitable purposes and government services, the public will be better off across the board. Political parties would have less anger to support protests. Less activism and less division will hopefully lead to less perception of influence over political parties or charities.
Conclusion
The above discussion on balance supports the idea that increasing funding available to charities over time would provide an opportunity for a thriving democracy in the future.
Funding must be channeled to support democracy and not be used in ways that are negative to democracy right from the start. More work is needed here to identify ways to fairly balance the missions undertaken by the seed funder across society.
The missions of supported charities should be monitored to ensure fund payouts constructively and continuously both align to seed funder intent and support democracy.
Footnotes:
[ii] A Ben’s Way Funds Generator is a proposed organization that invests donated seed funds to grow and repeatedly give portions per the donor’s wishes from the portfolio to charity at various set payout periods or targets. Since we hope that a great deal of time for humanity continues after we die, we advocate that society use some of that time to securely fund future societies by investing funds to grow more new charitable donations, in effect creating a repeating Funds Generator for the benefit of charities.
The term Ben’s Way attributes the inspiration for Funds Generator plans to Benjamin Franklin. He set up a social impact loan business to last 200 years after his passing via his Last Will and Testament. The business was a socially impactful money lender to young, apprenticed artisans from 1790 to 1990. Ultimately, Franklin's donation and legacy of social impact investments compounded his seed funds into major gifts to Boston and Philadelphia at the 100- and 200-year mark. In 2022 dollars, his roughly $283 thousand invested in 1790 grew to become gifts in 1890 of $11.2 million and $13.9 million in 1990. Learn more here.
[iii] Governments will benefit indirectly by charities being well funded in two ways. First, Ben’s Way donations are not deductible saving governments about half of each payout, and second, the charities eventually will be financially independent, saving governments a great deal. In Canada only about 10% of charity funds come from annual tax-receipted donations. Revenues from activities (e.g. student tuitions, etc.) and government contributions make up the rest.
[iv] The pros and cons of this article come from this excellent article by Rhodri Davies (Does Philanthropy Help or Hinder Democracy| CAF Giving Thought (cafonline.org)), which serves as benchmarks against which we may postulate how Ben’s Way funds may affect the desired outcome of a stronger democracy.
[v] “We find that … higher levels of economic inequality reduce support for democracy amongst all social classes…” Economic Inequality and Democratic Support | The Journal of Politics: Vol 76, No 1 (uchicago.edu) (2014)
Photo by Phil Scroggs on Unsplash
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