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In Defense of Donor Privacy

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eye on the news

In Defense of Donor Privacy

Recent efforts to publicize private philanthropic giving are misguided. December 17, 2021
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It took only a few days for MacKenzie Scott to cave. Last week, Scott, the philanthropist ex-wife of Amazon’s Jeff Bezos, said that she wanted a little less publicity for her donations. She wrote that, contrary to past practices, she would no longer announce to the public the recipients of her philanthropy or the amounts of money they receive. “I want to let each of these incredible teams speak for themselves first if they choose to, with the hope that when they do, media focuses on their contributions instead of mine.”

Many might view this as an admirable decision—that is, encouraging charitable organizations to speak for themselves instead of allowing donors to speak for them. But several critics denounced her approach, and now she has taken it all back, apologizing for the initial announcement and promising a full public accounting of each gift she makes.

The criticisms of Scott are worth answering, so that other donors and the public may understand the rights and obligations of private philanthropy. One of those critics, Benjamin Soskis of the Urban Institute, responded to Scott’s initial announcement on Twitter by suggesting that her “attempts to shine light on grantees by refusing to give info on $ amounts or orgs . . . also obscures her own power.” He continued, “it’s a rhetorical move that others less principled than her can take up to evade any responsibility to norms of philanthropic accountability & transparency.” In Soskis’s view, other donors with different priorities—perhaps conservative donors—could exploit her example to keep their donations private.

Many in the liberal philanthropic establishment agree with Soskis. Scott’s donations, they argue, should be made public because the wealth in her foundation is really public money. After all, Scott receives a tax deduction in return for her contributions, so the public has a claim on those funds. This is an increasingly common and dangerous sentiment that many conservative and independent-minded donors have been trying to counter. Campaigns to make private giving public often turn into efforts to pressure or even cancel donors who don’t give to progressively approved causes. Donations sent to conservative charitable organizations or causes often provoke retaliation against philanthropists, their businesses, or their families. In any case, private foundations must disclose donations on their federal tax returns, which are then made available to the public. It is thus farfetched to claim that such donations are “secret.”

Last year, the Supreme Court struck down a California law that would have required charitable organizations to disclose their donors on state tax returns in order to make such lists available to the state’s attorney general. The Court ruled, against progressive claims to the contrary, that California’s regulation was overly broad and would threaten freedom of association for charities that may be unpopular among some political groups. Indeed, the plaintiffs in that case, Americans for Prosperity Foundation v. Bonta, noted that they had suffered retaliation and harassment, a point that proved persuasive to a majority on the Court.

These arguments don’t phase critics like Chuck Collins, who leads the Program on Inequality and the Common Good at the Institute for Policy Studies. An heir to the Oscar Mayer fortune, Collins told the Chronicle of Philanthropy that he disapproved of Scott’s move. “People who reduce their taxes by charitable giving should report in a public way because we’re all chipping in for her tax reduction,” Collins says. By that logic, we might require homeowners to report how they spend money, since the public subsidizes their mortgage deductions. State and federal governments encourage many activities via tax deductions, including health expenses and electric cars. Do these tax advantages mean that all activities related to them should be “public”?

Among those believing that they have a right to know how MacKenzie Scott decides to give away her money are the organizations competing to receive it. “There’s a fair number of nonprofits I speak to that have not been on the receiving end of these gifts but don’t understand why because they feel like their work is aligned with what they deduce to be the priorities and values of MacKenzie Scott,” says Phil Buchanan, president of the Center for Effective Philanthropy, which has received $10 million from Scott, told the Chronicle of Philanthropy. Buchanan thinks that Scott has an obligation to say why she funded some groups and not others. It’s a bizarre argument—and an unrealistic one. Limited by both resources and time, donors can’t support every proposal or charitable group that comes their way. They are free to open themselves to political pressure by publicizing their giving if they choose to do so, but they should also be free, especially in our current political environment, to keep their own counsel.

Photo: Velishchuk/iStock

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