A Concern over a Philanthropic Superfund

So, I read in the papers that the second richest man in the world has been overtaken by a bout of philanthropy and decided to give his vast fortune away . . . to the richest man in the world. Warren Buffett will be giving away his vast accumulation of wealth by donating it to the Bill and Melinda Gates Foundation.

Bill Gates, in turn, is retiring from Microsoft so that he can focus on running his Foundation full time -- putting his business skills to work in the private charity sector.

Clearly, this is admirable. It is a bit difficult to maintain the bigotry (and it is, in fact, bigotry) that corporate leaders are inherently evil when the vast majority of their wealth goes into establishing and maintaining services to the poor. (The Bill and Melinda Gates Foundation is devoting most of its resources to fighting diseases such as AIDS and malaria in third-world countries, particularly Africa, and in promoting high-school education.)

Buffett chose to give his money to the Bill and Melinda Gates Foundation for a reason -- it was the only charity that could handle such a large influx of new wealth. Any other organization would have had growing pains as they grew to handle the new wealth.

Yet, I do think that there are a couple of dangers here.

The first danger comes from having so much power (and wealth is power) in so few hands. Regardless of what I may think about the merit of this Foundation's work, I know that there are a lot of people out there who are just aching to get their hands on nearly $100 billion in wealth. They can well imagine what they can do with that type of wealth, advancing those causes that they think are worthy of advancing.

It is not at all difficult to imagine an organization, filled with zealous devotion to some ideal that they have pledged themselves to accomplish, struggling to take over the wealth of a foundation such as this. We see something much like this in the way the Religious Right has taken over the Republican Party as well as several once-moderate churches. The begin by getting one or two of their members into positions of power, and then they use the leverage that these people have to pull others into powerful positions, until they control the organization. This does not require an elaborate conspiracy theory. This simply requires a group of people with common aims, a lust for power, and an unflinching dedication to getting what they want.

In this case, the power of having control of nearly a hundred billion dollars would provide a lot of motivation. We would be foolish if we did not expect a power struggle for control of this money that is little different from the power struggle we see to control existing governments and churches.

Eventually, that power will end up in the wrong hands. The wrong hands, with that much power, will be able to do tremendous harm.

One way to avoid this danger is to lock the Foundation on a particular course so that power-hungry individuals cannot hijack it. This means that, no matter who takes over the Foundation, they will not have the liberty to do as they please with the money. They can only pursue the original intent of that foundation.

This option suffers from its own problems.

The first risk is that the original intent is not worth the effort. We can imagine, for example, an ante-bellum Southern aristocrat establishing a Foundation for the Promotion and Expansion of the Institution of Negro Slavery. If the foundation is incapable of changing its charter as time goes by, then the funds will continue to be dedicated to this objective long after rational people have identified the objective as unworthy of support.

The second risk does not require that we imagine that the original intention of the Foundation is bad to be able to imagine where poor flexibility leads to bad consequences. Think of a Foundation, for example, strictly concerned with finding a vaccine for Polio. The vaccine has since been found. If the Foundation is fixed on one project in order to prevent it from being hijacked, it may find itself poised to solve problems that do not exist, while new problems are under-funded. On the other hand, the ability to change course leaves the Foundation vulnerable to being hijacked.

In addition to bad objectives, or objectives that become bad as the world situation changes, people simply have an uncanny ability to ignore rules they do not like. The Bush Administration has shown us how easy it is for those in charge to ignore the plain text of a charter or Constitution by simply deciding that they will no longer follow its requirements. Plain-text rules such as "no search or seizure without a warrant" and the invention of "signing statements" that allow the President to rewrite any law he does not like before signing it are tools that can also be put to work against the bylaws of any Foundation.

So, we are stuck between a flexible Foundation that can be hijacked by those who have less than admirable intentions for their use of the money, or an inflexible Foundation whose objectives are bad, or start out good and become outdated, or are ignored by power-hungry individuals who simply decide to ignore the charter.

One way to avoid this dilemma is to simply be aware of the dangers of putting too much power in too few hands. This is the same argument that suggests that rational people adopt a government whose powers are divided among different branches, where each branch has the power to check and balance the powers of the other. In this case, we are talking about a division of wealth so that no self-important person or group can hijack the whole sum for his or her personal project.

I am more than pleased with what Bill and Melinda Gates and Warren Buffett have decided to do with their wealth. I hope that others follow suit. However, I sincerely hope that they do not follow suit in a way that puts all too much wealth and power into too few hands. Eventually, that wealth and power is going to end up in hands of somebody who lack good intentions, at which time the wealth and power will be doing more harm than good.

I actually have no idea what type of charter Bill and Melinda Gates have set up. I hope that they were smart enough to realize that, after they had gone, others may divert their great wealth to the interloper's own pet projects. I think we are foolish if we do not anticipate the fact that creating the largest private accumulation of wealth in one foundation will generate a great deal of political conflict over who gets to control that power, and that conflict will inflict its own costs.