The Shortcomings of Billionaire Philanthropy

Wealthy moguls have historically thwarted efforts to eradicate poverty despite their contributions. Will Mark Zuckerberg’s newly announced initiative suffer from the same pattern?

Shirish Shete / AP

The Internet erupted this week when Facebook CEO Mark Zuckerberg and his wife, Priscilla Chan, published a letter to their newborn daughter, pledging to donate 99 percent of their Facebook shares (currently worth $45 billion) to charity.

Zuckerberg and Chan cover a lot of ground in their letter, including an inspiring desire to eradicate poverty. “If our generation connects [the world’s population], we can lift hundreds of millions of people out of poverty,” it reads. On this front, they’ve largely penned a manifesto in support of health and education. But wealthy moguls embraced similar priorities roughly a century ago—and Zuckerberg and Chan may very well be replicating their mistakes.

Magnates in the early 20th century were hardly crusaders for economic justice. Rather, wealthy businessmen opposed nearly every significant effort to ameliorate poverty, from relatively modest proposals to Franklin Delano Roosevelt’s wide-ranging New Deal. Indeed, history shows that one can champion health and education without addressing poverty at all.

The United States was still in the throes of the industrial revolution in the early 20th century. Factories were spreading rapidly, exploding in size and number. Wages were abysmally low, workdays gruelingly long, and factories incredibly dangerous. Bouts of unemployment remained commonplace for working-class Americans. So did destitution in old age. In urban America, the cauldron of industrialization, disease and overcrowding were rampant.

Americans famously worried that these trends were tearing the nation apart. Many of them fought to save the United States from the excesses of industrial capitalism. What is commonly overlooked, however, is that industrial capitalists themselves joined this fight with health and education among their main points of attack.

In Detroit, for example, automobile executives led the charge to build parks and playgrounds across the city in the years surrounding World War I. Detroit’s mayor at the time—a multimillionaire and former executive at Ford—appropriated large sums to fund the effort. In the minds of business leaders, parks and playgrounds promised to provide healthy, wholesome, and safe recreational outlets in a city filled with debasing temptations. Distraught that countless Detroiters were “huddled together in small rooms ... robbed of normal home life,” the wealthy mayor and his business-friendly administration made alleviating overcrowding another top priority.

Commercial and industrial elites across urban America championed similar measures. They advocated expanding and reforming public school systems, and supported a variety of public health initiatives, from improving sanitation to vaccinating children. They also strove to build edifying cultural institutions, like art museums and libraries. Today, libraries that Andrew Carnegie in part funded dot the nation’s landscape. The enormous, Acropolis-like art museum made famous in the movie “Rocky” (the one whose steps Rocky triumphantly ascends) was the brainchild of Peter Widener, Philadelphia’s richest citizen in the early 20th century.

But these initiatives were limited in what they could accomplish. Wealthy magnates fought most attempts to give the working-class a modicum of economic security. Most moguls bitterly opposed unionization and scoffed at the notion of workers’ rights. Business interests supported the creation of the nation’s first workmen’s-compensation laws but only because they were tired of squabbling over injury claims in court. Meanwhile, working poverty remained commonplace primarily for one reason: Employers kept profits high by keeping wages low. Even during the depths of the Great Depression, most wealthy businessmen opposed New Deal programs—from government-sponsored unemployment compensation and Social Security to protecting workers’ right to unionize—that eventually helped lift many working-class Americans out of poverty.

As wealthy businessmen in the early 20th century well knew, ending poverty demanded far more than promoting education and good health. Indeed, it entailed something most of them fought against tooth and nail: revamping the distribution of power and economic resources between society’s haves and have-nots.

Whether today or in the early 20th century, that means abolishing poverty wages, promoting labor rights, and garnering tax dollars to build a safety net strong enough to cope with enduring shortcomings in the labor market (goals that Zuckerberg and Chan perhaps hint at in passing when they write, “it's difficult to reach your full potential” when worrying about “food or rent”).

Forty-five billion dollars in charitable donations can’t do it all, as Zuckerberg and Chan note.  But it’s more than enough to stake out an aggressive and encompassing agenda in the fight against poverty.

Unless Zuckerberg and Chan use their wealth and power to curb the abuses and negligence of the wealthy and powerful, they risk mimicking the shortcomings of moguls in the early 20th century and never fulfilling “the moral responsibility to all children” that they invoke so poignantly in their letter to their daughter.