Robert Reich Hates Harvard

Former Secretary of Labor Robert Reich has one of those op/eds out this week designed to show people how smart and liberal he is. What it really shows, however, is how ensconced in Ivory Tower academia he has become.

In his piece, Reich makes the argument that charitable donations should only be fully tax-deductible if the non-profit on the receiving end is "set up to help the poor." He's troubled by the idea that most charitable donations are directed at what he dismissively calls "culture palaces"--operas, symphonies, theaters, art museums, and private universities. He'd like to rewrite the tax code so that "donors can take a full deduction only if the donation goes to an institution or agency set up to help the poor. If the donation goes somewhere else -- to an art palace, a university, a symphony or any other nonprofit -- the donor gets to deduct only half of the contribution."

Is Reich right that we as Americans spend way too many of our charity dollars on vanity philanthropy, endowing already-rich cultural arts and educational organizations, so we can attend opening night galas and see our names on brass plaques? Of course he is. Every day I see fabulous organizations, with innovative programs working to aid the poor, struggling to make ends meet, while Ivy League schools and New York City museums wrestle with how best to invest their billion-dollar endowments. But Reich's wrong in thinking that we can solve this problem by proposing changes to the tax code.

I suspect that Reich's not really annoyed that donors are funding museums and private universities. He's too smart to think that those types of groups, in theory, don't have a valuable role in society in promoting great public benefits. I suspect that he's really upset that donors are funding already-rich organizations. And that's where he shows the simplicity of his proposal. We all might agree that Harvard and MoMA don't need any more funding right now, but we don't feel the same way about the historically-black college in economically-depressed Mississippi, or the children's museum in the Bronx that spends the vast majority of its budget on school programs and community outreach. And yet the latter groups do the same basic things as their richer peers, just without the A-list donors, the excessive galas, the corporate connections, and the glossy photos in the New York Times. He wants to punish the museums and universities not for what they do, but for being so fabulously successful at raising money to do it.

And of course, this criticism of mine only addresses one aspect of Reich's argument, that donations to museums and universities should count less than donations to those that serve the poor. What does Reich want to do about gifts to those that serve the environment? Those that do medical research? Those that work with unwanted animals? None of these groups focus solely on the poor. Are donations to animal shelters or environmental groups also going to be worth only half what donations to groups that serve the poor are? I doubt it, and I know this is not even remotely politically possible. No one is going to sit down with a list of the 1 million non-profits in this country, pick out the few that aid the poor, and designate them as "worthy," while the rest are left by the donation wayside. This is just silly.

So we're left with an editorial by a commonly-recognized brilliant man, where he wastes everyone's time (most importantly--his own) by only providing a knee-jerk, simplistic, and half-baked solution to a very real problem in this country, which is that donors, especially the truly wealthy, have abandoned the poor.

I just wish that when people like Robert Reich bothered to think about problems as big and as profound as this one, they took it seriously, and tried to come up with real solutions and not just ones that sounded edgy on the cocktail party circuit. Reich's proposal will never see the light of day, as we're obviously never going to reach a point where a donation to one registered 501c3 public charity is worth more than another. Rather than proposing a change to the tax code where an ineffective and inefficient homeless advocacy group can offer a bigger deduction to their donors than a reputable and high-performing breast cancer research charity, I wish he'd spend his time trying to figure out ways to convince his rich and influential friends that making a gift to a food bank was a better use of their money than creating another endowed chair at their alma mater. Of course, doing that would mean calling out rich donors, and telling them that they've historically been egoists and ineffective givers. And that, I suspect, wouldn't fly on the cocktail party circuit. It's much easier to just blame the tax code.