Plucking

When a philanthropist pays off the college loans of 400 students, that’s a good thing, right?

Absolutely!

During his recent speech at the Morehouse College graduation, Robert F. Smith shocked and thrilled the crowd by promising to pay the college-related debt for the entire graduating class. Reaction to his gift (estimated at $40 million) was immediate and enthusiastic – at the ceremony itself, of course, and around the country.

Robert F. Smith
Morehouse College
May 19, 2019

But Smith’s gift also spurred a debate about wealth disparity, tax breaks for the rich, and the way in which the wealthiest sliver of society wields its philanthropic power.

Anand Giridharadas, the author of the provocative Winners Take All: The Elite Charade of Changing the World, pointed out on Twitter that, while Smith was no doubt extremely generous, for decades he had also benefitted from the notorious “carried interest” loophole that had taxed his earnings at an artificially low rate and saved him and other private equity and hedge fund barons billions in taxes. More to the point, Smith has spoken on the record defending the very tax loophole that helped him amass his fortune. Giridharadas cites a New York Times analysis that indicated that closing the carried interest loophole would increase revenues to the federal government by $180 billion over ten years – money that, if used to reduce college debt, could significantly help a vastly larger number of students than the 400 or so at Morehouse.

Predictably, there was then a counter-reaction to this critique. Phil Buchanan, who leads the Center for Effective Philanthropy, asserted in a Chronicle of Philanthropy op-ed that Giridharadas and others had “jumped the shark” in their criticism, seeing every philanthropic act as a cynical way of laundering bad reputations. Buchanan writes, “…there has lately been a turn from helpful and thoughtful criticism to off-based [sic] generalizations and statements that veer into the absurd.” Buchanan also points out that there’s hardly any reassurance that extra tax dollars would find their way to a cause as worthy as college debt relief.

This debate speaks to a divide I’ve seen throughout my career: people of good faith trying to improve society in two very different ways.

To introduce one side of this debate, I’ll describe a social service organization I know well that works very effectively to provide opportunities to kids from families with low incomes.

The organization’s board and donor base are filled with generous people who care greatly about the young people in the program. But I have heard many of these same donors and board members rail against higher taxes that would provide increased funding for social workers, recreational and cultural opportunities, and nutrition programs – the very kind of broad-based investments, to my mind, that would help not only the particular kids served by that nonprofit, but thousands of their peers in similarly difficult socio-economic circumstances.

I have come to call these donors “pluckers.” These are folks who think that American capitalism works well for nearly everyone, but that there are a few people, mostly children, who have fallen through the cracks. These donors support efforts that essentially pluck the fallen kids up and provide them with opportunity. They donate not only to the kind of social service program I described, but to scholarships at prep schools and colleges. And these donors enjoy seeing their charitable impact personified in the particular young people they’re benefiting, whom they often get the chance to meet in person.

On the other hand, there are the systems thinkers. These are the people who try to provide opportunity and support to the broadest possible swath of society, to reduce inequality, and to minimize the number of people facing hunger, homelessness, and hopelessness. Given their society-wide scope, systems thinkers naturally migrate toward expanding government programs and expenditures – which, of course, involves supporting increased taxation.

The gift by Robert Smith is a very public and admirable version of plucking: choosing 400 young men, all African American, who can now start their post-college careers without the burden of debt. This is a remarkable gift to those fortunate enough to have graduated from Morehouse College in 2019. Smith’s critics – the systems thinkers, including Anand Giridharadas – respond by saying, in essence, “Sure, it’s great for those 400 men. But Mr. Smith: You’ve been underpaying your taxes for decades. Your tax rate is lower than your executive assistant’s! You should have been helping these students and people like them all along by paying higher taxes. And if you had, you might have a few hundred million dollars less to play with – and give away – today, but more people would have benefited all along.”

Herein lies the tension. The pluckers dismiss the systems thinkers as tax-and-spenders who are overly trusting of government and dismissive of its inefficiencies. The systems thinkers dismiss the pluckers as un-strategic, whimsical plutocrats who are preoccupied with burnishing their reputations and avoiding paying their fair share of taxes.

But let’s pause to think about why Robert Smith’s gift affected us so profoundly: because we all know the crushing burden of escalating college debt. College debt has risen to $1.5 trillion owed by 44 million people. Student debt (and the potential of mass default) is a huge issue for the economy, and it’s a preoccupation for each of the debtors. Student debt causes young people to delay buying a home or starting a family. We all know friends and family members who are struggling with student debt. To know that these 400 Morehouse grads are freed from that weight lifts our spirits – we’re genuinely thrilled for them – precisely because we know how miserable that burden is for everyone else. But Smith’s gift doesn’t address the overall problem.

There’s a similar issue with healthcare costs. Fully two-thirds of bankruptcies in the U.S. are caused by medical emergencies. Virtually all of us have responded to one-off requests to support friends or family or people we hear about through crowd-funding platforms – or even to drop money into coin canisters at the convenience store for families hard on their luck because of a medical emergency. We help those individuals, a bit, by our donations, but we know that more and more individuals are slipping into crisis each day because the system is fundamentally broken.

The pluckers perform an admirable service. They make a difference to those people in distress lucky enough to benefit. But it’s the systems thinkers – in philanthropy and in public policy – who are working to improve the lot of everyone.

I’ve had an ongoing conversation on this topic for more than a decade now with a friend of mine I’ll call Victor. Victor immigrated to the U.S. from the Caribbean when he was twelve. Victor was plucked from his inner-city public school after eighth grade and given a full scholarship to a prestigious New England prep school. To say that Victor prospered is an understatement. He was a star student at boarding school, went on to an Ivy League college and a top law school, and he’s now one of a handful of black partners at a prestigious New York law firm.

Victor and I agree that the nation needs to invest much more in our public school systems to help the millions of young people attending those schools to learn, have opportunity, and develop into thoughtful and contributing citizens. Victor and I also agree that the very wealthy (a group that now includes Victor himself) should pay more in taxes. But Victor reminds me that programs and scholarship opportunities such as those that singled him out and gave him a special opportunity need and deserve support as well. He’s right.

And how does this apply to the Morehouse gift? We should absolutely applaud Robert Smith for his act of generosity. But Smith should not escape critcism for his advocacy of a tax system that allows him and other top dogs of the private equity world to escape fair taxation. And we should apply pressure to our political leaders and candidates to work systemically on critical issues like student debt, medical costs, and public education.

We face innumerable major problems in the nation and the world. In casting about for solutions, there’s no single right approach. We need the pluckers. We need the systems thinkers. But the more successful we are at improving our systems and making the world fairer and less potentially traumatic for the most people possible, the less need we’ll have for the Robert Smiths of the world to make heroic gifts.

Copyright Alan Cantor 2019. All rights reserved.

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17 Comments. Leave new

Thank you Al. I have heard your pluckers and systems thinkers described as charity versus social justice. Demanding that local government provide funds for affordable housing is social justice while Habitat for Humanity is charity. Both are needed. Everyone has to decide for themselves what effort they should give to each.

Reply
Peter Labombarde
May 29, 2019 12:01 pm

Great post, Al – very thought-provoking. Peter

Reply

Alan Cantor for President!

Reply
    Alan Cantor
    May 29, 2019 5:46 pm

    To quote William Tecumseh Sherman: If nominated, I will not run. If elected, I will not serve!

    But thank you, Leslie, for the generous thought!

    Reply
Raymond Lanza-Weil
May 29, 2019 1:30 pm

Thank you, Al, for your thoughtful and cogent analysis (as usual). It helped me understand my own discomfort with Mr Smith’s amazing generosity. Our country’s economic disparities won’t be solved by pluckers; we need collective action.

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    Alan Cantor
    May 29, 2019 10:57 pm

    Thanks, Raymond. I evolved in thinking about the Smith gift, perhaps in parallel with you. “It’s SO cool!” I thought at first. And then — “But why am I not totally happy?” Anyway, thanks — hope you are well!

    Reply
Aron Goldman
May 29, 2019 2:02 pm

I think even Dems can be forgiven for wondering if tax revenue will go “where it should” in these chaotic (and dark?) times, and instead wanting to direct resources to individuals and private nonprofit direct services providers (or charter schools). And even in good times, systems thinkers need constant connections to real people–and plucking serves that purpose. This is also of course a new version of robber barron philanthropy, and it would be good to build a consensus that this is not the kind of social safety net we aspire to.

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Wendy McCorkle
May 29, 2019 2:55 pm

Great post – thank you Al!

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Debbie Watrous
May 30, 2019 1:25 pm

Such a thoughtful post that helps me understand my mixed feelings about this gift. Thank you! As a fundraiser I often struggle with my role seeking investments from those who benefit from our broken system to support work designed to counteract its effects on children’s health. I’m grateful to work for a nonprofit that’s focused on systems change, including at the federal and state policy levels. Thank you, Al, for expanding my understanding once again.

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    Alan Cantor
    May 30, 2019 1:32 pm

    Thanks for your kind words, Debbie! Glad you found my thinking helpful, and hope you are well!

    Reply
Charlie Kohl
June 5, 2019 9:50 am

It is refreshing to read a balanced and cogent analysis on this topic.

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Cotton Cleveland
June 30, 2019 3:26 pm

Hi Al, I’m on vacation and finally getting a chance to catch up on my emails, blogs, etc. I read yours quickly last month and put it aside to think about “later”….which is another way of saying I find this whole subject uncomfortable or filled with tension for me personally and professionally. It goes to the heart of how can I make a positive difference in the world? Back the early 1990’s when I was trying to save the world, I recall a conversation with with a deep systems thinker, a mentor of mine. He was essentially dissing the work of a person running a child/family services organization as charity (he did not use that term) and was proselytizing for fixing the whole system as the only one true course of action. I was deeply shaken (you will recall I grew up in a conservative/moderate republican household!) and am still not reconciled to how to respond to this plucking v. systems thinkers tension. At my very core this tension goes to how in my lifetime can I help make things better in any small or big way, either professionally or personally? For instance:
1. Effectively facilitate nonprofit organizations with their strategic planning v. lobbying for the government to give these nonprofits more funding?
2. As a board member help guide a business to stay healthy, pay employees wages & benefits v. support increasing regulations that may cause additional burdens on that business, but may be helpful to the overall community
3. Helping abused and neglected children as they are entangled within the court and DCYF and poor parenting v. Becoming the Governor and hiring the most effective head of DCYF and nominating dedicated family court judges, etc.?
4. Getting out voters v. running for state representative?
One of the reasons I don’t really like these kinds of tension is that it’s hard work to reconcile and actually do anything concrete to to resolve. I don’t love thinking about myself as ineffective, but I believe that in the whole systems view of change, I am lacking. On the other hand, I am stronger on the Plucking side by focusing on family, work and small issues that I can handle. I’d like to think that unlike my 1990’s Guru, it’s not a zero sum game. Thank you, Roy Tamura, for your comment, “Both are needed. Everyone has to decide for themselves what effort they should give to each.”

Reply
    Alan Cantor
    July 5, 2019 5:48 am

    Thanks, Cotton, for your characteristically thoughtful response. And, yes, it’s not either/or. Perhaps the most important thing is tho know that both strategies exist, and that both are critically important.

    Again, thanks!

    Reply

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