One of 2018’s most popular music videos is Drake’s “God’s Plan” which has now surpassed three-quarters of a billion views. If you haven’t seen it already, let me recap. A curious title card appears at the opening: “The budget for this video was $996,631.90. We gave it all away. Don’t tell the label.” We then see the Toronto rapper popping up at various Miami spots: a grocery store, where he announces he is picking up the tab for shoppers; a beachside park, where he surprises families with stacks of cash; and a housing complex, where he delivers gift-wrapped new cars for residents. He even provides a young woman a check for college. Drake also visits a women’s shelter, a fire station, a youth center and a high school, presenting oversized checks of $20,000 and up.
It’s a viral-ready message: What matters is not buying expensive homes or jewelry but rather helping out those in need. Implicitly, however, there’s another message: The answers to the problems of the poor are not to be found in self-organization but in (literal) handouts from the rich. This is the guiding principle of charities, and it is a message that fits squarely within the ideology of the capitalist system, particularly the neoliberal model.
The Golden Age of Charity
There are more than 1 million public charities in the United States. They include major institutions, such as hospitals, universities, religious organizations, international aid organizations and political action groups, as well as relatively small local organizations like homeless shelters, food pantries and workers’ centers.
In 2017, U.S. charities took in a record $410 billion in donations from the public. This doesn’t include the government grants that charities receive, which are ultimately paid for by tax dollars, or the fees that many nonprofits charge the public, like tuition charged by “nonprofit” universities. When we include other sources of revenue like these, nonprofit revenue reaches nearly $2 trillion annually.
What’s more, this revenue has increased dramatically since 1975. Donations to nonprofits have jumped since then by more than 250% in inflation-adjusted dollars. It is no coincidence that charities became increasingly influential precisely at this moment—the dawn of neoliberalism in the United States.
Charity as a Neoliberal Project
The end of the 1970s was marked by a fall in corporate profits, fiscal crises and bailouts, the OPEC oil embargo, unemployment and inflation. In 1965, the corporate profit rate stood at over 32%. By 1982, it had plummeted to 20%, a rate not seen since the pre-war period. It was then that the bourgeoisie around the world began a radical new experiment, which we know now as neoliberalism. As George Monbiot notes, it was a period of “massive tax cuts for the rich, the crushing of trade unions, deregulation, privatization, outsourcing and competition in public services.” As the limited U.S. welfare state was eroded, charities took up more and more space in civil society. Of course, charities had existed for hundreds of years. But they began to rapidly expand, because the philanthropic model supports neoliberalism’s chief objectives.
Charities that provide basic services to the poor at least partially relieves the state of the obligation to do so. For example, if a nonprofit can provide free childcare or college scholarships, the government feels less pressure to offer the benefit. More and more, the public begins to see these services not as the rightful responsibility of the state but as gifts from “generous” capitalists and corporations. This, in turn, means the budgets of federal, state and municipal government can be cut and corporate taxes and taxes on the ultrarich can be slashed. Neoliberalism’s ultimate aim is fulfilled.
It is no surprise, then, that some of charity’s biggest backers are corporations. Corporations will always willingly help a charity provide, say, a few college scholarships, if the cost of doing so is less than the federal and state taxes they would be required to pay to fund free, universally accessible higher education. As an added bonus, charitable donations always come with marketing opportunities for corporations, like naming rights for buildings or awards, or the opportunity to display their logos at charitable galas or walkathons.
Charity’s apologists claim that tax money is simply being redirected to organizations that can provide goods or services better than government bureaucracies. Nonprofits, they tell us, operate with less red tape, and they better understand the needs of the communities they serve. But nonprofits are, in fact, under far less pressure to serve the numbers of people a government agency would. Nonprofit work with less oversight, less scrutiny and no legal obligation to serve any minimum number of people. In fact, there is scant evidence that nonprofits work as effectively as they claim.
For all the money that has flowed to nonprofits in recent decades, how much have they improved the lives of working-class and poor Americans? To demonstrate their success to donors—and thereby attract even more donations—charities will often cite the number of people they’ve provided with free meals or beds or medical care. But these services reached a tiny fraction of the people who are actually in need. Providing a real answer to the problem of hunger would require a systemic response. In virtually every area, the tens of thousands of nonprofit organizations operating across the country have failed to even make a dent in the overall trends.
Let’s look at hunger across the country. The federal government’s own statistics, which almost certainly underestimate the problem, show that the rates of food insecurity—that is, when a household is uncertain that it can feed all its members—have remained virtually unchanged since the late 1990s. The same holds for national homelessness statistics. A New York City government report showed that in the 20 year period of 1994-2014, the homeless population, as measured by the number of people living in city shelters, actually rose by 115%. Yet the number of organizations ostensibly fighting homelessness and hunger have risen steadily in recent decades, as have their respective budgets.
When confronted with trends like rising poverty or racial oppression, charities will claim that they simply need more resources to combat these problems. Help us to meet our annual fundraising goal, they say, and you can make a difference. But each of these organizations has experienced a steady increase in revenue over the years. When will we realize that the nonprofit model cannot these problems? When will we say that, in fact, charities allow these problems to continue?
Nonprofits depend on contributions from the rich and from big business. As long as this is the case, they will be unwilling to challenge capitalist profits. Most of the gains of the working class in the 20th century—like civil rights laws, the eight-hour workday and the creation of Social Security—were won through combative actions and strikes. But as James Petras has noted, NGOs rarely support strikes because doing so would threaten the capitalists who back them. When confronted with the problem of hunger, Petras says, nonprofits focus on so-called “survival strategies” like soup kitchens, not “mass demonstrations against food hoarders, neo-liberal regimes or U.S. imperialism.”
Even organizations that were once part of real movements, like the NAACP, have become institutionalized and incorporated into the social regime. Movements are effective only as long as they’re disruptive. And they cease to be so when they adapt to the framework of capitalism. Their logic no centers on challenging the existing system but rather on negotiating with the political establishment for slightly improved conditions. They begin to form lobbying groups and make significant campaign contributions to Democratic Party politicians, as virtually every large advocacy organization does today, from the Sierra Club to the National Council on La Raza. Thus, the very nature of charities pushes them toward making compromises.
Charities Drive Lower Salaries
A reported one-in-seven Americans relied on food pantries to sustain herself or her family last year. In a large number of cases, those who receive food and basic necessities from organizations like food pantries are not jobless. It’s just that they cannot get by on their miserable salaries alone. What is the consequence when a working-class person must turn to a charity for her basic necessities?
Her employer now feels less pressure to increase her salary because there is no need for the worker to buy the commodities she needs to sustain herself and her family. When this phenomenon is extended to millions of workers in a given society, the cost of labor-power—to use the term of Marx—is lowered, meaning salaries can be cut. Marxists understand that, in the final analysis, all profit is the result of surplus-value, that is to say, the unpaid portion of a worker’s labor. The more employers can cut salaries of their employees, the greater the profits of the bosses and shareholders. Services offered by nonprofits, whether free meals, or furniture, or clothing or “financial counseling” services which teach workers to stretch their meagre incomes further—give bosses a way out of paying salaries they otherwise would be obligated to, resulting directly in a greater share of wealth for those at the top. It is no coincidence that CEO pay has skyrocketed since the 1970s—more than 1,000%—while the average wages of workers have remained more or less equal.
No Transparency, No Oversight
Open a nonprofit’s annual report and you will see all sorts of graphs and photos touting its good work. But there is virtually no assurance that any of the claims that charities make about the services they provide are based in reality. In 2015, ProPublica released a report pointing out that the Red Cross, one of the largest charities in the world, took in half a billion dollars in the wake of the devastating earthquake of 2010 in Haiti. The result of this record-breaking fundraising effort? The aid agency built just six homes in the country.
The Red Cross scrambled to explain that while home construction had stalled, the money it had taken in had been put into many necessary initiatives, including vaccinations and the distribution of tents and water tablets. But the organization never provided specific details about its programs or how much they had cost.
This was not the organization’s only scandal. ProPublica also found that, during various relief efforts, the Red Cross had pulled ambulances away from aid work and used them for photo ops, left disabled victims sleeping in their wheelchairs, gave away batteries without flashlights and dispatched hundreds of volunteers to locations that were outside the paths of hurricanes. If one of the largest aid organizations in the world has been exposed for mismanaging its funds and lying to the public about its activities, how many other smaller nonprofits have done the same, while evading the scrutiny of investigative journalists and public oversight?
Furthering the Income Gap
While nonprofits portray themselves as operating on shoestring budgets, their executives often earn salaries that place them among the richest 1% of Americans. For example, the president of Planned Parenthood earns an annual salary of about half a million dollars. The Nature Conservancy’s CEO brings in over $600,000 annually. Even smaller local organizations typically pay their executive staff salaries that are several times beyond the incomes of the people they purport to serve.
Meanwhile, the average nonmanagement employees of nonprofits earn salaries consistently below that of for-profit corporations, and even below comparable positions at government agencies. Secretaries and administrative staff, for example, make 20% less in nonprofits than their counterparts in for-profits, often because nonprofits can convince their workers to sacrifice better pay for the sake of the organization’s cause. Employees of charitable organizations are also less likely to be unionized than public sector workers.
A Working-Class Response
This is not a rejection of generosity or solidarity. To the contrary. Expressions of solidarity are abundant in working-class communities, and this spirit should be encouraged. In fact, it is workers and poor people who often show the most generosity despite their limited resources—they give out food on holidays, and they volunteer in their communities. In the aftermath of last year’s earthquake in Oaxaca, Mexico, working-class people organized massive relief efforts, rescuing neighbors from under the rubble and distributing water, food and supplies to those who had lost their homes.
Nor do we deny the good intentions of the tens of thousands of young people who invest their time and energies in supporting nonprofit organizations. They are eager to change our society and to fight poverty and oppression. But the path offered by nonprofits leads us inevitably back to square one, offering only a temporary, partial fix to the miseries of capitalism. Instead of giving to charity, let’s direct our energy instead to organizing, striking, mobilizing and fighting in the streets for the society we deserve. It is the only strategy that has ever won.