If philanthropy is seen as a voluntary form of wealth redistribution, what is the logic of part-funding it with public money, which in effect is what tax concessions do?

This kind of either/or approach, which seems to look on philanthropy as partial substitute for taxation seems flawed. If they are both forms of redistribution, does their relationship need to be realigned? In any case, the evidence that tax incentives do significantly increase philanthropy is mixed at best and, again, if it does, the effects may well aggravate existing inequalities.

This webinar on taxation and philanthropy was organised by Alliance and sponsored by Thousand Currents. Moderated by Alliance Features Editor Andrew Milner, the webinar included an introduction from Rajiv Khanna, Vice President, Center for Transforming Philanthropy at Thousand Currents. The speakers were:

• Marlene Engelhorn, Activist, philanthropist and co-founder of taxmenow
• Chenai Mukumba, Executive Director at the Tax Justice Network Africa (TJNA)
• Gabriela Sandoval, Executive Director at EWDI – Excessive Wealth Disorder Institute

The webinar included an introduction from Rajiv Khanna of Thousand Currents.

Rajiv: Taxes of course, like philanthropy, are a mechanism for redistribution. But can we return wealth in a responsible and dignified way to the entities from which it was extracted, through the mechanism of tax? That’s a question that maybe you all can think about.

Along with taxes, we also need deep and inclusive accountable democracy to ensure resources are flowing in the right places. I want to globalise this conversation on tax in a couple of ways. We know that the countries in the Global North, especially Europe, made their wealth out of colonialism and extraction from the Global South, the former colonies. Even after colonialism ended, this extractive financial relationship continued in the 1960s and 70s and 80s, through international development, structural adjustment policies, and snaring countries in the Global South in debt traps. So you have this historical obligation to return money that was extracted. How do you do that on a global scale, when taxes are national?

Finally, in terms of the global peace, I’ll add a piece about climate and the possibility of this global redistribution through the mechanism of a global climate tax. Historically of course, the Global North has consumed most of the world’s resources. It’s largely responsible for climate change. But the worst impacts are being felt by communities in the Global South that did not create this problem. So what would it mean to institute a global climate tax on wealthy countries, to support nations and communities in the Global South not only to adapt to the new climate reality, but also take steps to mitigate climate change. How can philanthropy create the enabling conditions for this to happen, so that there can be a mutually reinforcing relationship between philanthropy and taxes at a global scale.

A few highlights from the event

Marlene: I asked people to create this Council [for Redistribution] to model democracy as closely as possible. Also to show that a parliament-like structure, a democratically organised space, can be a space where even the most normal people are representative. When you bring them together to facilitate this process (and I say ‘you’, but I mean teams of people) all of them are very engaged in the work they facilitate. You can get incredible results and you can prove that there is no need for the brilliant rich kid. It is absolutely unnecessary. It can be a philanthropic endeavour to redistribute your wealth, but it must be different from classical philanthropy where there’s a rich person in charge who says ‘this is good enough and worthy of my money’.

This needs to be broken apart, and if tax doesn’t do that – and there is a strong incentive I think for governments to use tax to do that – there’s always going to be some sort of a private sector. This needs to be organised in a way that reflects the most critical and crucial ideals that we hold in democratic society. So democracy, transparency, but also participation of people who are going to be influenced and affected by all of the decisions made. They should be the ones making the decisions, because they can bring so much wisdom to the table in order to shape these decisions. And inclusion, because most of these processes are incredibly exclusive. So I paid a lot of money for a lot of wonderful people to do incredible works so that they could redistribute even more money, and it was one of the best decisions I’ve ever taken in my life.

Chenai: Tax justice is the idea that those who earn the most or have the most in terms of wealth are paying the most in terms of taxes, and are contributing more to government purses. This is the idea of progressive taxation, and this is work that as an institution we are constantly thinking about, constantly working to see how we can support African governments to do this.

The reason this is important is on two fronts – the first is that we are convinced that if we are able to get this progressive taxation right in many African countries, we would be able to reach our own development objectives. So the dependency on either development assistance or even private financing is something that we could start to wean ourselves away from. The numbers show this – as a continent, a lot of multinational corporations and multi-individuals are funnelling close to 100 billion dollars outside of the continent. This is more than the amount that we receive in both development assistance and private financing. So there’s something to be said for if we are able to get our tax systems right, there is certain autonomy or independence that African countries could have. To support them to meet a lot of their developmental objectives; the addressing of poverty and inequality, and all of the crises that we have on the continent.

Gabriela: When I began formally working on closing the racial wealth gap initiative over a decade ago, we talked a lot – and when I say a lot, I mean really we spent about 99.9% of our time – talking about building assets and communities of colour in the US.

But a wealth gap connotes two sides of a chasm. It seemed that no matter how often I tried to bring up that other side of the gap, I was told that it was a non-starter. In fact, many of my colleagues in philanthropy said it’s a third rail, don’t touch that, don’t risk your funding for the good work that you’re doing by talking about excessive wealth. Since then, I’ve seen how we’ve moved toward this concept of good philanthropy…

I believe we’re finally beginning to recognise that we need to connect all of these efforts. In the US, we’re working really hard to connect state efforts to federal efforts, and I love the fact that we’re having this conversation about global efforts and ways that we can change the system in order to all pull together. So despite the fact that 10 years ago, I was definitely not encouraged to talk about that other side of the racial wealth gap in my work, I think this is an idea whose time has come. We need to be poised to take advantage of every opportunity to make a difference.

You can watch the full video here:

Emily Reid is Marketing Executive at Alliance magazine