March 10, 2021

In the face of a devastating global pandemic, the approximately half-trillion dollar American philanthropic sector has stepped up. As of November 2020, foundations and corporations awarded close to $20B globally for COVID-19 research and relief. The Jewish community, responsible typically for $25-50B in annual giving, continues to play a prominent role: a group of Jewish foundations allocated $80M in grants and interest-free loans for pandemic relief last April, and has now increased their pledge. Thankfully, the engine driving American — and Jewish — philanthropy is humming vigorously.

But to say that the sector is “alive and well” would be considered only half-correct, at least by its most strident critics. How wealth is amassed, the purposes of gifts and grants and, perhaps most importantly, the arrangements allowing charitable organizations and individuals to reduce their tax liability dominate headline news. Lila Corwin-Berman’s new book, “The American Jewish Philanthropic Complex: The History of a Multibillion-Dollar Institution,” is a worthwhile, if difficult, contribution to the debate.

The author knows that drawing attention to “Jewish wealth” can trigger nasty stereotypes, but she takes the chance, arguing that “early twentieth-century antisemitic writing about Jewish economic behavior has warded off precisely [this] sort of study.” Whether Jewish philanthropy can be distinguished from its American context is one of the book’s central questions — a difficult assignment only partly fulfilled. Ultimately, “The American Jewish Philanthropic Complex” argues that the whole system, and perhaps especially the Jewish part, needs reform. In somewhat more dulcet tones, Corwin-Berman joins the chorus of critique against the wealthy and their complicity in unsavory outcomes of capitalism.

Corwin-Berman does admit that “not a single day in my life passes untouched by philanthropy,” but she also expresses considerable discomfort with the capitalist economy in which that philanthropy thrives. I come down on the more optimistic side: Its imperfections notwithstanding, without private philanthropy would the airlift of Ethiopian Jews have been as successful? Would we have the Museum of the History of Polish Jews? Who would have provided billions to support Jewish day schools and summer camps, major seminaries and programs to enhance Jewish life and communal engagement? How many American kids would experience Israel without Birthright?

A key element in Corwin-Berman’s critique of the “philanthropic complex” is the “charitable deduction.” Simply put, through the tax deduction, the government supports private funding for activities that it may not care about or consider high priority or even abhor. Other than the requirement that individuals and companies disburse at least five percent of their holdings in programs for the public good and not engage in overtly partisan advocacy, donors can keep much of their accumulated wealth pretty much tax-free. The government offers a choice: send in x percent of your income or donate it to a good cause, and we’ll reduce your taxable base (an implicit payment).

Reasonable people might differ on the optimal size of the deduction, definitions of “the public good” and how to hold donors and grantees accountable. But Corwin-Berman’s generally suspicious stance towards the deduction is based in part on an interpretation that ascribes personal self-interest, if not greed, to philanthropic efforts that are often coated in a veneer of altruism. Further, she argues that “as soon as [Jewish] charitable donations and institutions received special tax treatment, charity became an instrument of the American state,” which seems to contradict her thesis that Jewish and American philanthropy are, in fact, separable.

Corwin-Berman contextualizes her critiques of the charitable deduction within the history of the federal income tax, first used during peacetime in 1894, then struck down by the Supreme Court, and finally codified in 1913 with passage of the 16^th amendment. But she skips a vital fact: the first foundations were established before the charitable deduction was enacted in 1917. (The Russell Sage Foundation was established in 1907 “for the improvement of social and living conditions in the United States”; Andrew Carnegie bequeathed the equivalent of $2 billion (in today’s dollars) in 1911). Corwin-Berman’s omission of that piece in the timeline bolsters a nagging subtext in much of the hostile skepticism about wealth and philanthropy: Is observed generosity really just a response to financial incentives?

Even today, although some philanthropists surely benefit from tax law, is that the dominant impulse for their charitable giving? Students of Maimonides — and modern social psychology — know that altruism is complicated. As I have argued in my book “The Rising Price of Objectivity,” Bill and Melinda Gates could spend their time on a private yacht, sipping champagne and observing the worldwide ravages of environmental degradation, poverty and disease from a safe distance. Instead, they work tirelessly toward eradication of polio, access to sanitation and education in the developing world, curbing climate change and, most recently, funding research toward a COVID-19 vaccine. The same applies to the scions of American Jewish philanthropy — people like Mort Mandel (z”l), Shimon Ben Joseph (z”l), Zalman Bernstein (z”l), Bernie Marcus and many others. Is their largesse — in terms of the dollars they donate and time they devote — fueled mainly by a personal self-interest in receiving a tax deduction?

I believe that the tax code encourages and rewards existing impulses for generosity, which is different from saying that incentives cause such behavior. Social scientists have long pondered if instincts to help others are attenuated, not amplified, by extrinsic monetary rewards; maybe by giving people a tax break we send a friendly nudge about civic responsibility. But as someone who has been inspired by and supported by philanthropic stewards in the Jewish (and secular) world, I find it unseemly to assert that self-interest is the main driver.

The tax code encourages and rewards existing impulses for generosity, which is different from saying that incentives cause such behavior.

Corwin-Berman’s anxiety about philanthropic wealth, shared by other critics, stems in part from disdain for where it is spent. Do we love everything that foundations, family funds and individual donors support? Certainly not. But would shifting the funds back to state control be preferable? I asked a friend known for her critiques of big foundations how she would feel if the recouped losses from the untaxed wealth of Eli Broad, for example, had been available to Trump’s Secretary of Education Betsy DeVos, with her love of vouchers and hatred of teacher unions. I’m waiting for an answer.

In her historical sweep of American Jewish philanthropy and communal organization, Corwin-Berman zeroes in on key players with mixed reviews. She praises Norman Sugarman for his advocacy that “fairly and evenly” applied tax law “served the interests of American democracy and capitalism equally,” and commends him for resisting politicians’ efforts to declare certain activities “un-American.” But she blames Sugarman and friends for dubious public-private entanglements: “Jewish leaders invoked a Jewish consensus… to justify plunging into deeply political waters … in concert with state transformations.” But should Jewish philanthropists have been barred from engaging with the political elites running America? Without more balanced evidence, Corwin-Berman’s dismissive undertone about Sugarman and his allies seems unwarranted.

Corwin-Berman also takes issue with the fact that prominent figures (Max Fisher, Sheldon Adelson and others) were or are friendly to Republicans and the Israeli right wing. But her sharpest sword is drawn against the most morally bankrupt, and for good reason: Who will argue that Bernard Madoff was not a monstrous scoundrel who deserved his 150-year prison sentence for destroying thousands of lives and institutions through his gargantuan greed? Who would defend Jeffrey Epstein if allegations of sexual abuse withstand evidentiary scrutiny?

As awful as those violators of decency are, though, Corwin-Berman’s claim that they and others are “byproducts of the philanthropic complex” is disturbing. I share the author’s sense of revulsion, but to assert that misogyny of certain Jewish philanthropists “implicates the central ideology of Jewish identity and continuity in a broad pattern of gender inequality and oppression” is a surprising claim from an accomplished scholar. Extrapolating from a small sample of funders and researchers, with no evidence of their representativeness of the general Jewish population, violates standards of scientific inquiry and fuels spurious inferences. (For all of its alleged complicity in this “pattern,” the community acted swiftly, if imperfectly, in its denunciations and ostracism of some of the more well-known perps.)

My reticence with Corwin-Berman’s book, a thoroughly-referenced scholarly accomplishment, stems from her neglect of counterfactuals. With what should we replace the system of donor advised funds, endowments, tax breaks, and other tools? Corwin-Berman showcases some potentially interesting innovations, but she requires a more dispassionate analytical framework to make her case. Evidence should precede advocacy.

Of course, the philanthropic sector needs to close loopholes that compromise transparency and address the question of accountability for how private wealth is distributed. Donors, grantees, trustees, program directors, fund managers, evaluators, lawyers and legislators should continue debating these issues and make them part of professional development. But bringing data, coherence and possibly consensus to this topic might require, well, philanthropic support.

I hope that our most enlightened funders rise to the occasion, which I’m sure Professor Corwin-Berman would welcome too. Although her book is not the last word on the subject, it’s worth studying — critically — if we are serious about getting into therapy to treat our “complex.”

Michael Feuer is dean and professor of education policy at the George Washington University, immediate past president of the National Academy of Education, nonresident senior fellow of the Brookings Institution and past co-chair of the Collaborative for Applied Studies in Jewish Education. His latest book, “The Rising Price of Objectivity: Philanthropy, Government, and the Future of Education Research,” was published by Harvard Education Press in 2016.