Income Inequality and Philanthropy Intersect

by Alan Klugman

In the 29 years since I left Israel and returned to the United States, Israel’s ability to narrow the socioeconomic divide between the “haves” and the “have nots” has decreased roughly by 35%. According to current statistics, more than 30% of Israel’s school aged children, are being raised below the poverty line. These children come to school hungry and without lunch.

Rising inequality has emerged as the grave effects of social inequality become more prominent in Israel, here at home, and in other countries around the globe. Israel seems to be losing the poverty battle. In the United States, too, inequality has been increasing sharply for more than four decades and shows little sign of slowing. Deepening concern about growing income inequality and the widening gap between the wealthy and those in poverty affects most of us who are involved in philanthropic and nonprofit organizations.

Extreme inequality multiplies the problems people face and their need for charitable services. Many health and human services organizations deal directly with the consequences of income inequality, from homelessness, at risk women, and poor children to former middle-class families.

In dealing with this conundrum, human-service groups and smaller community-based organizations quite often are the most helpful to people and to society itself. These organizations provide direct services and advocate for policy changes. It is these organizations, as well as social-change groups, that are challenging the structural forces that drive this economic issue, although not always vigorously enough. Yet they are among the organizations most strained financially in the face of budget cuts and decreasing contributions.

With continuing reductions in public funding, the nonprofit sector must depend on philanthropy that is perceived to reduce inequality. Philanthropy is also widely understood to be redistributive because it takes money from the wealthy and uses that money to improve conditions for the less fortunate.

We know that philanthropy in itself can not solve all the problems related to income inequality. But it must be acknowledged that philanthropic funding does improve social equality and in multiple settings provides for those who face difficult times. From my perspective, the intersection between income equality and philanthropy should be addressed head on with more public dialogue that could ultimately lead to more equitable social policies and better informed nonprofit professionals and volunteer leadership, as well as individual donors and foundations.

What does this mean in very real terms to my organization and yours? We know that economic limitations on households influence the quality of early education, access to higher education, and on knowledgeable human capital over the long term. What will it mean to the future human capital here in America, in Israel and other countries around the globe?

It means that we will need to intensify our efforts to install more and more smart or hi-tech classrooms in poor communities that depend on philanthropic support to serve as a socioeconomic equalizer. It means that we need to provide more scholarships to build a future cadre of educated workers. It also means we must make a major investment in job training programs for older workers to ensure they possess the technological skills needed to compete in tight job markets.

Working together, donors at every level and nonprofits can mitigate the effects of devastating income inequality and limit the effects it has on the social fabric of our communities. As Jewish communal leaders, we need to help our constituencies understand that it is in our collective interests to support organization and institutions that that focus on Tikkum olam, repairing the world, and provide everyone the opportunity to live viable lives with dignity, meaning, and purpose.

Alan E. Klugman serves as National Executive Director of ORT America.