Editorial: Salute private donors... and the taxpayers

Owen Glenn. Photo / APN

Private philanthropy, as exhibited by expatriate tycoon Owen Glenn this week, probably happens more often than the public knows.

This month, we have reported the passing of Aucklanders Hugh Green, co-founder of Green and McCahill, and Denis Nathan, grandson of one of the city's first merchants. Both gave a great deal of their wealth back to the community.

Mostly they give without fanfare, as has Mr Glenn for many years. He raised his public profile this time to promote a book he has written which also expresses his abiding concerns for this country. He pledged $80 million - starting with $8 million for projects in Otara, where he once lived - to fight family violence and child abuse. This problem moves him deeply, as it does all New Zealanders. He says the statistics are "shocking ... alarming ... a national embarrassment".

When a successful business entrepreneur, who sold his international logistics company for almost $500 million this year, turns his attention to a social problem, we are less interested in what he says than in what he intends to do about it.

The money he is giving to Otara will finance a women's refuge, a "men's house", a drive to stop violence in sports, school courses in financial literacy and entrepreneurship, and tertiary scholarships among other things. For the most part the programmes will be run by agencies such as Otara Health which work under state-funded contracts. This raises an important question.

The needs that appeal to the sympathies of private benefactors might not always match priorities for public spending.

Business judgment is much to be valued in state-owned enterprise and in any social service that can add value to the economy. But when it comes to allocating public money for welfare and health, the state's judgment is probably more reliable.

If private philanthropy was to dominate investment in health, the Starship children's hospital would have the lion's share and less appealing services would starve.

Likewise, child welfare might be well endowed and paroled criminals and drug addicts could be left begging.

That would not matter if private patronage relieved the taxpayer of expense, but it does not. Institutions such as the Starship do their fund-raising for "extras", not as a substitute for their public funding.

That would not matter either if the state's allocation decisions were indifferent to the efforts of celebrities and charities. But the state is vulnerable to politics.

It can easily come under pressure to underwrite the preferences of philanthropists and maintain services they have started. An announcement such as that Mr Glenn made this week always carries an implication, probably unintended, that the state is not doing enough in their chosen cause. Politicians are sensitive to that.

Charitable donations are tax deductible, which means every dollar deducted adds to the burden of taxpayers who provide the state with money for social welfare. The philanthropist who claims the deduction for a social programme of his own choosing prevents public representatives deciding on the best use of that money.

For all that, philanthropy has its place. A successful business investor will see that programmes he funds are practical, well-monitored and do not waste his money. He is unlikely to finance talk-fests and tendentious research.

Benefactors such as Owen Glenn, Hugh Green and Denis Nathan give with the finest motives, never intending to displace democratic decisions. Their generosity need never have that effect if we can also respect our collective effort.