There is an increasing volume of literature on whether philanthropy is necessary to help the needy, especially in a democratic world. In particular, critics argue against philanthropy because it is a popular method that wealthy people and organizations use to evade tax or other regulations. Nonetheless, other critics argue that there should be some changes to ensure that foundations are established for the sole aim of helping the disadvantaged people in society. In his argument, Reich (2018) proposes three rationales for supporting subsidies for philanthropy- charitable contributions income tax deduction, upside-down subsidy structure with the exclusion of nonitemizers, and pluralism rationales. While each of these rationales has its merits and demerits, it is arguable that pluralism rationale is the best as it implies creating more nonprofit organizations that will produce the social goods necessary to meet the needs of the poor.
On its part, charitable tax deduction tends to stimulate more charitable giving than when there is no deduction. However, the tax deduction favors a few foundations that do not serve the entire society while also denying the government the crucial tax money (Reich, 2018). On the contrary, the upside-down structure without nonitemizers is more redistributive than the government spending. Still, the approach has some demits because it does not serve and care for the needs of strangers who need material help. Pluralism rationale, on its part, is based on the idea that tax incentive for making charitable donations is not justified by assessing the discrete outputs or social goods funded through the donations (Reich, 2018). This rationale also focuses on the creation and sustenance of different slates of organizations that serve the needy. Nevertheless, the main disadvantage of pluralism rationale is that there is a net loss of the treasury in the process of production of social goods that nonprofit organizations develop.
Based on this brief analysis of the three rationales, it is evident that the pluralism rationale is the most applicable in philanthropy. In this case, pluralism rationale does not focus on the matrix of goods that charitable organizations produce but the creation and sustenance of those organizations.
Reich, R. (2018). Just giving: Why philanthropy is failing democracy and how it can do better? Princeton University Press.