There is a trend of extremely wealthy people establishing charity foundations to help people in need. Some of them are Bill and Melinda Gates Foundation, Mark-Priscilla Initiative, etc. The problem with these charities are twofold:
1. It serves a double purpose as a tax haven. There’s a loophole in current law that charities are only obliged to spend a minimum 5% of its assets per year in actual charitable activities, while the rest of the assets went untaxed. Obviously this means that there’s incentive to store massive amount of wealth there since it would be free from taxation.
2. The charities also serves as a distraction to the public about the bad actions of these capitalists themselves. It serves as a propaganda tool that they are benevolent people.
For example, Bill Gates was fined billions of dollars by US court because of his monopolistic business practices, and consequently depicted by the mass media as bullies. After the Bill & Melinda Gates Foundation was established, the media coverage shifted to their “charitable” actions.
Even when we talk about the charitable actions themselves, it is extremely flawed, for two reasons:
1. The actions are often ones that ALSO increases their profits. For example, Bill and Melinda Gates’ initiative of giving computers to poor children in Africa also gives them access to an extremely untapped lucrative market of metadata, that increases their profits. The same goes with Facebook “internet for all” initiative that increases the amount of Facebook users.
2. Their actions are undemocratic since the money are not in public hands. And oftentimes they tend to do projects that is free from public scrutiny and is not inline with public interests. For example, Bill Gates’ attempt of educational reforms (details on the article) failed, after we invested 100 million US$ in it. It’s a waste of cash that could’ve been spent better under the expertise of government.