The philanthrocapitalism debate

By Felix Salmon
December 23, 2011
debate over philanthrocapitalism in which Kavita Ramdas, on the anti-philanthrocapitalist side, makes some very salient points.  

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The Stanford Social Innovation Review is hosting a debate over philanthrocapitalism in which Kavita Ramdas, on the anti-philanthrocapitalist side, makes some very salient points.

Firstly, Ramdas breaks philanthropy down into three groups: traditional philanthropies; philanthrocapitalism; and what she calls “social change philanthropies”, which “are emerging to challenge the substance, form, and direction of philanthrocapitalism as well as the current, largely unequal systems of trade and global capitalism”.

Ramdas doesn’t give examples of these anti-capitalist social change philanthropies, so I’m a bit unclear on what exactly she has in mind, although Occupy Wall Street and its funders certainly seem to count. And interestingly, although Ramdas is siding with the social-change philanthropies against the philanthrocapitalists, the philanthrocapitalists, in the form of Matthew Bishop and Michael Green, seem more interested in opposing traditional philanthropies:

We still need to talk about nonprofit performance and impact. Most nonprofits are “black boxes” to their supporters. We are excited that the Internet and social media can engage and mobilize “mass philanthrocapitalism” from ordinary donors. Organizations such as GlobalGiving, Kiva, and DonorsChoose have made a great start, but this revolution has a long way to go. And we mean revolution, maybe even a mass extinction of traditional nonprofits that cannot engage their givers.

Although I have no desire to overthrow the capitalist system, I have a lot of sympathy with Ramdas, here, and very little with the philanthrocapitalists. The idea that a “black box” is always and obviously a Bad Thing is oversimplistic: while transparency and accountability are good, they can result in conservatism and a lack of the very kind of risk appetite and failure-embracing that the philanthrocapitalists love to espouse.

Meanwhile, Ramdas has a strong point here:

Current philanthropic practice is also driven by the need to find technological solutions, the same “fix-the-problem” mentality that allowed business people to succeed as hedge-fund managers, capital-market investors, or software-developers. This approach is designed to yield measurable and fairly quick solutions. A symptom of this may be found in the kind of skills that new foundations are seeking. I am struck by how few social scientists are employed at the new “mega-philanthropies.” Instead, the people most sought after are management consultants, business people, former industry leaders or lobbyists, and scientists. Each of these is expected to bring a crisp and coolly efficient approach to their work, demonstrating their “expertise” on specific issues—climate change, agricultural productivity, soil quality, or infectious disease. The nuance and inherent humility of the social sciences—the realization that development has to do with people, with human and social complexity, with cultural and traditional realities, and their willingness to struggle with the messy and multifaceted aspects of a problem—have no cachet in this metrics-driven, efficiency-seeking, technology-focused approach to social change.

Pointedly, Ramdas asks for — and the philanthrocapitalists fail to provide — “evidence that philanthrocapitalism works”. When the Gates Foundation, armed with a million-dollar salary for its new CEO, ends up hiring a second Microsoft centimillionaire, the simplest explanation is usually the right one: it’s not because that person, at that salary, is the best possible choice for the foundation. It’s just that extraordinarily rich people, like everybody else, like familiar surroundings. And they’re also disproportionately likely to have an immodestly high opinion of their own ability to be a success in any field they choose. If they hired management consultants as a tool to make lots of money, then why not hire management consultants as a tool to give it away?

There’s a lot of this which can’t and won’t be changed. Philanthropy is driven by money, and money comes from rich people. If it’s rich people who are paying the philanthropic piper, then it’s rich people who will call the philanthropic tune. And non-profit organizations which don’t pay the requisite lip service when it comes to return on investment and the like will simply get passed over, when the dollars are doled out, in favor of fundraisers who can talk the talk.

I have little reason to believe that the rich are better at giving away money than the poor, or that they run philanthropies better. But this is how rich people like to give away their money, these days — and it’s better that they give it away than that they don’t. I think they have a lot to learn from philanthropies which have been around for decades, but they’ll have to learn that themselves, slowly. In the mean time, we don’t need to celebrate philanthrocapitalism in order to be happy that the rich are choosing to give their money away, rather than just keep it in their families forever.

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Comments
One comment so far

For some, money is subsistence.
For some, money is security.
For some, money is freedom.
For the very wealthy, money is power and fame.

Giving money to a charity would be ceding that power. Giving up the ability to splash your name all over the headlines. Surely that must take precedence over charitable endeavors?

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