Bill Totten's Weblog

Sunday, March 30, 2008

It's better to give than receive

Philanthropists aren't being that altruistic

by Peter Wilby

New Statesman (March 19 2008)

Here is a very long word that may be new to you (I Googled it and, at the time of writing, it has only 2,710 hits): philanthrocapitalism. If you wish to be very hip and savvy, you can call it Philanthropy 3.0.

At bottom - though, as we shall see, there is more to it - this is about very rich people, such as Bill Gates, Jeff Skoll (the creator of eBay), Bono, George Soros and the founders of Google, giving away lots of money. What's wrong with that? It shows they have a heart, doesn't it? But I have long regarded this as a pernicious trend and I am delighted that a report from the Young Foundation and Demos this month (Just Another Emperor? by Michael Edwards) shares at least some of my concerns.

The great philanthropists of the twentieth century - Rockefeller, Ford, Carnegie, for example - gave their money to foundations, set out broad principles, appointed key people and left them to get on with it. That was Philanthropy 1.0 (don't ask me what 2.0 was) and the results have been described as "autocratic, ineffective, elitist, cloistered, arrogant and pampered".

In other words, it's right out of fashion. The 21st-century philanthropists take a more hard-nosed approach to giving. They behave like investors, allocating their money to maximise "social return". So, for example, Gates calculates how much malaria costs in lost GDP and then decides it's worth paying for its eradication.

Increasingly, bodies such as New Philanthropy Capital in Britain or GiveWell in the US provide data to help donors decide which charities or social enterprises should receive funds. The former "measures 54 indicators including the average years of experience of senior managers and the percentage increase in the budget for the previous year"; the latter records effectiveness according to "the most lives saved for the least money". Just as market principles and measurable outcomes were applied to public services, so they are being applied to charities. Forget the first, second and third sectors; they are being merged into one.

I have several concerns. First, philanthrocapitalism legitimises growing inequality, which might be unsustainable politically without greater generosity from the filthy rich. In fact, the rich are not particularly generous; if anything, people on middling or low incomes give proportionately more of their money to charity. Moreover, generosity is subsidised from tax breaks.

Second, philanthropy is often just another form of marketing, designed to strengthen the donors' market dominance and even to tie certain groups into buying their products or services.

Third, it is unhealthy for democracy. Why should rich people, who wield enormous economic power, also determine social priorities? As Robert Reich, secretary for labour under President Clinton, has observed, governments used to collect billions from tycoons and then decide democratically what to do with it.

Fourth, the new philanthropists bring business attitudes into an area where they are not always appropriate. Not-for-profit organisations often exist to tackle problems that are beyond conventional market-led approaches. If charities and voluntary organisations are to be judged according to their success rates, they will tend to avoid the most complex and expensive issues and ignore the people who are most difficult to reach.

Fifth, the new philanthropists crowd out civil society. The Young Foundation/Demos report is particularly good on this last point. "No great social cause", Edwards writes, "was mobilised through the market in the twentieth century. The civil rights movement, the women's movement, the environmental movement, the New Deal, the Great Society - all were pushed ahead by civil society and anchored in the power of government as a force for the public good. Business and markets play a vital role in taking these advances forward, but they are followers, not leaders." He adds: "The world needs more civil society influence on business, not the other way around - more co-operation, not competition, more collective action, not individualism".

The Gates Foundation wants to "give where we can effect the greatest change". But the greatest change might come from transforming the economic system, the pattern of property ownership and the distribution of global power, and Gates is hardly likely to favour any of that. The danger is that things are done to the poor, rather than with them. The poor are written out of their own story.

I suppose it is very grudging of me not to applaud when wealthy folk open their wallets. It's surely better than spending their money on fifty-bedroom mansions or carbon-emitting private jets. But this, in effect, is what they are saying: leave the world's problems to us to fix, using our brilliant business techniques. Meanwhile, leave intact the system that made us rich, and promises to keep us so. Not a bad deal for them, eh?

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes a weekly column for the NS.

Bill Totten


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