Peter Buffett, son to billionaire Warren Buffett, describes how he came to understand the nature of and the problems with philanthropy and charity. He describes in the a New York Times OpEd how he was introduced to the sector when his father established three foundations for his children to run.
The musician had little experience in charity work, but soon learned of what he called ‘Philanthropic Colonialism.’ Donors act on an urge to save other people that often involves implementing solutions without regard for social norms, culture or even physical location. This can lead to problems or actually make matters worse for the people who are supposedly being helped, says Buffett.
However the problems of charity go much deeper. He makes the case that philanthropy and charity perpetuate the very systems that allow for widespread poverty. The very people who benefit from a warped global system are the ones who later turn around and give away their money without ever really changing the fundamental reasons that massive inequalities exist.
As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering” — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.
Buffett says that the system needs to be reimagined. Money should go to testing innovations so that they have the chance to succeed or fail.
Often I hear people say, “if only they had what we have” (clean water, access to health products and free markets, better education, safer living conditions). Yes, these are all important. But no “charitable” (I hate that word) intervention can solve any of these issues. It can only kick the can down the road.
Tom Watson over at Forbes agrees and disagrees with Buffett. He says that Buffett is right on the number of charities growing, but the spending on charity by Americans is only 2% of GDP, a number that is unchanged since the 1970s. Though he agrees on the need to invest in riskier ideas. A reimagining of charity is needed, says Watson, but there there needs to be more money for organizations to do good work and even take some chances.
Buffett’s crisis of imagination should mesh with his thoughtful call for more humanism. Risk capital is needed – but only in addition to the capital that saves and improves lives on a daily basis.