More Fighting Over (the meaning and purpose of) Philanthropy

Bill Gates in India, checking on polio eradication

Question: Is philanthropy a means for reducing inequity in the world or just another vehicle used by the super-rich to justify the inequity?

Bill Gates in India, checking on polio eradication

Answer: It depends upon what you mean by philanthropy.

Oddly enough (or maybe not), there is wide disagreement about some of what many would see as the most basic assumptions and characteristics of philanthropy. I’ve written about these confused semantics before, such as this argument between two experts over whether philanthropies should seek profits — a debate which ended up promoting an even more heated exchange of words.

The battle has been rejoined in a debate going on between the advocates of the more business-oriented, profit-seeking approach they’ve dubbed “philanthrocapitalism” and those who think philanthropy needs to be more precisely defined by its ability to effect positive social change.

Kavita Ramdas

Leading off in the debate online at the Stanford Social Innovation Review is Kavita Ramdas, former chief of the Global Fund for Women now based at Stanford University. Ramdas opens with a tale of Bill and Melinda Gates in India seeking more billionaires for their Giving Pledge initiative.

The problem here, writes Ramdas, is that such well-intended acts of charity usually do nothing to solve the fundamental problems they are trying to solve:

In fact, as a recent Wall Street Journal article suggests, the same factors that helped create the billionaires may have also exacerbated social injustice and inequality, malnutrition, and dis-empowerment for millions of poor people cross India.

Ramdas believes the Gateses’ pitch in her home country of India to get more of the super-rich to engage in philanthropy is well-intended and positive (though there are some who see the Giving Pledge as harmful). But she says such efforts may deflect from doing something even more crucial:

My concern, however, is that far too few in this elite club are willing to ask themselves hard questions about a model of economic growth that has made their phenomenal acquisition of wealth possible, in a nation where more than 800 million people still languish in poverty.

For any philanthropic effort to succeed, Ramdas writes, it must include a challenge to the fundamental economic and development structures that now work to keep so many in poverty.

The market-oriented, business-like ideas of this new notion dubbed philanthrocapitalism, she writes, may be effective when it comes to achieving some immediate goals. But, Ramdas says, they will fail to achieve much lasting good without a grounding in equity and social justice.

Matthew Bishop

In response, philanthrocapitalists Matthew Bishop and Michael Green don’t waste any time on niceties. They immediately attack Ramdas as being illogical (confusing symptoms and causes) and as promoting an obsolete and disproven economic strategy (i.e., charitable versus market-based endeavors).

Oddly, after such snarky opening remarks, Bishop and Green add:

We need to get beyond this type of blame-game rhetoric to try to figure out solutions to the world’s problems. Philanthrocapitalists are playing a vital role in this process and could do even more.

They don’t quite move beyond the blame game themselves, as it turns out, but the gist of their argument is that the traditional approach to philanthropy has largely failed — because it fails to incorporate market-based principles.

Rather than continue to bemoan the failings of the market to reduce social inequities worldwide, Bishop and Green say, let’s find a new approach that embraces both the proven principles of capitalism and the desire to make the world a better place.

And let’s stop talking as if corporations and the goals of philanthropy exist in separate, parallel universes, they say:

Let’s talk more about how businesses add or subtract to social value—not through PR-driven corporate social responsibility projects, but through their core business activities. (10,000 Women is a great example of corporate philanthropy, but Goldman Sachs’s use of the billions of dollars that it controls is way more important.) How do we measure this social value, and how do we engage citizens to vote with their wallets—not just as consumers, but as investors, using their savings and investments to promote better business?

It’s a fascinating, complex and important debate.

On Friday, Reuters financial columnist Felix Salmon weighed in, on Ramdas’ side.

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Tom Paulson

Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom[at]humanosphere.org or follow him on Twitter @tompaulson.