Fighting over the fundamentals of philanthropy

There appears to be a  deep-seated intellectual boil festering at the base of our discussions around philanthropy, foreign aid and development.

Those three words? I’m not sure anyone really knows what they mean.

Yes, I’m sure the experts on philanthropy, aid and development all think they know what they mean. But as a journalist assigned to cover this stuff — and asked to translate it into “normal” language — I’m increasingly running into debates about fundamentals, if not outright confusion.

To wit:

Felix Salmon, a brilliant and often hilarious economics writer for Reuters, felt compelled to point out that Philanthropy Isn’t For Profit.

Duh, you say? Salmon was responding to the notion, which seems to be gaining popularity in some circles, that making a profit is in fact the best way to achieve a social good. He writes:

You can’t just invest money in the stock market and declare it the best way to do good in the world, any more than you can start an arms or cigarette manufacturer and claim that your pursuit of profits is the best way to improve global welfare.

Salmon wrote his argument in response to recent statements made by an economist with a leading “international consultancy” firm called Dalberg, which in its mission statement says: “We value social impact above profit but recognize that a sustainable business model is essential to our success.”

That sounds fine (and fairly routine), says Salmon, but then a Dalberg self-proclaimed “thought leader,” Daniel Altman, goes too far.

Altman argues in favor of the “Single Bottom Line” — basically, Salmon says, a focus on profit that merely assumes social benefit (as opposed to the “double bottom line” of trying to do good first but with a sustainable business model).

“All of this is profoundly silly,” says Salmon, who includes in his denunciation the popular concept of “Philanthrocapitalism” — as both an expression of and a driving force behind all this silliness.

Those were fighting word for Matthew Bishop, editor at The Economist as well as the author of both this term and a book called Philanthrocapitalism. Bishop is also often highly entertaining, I should add.

Bishop wrote a retort to Salmon, actually calling him a “bigot” for writing what he did. Really, a bigot? Is that the right word here? Anyway, Bishop soon calms down and makes some good points:

The first is the growing realization that business does have the capacity to create as well as destroy social value…. (T)he second big thing that we have learned about capitalism is that chasing financial value, if measured exclusively by short-term profits, is bad capitalism.

You can read Bishop’s defense for yourself. He basically says Salmon is thinking too narrowly, afraid of exploring new ideas, about what it means to do philanthropy — or business, for that matter.

Then you can read Salmon’s rebuttal today – which I can only hope will prompt further response from Bishop.

Salmon says these philanthrocapitalist ideas — of putting profit at or above achieving social good — are hardly new or broad-minded. In fact, he says, they are just dressing up routine business practices as if they are philanthropy:

The truth is that Altman, and to some degree Bishop too, is being too ideological, with their article of faith that long-term profitability means long-term social welfare. Tell that to the companies removing mountaintops.

Anyway, it’s a fun debate and supports my contention that none of these guys agree on what any of these words mean.

SIDE NOTE: Bishop recently hailed a global vaccination project dear to the Gates Foundation as the “best example yet of philanthrocapitalism” following a big meeting in London this week which raised new funds for the initiative.

It is called GAVI, the Global Alliance for Vaccines and Immunization, and was launched by the Gates Foundation in 2000 aimed at expanding child vaccination around the world. Bishop hailed it as a highly successful public-private partnership between philanthropy, industry and governments. Others, as I wrote about earlier, see it as a bit too friendly to the private side of that partnership.