INCREASING THE FLOW OF CAPITAL FOR GOOD - INVESTING AND GIVING
For the past thirty years, I have spent much of my working life raising money for causes and organizations I believe in, and during that time I have met a great number of philanthropists whose generosity and humanity are inspiring. Because of these largely positive experiences, I am concerned with some of the changes I see in the philanthropic community – changes which reflect a move away from altruistic philanthropy and a move toward building a personal brand and directing policy while engaging in a market-based idea of philanthropic work. My thoughts on this no doubt reflect a bias based in the value of professionalism in the non-profit sector, and a belief that institutions can achieve mission with visionary leadership and sustainable support.
Peter Buffet recently wrote a stirring and controversial article in the New York Times entitled “The Charitable-Industrial Complex.1” Mr. Buffet is better placed than most of us to comment with candour and courage on the foibles of the very rich, and his article struck a chord with a great many of my colleagues in the non-profit sector as he unflinchingly described Philanthropic Colonialism (his term for donors who believe that their absence of knowledge about local contexts in no way prohibits them from “solving” local problems with money). He noted that in the US alone in 2012 more than $316 billion was given to non-profits, the growth of which exceeds both business and government sectors in America2. He describes with charming clarity being present in rooms with heads of state and major donors where “all are searching for answers with their right hand to problems others in the room have created with their left.” And he bravely and rightly, in my view, talks about how the fame and glory of “giving back” a small percentage of the wealth these donors have accumulated allows them to feel good about perpetuating and exacerbating the wealth inequality gap that locks millions into a system where they continue to need aid.
In America right now any discussion of wealth redistribution, curtailing the absolute freedom of the rich, and hoping for greater financial equality is met in many quarters by the knee-jerk labelling of socialism. Having lived in England for nearly 20 years I mostly find this amusing since I have yet to see the word presented in an accurate way in these situations, and do not have the allergy to it that our conservative media seem to have. I have always liked fundraising, even while in leadership roles in organizations, because it seems to me to be a socially enjoyable form of wealth redistribution where all parties feel good about the outcomes.
What we are seeing now is the rise of the super-rich philanthropist who is also an activist, in the words of Sarah Lutman, an outstanding writer and thinker who has both run non-profits and given money away professionally. She looks at the behavioural standards by which philanthropy is (or is not) bound, and notes that as it is all voluntary it leaves a great deal of room for variable standards.
Rich people can give to whatever they wish to, and I support this freedom of giving, but this giving is supported by tax benefits and when it begins to be large scale ideological arbitrage without nuance it becomes worrying. Bill and Melinda Gates are extraordinary philanthropists, but along with two or three others in America they are now taking on the mantle of unelected and unaccountable national school supervisors. Paul Tudor Jones, who made staggering sums of money by shorting the market before the 1987 crash, has announced that he intends to devote his time to “saving” America’s public schools. With his (no trace of irony) Robin Hood Foundation he has given, and raised, over 1.5 billion dollars which he “deploys on behalf of the poor in New York City in a quantitative, results-based manner. In essence, he runs his foundation like he runs his hedge fund.”4 The phrase “deploys on behalf of the poor” makes me very uneasy, as it implies that because he is not poor he knows what is best for those who are. Tudor Jones is a generous man with a personal net worth of $3.7 billion. And now he is going to save public education. We can only wish him luck.
It is the wholesale transfer of market values into the philanthropic arena that gives me pause. Michael Sandel has written brilliantly on the erosion of our notions of public goods and civil society when we allow market values to enter areas where they do not belong. We used to feel that we could address needs, but now many philanthropists are only interested in solving problems and being seen to do so. The ideas that inspired Muhammad Yunus, who saw micro-lending as self-empowerment and as a vehicle for attaining dignity, are noble and effective. But the idea that every societal challenge can be tackled with the tool box of free market capitalism is wrong. Equating non-profit organizational under-capitalization with ineptitude is sloppy thinking. Believing that the methodology that made you rich is the appropriate path for solving a social problem is more ego than philanthropy, more personal brand than societal good. Many non-profits are not purely efficient by design – creation of social capital is not a purely efficient exercise.
This year Forbes Magazine (parish newsletter for the very rich) produced its second annual Philanthropy edition. It would take a very churlish person to feel less than grateful for the people profiled in this edition, and it is worth looking at it online for the surreal video of Bono singing an ode to Warren Buffet. The tone of the entire publication could be summed up in the opening essay from Randall Lane, Editor of Forbes. He notes: “Governments no longer seem capable of executing big ideas. Ditto for major corporations. It is left to entrepreneurial capitalism to innovate. And modern-day philanthropy taps the same skills, substituting public good for profits in instances where there is not yet an economic interest to do the right thing. We centred this year’s issue on solutions for extreme poverty, from America to Africa. While that is a noble goal worth focusing on, it is also a prism to view the larger scope of philanthropy, whatever your interest. There are lessons here for anyone who believes in market-based, permanent answers to large-scale problems.”5
Leaving aside the whimsical bypass of the fact that in the United States large corporations have devoted a lot of time, money and energy to making sure that the government can not get a lot done, it is the last sentence of that introduction that I find the most worrying. What about those of us who do not believe that market-based answers are or should be the premier and permanent solutions to our problems? What if we do not accept the inclusion of the words “not yet” in Randall Lanes’ description of philanthropy as substituting public good for profits in instances where there is not yet an economic interest to do the right thing. How do we describe in compelling language that sometimes the right thing has no economic return?
We as effective fundraisers must now frame the discussion that we all need to have about how unchecked markets are creating ever bigger problems for us while widening the wealth and resources inequality gap. What conversations can we have with these new philanthropists if we do not accept the underlying principle that being rich also automatically makes you wise and visionary? How can we reassert the validity and value of people experienced in working on global problems who do not believe that all meaning is created within commercial markets?
Peter Buffet believes that the luxury of wealth should enable him to be curious and attentive, and I support his views. Innovation in philanthropy should be welcomed, and I do not wish to suggest that it should not. But innovation in philanthropy should still, in my old fashioned view, do more to benefit those who receive than those who give. That is why we call it giving, not getting.
1. New York Times, July 26, 2013
2. For a full review of global giving, please refer to the Hudson Institute’s research on this subject: http://www.hudson.org/files/publications/2013IndexofGlobalPhilanthropyan...
3. Sarah Lutman, Twin Cities Business, October 25, 2013. Impartiality, Journalism and Philanthropy
4. Can Hedge Fund Billionaire Paul Tudor Jones Save America’s Public Education System? Forbes Magazine, November 2013.
5. Forbes Magazine Golden Age of Philanthropy Issue, November 2013