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Future Of Philanthropy

Can Philanthrocapitalism Really Save The World?

We laud Bill Gates and Warren Buffett as heroes. But are they the heroes we need?

Can Philanthrocapitalism Really Save The World?

[Top Photo: JStone via Shutterstock]

Bill Gates gets a lot of good press, on this site as much as anywhere else (maybe more!). He's praised for giving away his fortune, for funding everything from condoms to vaccines, and, most of all, for ushering in a new type of philanthropy, and persuading other rich people, from Warren Buffett to Mark Zuckerberg, to do as he does. Gates personifies the new "philanthrocapitalism" with its emphasis on results, technological innovation, and business-like no-nonsense.

Nobody can deny the good Gates does in the world, and that isn't the point of "No Such Thing As a Free Gift: The Gates Foundation and the Price of Philanthropy," a new book by the Canadian sociologist Linsey McGoey. McGoey's argument isn't that the Gates Foundation is evil (though she does make some sharp points about unintended consequences of their work on the ground). It's that we give too little scrutiny to people like Gates, and too much credence to the idea that philanthrocapitalism can "save the world" as a well-known book of that name says it can.

McGoey is sometimes too cynical (at least for my liking). But it's worth hearing what she has to say, because it's not said enough.

First, she disputes the idea that foundations run with business principles—as the Gates foundation is often lauded for—are anything new. The idea goes back to John D. Rockefeller and his philanthropic advisor, Frederick Gates (no relation). Gates was a big believer in the Efficiency Movement, which looked to import principles from making factories run better into every corner of society. Rockefeller and Gates also believed in getting results and not wasting resources.

McGoey criticizes philanthrocapitalists for this ahistoricism and for poo-pooing older foundations as amateurish. "There's a level of hubris in the rhetoric in these self-styled philanthrocapitalists who imply that in the past foundations weren't interested in impact," McGoey tells Co.Exist. "That's simply not the case. To say these philanthropic foundations were not interested in having a business mentality is erroneous."

Second, the Gates Foundation is often unaccountable, she says, even though it holds increasing sway over public agencies. In 2013, the Gates Foundation was the single largest donor to the World Health Organization, which is increasingly funded from "voluntary" contributions rather than governments. "There's a problematic precedent being set where a small group of private donors have the ability to dictate health policy at the highest level of the UN organization who aren't accountable to states who officially make up the membership," she says.

Third, philanthropic giving can "exacerbate the same social and economic inequalities that philanthropists purport to remedy." Philanthropists pay less tax because they can write off their donations. And, by giving large sums and claiming to spend their money in a scientifically effective way, they insulate themselves from arguments around tax avoidance and wealth inequality.

"Through initiatives like the Giving Pledge—Gates and Buffett’s exhortation to their fellow billionaires to give at least 50% of their fortunes to charity—Gates offers a powerful antidote to the mushrooming legions of economic doomsayers who suggest that growing wealth gaps are the biggest threat to global sustainability today," she says: "'Back off,' Gates and his fellow pledgers protest when faced with criticism from economists such as Thomas Piketty and James Galbraith. ‘We’re giving it away.’"

McGoey also points out that the level of philanthropy today isn't as great as we might think (though there are almost the double the amount of foundations today than in 2000). Overall charitable giving has stayed at about 2% of GDP since the 1970s. And in 2011, only 7% of charitable donations in the U.S. went to "public-society benefit" causes as opposed to religious and cultural pursuits, according to a Giving USA study. Philanthropists like Gates and Buffett may be exceedingly generous, but that's no indication that as society we're doing a particularly good job, at least not toward the poor.

Sometimes McGoey's arguments feel a little mean-spirited. While she's right to criticize hubris among the philanthrocapitalists, it's doubtful if people receiving polio vaccines and anti-malaria netting care much about the arrogance of their benefactors. McGoey sounds nasty when she criticizes "‘TED Heads’—amiable entrepreneurs and executives who congregate at exorbitantly priced TED events around the world, flocking to headline events (‘speaking innovation to power’; ‘branding for good’) with the earnestness of a Grateful Deadhead on his fifth tour." There's nothing inherently wrong with being amiable or earnest, with tickets being overpriced (you don't have to pay), or with the Grateful Dead.

But McGoey makes important points about over-relying on philanthropy. We can't expect philanthropists to fix fundamental imbalances in the economic system, and it may be that relying on super wealthy philanthropists could make inequality worse. McGoey points out that the last great burst of faith in philanthropy occurred in the 1920s. It did nothing to correct growing gaps between rich and poor during that era—an era that ended in the Great Depression. It took changes at a government level before inequality narrowed and broad-based social programs came into place.

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