Showing posts with label philanthropy. Show all posts
Showing posts with label philanthropy. Show all posts
Thursday, 3 March 2022
Saturday, 28 March 2020
Why India’s wealthy happily donate to god and govt but loathe helping needy and poor
Be it Amitabh Bachchan or Virat Kohli, India’s rich and famous are quick to lecture or follow PM Modi’s diktat. But selfless charity is missing among most Indians writes KAVEREE BAMZAI in The Print
Migrant workers in Delhi trying to get back to Uttar Pradesh amid the nationwide Covid-19 lockdown | Photo by Suraj Singh Bisht | ThePrint
The modern world is facing its worst crisis in coronavirus pandemic and what are Indian celebrities doing? Well, many clapped and banged pots and pans on 22 March at 5 pm following Prime Minister Narendra Modi’s call, and filmed themselves while doing so. Others are showing us how to do dishes and clean the home, participating in mock celebrity bartan-jhadu-poncha (BJP) challenges. The rest of the world is trying to help find a cure for the deadly virus or providing monetary assistance to the poor or arranging equipment for medical workers, underlining yet again the generosity gap between other countries’ and India’s elite.
Tennis star Roger Federer donates $1.02 million to support the most vulnerable families in Switzerland during the coronavirus crisis; India’s former cricket captain Sourav Ganguly gives away Rs 50 lakh worth of rice in collaboration with the West Bengal-based company Lal Baba Rice, in what is clearly a sponsored, mutual brand-building exercise. Chinese billionaire Jack Ma donates one million face masks and 500,000 coronavirus testing kits to the United States, and pledged similar support for European and African countries; Amitabh Bachchan uses social media to spread half-baked information — such as ‘flies spread coronavirus’ — and wonders if the clanging of pots, pans and thalis defeats the potency of the virus because it was Amavasya on 22 March (he later deleted the tweet).
Hollywood’s golden couple Blake Lively and Ryan Reynolds announce they will donate $1 million to Feeding America and Food Banks Canada that work for low-income families and the elderly; while Indian cricket and Bollywood’s beautiful match Virat Kohli and Anushka Sharma get into familiar lecture mode, asking everyone to “stay home and stay safe”. This follows Anushka Sharma’s earlier run-in with a ‘luxury car’ passenger where she ticked him off for violating PM Modi’s diktat of Swachh Bharat.
Where the rich are charitably poor
What makes rich and famous Indians so quick to lecture, especially on issues in congruence with government initiatives, but so loathe to help the poor desperately in need? The 2010 Giving Pledge by Warren Buffet and Bill Gates, to which five wealthy Indians are signatories, was meant to give a gigantic push to philanthropy worldwide. This was followed by India’s then minister of corporate affairs Sachin Pilot making it legally mandatory for companies to put aside charity funds for Corporate Social Responsibility (CSR) projects, making India the first country in the world to pass such a legislation. This year, an attempt to criminalise non-compliance was eventually softened after an uproar from corporates.
Philanthropy is up. According to Bain and Company’s annual Philanthropy Report 2020, domestic philanthropic funding has rapidly grown from approximately Rs 12,500 crore in 2010 to approximately Rs 55,000 crore in 2018. Contributions by individual philanthropists have also recorded strong growth in the past decade. In 2010, individual contributions accounted for 26 per cent of private funding, and as of 2018, individuals contribute about 60 per cent of the total private funding in India, estimated at approximately Rs 43,000 crore.
But in a prophetic warning, the report underscored the need for philanthropy ”to now consciously focus on India’s most vulnerable” and called for targeted action for the large population caught in a vicious cycle of vulnerability — precisely those worst hit by the coronavirus pandemic.
“The disadvantaged,” it said, “are unable to adapt to unpredictable situations that can push them deeper into vulnerability, such as climate change, economic risks and socio-political threats.” Even Azim Premji, who recently made news by committing 34 per cent of his company’s shares — worth $7.5 billion or Rs 52,750 crore — to his continuing cause, the public schooling system in India, has not set aside anything specific for those affected by the coronavirus. India’s second-richest man was the first Indian to sign The Giving Pledge.
Vaishali Nigam Sinha, Chief Sustainability Officer at Renew Power, started charity a few years ago to promote giving. Her experience has been less than happy. Indians, she finds, have refrained from planned giving for broader societal transformation. “Giving is individualistic and not driven via networks, which can be quite effective as we have seen in other parts of the world like the Bill and Melinda Gates Foundation. And in India, giving is usually done to get something back – to god for prosperity, to religious affiliations for advocacy of these platforms, and to government for business returns. Wealthy Indians need to learn to give in a planned way for greater social impact and transformation,” she says.
Little surprise then that India was ranked 124 in World Giving Index 2018 — and placed 82 in the 10th edition of the index compiled by Charities Aid Foundation looking at the data for 128 countries over the 10-year period.
All of us are in the same boat
But it’s not about celebrities or wealthy Indians alone. We are all in it together. Special planes are sent to bring back Indians stuck abroad due to the pandemic, but labourers and daily wage workers are left to walk hundreds of kilometres to reach their villages. Doctors treating coronavirus patients will be applauded but not allowed to enter their homes.
JNU sociologist Maitrayee Chaudhuri calls it a potent mix of selfishness, self care and entitlement. ”We have a complete disregard for people on the margins and on whose labour we sit. It is all about us and our safety,” she says. This communal selfishness is very different from the churning in the 19th and early 20th century, which led to enormous social reform movements. The slow and meticulous destruction of ‘secularism’, ‘socialism’ and ‘liberalism’ has helped. As has the rise of neoliberal ‘individual self centredness’. “Not to talk about smartphone dumbness,” she adds. There is an absence of empathy everywhere, filled instead with the noise of thalis being banged and bells being rung to show symbolic gratitude to those who serve us.
The examples of those who are giving are few and far in between. There is comedian Kapil Sharma, who is giving Rs 50 lakh to the Prime Minister’s Relief Fund and southern superstars Pawan Kalyan, Ram Charan and Rajinikanth. But in general, our stars have chosen to share very little. Former cricket captain M.S. Dhoni, for instance, has been reported to have donated Rs 1 lakh to a charity trust in Pune, which led to some criticism and a counter from his wife Sakshi, even though it wasn’t immediately clear which incident she was alluding to.
India Inc hasn’t fared much better either. When PM Modi asked everyone to show their support for health workers fighting coronavirus by applauding them, one of the country’s most proactive industrialists was among the first to tweet his support, and also one of the first to be trolled for it. He quickly responded by offering to manufacture ventilators, among other things. Reliance is reportedly donating a hospital for coronavirus patients, weeks after Isha Ambani had hosted a Holi party on 7 March — when the number of coronavirus cases had rapidly begun to rise. Her mother, after all, is the queen of giving, contributing to an array of eclectic causes, and has been honoured for it by getting elected to the board of New York’s Metropolitan Museum of Art in 2019 or by becoming the first Indian woman in 2016 to be elected to the International Olympic Committee for supporting the sporting dreams of seven million Indian children.
But for India’s corporate class, it took a nudge from the Principal Scientific Adviser K. Vijay Raghavan to remind them that healthcare and preventive healthcare are covered under Schedule VII of the Companies Act: “Hence supporting any project or programme for preventing or controlling or managing COVID19 is legitimate CSR (CSR) expenditure.” He also quickly got an office memorandum issued by the Ministry of Corporate Affairs a day later.
Elites’ capitalist worldview
Is there a kindness deficit in India’s business elite as well, which mirrors the lack of empathy of the country’s middle class? Business writer and bestselling author Tamal Bandyopadhyay says there are exceptions but culturally, the Indian business community is not exactly fond of opening up its purse on its own unless there is a compulsion. “Even when the companies are compelled, they find ways to evade it. We all know how many of them handle their CSR activities through creation of trusts. When it comes to buying electoral bonds, the story is different.
“Similarly, some of them get excited and rush to do certain things to express solidarity with the government in power. For instance, when the push is on digitalisation, there are takers for adopting towns for digitalisation in constituencies which matter. Essentially, most of them don’t believe in doing things no strings attached. Of course, there are people who believe in doing things quietly but they are exceptions,” he says.
In Western nations such as the US, philanthropy has deeper roots, with the practice essentially starting through donations to religious organisations. By the late 19th century, there was a rise of secular philanthropists such as Andrew Carnegie and John D. Rockefeller, which Stanford professor Rob Reich has noted as being controversial and one way of cleansing one’s hands of the dirty money.
In his book Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better (2018), he has noted: “Big Philanthropy is definitionally a plutocratic voice in our democracy, an exercise of power by the wealthy that is unaccountable, non-transparent, donor-directed, perpetual, and tax-subsidised.”
A similar critique has come from Anand Giridharadas, whose Winners Take All: The Elite Charade of Changing the World makes the argument that the global financial elite has reinterpreted Andrew Carnegie’s view that it’s good for society for capitalists to give something back to create a new formula: It’s good for business to do so when the time is right, but not otherwise. According to Reich, philanthropy works when it is able to find a gap between what governments do and what the market wants.
Few people exemplify this better than Bill Gates, who has for long donated to the cause of global healthcare. The Bill and Melinda Gates Foundation has already contributed $100 million to contain the virus, which he declared a pandemic even before the World Health Organisation did. The Foundation’s newsletter The Optimist is also performing a key role in spreading critical information about the Covid-19 pandemic and dispelling myths.
Migrant workers in Delhi trying to get back to Uttar Pradesh amid the nationwide Covid-19 lockdown | Photo by Suraj Singh Bisht | ThePrintThe modern world is facing its worst crisis in coronavirus pandemic and what are Indian celebrities doing? Well, many clapped and banged pots and pans on 22 March at 5 pm following Prime Minister Narendra Modi’s call, and filmed themselves while doing so. Others are showing us how to do dishes and clean the home, participating in mock celebrity bartan-jhadu-poncha (BJP) challenges. The rest of the world is trying to help find a cure for the deadly virus or providing monetary assistance to the poor or arranging equipment for medical workers, underlining yet again the generosity gap between other countries’ and India’s elite.
Tennis star Roger Federer donates $1.02 million to support the most vulnerable families in Switzerland during the coronavirus crisis; India’s former cricket captain Sourav Ganguly gives away Rs 50 lakh worth of rice in collaboration with the West Bengal-based company Lal Baba Rice, in what is clearly a sponsored, mutual brand-building exercise. Chinese billionaire Jack Ma donates one million face masks and 500,000 coronavirus testing kits to the United States, and pledged similar support for European and African countries; Amitabh Bachchan uses social media to spread half-baked information — such as ‘flies spread coronavirus’ — and wonders if the clanging of pots, pans and thalis defeats the potency of the virus because it was Amavasya on 22 March (he later deleted the tweet).
Hollywood’s golden couple Blake Lively and Ryan Reynolds announce they will donate $1 million to Feeding America and Food Banks Canada that work for low-income families and the elderly; while Indian cricket and Bollywood’s beautiful match Virat Kohli and Anushka Sharma get into familiar lecture mode, asking everyone to “stay home and stay safe”. This follows Anushka Sharma’s earlier run-in with a ‘luxury car’ passenger where she ticked him off for violating PM Modi’s diktat of Swachh Bharat.
Where the rich are charitably poor
What makes rich and famous Indians so quick to lecture, especially on issues in congruence with government initiatives, but so loathe to help the poor desperately in need? The 2010 Giving Pledge by Warren Buffet and Bill Gates, to which five wealthy Indians are signatories, was meant to give a gigantic push to philanthropy worldwide. This was followed by India’s then minister of corporate affairs Sachin Pilot making it legally mandatory for companies to put aside charity funds for Corporate Social Responsibility (CSR) projects, making India the first country in the world to pass such a legislation. This year, an attempt to criminalise non-compliance was eventually softened after an uproar from corporates.
Philanthropy is up. According to Bain and Company’s annual Philanthropy Report 2020, domestic philanthropic funding has rapidly grown from approximately Rs 12,500 crore in 2010 to approximately Rs 55,000 crore in 2018. Contributions by individual philanthropists have also recorded strong growth in the past decade. In 2010, individual contributions accounted for 26 per cent of private funding, and as of 2018, individuals contribute about 60 per cent of the total private funding in India, estimated at approximately Rs 43,000 crore.
But in a prophetic warning, the report underscored the need for philanthropy ”to now consciously focus on India’s most vulnerable” and called for targeted action for the large population caught in a vicious cycle of vulnerability — precisely those worst hit by the coronavirus pandemic.
“The disadvantaged,” it said, “are unable to adapt to unpredictable situations that can push them deeper into vulnerability, such as climate change, economic risks and socio-political threats.” Even Azim Premji, who recently made news by committing 34 per cent of his company’s shares — worth $7.5 billion or Rs 52,750 crore — to his continuing cause, the public schooling system in India, has not set aside anything specific for those affected by the coronavirus. India’s second-richest man was the first Indian to sign The Giving Pledge.
Vaishali Nigam Sinha, Chief Sustainability Officer at Renew Power, started charity a few years ago to promote giving. Her experience has been less than happy. Indians, she finds, have refrained from planned giving for broader societal transformation. “Giving is individualistic and not driven via networks, which can be quite effective as we have seen in other parts of the world like the Bill and Melinda Gates Foundation. And in India, giving is usually done to get something back – to god for prosperity, to religious affiliations for advocacy of these platforms, and to government for business returns. Wealthy Indians need to learn to give in a planned way for greater social impact and transformation,” she says.
Little surprise then that India was ranked 124 in World Giving Index 2018 — and placed 82 in the 10th edition of the index compiled by Charities Aid Foundation looking at the data for 128 countries over the 10-year period.
All of us are in the same boat
But it’s not about celebrities or wealthy Indians alone. We are all in it together. Special planes are sent to bring back Indians stuck abroad due to the pandemic, but labourers and daily wage workers are left to walk hundreds of kilometres to reach their villages. Doctors treating coronavirus patients will be applauded but not allowed to enter their homes.
JNU sociologist Maitrayee Chaudhuri calls it a potent mix of selfishness, self care and entitlement. ”We have a complete disregard for people on the margins and on whose labour we sit. It is all about us and our safety,” she says. This communal selfishness is very different from the churning in the 19th and early 20th century, which led to enormous social reform movements. The slow and meticulous destruction of ‘secularism’, ‘socialism’ and ‘liberalism’ has helped. As has the rise of neoliberal ‘individual self centredness’. “Not to talk about smartphone dumbness,” she adds. There is an absence of empathy everywhere, filled instead with the noise of thalis being banged and bells being rung to show symbolic gratitude to those who serve us.
The examples of those who are giving are few and far in between. There is comedian Kapil Sharma, who is giving Rs 50 lakh to the Prime Minister’s Relief Fund and southern superstars Pawan Kalyan, Ram Charan and Rajinikanth. But in general, our stars have chosen to share very little. Former cricket captain M.S. Dhoni, for instance, has been reported to have donated Rs 1 lakh to a charity trust in Pune, which led to some criticism and a counter from his wife Sakshi, even though it wasn’t immediately clear which incident she was alluding to.
India Inc hasn’t fared much better either. When PM Modi asked everyone to show their support for health workers fighting coronavirus by applauding them, one of the country’s most proactive industrialists was among the first to tweet his support, and also one of the first to be trolled for it. He quickly responded by offering to manufacture ventilators, among other things. Reliance is reportedly donating a hospital for coronavirus patients, weeks after Isha Ambani had hosted a Holi party on 7 March — when the number of coronavirus cases had rapidly begun to rise. Her mother, after all, is the queen of giving, contributing to an array of eclectic causes, and has been honoured for it by getting elected to the board of New York’s Metropolitan Museum of Art in 2019 or by becoming the first Indian woman in 2016 to be elected to the International Olympic Committee for supporting the sporting dreams of seven million Indian children.
But for India’s corporate class, it took a nudge from the Principal Scientific Adviser K. Vijay Raghavan to remind them that healthcare and preventive healthcare are covered under Schedule VII of the Companies Act: “Hence supporting any project or programme for preventing or controlling or managing COVID19 is legitimate CSR (CSR) expenditure.” He also quickly got an office memorandum issued by the Ministry of Corporate Affairs a day later.
Elites’ capitalist worldview
Is there a kindness deficit in India’s business elite as well, which mirrors the lack of empathy of the country’s middle class? Business writer and bestselling author Tamal Bandyopadhyay says there are exceptions but culturally, the Indian business community is not exactly fond of opening up its purse on its own unless there is a compulsion. “Even when the companies are compelled, they find ways to evade it. We all know how many of them handle their CSR activities through creation of trusts. When it comes to buying electoral bonds, the story is different.
“Similarly, some of them get excited and rush to do certain things to express solidarity with the government in power. For instance, when the push is on digitalisation, there are takers for adopting towns for digitalisation in constituencies which matter. Essentially, most of them don’t believe in doing things no strings attached. Of course, there are people who believe in doing things quietly but they are exceptions,” he says.
In Western nations such as the US, philanthropy has deeper roots, with the practice essentially starting through donations to religious organisations. By the late 19th century, there was a rise of secular philanthropists such as Andrew Carnegie and John D. Rockefeller, which Stanford professor Rob Reich has noted as being controversial and one way of cleansing one’s hands of the dirty money.
In his book Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better (2018), he has noted: “Big Philanthropy is definitionally a plutocratic voice in our democracy, an exercise of power by the wealthy that is unaccountable, non-transparent, donor-directed, perpetual, and tax-subsidised.”
A similar critique has come from Anand Giridharadas, whose Winners Take All: The Elite Charade of Changing the World makes the argument that the global financial elite has reinterpreted Andrew Carnegie’s view that it’s good for society for capitalists to give something back to create a new formula: It’s good for business to do so when the time is right, but not otherwise. According to Reich, philanthropy works when it is able to find a gap between what governments do and what the market wants.
Few people exemplify this better than Bill Gates, who has for long donated to the cause of global healthcare. The Bill and Melinda Gates Foundation has already contributed $100 million to contain the virus, which he declared a pandemic even before the World Health Organisation did. The Foundation’s newsletter The Optimist is also performing a key role in spreading critical information about the Covid-19 pandemic and dispelling myths.
Indian philanthropy isn’t secular
In India, the twain of religious giving and secular funding has not met. Management expert Nirmalya Kumar calls it a sensitive subject and says it is related to the philosophical concept underlying Indian religions such as Hinduism, Buddhism and Sikhism that believe in reincarnation. “Our soul starts life again in a different physical form based on the karma of previous lives. As such, as has been sometimes articulated to me, the lack of charity is an unwillingness to interfere with the consequences that God has determined appropriate. Who am I to come in between the person and their God?”
But the Rashtriya Swayamsevak Sangh (RSS) is traditionally known for engaging in social seva (not just swayam seva , or self service), evidenced by the Bharatiya Janata Party (BJP)’s decision to feed five crore people during the 21-day lockdown. Sikhism has a well-developed tradition of Guru ka langar, and it was on full display at Shaheen Bagh when ordinary Sikhs served food to people protesting against the Citizenship Amendment Act (CAA) and the National Register of Citizens (NRC).
Some business families also do philanthropic work, among them the Nilekanis, the Murtys and the older Bharatrams (their founder Lala Shri Ram founded Delhi Cloth Mills and set up several educational institutes like Shri Ram College of Commerce and Lady Shri Ram College). Radhika Bharatram, joint vice chairperson, The Shri Ram Schools, recalls growing up in a middle class, progressive home where her sister and she were encouraged to volunteer at the Cheshire Home and Mother Teresa Home. Marriage, she says, brought her into a home where making contributions to society was in the family’s DNA and she is now involved as a volunteer with organisations such as Delhi Crafts Council, Blind Relief Association, SRF Foundation, the CII Foundation Woman Exemplar Programme, and Cancer Awareness Prevention and Early Detection. What drives her is empathy: When “you come from a position of privilege, there is joy in making a difference to someone else’s life”. She says it motivates her when the purpose is greater than the individual.
Unfortunately, the middle class and the elites have tended to keep self interest above public interest. In the new world after the coronavirus pandemic, this is one attitude it must change.
In India, the twain of religious giving and secular funding has not met. Management expert Nirmalya Kumar calls it a sensitive subject and says it is related to the philosophical concept underlying Indian religions such as Hinduism, Buddhism and Sikhism that believe in reincarnation. “Our soul starts life again in a different physical form based on the karma of previous lives. As such, as has been sometimes articulated to me, the lack of charity is an unwillingness to interfere with the consequences that God has determined appropriate. Who am I to come in between the person and their God?”
But the Rashtriya Swayamsevak Sangh (RSS) is traditionally known for engaging in social seva (not just swayam seva , or self service), evidenced by the Bharatiya Janata Party (BJP)’s decision to feed five crore people during the 21-day lockdown. Sikhism has a well-developed tradition of Guru ka langar, and it was on full display at Shaheen Bagh when ordinary Sikhs served food to people protesting against the Citizenship Amendment Act (CAA) and the National Register of Citizens (NRC).
Some business families also do philanthropic work, among them the Nilekanis, the Murtys and the older Bharatrams (their founder Lala Shri Ram founded Delhi Cloth Mills and set up several educational institutes like Shri Ram College of Commerce and Lady Shri Ram College). Radhika Bharatram, joint vice chairperson, The Shri Ram Schools, recalls growing up in a middle class, progressive home where her sister and she were encouraged to volunteer at the Cheshire Home and Mother Teresa Home. Marriage, she says, brought her into a home where making contributions to society was in the family’s DNA and she is now involved as a volunteer with organisations such as Delhi Crafts Council, Blind Relief Association, SRF Foundation, the CII Foundation Woman Exemplar Programme, and Cancer Awareness Prevention and Early Detection. What drives her is empathy: When “you come from a position of privilege, there is joy in making a difference to someone else’s life”. She says it motivates her when the purpose is greater than the individual.
Unfortunately, the middle class and the elites have tended to keep self interest above public interest. In the new world after the coronavirus pandemic, this is one attitude it must change.
Dickens and Orwell — the choice for capitalism
When this is all over, there is likely to be a new social contract. Which way will we go? asks JANAN GANESH in The FT
This year is the 70th anniversary of George Orwell’s death and the 150th of Charles Dickens’s. Never spellbound by either (“The man can’t write worth a damn,” said the young Martin Amis, after one page of 1984), I was inclined to sit out all the commemorative rereading. And I did. But then the crisis of the day took me back to what one man wrote about the other.
More on that in a minute. First, you will notice the pandemic is putting large corporations through a sort of moral invigilation. Ones that rejig their factories to make hand sanitiser (LVMH) or donate their knowhow (IBM) are hailed. Ones that behave like skinflints (JD Wetherspoon, Britannia Hotels) are tarred and feathered.
Companies have to weigh how much discretionary help to give without flunking their narrow duty to survive and profit.
This is the stuff of Stakeholder Capitalism or Corporate Social Responsibility.The topic has been in the air all of my career. It has been given new urgency by events. It is the subject of much FT treatment.
And Orwell, I suspect, would see through it like glass.
In a 1940 essay (how spoilt we are for round-number anniversaries) he politely explodes the idea of Dickens as a radical, or even as a social reformer. His case is that, for Dickens, nothing is wrong with the world that cannot be fixed through individual conscience.
If only Murdstone were kinder to David Copperfield. If only all bosses were as nice as Fezziwig. That no one should have such awesome power over others in the first place goes unsaid by Dickens, and presumably unthought. And so his worldview, says Orwell, is “almost exclusively moral”.
Dickens wants a “change of spirit rather than a change of structure”. He has no sense that a free market is “wrong as a system”. The French Revolution could have been averted had the Second Estate just “turned over a new leaf, like Scrooge”.
And so we have “that recurrent Dickens figure, the Good Rich Man”, whose arbitrary might is used to help out the odd grateful urchin or debtor. What we do not have is the Good Trade Unionist pushing for structural change. What we do not have is the Good Finance Minister redistributing wealth. There is something feudal about Dickens. The rich man in his castle should be nicer to the poor man at his gate, but each is in his rightful station.
You need not share Orwell’s ascetic socialism (I write this next to a 2010 Meursault) to see his point. And to see that it applies just as much to today’s economy.
Some companies are open to any and all options to serve the general good — except higher taxes and regulation. “I feel like I’m at a firefighters’ conference,” said the writer Rutger Bregman, at a Davos event about inequality that did not mention tax. “And no one is allowed to speak about water.”
What Orwell would hate about Stakeholder Capitalism is not just that it might achieve patchier results than the universal state. It is not even that it accords the powerful yet more power — at times, as we are seeing, over life and death. Under-resourced governments counting on private whim for basic things: it is a spectacle that should both warm the heart and utterly chill it.
No, what Orwell would resent, I think, is the unearned smugness. The halo of “conscience”, when more systemic answers are available via government. The halo that Dickens still wears. You can see it in the world of philanthropy summits and impact investment funds.
The double-anniversary of England’s most famous writers since Shakespeare meant little to me until the virus broke. All of a sudden, they serve as a neat contrast of worldviews. Dickens would look at the crisis and shame the corporates who fail to tap into their inner Fezziwig. Orwell would wonder how on earth it is left to their caprice in the first place.
The difference matters because, when all this is over, there is likely to be a new social contract. The mystery is whether it will be more Dickensian (in the best sense) or Orwellian (also in the best sense). That is, will it pressure the rich to give more to the commons or will it absolutely oblige them?
This year is the 70th anniversary of George Orwell’s death and the 150th of Charles Dickens’s. Never spellbound by either (“The man can’t write worth a damn,” said the young Martin Amis, after one page of 1984), I was inclined to sit out all the commemorative rereading. And I did. But then the crisis of the day took me back to what one man wrote about the other.
More on that in a minute. First, you will notice the pandemic is putting large corporations through a sort of moral invigilation. Ones that rejig their factories to make hand sanitiser (LVMH) or donate their knowhow (IBM) are hailed. Ones that behave like skinflints (JD Wetherspoon, Britannia Hotels) are tarred and feathered.
Companies have to weigh how much discretionary help to give without flunking their narrow duty to survive and profit.
This is the stuff of Stakeholder Capitalism or Corporate Social Responsibility.The topic has been in the air all of my career. It has been given new urgency by events. It is the subject of much FT treatment.
And Orwell, I suspect, would see through it like glass.
In a 1940 essay (how spoilt we are for round-number anniversaries) he politely explodes the idea of Dickens as a radical, or even as a social reformer. His case is that, for Dickens, nothing is wrong with the world that cannot be fixed through individual conscience.
If only Murdstone were kinder to David Copperfield. If only all bosses were as nice as Fezziwig. That no one should have such awesome power over others in the first place goes unsaid by Dickens, and presumably unthought. And so his worldview, says Orwell, is “almost exclusively moral”.
Dickens wants a “change of spirit rather than a change of structure”. He has no sense that a free market is “wrong as a system”. The French Revolution could have been averted had the Second Estate just “turned over a new leaf, like Scrooge”.
And so we have “that recurrent Dickens figure, the Good Rich Man”, whose arbitrary might is used to help out the odd grateful urchin or debtor. What we do not have is the Good Trade Unionist pushing for structural change. What we do not have is the Good Finance Minister redistributing wealth. There is something feudal about Dickens. The rich man in his castle should be nicer to the poor man at his gate, but each is in his rightful station.
You need not share Orwell’s ascetic socialism (I write this next to a 2010 Meursault) to see his point. And to see that it applies just as much to today’s economy.
Some companies are open to any and all options to serve the general good — except higher taxes and regulation. “I feel like I’m at a firefighters’ conference,” said the writer Rutger Bregman, at a Davos event about inequality that did not mention tax. “And no one is allowed to speak about water.”
What Orwell would hate about Stakeholder Capitalism is not just that it might achieve patchier results than the universal state. It is not even that it accords the powerful yet more power — at times, as we are seeing, over life and death. Under-resourced governments counting on private whim for basic things: it is a spectacle that should both warm the heart and utterly chill it.
No, what Orwell would resent, I think, is the unearned smugness. The halo of “conscience”, when more systemic answers are available via government. The halo that Dickens still wears. You can see it in the world of philanthropy summits and impact investment funds.
The double-anniversary of England’s most famous writers since Shakespeare meant little to me until the virus broke. All of a sudden, they serve as a neat contrast of worldviews. Dickens would look at the crisis and shame the corporates who fail to tap into their inner Fezziwig. Orwell would wonder how on earth it is left to their caprice in the first place.
The difference matters because, when all this is over, there is likely to be a new social contract. The mystery is whether it will be more Dickensian (in the best sense) or Orwellian (also in the best sense). That is, will it pressure the rich to give more to the commons or will it absolutely oblige them?
Friday, 26 October 2018
We don’t want billionaires’ charity. We want them to pay their taxes
Owen Jones in The Guardian
Charity is a cold, grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.” It is a phrase commonly ascribed to Clement Attlee – the credit actually belongs to his biographer, Francis Beckett – but it elegantly sums up the case for progressive taxation. According to a report by the Swiss bank UBS, last year billionaires made more money than any other point in the history of human civilisation. Their wealth jumped by a fifth – a staggering $8.9tn – and 179 new billionaires joined an exclusive cabal of 2,158. Some have signed up to Giving Pledge, committing to leave half their wealth to charity. While the richest man on earth, Jeff Bezos – who has $146bn to his name – has not, he has committed £2bn to tackling homelessness and improving education.
Who can begrudge the generosity of the wealthy, you might say. Wherever you stand on the concentration of wealth and power in the hands of a tiny global elite, surely such charity should be applauded? But philanthropy is a dangerous substitution for progressive taxation. Consider Bono, a man who gained a reputation for ceaselessly campaigning for the world’s neediest. Except his band, U2, moved their tax affairs from Ireland to the Netherlandsin 2006 in order to avoid tax. Bono himself appeared in the Paradise Papers – a huge set of documents exposing offshore investments by the wealthy – after he invested in a company based in Malta that bought a Lithuanian firm. This behaviour is legal: Bono himself said of U2’s affairs it was “just some smart people we have … trying to be sensible about the way we’re taxed”.
And he’s right: rich people and major corporations have the means to legally avoid tax. It’s estimated that global losses from multinational corporations shifting their profits are about $500bn a year, while cash stashed in tax havens is worth at least 10% of the world’s economy. It is the world’s poorest who suffer the consequences. Philanthropy, then, is a means of making the uber rich look generous, while they save far more money through exploiting loopholes and using tax havens.
The trouble with charitable billionaires
There’s another issue, too. The decision on how philanthropic money is spent is made on the whims and personal interests of the wealthy, rather than what is best. In the US, for example, only 12% of philanthropic money went to human services: it was more likely be spent on arts and higher education. Those choosing where the money goes are often highly unrepresentative of the broader population, and thus more likely to be out of touch with their needs. In the US, 85% of charitable foundation board members are white, and just 7% are African Americans. Money raised by progressive taxation, on the other hand, is spent by democratically accountable governments that have to justify their priorities, which are far more likely to relate to social need.
What is striking is that even as the rich get richer, they are spending less on charity, while the poor give a higher percentage of their income to good causes. That the world’s eight richest people have as much wealth as the poorest half of humanity is a damning indictment of our entire social order. The answer to that is not self-serving philanthropy, which makes a wealthy elite determined to put vast fortunes out of reach of the authorities look good. We need global tax justice, not charitable scraps dictated by the fancies of the elite.
Charity is a cold, grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.” It is a phrase commonly ascribed to Clement Attlee – the credit actually belongs to his biographer, Francis Beckett – but it elegantly sums up the case for progressive taxation. According to a report by the Swiss bank UBS, last year billionaires made more money than any other point in the history of human civilisation. Their wealth jumped by a fifth – a staggering $8.9tn – and 179 new billionaires joined an exclusive cabal of 2,158. Some have signed up to Giving Pledge, committing to leave half their wealth to charity. While the richest man on earth, Jeff Bezos – who has $146bn to his name – has not, he has committed £2bn to tackling homelessness and improving education.
Who can begrudge the generosity of the wealthy, you might say. Wherever you stand on the concentration of wealth and power in the hands of a tiny global elite, surely such charity should be applauded? But philanthropy is a dangerous substitution for progressive taxation. Consider Bono, a man who gained a reputation for ceaselessly campaigning for the world’s neediest. Except his band, U2, moved their tax affairs from Ireland to the Netherlandsin 2006 in order to avoid tax. Bono himself appeared in the Paradise Papers – a huge set of documents exposing offshore investments by the wealthy – after he invested in a company based in Malta that bought a Lithuanian firm. This behaviour is legal: Bono himself said of U2’s affairs it was “just some smart people we have … trying to be sensible about the way we’re taxed”.
And he’s right: rich people and major corporations have the means to legally avoid tax. It’s estimated that global losses from multinational corporations shifting their profits are about $500bn a year, while cash stashed in tax havens is worth at least 10% of the world’s economy. It is the world’s poorest who suffer the consequences. Philanthropy, then, is a means of making the uber rich look generous, while they save far more money through exploiting loopholes and using tax havens.
The trouble with charitable billionaires
There’s another issue, too. The decision on how philanthropic money is spent is made on the whims and personal interests of the wealthy, rather than what is best. In the US, for example, only 12% of philanthropic money went to human services: it was more likely be spent on arts and higher education. Those choosing where the money goes are often highly unrepresentative of the broader population, and thus more likely to be out of touch with their needs. In the US, 85% of charitable foundation board members are white, and just 7% are African Americans. Money raised by progressive taxation, on the other hand, is spent by democratically accountable governments that have to justify their priorities, which are far more likely to relate to social need.
What is striking is that even as the rich get richer, they are spending less on charity, while the poor give a higher percentage of their income to good causes. That the world’s eight richest people have as much wealth as the poorest half of humanity is a damning indictment of our entire social order. The answer to that is not self-serving philanthropy, which makes a wealthy elite determined to put vast fortunes out of reach of the authorities look good. We need global tax justice, not charitable scraps dictated by the fancies of the elite.
Friday, 25 May 2018
The trouble with charitable billionaires
More and more wealthy CEOs are pledging to give away parts of their fortunes – often to help fix problems their companies caused. Some call this ‘philanthrocapitalism’, but is it just corporate hypocrisy? By Carl Rhodes and Peter Bloom in The Guardian
In February 2017, Facebook’s founder and CEO Mark Zuckerberg was in the headlines for his charitable activities. The Chan Zuckerberg Initiative, founded by the tech billionaire and his wife, Priscilla Chan, handed out over $3m in grants to aid the housing crisis in the Silicon Valley area. David Plouffe, the Initiative’s president of policy and advocacy, stated that the grants were intended to “support those working to help families in immediate crisis while supporting research into new ideas to find a long-term solution – a two-step strategy that will guide much of our policy and advocacy work moving forward”.
This is but one small part of Zuckerberg’s charity empire. The Initiative has committed billions of dollars to philanthropic projects designed to address social problems, with a special focus on solutions driven by science, medical research and education. This all took off in December 2015, when Zuckerberg and Chan wrote and published a letter to their new baby Max. The letter made a commitment that over the course of their lives they would donate 99% of their shares in Facebook (at the time valued at $45bn) to the “mission” of “advancing human potential and promoting equality”.
The housing intervention is of course much closer to home, dealing with issues literally at the door of Facebook’s Menlo Park head office. This is an area where median house prices almost doubled to around $2m in the five years between 2012 and 2017.
More generally, San Francisco is a city with massive income inequality, and the reputation of having the most expensive housing in the US. Chan Zuckerberg’s intervention was clearly designed to offset social and economic problems caused by rents and house prices having skyrocketed to such a level that even tech workers on six-figure salaries find it hard to get by. For those on more modest incomes, supporting themselves, let alone a family, is nigh-on impossible.
Ironically, the boom in the tech industry in this region – a boom Facebook has been at the forefront of – has been a major contributor to the crisis. As Peter Cohen from the Council of Community Housing Organizations explained it: “When you’re dealing with this total concentration of wealth and this absurd slosh of real-estate money, you’re not dealing with housing that’s serving a growing population. You’re dealing with housing as a real-estate commodity for speculation.”
Zuckerberg’s apparent generosity, it would seem, is a small contribution to a large problem that was created by the success of the industry he is involved in. In one sense, the housing grants (equivalent to the price of just one-and-a-half average Menlo Park homes) are trying to put a sticking plaster on a problem that Facebook and other Bay Area corporations aided and abetted. It would appear that Zuckerberg was redirecting a fraction of the spoils of neoliberal tech capitalism, in the name of generosity, to try to address the problems of wealth inequality created by a social and economic system that allowed those spoils to accrue in the first place.
It is easy to think of Zuckerberg as some kind of CEO hero – a once regular kid whose genius made him one of the richest men in the world, and who decided to use that wealth for the benefit of others. The image he projects is of altruism untainted by self-interest. A quick scratch of the surface reveals that the structure of Zuckerberg’s charity enterprise is informed by much more than good-hearted altruism. Even while many have applauded Zuckerberg for his generosity, the nature of this apparent charity was openly questioned from the outset.
The wording of Zuckerberg’s 2015 letter could easily have been interpreted as meaning that he was intending to donate $45bn to charity. As investigative reporter Jesse Eisinger reported at the time, the Chan Zuckerberg Initiative through which this giving was to be funnelled is not a not-for-profit charitable foundation, but a limited liability company. This legal status has significant practical implications, especially when it comes to tax. As a company, the Initiative can do much more than charitable activity: its legal status gives it rights to invest in other companies, and to make political donations. Effectively the company does not restrict Zuckerberg’s decision-making as to what he wants to do with his money; he is very much the boss. Moreover, as Eisinger described it, Zuckerberg’s bold move yielded a huge return on investment in terms of public relations for Facebook, even though it appeared that he simply “moved money from one pocket to the other” while being “likely never to pay any taxes on it”.
The creation of the Chan Zuckerberg Initiative – decidedly not a charity organisation – means that Zuckerberg can control the company’s investments as he sees fit, while accruing significant commercial, tax and political benefits. All of this is not to say that Zuckerberg’s motives do not include some expression of his own generosity or some genuine desire for humanity’s wellbeing and equality.
What it does suggest, however, is that when it comes to giving, the CEO approach is one in which there is no apparent incompatibility between being generous, seeking to retain control over what is given, and the expectation of reaping benefits in return. This reformulation of generosity – in which it is no longer considered incompatible with control and self-interest – is a hallmark of the “CEO society”: a society where the values associated with corporate leadership are applied to all dimensions of human endeavour.
Mark Zuckerberg was by no means the first contemporary CEO to promise and initiate large-scale donations of wealth to self-nominated good causes. In the CEO society it is positively a badge of honour for the world’s most wealthy businesspeople to create vehicles to give away their wealth. This has been institutionalised in what is known as The Giving Pledge, a philanthropy campaign initiated by Warren Buffett and Bill Gates in 2010. The campaign targets billionaires around the world, encouraging them to give away the majority of their wealth. There is nothing in the pledge that specifies what exactly the donations will be used for, or even whether they are to be made now or willed after death; it is just a general commitment to using private wealth for ostensibly public good. It is not legally binding either, but a moral commitment.
There is a long list of people and families who have made the pledge. Mark Zuckerberg and Priscilla Chan are there, and so are some 174 others, including household names such as Richard and Joan Branson, Michael Bloomberg, Barron Hilton and David Rockefeller. It would seem that many of the world’s richest people simply want to give their money away to good causes. This all amounts to what human geographers Iain Hay and Samantha Muller sceptically refer to as a “golden age of philanthropy”, in which, since the late 1990s, bequests to charity from the super-rich have escalated to the hundreds of billions of dollars. These new philanthropists bring to charity an “entrepreneurial disposition”, Hay and Muller wrote in a 2014 paper, yet one that they suggest has been “diverting attention and resources away from the failings of contemporary manifestations of capitalism”, and may also be serving as a substitute for public spending withdrawn by the state.
A protester outside the Nasdaq headquarters in New York marks Facebook’s IPO, 2012. Photograph: Alamy Stock Photo
The recent development of philanthrocapitalism also marks the increasing encroachment of business into the provision of public goods and services. This encroachment is not limited to the activities of individual billionaires; it is also becoming a part of the activities of large corporations under the rubric of CSR. This is especially the case for large multinational corporations whose global reach, wealth and power give them significant political clout. This relationship has been referred to as “political CSR”. Business ethics professors Andreas Scherer and Guido Palazzo note that, for large corporations, “CSR is increasingly displayed in corporate involvement in the political process of solving societal problems, often on a global scale”. Such political CSR initiatives see organisations cooperating and collaborating with governments, civic bodies and international institutions, so that historical separations between the purposes of the state and the corporations are increasingly eroded.
Global corporations have long been involved in quasi-governmental activities such as the setting of standards and codes, and today are increasingly engaging in other activities that have traditionally been the domain of government, such as public health provision, education, the protection of human rights, addressing social problems such as Aids and malnutrition, protection of the natural environment and the promotion of peace and social stability.
Today, large organisations can amass significant economic and political power, on a global scale. This means that their actions – and the way those actions are regulated – have far-reaching social consequences. The balanced tipped in 2000, when the Institute for Policy Studies in the US reported, after comparing corporate revenues with gross domestic product (GDP), that 51 of the largest economies in the world were corporations, and 49 were national economies. The biggest corporations were General Motors, Walmart and Ford, each of which was larger economically than Poland, Norway and South Africa. As the heads of these corporations, CEOs are now quasi-politicians. One only has to think of the increasing power of the World Economic Forum, whose annual meeting in Davos in Switzerland sees corporate CEOs and senior politicians getting together with the ostensible goal of “improving the world”, a now time-honoured ritual that symbolises the global power and agency of CEOs.
The development of CSR is not the result of self-directed corporate initiatives for doing good deeds, but a response to widespread CSR activism from NGOs, pressure groups and trade unions. Often this has been in response to the failure of governments to regulate large corporations. High-profile industrial accidents and scandals have also put pressure on organisations for heightened self-regulation.
An explosion at a Union Carbide chemical plant in Bhopal, India in 1984 led to the deaths of an estimated 25,000 people. James Post, a professor of management at Boston University, explains that, after the disaster, “the global chemical industry recognised that it was nearly impossible to secure a licence to operate without public confidence in industry safety standards. The Chemical Manufacturers Association (CMA) adopted a code of conduct, including new standards of product stewardship, disclosure and community engagement.”
The impetus for this was corporate self-interest, rather than generosity, as industries and corporations globally “began to recognise the increasing importance of reputation and image”. Similar moves were enacted after other major industrial accidents, such as the Exxon Valdez oil tanker spilling hundreds of thousands of barrels of oil in Alaska in 1989, and BP’s Deepwater Horizon oil rig exploding in the Gulf of Mexico in 2010.
In the CEO society, corporate logic such as this rules supreme, and ensures that any activities thought of as generous and socially responsible ultimately have a payoff in terms of self-interest. If there was ever a debate between the ethics of genuine hospitality, reciprocity and self-interest, it is not to be found here. It is in accordance with this CEO logic that the mechanisms for redressing the inequality created through wealth generation are placed in the hands of the wealthy, and in a way that ultimately benefits them. The worst excesses of neoliberal capitalism are morally justified by the actions of the very people who benefit from those excesses. Wealth redistribution is placed in the hands of the wealthy, and social responsibility in the hands of those who have exploited society for personal gain.
Meanwhile, inequality is growing, and both corporations and the wealthy find ways to avoid the taxes that the rest of us pay. In the name of generosity, we find a new form of corporate rule, refashioning another dimension of human endeavour in its own interests. Such is a society where CEOs are no longer content to do business; they must control public goods as well. In the end, while the Giving Pledge’s website may feature more and more smiling faces of smug-looking CEOs, the real story is of a world characterised by gross inequality that is getting worse year by year.
In February 2017, Facebook’s founder and CEO Mark Zuckerberg was in the headlines for his charitable activities. The Chan Zuckerberg Initiative, founded by the tech billionaire and his wife, Priscilla Chan, handed out over $3m in grants to aid the housing crisis in the Silicon Valley area. David Plouffe, the Initiative’s president of policy and advocacy, stated that the grants were intended to “support those working to help families in immediate crisis while supporting research into new ideas to find a long-term solution – a two-step strategy that will guide much of our policy and advocacy work moving forward”.
This is but one small part of Zuckerberg’s charity empire. The Initiative has committed billions of dollars to philanthropic projects designed to address social problems, with a special focus on solutions driven by science, medical research and education. This all took off in December 2015, when Zuckerberg and Chan wrote and published a letter to their new baby Max. The letter made a commitment that over the course of their lives they would donate 99% of their shares in Facebook (at the time valued at $45bn) to the “mission” of “advancing human potential and promoting equality”.
The housing intervention is of course much closer to home, dealing with issues literally at the door of Facebook’s Menlo Park head office. This is an area where median house prices almost doubled to around $2m in the five years between 2012 and 2017.
More generally, San Francisco is a city with massive income inequality, and the reputation of having the most expensive housing in the US. Chan Zuckerberg’s intervention was clearly designed to offset social and economic problems caused by rents and house prices having skyrocketed to such a level that even tech workers on six-figure salaries find it hard to get by. For those on more modest incomes, supporting themselves, let alone a family, is nigh-on impossible.
Ironically, the boom in the tech industry in this region – a boom Facebook has been at the forefront of – has been a major contributor to the crisis. As Peter Cohen from the Council of Community Housing Organizations explained it: “When you’re dealing with this total concentration of wealth and this absurd slosh of real-estate money, you’re not dealing with housing that’s serving a growing population. You’re dealing with housing as a real-estate commodity for speculation.”
Zuckerberg’s apparent generosity, it would seem, is a small contribution to a large problem that was created by the success of the industry he is involved in. In one sense, the housing grants (equivalent to the price of just one-and-a-half average Menlo Park homes) are trying to put a sticking plaster on a problem that Facebook and other Bay Area corporations aided and abetted. It would appear that Zuckerberg was redirecting a fraction of the spoils of neoliberal tech capitalism, in the name of generosity, to try to address the problems of wealth inequality created by a social and economic system that allowed those spoils to accrue in the first place.
It is easy to think of Zuckerberg as some kind of CEO hero – a once regular kid whose genius made him one of the richest men in the world, and who decided to use that wealth for the benefit of others. The image he projects is of altruism untainted by self-interest. A quick scratch of the surface reveals that the structure of Zuckerberg’s charity enterprise is informed by much more than good-hearted altruism. Even while many have applauded Zuckerberg for his generosity, the nature of this apparent charity was openly questioned from the outset.
The wording of Zuckerberg’s 2015 letter could easily have been interpreted as meaning that he was intending to donate $45bn to charity. As investigative reporter Jesse Eisinger reported at the time, the Chan Zuckerberg Initiative through which this giving was to be funnelled is not a not-for-profit charitable foundation, but a limited liability company. This legal status has significant practical implications, especially when it comes to tax. As a company, the Initiative can do much more than charitable activity: its legal status gives it rights to invest in other companies, and to make political donations. Effectively the company does not restrict Zuckerberg’s decision-making as to what he wants to do with his money; he is very much the boss. Moreover, as Eisinger described it, Zuckerberg’s bold move yielded a huge return on investment in terms of public relations for Facebook, even though it appeared that he simply “moved money from one pocket to the other” while being “likely never to pay any taxes on it”.
The creation of the Chan Zuckerberg Initiative – decidedly not a charity organisation – means that Zuckerberg can control the company’s investments as he sees fit, while accruing significant commercial, tax and political benefits. All of this is not to say that Zuckerberg’s motives do not include some expression of his own generosity or some genuine desire for humanity’s wellbeing and equality.
What it does suggest, however, is that when it comes to giving, the CEO approach is one in which there is no apparent incompatibility between being generous, seeking to retain control over what is given, and the expectation of reaping benefits in return. This reformulation of generosity – in which it is no longer considered incompatible with control and self-interest – is a hallmark of the “CEO society”: a society where the values associated with corporate leadership are applied to all dimensions of human endeavour.
Mark Zuckerberg was by no means the first contemporary CEO to promise and initiate large-scale donations of wealth to self-nominated good causes. In the CEO society it is positively a badge of honour for the world’s most wealthy businesspeople to create vehicles to give away their wealth. This has been institutionalised in what is known as The Giving Pledge, a philanthropy campaign initiated by Warren Buffett and Bill Gates in 2010. The campaign targets billionaires around the world, encouraging them to give away the majority of their wealth. There is nothing in the pledge that specifies what exactly the donations will be used for, or even whether they are to be made now or willed after death; it is just a general commitment to using private wealth for ostensibly public good. It is not legally binding either, but a moral commitment.
There is a long list of people and families who have made the pledge. Mark Zuckerberg and Priscilla Chan are there, and so are some 174 others, including household names such as Richard and Joan Branson, Michael Bloomberg, Barron Hilton and David Rockefeller. It would seem that many of the world’s richest people simply want to give their money away to good causes. This all amounts to what human geographers Iain Hay and Samantha Muller sceptically refer to as a “golden age of philanthropy”, in which, since the late 1990s, bequests to charity from the super-rich have escalated to the hundreds of billions of dollars. These new philanthropists bring to charity an “entrepreneurial disposition”, Hay and Muller wrote in a 2014 paper, yet one that they suggest has been “diverting attention and resources away from the failings of contemporary manifestations of capitalism”, and may also be serving as a substitute for public spending withdrawn by the state.
Warren Buffett announces a $30bn donation to the Bill and Melinda Gates Foundation, 2006. Photograph: Justin Lane/EPA
Essentially, what we are witnessing is the transfer of responsibility for public goods and services from democratic institutions to the wealthy, to be administered by an executive class. In the CEO society, the exercise of social responsibilities is no longer debated in terms of whether corporations should or shouldn’t be responsible for more than their own business interests. Instead, it is about how philanthropy can be used to reinforce a politico-economic system that enables such a small number of people to accumulate obscene amounts of wealth. Zuckerberg’s investment in solutions to the Bay Area housing crisis is an example of this broader trend.
The reliance on billionaire businesspeople’s charity to support public projects is a part of what has been called “philanthrocapitalism”. This resolves the apparent antinomy between charity (traditionally focused on giving) and capitalism (based on the pursuit of economic self-interest). As historian Mikkel Thorup explains, philanthrocapitalism rests on the claim that “capitalist mechanisms are superior to all others (especially the state) when it comes to not only creating economic but also human progress, and that the market and market actors are or should be made the prime creators of the good society”.
The golden age of philanthropy is not just about benefits that accrue to individual givers. More broadly, philanthropy serves to legitimise capitalism, as well as to extend it further and further into all domains of social, cultural and political activity.
Philanthrocapitalism is about much more than the simple act of generosity it pretends to be, instead involving the inculcation of neoliberal values personified by the billionaire CEOs who have led its charge. Philanthropy is recast in the same terms in which a CEO would consider a business venture. Charitable giving is translated into a business model that employs market-based solutions characterised by efficiency and quantified costs and benefits.
Philanthrocapitalism takes the application of management discourses and practices from business corporations and adapts them to charitable work. The focus is on entrepreneurship, market-based approaches and performance metrics. The process is funded by super-rich businesspeople and managed by those experienced in business. The result, at a practical level, is that philanthropy is undertaken by CEOs in a manner similar to how they would run businesses.
As part of this, charitable foundations have changed in recent years. As explained in a paper by Garry Jenkins, a professor of law at the University of Minnesota, this involves becoming “increasingly directive, controlling, metric-focused and business-oriented with respect to their interactions with grantee public charities, in an attempt to demonstrate that the work of the foundation is ‘strategic’ and ‘accountable’”.
This is far from the benign shift to a different and better way of doing things that it claims to be – a CEO style to “save the world through business thinking and market methods”, as Jenkins puts it. Instead, the risk of philanthrocapitalism is a takeover of charity by business interests, such that generosity to others is appropriated into the overarching dominance of the CEO model of society and its corporate institutions.
The modern CEO is very much at the forefront of the political and media stage. While this often leads to CEOs becoming vaunted celebrities, it also leaves them open to being identified as scapegoats for economic injustice. The increasingly public role taken by CEOs is related to a renewed corporate focus on their wider social responsibility. Firms must now balance, at least rhetorically, a dual commitment to profit and social outcomes. This has been reflected in the promotion of the “triple bottom line”, which combines social, financial and environmental priorities in corporate reporting.
This turn toward social responsibility represents a distinct problem for CEOs. While firms may be willing to sacrifice some short-term profit for the sake of preserving their public reputation, this same bargain is rarely on offer to CEOs themselves, who are judged on their quarterly reports and how well they are serving the fiscal interests of their shareholders. Thus, whereas social responsibility strategies may win public kudos, in the confines of the boardroom it is often a different story, especially when the budget is being scrutinised.
There is a further economic incentive for CEOs to avoid making fundamental changes to their operations in the name of social justice, in that a large portion of CEO remuneration often consists of company stock and options. Accepting fair trade policies and closing sweatshops may be good for the world, but is potentially disastrous for a firm’s immediate financial success. What is ethically valuable to the voting and buying public is not necessarily of concrete value to corporations, nor personally beneficial to their top executives.
Many firms have sought to resolve this contradiction through high-profile philanthropy. Exploitative labour practices or corporate malpractice are swept under the carpet as companies publicise tax-efficient contributions to good causes. Such contributions may be a relatively small price to pay compared with changing fundamental operational practices. Likewise, giving to charity is a prime opportunity for CEOs to be seen to be doing good without having to sacrifice their commitment to making profit at any social cost. Charitable activity permits CEOs to be philanthropic rather than economically progressive or politically democratic.
There is an even more straightforward financial consideration at play in some cases. Charity can be an absolute boon to capital accumulation: corporate philanthropy has been shown to have a positive effect on perceptions by stock market analysts. At the personal level, CEOs can take advantage of promoting their individual charity to distract from other, less savoury activities; as an executive, they can cash in on the capital gains that can be made from introducing high-profile charity strategies.
The very notion of corporate social responsibility, or CSR, has been criticised for providing companies with a moral cover to act in quite exploitative and socially damaging ways. But in the current era, social responsibility, when portrayed as an individual character trait of chief executives, has allowed corporations to be run as irresponsibly as ever. CEOs’ very public engagement in philanthrocapitalism can be understood as a key component of this reputation management. It is part of the marketing of the firm itself, as the good deeds of its leaders come to signify the overall goodness of the corporation.
Ironically, philanthrocapitalism also grants corporations the moral right, at least within the public consciousness, to be socially irresponsible. The trumpeting of the CEOs’ personal generosity can grant an implicit right for their corporations to act ruthlessly and with little consideration for the broader social effects of their activities. This reflects a productive tension at the heart of modern CSR: the more moral a CEO, the more immoral their company can in theory seek to be.
The hypocrisy revealed by CEOs claiming to be dedicated to social responsibility and charity also exposes a deeper authoritarian morality that prevails in the CEO society. Philanthrocapitalism is commonly presented as the social justice component of an otherwise amoral global free market. At best, corporate charity is a type of voluntary tax paid by the 1% for their role in creating such an economically deprived and unequal world. Yet this “giving” culture also helps support and spread a distinctly authoritarian form of economic development that mirrors the autocratic leadership style of the executives who predominantly fund it.
The marketisation of global charity and empowerment has dangerous implications that transcend economics. It also has a troubling emerging political legacy, one in which democracy is sacrificed on that altar of executive-style empowerment. Politically, the free market is posited as a fundamental requirement for liberal democracy. However, recent analysis reveals the deeper connection between processes of marketisation and authoritarianism. In particular, a strong government is required to implement these often unpopular market changes. The image of the powerful autocrat is, to this effect, transformed into a potentially positive figure, a forward-thinking political leader who can guide their country on the correct market path in the face of “irrational” opposition. Charity becomes a conduit for CEOs to fund these “good” authoritarians.
Essentially, what we are witnessing is the transfer of responsibility for public goods and services from democratic institutions to the wealthy, to be administered by an executive class. In the CEO society, the exercise of social responsibilities is no longer debated in terms of whether corporations should or shouldn’t be responsible for more than their own business interests. Instead, it is about how philanthropy can be used to reinforce a politico-economic system that enables such a small number of people to accumulate obscene amounts of wealth. Zuckerberg’s investment in solutions to the Bay Area housing crisis is an example of this broader trend.
The reliance on billionaire businesspeople’s charity to support public projects is a part of what has been called “philanthrocapitalism”. This resolves the apparent antinomy between charity (traditionally focused on giving) and capitalism (based on the pursuit of economic self-interest). As historian Mikkel Thorup explains, philanthrocapitalism rests on the claim that “capitalist mechanisms are superior to all others (especially the state) when it comes to not only creating economic but also human progress, and that the market and market actors are or should be made the prime creators of the good society”.
The golden age of philanthropy is not just about benefits that accrue to individual givers. More broadly, philanthropy serves to legitimise capitalism, as well as to extend it further and further into all domains of social, cultural and political activity.
Philanthrocapitalism is about much more than the simple act of generosity it pretends to be, instead involving the inculcation of neoliberal values personified by the billionaire CEOs who have led its charge. Philanthropy is recast in the same terms in which a CEO would consider a business venture. Charitable giving is translated into a business model that employs market-based solutions characterised by efficiency and quantified costs and benefits.
Philanthrocapitalism takes the application of management discourses and practices from business corporations and adapts them to charitable work. The focus is on entrepreneurship, market-based approaches and performance metrics. The process is funded by super-rich businesspeople and managed by those experienced in business. The result, at a practical level, is that philanthropy is undertaken by CEOs in a manner similar to how they would run businesses.
As part of this, charitable foundations have changed in recent years. As explained in a paper by Garry Jenkins, a professor of law at the University of Minnesota, this involves becoming “increasingly directive, controlling, metric-focused and business-oriented with respect to their interactions with grantee public charities, in an attempt to demonstrate that the work of the foundation is ‘strategic’ and ‘accountable’”.
This is far from the benign shift to a different and better way of doing things that it claims to be – a CEO style to “save the world through business thinking and market methods”, as Jenkins puts it. Instead, the risk of philanthrocapitalism is a takeover of charity by business interests, such that generosity to others is appropriated into the overarching dominance of the CEO model of society and its corporate institutions.
The modern CEO is very much at the forefront of the political and media stage. While this often leads to CEOs becoming vaunted celebrities, it also leaves them open to being identified as scapegoats for economic injustice. The increasingly public role taken by CEOs is related to a renewed corporate focus on their wider social responsibility. Firms must now balance, at least rhetorically, a dual commitment to profit and social outcomes. This has been reflected in the promotion of the “triple bottom line”, which combines social, financial and environmental priorities in corporate reporting.
This turn toward social responsibility represents a distinct problem for CEOs. While firms may be willing to sacrifice some short-term profit for the sake of preserving their public reputation, this same bargain is rarely on offer to CEOs themselves, who are judged on their quarterly reports and how well they are serving the fiscal interests of their shareholders. Thus, whereas social responsibility strategies may win public kudos, in the confines of the boardroom it is often a different story, especially when the budget is being scrutinised.
There is a further economic incentive for CEOs to avoid making fundamental changes to their operations in the name of social justice, in that a large portion of CEO remuneration often consists of company stock and options. Accepting fair trade policies and closing sweatshops may be good for the world, but is potentially disastrous for a firm’s immediate financial success. What is ethically valuable to the voting and buying public is not necessarily of concrete value to corporations, nor personally beneficial to their top executives.
Many firms have sought to resolve this contradiction through high-profile philanthropy. Exploitative labour practices or corporate malpractice are swept under the carpet as companies publicise tax-efficient contributions to good causes. Such contributions may be a relatively small price to pay compared with changing fundamental operational practices. Likewise, giving to charity is a prime opportunity for CEOs to be seen to be doing good without having to sacrifice their commitment to making profit at any social cost. Charitable activity permits CEOs to be philanthropic rather than economically progressive or politically democratic.
There is an even more straightforward financial consideration at play in some cases. Charity can be an absolute boon to capital accumulation: corporate philanthropy has been shown to have a positive effect on perceptions by stock market analysts. At the personal level, CEOs can take advantage of promoting their individual charity to distract from other, less savoury activities; as an executive, they can cash in on the capital gains that can be made from introducing high-profile charity strategies.
The very notion of corporate social responsibility, or CSR, has been criticised for providing companies with a moral cover to act in quite exploitative and socially damaging ways. But in the current era, social responsibility, when portrayed as an individual character trait of chief executives, has allowed corporations to be run as irresponsibly as ever. CEOs’ very public engagement in philanthrocapitalism can be understood as a key component of this reputation management. It is part of the marketing of the firm itself, as the good deeds of its leaders come to signify the overall goodness of the corporation.
Ironically, philanthrocapitalism also grants corporations the moral right, at least within the public consciousness, to be socially irresponsible. The trumpeting of the CEOs’ personal generosity can grant an implicit right for their corporations to act ruthlessly and with little consideration for the broader social effects of their activities. This reflects a productive tension at the heart of modern CSR: the more moral a CEO, the more immoral their company can in theory seek to be.
The hypocrisy revealed by CEOs claiming to be dedicated to social responsibility and charity also exposes a deeper authoritarian morality that prevails in the CEO society. Philanthrocapitalism is commonly presented as the social justice component of an otherwise amoral global free market. At best, corporate charity is a type of voluntary tax paid by the 1% for their role in creating such an economically deprived and unequal world. Yet this “giving” culture also helps support and spread a distinctly authoritarian form of economic development that mirrors the autocratic leadership style of the executives who predominantly fund it.
The marketisation of global charity and empowerment has dangerous implications that transcend economics. It also has a troubling emerging political legacy, one in which democracy is sacrificed on that altar of executive-style empowerment. Politically, the free market is posited as a fundamental requirement for liberal democracy. However, recent analysis reveals the deeper connection between processes of marketisation and authoritarianism. In particular, a strong government is required to implement these often unpopular market changes. The image of the powerful autocrat is, to this effect, transformed into a potentially positive figure, a forward-thinking political leader who can guide their country on the correct market path in the face of “irrational” opposition. Charity becomes a conduit for CEOs to fund these “good” authoritarians.
A protester outside the Nasdaq headquarters in New York marks Facebook’s IPO, 2012. Photograph: Alamy Stock Photo
The recent development of philanthrocapitalism also marks the increasing encroachment of business into the provision of public goods and services. This encroachment is not limited to the activities of individual billionaires; it is also becoming a part of the activities of large corporations under the rubric of CSR. This is especially the case for large multinational corporations whose global reach, wealth and power give them significant political clout. This relationship has been referred to as “political CSR”. Business ethics professors Andreas Scherer and Guido Palazzo note that, for large corporations, “CSR is increasingly displayed in corporate involvement in the political process of solving societal problems, often on a global scale”. Such political CSR initiatives see organisations cooperating and collaborating with governments, civic bodies and international institutions, so that historical separations between the purposes of the state and the corporations are increasingly eroded.
Global corporations have long been involved in quasi-governmental activities such as the setting of standards and codes, and today are increasingly engaging in other activities that have traditionally been the domain of government, such as public health provision, education, the protection of human rights, addressing social problems such as Aids and malnutrition, protection of the natural environment and the promotion of peace and social stability.
Today, large organisations can amass significant economic and political power, on a global scale. This means that their actions – and the way those actions are regulated – have far-reaching social consequences. The balanced tipped in 2000, when the Institute for Policy Studies in the US reported, after comparing corporate revenues with gross domestic product (GDP), that 51 of the largest economies in the world were corporations, and 49 were national economies. The biggest corporations were General Motors, Walmart and Ford, each of which was larger economically than Poland, Norway and South Africa. As the heads of these corporations, CEOs are now quasi-politicians. One only has to think of the increasing power of the World Economic Forum, whose annual meeting in Davos in Switzerland sees corporate CEOs and senior politicians getting together with the ostensible goal of “improving the world”, a now time-honoured ritual that symbolises the global power and agency of CEOs.
The development of CSR is not the result of self-directed corporate initiatives for doing good deeds, but a response to widespread CSR activism from NGOs, pressure groups and trade unions. Often this has been in response to the failure of governments to regulate large corporations. High-profile industrial accidents and scandals have also put pressure on organisations for heightened self-regulation.
An explosion at a Union Carbide chemical plant in Bhopal, India in 1984 led to the deaths of an estimated 25,000 people. James Post, a professor of management at Boston University, explains that, after the disaster, “the global chemical industry recognised that it was nearly impossible to secure a licence to operate without public confidence in industry safety standards. The Chemical Manufacturers Association (CMA) adopted a code of conduct, including new standards of product stewardship, disclosure and community engagement.”
The impetus for this was corporate self-interest, rather than generosity, as industries and corporations globally “began to recognise the increasing importance of reputation and image”. Similar moves were enacted after other major industrial accidents, such as the Exxon Valdez oil tanker spilling hundreds of thousands of barrels of oil in Alaska in 1989, and BP’s Deepwater Horizon oil rig exploding in the Gulf of Mexico in 2010.
The Deepwater Horizon oil rig ablaze in the Gulf of Mexico, April 2010.
Photograph: Handout/Getty Images
Another important case was the involvement of the clothing companies Gap and Nike in a child labour scandal after the broadcast of a BBC Panorama documentary in October 2000. Factories in Cambodia making Gap and Nike clothing were shown to operate with terrible working conditions, involving children as young as 12 working seven days a week, being forced to do overtime, and enduring physical and emotional abuse from management. The public outcry that ensued demanded that Gap and Nike, and other organisations like them, take more responsibility for the negative human social impacts of their business practices.
CSR was introduced in order to reduce the ill effects of corporate self-interest. But over time it has turned into a means for further enhancing that self-interest while ostensibly claiming to be addressing the interests of others. When facing the threat of corporate scandal, CSR is seen as the vehicle through which corporate reputation can be boosted, and the threat of government regulation can be mitigated. Again, here we see how corporations engage in seemingly responsible practices in order to increase their own political power, and to diminish the power of nation states over their own operations.
The idea that organisations adopt CSR for the purposes of developing or defending a corporate reputation has put the ethics of CSR under scrutiny. The contention has arisen that, rather than using CSR as a means of “being good”, corporations adopt it merely as a means of “looking good”, while not in any way questioning their basic ethical or political stance. Even Enron, before its legendary fraud scandal and eventual demise in 2001, was well known for its advocacy of social responsibility.
CEO generosity is epic in proportions – or at least that is how it is portrayed. Indeed, on an individual level it is hard to find fault with those rich people who have given away vast swaths of their wealth to charitable causes, or those corporations that champion socially responsible programmes. But what CSR and philanthrocapitalism achieve more broadly is the social justification of extreme wealth inequality, rather than any kind of antidote to it. We need to note here that, despite the apparent proliferation of giving promised by philanthrocapitalism, the so-called golden age of philanthropy is also an age of expanding inequality.
This is clearly spelled out a 2017 report by Oxfam called An Economy for the 99%. It highlights the injustice and unsustainability of a world suffering from widening levels of inequality: since the early 1990s, the top 1% of the world’s wealthy people have gained more income than the entire bottom 50%. Why so? Oxfam’s report places the blame firmly with corporations and the global market economies in which they operate. The statistics are alarming, with the world’s 10 biggest corporations having revenues that exceed the total combined revenues of the 180 least wealthy nations. Corporate social responsibility is not making any real difference. The report states: “When corporations increasingly work for the rich, the benefits of economic growth are denied to those who need them most. In pursuit of delivering high returns to those at the top, corporations are driven to squeeze their workers and producers ever harder – and to avoid paying taxes which would benefit everyone, and the poorest people in particular.”
Neither the philanthropy of the super-rich nor socially directed corporate programmes have any real effect on combating this trend, in the same way that Zuckerberg’s handout of $3m will have a negligible effect on the San Francisco housing crisis. Instead, vast fortunes in the hands of the few, whether earned through inheritance, commerce or crime, continue to grow at the expense of the poor.
In the end, it is capitalism that is at the heart of philanthrocapitalism, and the corporation that is at the heart of corporate social responsibility, with even well-meaning endeavours serving to justify a system that is rigged in favour of the rich.
What is particular about this new approach is not that rich people are supporting charitable endeavours, but that it involves, as sociologist Linsey McGoey explains, “an openness that deliberately collapses the distinction between public and private interests, in order to justify increasingly concentrated levels of private gain”.
Photograph: Handout/Getty Images
Another important case was the involvement of the clothing companies Gap and Nike in a child labour scandal after the broadcast of a BBC Panorama documentary in October 2000. Factories in Cambodia making Gap and Nike clothing were shown to operate with terrible working conditions, involving children as young as 12 working seven days a week, being forced to do overtime, and enduring physical and emotional abuse from management. The public outcry that ensued demanded that Gap and Nike, and other organisations like them, take more responsibility for the negative human social impacts of their business practices.
CSR was introduced in order to reduce the ill effects of corporate self-interest. But over time it has turned into a means for further enhancing that self-interest while ostensibly claiming to be addressing the interests of others. When facing the threat of corporate scandal, CSR is seen as the vehicle through which corporate reputation can be boosted, and the threat of government regulation can be mitigated. Again, here we see how corporations engage in seemingly responsible practices in order to increase their own political power, and to diminish the power of nation states over their own operations.
The idea that organisations adopt CSR for the purposes of developing or defending a corporate reputation has put the ethics of CSR under scrutiny. The contention has arisen that, rather than using CSR as a means of “being good”, corporations adopt it merely as a means of “looking good”, while not in any way questioning their basic ethical or political stance. Even Enron, before its legendary fraud scandal and eventual demise in 2001, was well known for its advocacy of social responsibility.
CEO generosity is epic in proportions – or at least that is how it is portrayed. Indeed, on an individual level it is hard to find fault with those rich people who have given away vast swaths of their wealth to charitable causes, or those corporations that champion socially responsible programmes. But what CSR and philanthrocapitalism achieve more broadly is the social justification of extreme wealth inequality, rather than any kind of antidote to it. We need to note here that, despite the apparent proliferation of giving promised by philanthrocapitalism, the so-called golden age of philanthropy is also an age of expanding inequality.
This is clearly spelled out a 2017 report by Oxfam called An Economy for the 99%. It highlights the injustice and unsustainability of a world suffering from widening levels of inequality: since the early 1990s, the top 1% of the world’s wealthy people have gained more income than the entire bottom 50%. Why so? Oxfam’s report places the blame firmly with corporations and the global market economies in which they operate. The statistics are alarming, with the world’s 10 biggest corporations having revenues that exceed the total combined revenues of the 180 least wealthy nations. Corporate social responsibility is not making any real difference. The report states: “When corporations increasingly work for the rich, the benefits of economic growth are denied to those who need them most. In pursuit of delivering high returns to those at the top, corporations are driven to squeeze their workers and producers ever harder – and to avoid paying taxes which would benefit everyone, and the poorest people in particular.”
Neither the philanthropy of the super-rich nor socially directed corporate programmes have any real effect on combating this trend, in the same way that Zuckerberg’s handout of $3m will have a negligible effect on the San Francisco housing crisis. Instead, vast fortunes in the hands of the few, whether earned through inheritance, commerce or crime, continue to grow at the expense of the poor.
In the end, it is capitalism that is at the heart of philanthrocapitalism, and the corporation that is at the heart of corporate social responsibility, with even well-meaning endeavours serving to justify a system that is rigged in favour of the rich.
What is particular about this new approach is not that rich people are supporting charitable endeavours, but that it involves, as sociologist Linsey McGoey explains, “an openness that deliberately collapses the distinction between public and private interests, in order to justify increasingly concentrated levels of private gain”.
In the CEO society, corporate logic such as this rules supreme, and ensures that any activities thought of as generous and socially responsible ultimately have a payoff in terms of self-interest. If there was ever a debate between the ethics of genuine hospitality, reciprocity and self-interest, it is not to be found here. It is in accordance with this CEO logic that the mechanisms for redressing the inequality created through wealth generation are placed in the hands of the wealthy, and in a way that ultimately benefits them. The worst excesses of neoliberal capitalism are morally justified by the actions of the very people who benefit from those excesses. Wealth redistribution is placed in the hands of the wealthy, and social responsibility in the hands of those who have exploited society for personal gain.
Meanwhile, inequality is growing, and both corporations and the wealthy find ways to avoid the taxes that the rest of us pay. In the name of generosity, we find a new form of corporate rule, refashioning another dimension of human endeavour in its own interests. Such is a society where CEOs are no longer content to do business; they must control public goods as well. In the end, while the Giving Pledge’s website may feature more and more smiling faces of smug-looking CEOs, the real story is of a world characterised by gross inequality that is getting worse year by year.
Sunday, 16 October 2016
Who will save us from Silicon Valley?
Evgeny Morozov in The Guardian
Mark Zuckerberg and Priscilla Chan have given $3bn to help cure all disease. Photograph: Jeff Chiu/AP
A world where billionaires were blunt and forthright, where they preferred pillaging the world to saving it, was far less confusing. The robber barons of the industrial era – from Carnegie to Ford to Rockefeller – did eventually commit some of their riches to charity but there was no mistaking one for the other. Oil and steel brought in the cash; education and arts helped to spend it.
Of course, the eponymous foundations were neither neutral nor apolitical. They pursued projects that were rarely at odds with US foreign policy and often shared many of its key ideological biases and presuppositions. From modernisation theory to democracy promotion, the civilising imperative behind them was not so hard to discern. Some of these foundations have eventually come to regret many of their dubious advocacy campaigns; the Rockefeller Foundation’s imprudent support for population control in India is just one example.
Today, when five of the world’s most valuable companies are technology firms, it’s very hard to see where their businesses end and their charity efforts begin. As digital platforms, they power diverse industries and sectors from education to health to transport and thus have an option that was not available to the oil and steel magnates of yesteryear: they can simply continue selling their core product – mostly hope, albeit wrapped up in infinite layers of data, screens and sensors – without having to divert their funds into any nonproductive activities.
The Chan Zuckerberg initiative, a limited liability company (a somewhat unusual format for a charity), was set up by Mark Zuckerberg and his wife, Priscilla Chan, in December 2015, ostensibly to share their wealth with the rest of us. It has recently been in the news thanks to its founders’ ambitious commitment – to the tune of $3bn – to cure all disease.
Zuckerberg can surely afford this, given how little tax his company is paying: in the UK, its tax filings for 2015 show revenues of £210.7m, on which the company paid just £4.17m of taxes – an effective rate of 2% (itself a 1,000-fold increase on what it paid in 2014). Facebook, however, also managed to generate a tax credit of £11m, which it can use to reduce its future tax burden. The disease of tax avoidance is unlikely to be cured by the Chan Zuckerberg initiative.
Henry Ford in his first car, built in 1896. Photograph: Library of Congress/Getty Images
To speak of “philanthrocapitalism” here – as many have done, either to praise or bury it – seems misguided, if only because such projects bear so little resemblance to philanthropy proper. One doesn’t have to admire Ford or Rockefeller to notice that their philanthropic endeavours, whatever their real political goals, were not supposed to make extra cash. But is it really so with our new tech barons?
While Zuckerberg’s commitments in the health sector are still too recent and ambiguous to judge, he has a more extensive history in education. Following Zuckerberg’s personal commitment of $100m dollars to schools in New Jersey – an investment that is yet to bring the desired results – the Chan Zuckerberg initiative has invested in companies that supposedly help expand educational opportunities in the developing world.
Thus, it has poured money into Andela, a Lagos-based startup that trains coders, joining the likes of Google (via GV, its venture fund) and Omidyar Network, a similar philanthropic investment firm belonging to another tech billionaire. A few weeks later, one of Andela’s co-founders left to found a payments startup: apparently, there are a lot of arbitrage opportunities in saving the world.
That one can never fully understand what drives these investments, a profit motive or a genuine desire to help out, is a feature, not a bug. If the logic driving the Fords and the Carnegies was to atone for the sins of rapacious capitalism, the logic of the Zuckerbergs and the Omidyars is to convince us that rapacious capitalism, fully unleashed on society, will do lots of good.
The Chan Zuckerberg initiative also invested in BYJU, an Indian company that has developed an app that teaches students science and maths. A noble endeavour, but what attracted Zuckerberg to the firm was, by his own admission, its heavy reliance on personalised learning, which, of course, is only possible when large troves of user data are recorded and analysed. Does that remind you of any giant tech company?
This celebration of personalisation is also present in another educational project supported by Zuckerberg – a learning software made by a company called Summit Basecamp. The company has the luxury of having 20 Facebook staffers, from engineers to product managers, helping it with growth and expansion – the result of Zuckerberg touring one of its schools in 2013. And expand it did: according to the Washington Post, its software is now used by 20,000 students in more than 100 schools.
The Chan Zuckerberg initiative has poured money into Andela, a Lagos-based startup that trains coders. Photograph: Mohini Ufeli/Andela
Parents of these students can hope that Summit Basecamp will keep its word and that no personal data will ever leave the company. Such promises won’t be any more reassuring than those of the founders of WhatsApp, who, on being acquired by Facebook, promised to defend their users’ personal data, only to announce, a few months ago, that it will be shared with Facebook.
Zuckerberg also joined the rest of the Silicon Valley elite, from Bill Gates to Laurene Powell Jobs, the widow of Steve Jobs, in investing in AltSchool, a startup founded by a former Google executive, which takes personalised learning to a whole new level. In a good Taylorist fashion, its classrooms feature cameras and microphones so that any glitches inherent in the learning process can be analysed and engineered away. AltSchool now wants to expand by selling licences to its software to other schools.
What passes for philanthropy these days is often just a sophisticated effort to make money on engineering the kinds of rational, entrepreneurial and quantitative souls that would delight at other types of personalisation. Such learning is, of course, well suited to the needs of consulting firms and technology giants. A recent profile of AltSchool in the New Yorker mentioned that its students read the Iliad armed with a spreadsheet where they mark how many times the theme of “rage” occurs in the text. Such schools can produce excellent auditors; poets, however, might need an alternative, to, well, the AltSchool.
The very same technology elites are also backing the charter school movement – a longrunning effort to bring more competition to the educational sector by supporting privately run but publicly funded educational initiatives. From Gates to Zuckerberg, technology billionaires are vocal defenders of this movement. It won’t be surprising if they deploy their big data weapons to advance the argument that the traditional educational system must be completely overhauled.
We should be careful not to fall victim to a perverse form of Stockholm syndrome, coming to sympathise with the corporate kidnappers of our democracy. On the one hand, given that the new tech billionaires pay very little tax, it’s not surprising that the public sector would fail to innovate as quickly. On the other, by constantly giving the private sector a head start through technologies that they own and develop, the new tech elites all but ensure that the public would rather choose slick but privatised technological solutions over quaint, but public, political ones.
That we can no longer differentiate between philanthropy and speculation is an occasion to worry, not celebrate. With Silicon Valley elites so keen on saving the world, shouldn’t we also ask who will eventually save us from Silicon Valley?
Mark Zuckerberg and Priscilla Chan have given $3bn to help cure all disease. Photograph: Jeff Chiu/AP
A world where billionaires were blunt and forthright, where they preferred pillaging the world to saving it, was far less confusing. The robber barons of the industrial era – from Carnegie to Ford to Rockefeller – did eventually commit some of their riches to charity but there was no mistaking one for the other. Oil and steel brought in the cash; education and arts helped to spend it.
Of course, the eponymous foundations were neither neutral nor apolitical. They pursued projects that were rarely at odds with US foreign policy and often shared many of its key ideological biases and presuppositions. From modernisation theory to democracy promotion, the civilising imperative behind them was not so hard to discern. Some of these foundations have eventually come to regret many of their dubious advocacy campaigns; the Rockefeller Foundation’s imprudent support for population control in India is just one example.
Today, when five of the world’s most valuable companies are technology firms, it’s very hard to see where their businesses end and their charity efforts begin. As digital platforms, they power diverse industries and sectors from education to health to transport and thus have an option that was not available to the oil and steel magnates of yesteryear: they can simply continue selling their core product – mostly hope, albeit wrapped up in infinite layers of data, screens and sensors – without having to divert their funds into any nonproductive activities.
The Chan Zuckerberg initiative, a limited liability company (a somewhat unusual format for a charity), was set up by Mark Zuckerberg and his wife, Priscilla Chan, in December 2015, ostensibly to share their wealth with the rest of us. It has recently been in the news thanks to its founders’ ambitious commitment – to the tune of $3bn – to cure all disease.
Zuckerberg can surely afford this, given how little tax his company is paying: in the UK, its tax filings for 2015 show revenues of £210.7m, on which the company paid just £4.17m of taxes – an effective rate of 2% (itself a 1,000-fold increase on what it paid in 2014). Facebook, however, also managed to generate a tax credit of £11m, which it can use to reduce its future tax burden. The disease of tax avoidance is unlikely to be cured by the Chan Zuckerberg initiative.
Henry Ford in his first car, built in 1896. Photograph: Library of Congress/Getty Images
To speak of “philanthrocapitalism” here – as many have done, either to praise or bury it – seems misguided, if only because such projects bear so little resemblance to philanthropy proper. One doesn’t have to admire Ford or Rockefeller to notice that their philanthropic endeavours, whatever their real political goals, were not supposed to make extra cash. But is it really so with our new tech barons?
While Zuckerberg’s commitments in the health sector are still too recent and ambiguous to judge, he has a more extensive history in education. Following Zuckerberg’s personal commitment of $100m dollars to schools in New Jersey – an investment that is yet to bring the desired results – the Chan Zuckerberg initiative has invested in companies that supposedly help expand educational opportunities in the developing world.
Thus, it has poured money into Andela, a Lagos-based startup that trains coders, joining the likes of Google (via GV, its venture fund) and Omidyar Network, a similar philanthropic investment firm belonging to another tech billionaire. A few weeks later, one of Andela’s co-founders left to found a payments startup: apparently, there are a lot of arbitrage opportunities in saving the world.
That one can never fully understand what drives these investments, a profit motive or a genuine desire to help out, is a feature, not a bug. If the logic driving the Fords and the Carnegies was to atone for the sins of rapacious capitalism, the logic of the Zuckerbergs and the Omidyars is to convince us that rapacious capitalism, fully unleashed on society, will do lots of good.
The Chan Zuckerberg initiative also invested in BYJU, an Indian company that has developed an app that teaches students science and maths. A noble endeavour, but what attracted Zuckerberg to the firm was, by his own admission, its heavy reliance on personalised learning, which, of course, is only possible when large troves of user data are recorded and analysed. Does that remind you of any giant tech company?
This celebration of personalisation is also present in another educational project supported by Zuckerberg – a learning software made by a company called Summit Basecamp. The company has the luxury of having 20 Facebook staffers, from engineers to product managers, helping it with growth and expansion – the result of Zuckerberg touring one of its schools in 2013. And expand it did: according to the Washington Post, its software is now used by 20,000 students in more than 100 schools.
The Chan Zuckerberg initiative has poured money into Andela, a Lagos-based startup that trains coders. Photograph: Mohini Ufeli/Andela
Parents of these students can hope that Summit Basecamp will keep its word and that no personal data will ever leave the company. Such promises won’t be any more reassuring than those of the founders of WhatsApp, who, on being acquired by Facebook, promised to defend their users’ personal data, only to announce, a few months ago, that it will be shared with Facebook.
Zuckerberg also joined the rest of the Silicon Valley elite, from Bill Gates to Laurene Powell Jobs, the widow of Steve Jobs, in investing in AltSchool, a startup founded by a former Google executive, which takes personalised learning to a whole new level. In a good Taylorist fashion, its classrooms feature cameras and microphones so that any glitches inherent in the learning process can be analysed and engineered away. AltSchool now wants to expand by selling licences to its software to other schools.
What passes for philanthropy these days is often just a sophisticated effort to make money on engineering the kinds of rational, entrepreneurial and quantitative souls that would delight at other types of personalisation. Such learning is, of course, well suited to the needs of consulting firms and technology giants. A recent profile of AltSchool in the New Yorker mentioned that its students read the Iliad armed with a spreadsheet where they mark how many times the theme of “rage” occurs in the text. Such schools can produce excellent auditors; poets, however, might need an alternative, to, well, the AltSchool.
The very same technology elites are also backing the charter school movement – a longrunning effort to bring more competition to the educational sector by supporting privately run but publicly funded educational initiatives. From Gates to Zuckerberg, technology billionaires are vocal defenders of this movement. It won’t be surprising if they deploy their big data weapons to advance the argument that the traditional educational system must be completely overhauled.
We should be careful not to fall victim to a perverse form of Stockholm syndrome, coming to sympathise with the corporate kidnappers of our democracy. On the one hand, given that the new tech billionaires pay very little tax, it’s not surprising that the public sector would fail to innovate as quickly. On the other, by constantly giving the private sector a head start through technologies that they own and develop, the new tech elites all but ensure that the public would rather choose slick but privatised technological solutions over quaint, but public, political ones.
That we can no longer differentiate between philanthropy and speculation is an occasion to worry, not celebrate. With Silicon Valley elites so keen on saving the world, shouldn’t we also ask who will eventually save us from Silicon Valley?
Friday, 2 September 2016
The trouble with philanthropy is that money can't buy equality
Courtney Martin in The Guardian
I spent Saturday morning at the public library with my 2.5-year-old daughter. She sat in the centre of a multi-racial, multi-lingual group of toddlers, spread her arms out as wide as they would go, and screamed: “He turned into a beautiful butterfly!” at the end of the consummate classic, The Very Hungry Caterpillar. The parents and grandparents giggled at the collective exuberance of little ones. The kids’ insanely spongy brains soaked up the sea of words surrounding them.
This may sound like a mundane scene, but it’s a surprising triumph for philanthropic equity – one of the few that exists at a meaningful, functional scale in our increasingly unequal country. At a time when early childhood has exploded as a lucrative market opportunity, no money is exchanged at the nation’s public libraries.
Why? Because in the 1850s, a wealthy guy invited a poor, 13-year-old immigrant boy to spend Saturday afternoons at his private library in Pittsburgh.
That boy grew up to be steel magnate Andrew Carnegie. Carnegie rememberedthat, as a child, “I resolved, if wealth ever came to me, that it should be used to establish free libraries.” True to his word, Carnegie’s funding built about half of the 3,500 public libraries that existed by 1920.
Philanthropy has come a long way since the “Patron Saint of Libraries” took a childhood experience and turned it into a national legacy. Too often, it feels like we’ve lost our core wisdom about how change actually happens.
As they say, money can’t buy love. It can’t, ultimately, buy equity either. Both start with the seed of relationship.
There would be no three-year-old black kid in Oakland screaming hungry caterpillar exuberance without Andrew Carnegie. And there would no Andrew Carnegie without that Pittsburgh bibliophile.
So what does this mean for philanthropy? It means that the only philanthropy worth engaging in – both ethically and strategically speaking – is the kind that honours the wisdom of relationships and the power of money.
In what organiser and human rights activist Ella Baker deemed the “foundation complex” in 1963, those with money usually call the shots. Typically, a foundation positions itself as the expert and judges the merits of a nonprofit to solve a particular problem, whether it’s childhood hunger, or deforestation, or homelessness.
A girl stamping her own book at the old Aberystwyth Carnegie-funded public library, Wales. Photograph: Keith Morris/Alamy
I’ve been on the phone myself, scrambling to feel worthy of a foundation officer’s attention and money; nothing has inflicted me with a more toxic form of impostor syndrome. The questions foundation representatives ask, like those little bubbles on a standardised test, seem to pop up one after the other. With each one, I feel my breath get shallow. I’m feverishly tap-dancing when what I want to be doing is have good faith, meaningful conversation.
With individual donors, the hierarchy is often softened with social graces – a cup of coffee, a chat about shared passions, the scent of camaraderie – but ultimately the power dynamic is no different. One of us has the means and therefore is in the position of judging the other’s “good works”. In some ways, these interactions can be even more demoralising because they are deeply confusing; sometimes it can feel like you are performing friendship.
In the midst of particularly demoralising experiences with wealthy philanthropists, I have often reminded myself of my own privilege – a white woman from an upper-middle-class background with an Ivy League degree. If these interactions make me feel this way, imagine how confusing and alienating they likely are for people even further afield of the social class of most philanthropists.
A note about philanthropists’ demographics: three-fourths of foundations’ full-time staff are white and nearly 90% are over 30. Women flourish at smaller foundations – about three of four fundraisers are female – but at those with assets of more than $750m, women comprise only 28.9% of CEOs and CGOs (chief growth officers).
Board leadership is even more demographically starved. “Fully 85% of foundation board members are white, while just 7% are African American and only 4% are Hispanic,” said Gara LaMarche, president of the Democracy Alliance. “Nearly three-quarters of foundations have no written policy on board diversity, and fewer than 10% of board members are under 40.”
This means a lot of people who are not white, male and older are hustling their asses off to understand the sensibility of those who are. They are spending energy being tactical about how they talk about their work and build relationships, however transactional or tokenising. I admire their commitment and acuity, but even if some get good at translating and tap-dancing for dollars, that should not comfort the philanthropic world about its own inclusivity or transparency.
It only means that some people are willing to put in the work to get good at the game, not that the game isn’t profoundly rigged or that it doesn’t distract from getting real work done.
And the truth is, I imagine it’s a disconcerting experience for most philanthropists, too. On some level, they must know that they’re not the wisest authorities on the issues they’re seeking to effect. Money doesn’t make you an expert on poverty alleviation; in fact, it can make you dumber with distance. And yet, traditional philanthropy is set up to put you – the one with financial wealth – in the position of playing god with something you deeply care about. Even if it strokes your ego to be the decider, it’s got to erode your sense of integrity.
How can we reinvent philanthropy with an eye toward true equity? How can we create new cultures and structures that allow resources – financial, experiential, energetic – to flow in ways that feel dignifying? How do we create paradigm-shifting shit together, not just send LinkedIn requests and push money and paper around?
One obvious thing we can do is work to change the demographics of those giving away money and sitting on boards. But even that isn’t a fix; it’s a good bet to slowly shift culture, but not a promise of radical restructuring. There has been a slight uptick in black executives at foundations, for example, but as soon as they arrive, many are looking for an out, according to the Association of Black Foundation Executives. They overwhelmingly cite as their reason for fleeing that they want to be “more directly engaged in creating community change.” Duh.
If we really want to reinvent philanthropy then we are going to have to look at the underlying historic and structural causes of poverty and work to dismantle them and put new systems in their place. It’s also about culture – intentionally creating boundary-bashing friendships, learning to ask better, more generous questions, taking up less space.
It’s about what we are willing to acknowledge about the origins of our own wealth and privilege. It’s about reclaiming values that privilege often robs us of: first and foremost, humility. But also trust in the ingenuity and goodness of other people, particularly those without financial wealth. And a more accurate sense of proportion – where and how are philanthropists really most crucial in the fight for a more just society?
Several groups are working to show us what this kind of giving might look like. An example: a group of trust fund kids, calling themselves the Gulf South Allied Funders, took their own inheritances, raised even more money from their own networks and then donated the sum to the Twenty-First Century Foundation, which has a long-standing presence in New Orleans. In the wake of Hurricane Katrina, they acknowledged their unfamiliarity with the community, and decided to funnel their resources to someone who could make a bigger difference.
Emergency response team volunteers clean up debris from a home destroyed by Hurricane Katrina. Photograph: Mark Humphrey/AP
Another: poor families in Boston and Detroit and Fresno track data about their own strengths and goals and then come together on a regular basis to talk about what they’re learning and the kinds of support they need. The families provide the moral support, while Family Independence Initiative provides the financial support in the form of scholarships, small business grants and other capital, on an as-needed basis.
And another: Self-Help, a family of nonprofit credit unions in North Carolina, California, and Florida, counter predatory lenders and high-fee check cashers in underserved communities by providing low-interest banking and loan services, financing community development projects and rehabilitating historic buildings with local partners. They celebrate the ways in which their current banking structure is significantly imprinted with the historic intelligence of African-American credit unions so critical during the Jim Crow era.
What makes these different than the average “foundation complex” experience? They have authentic, trusting relationships at the centre. They acknowledge history and local context. They walk their talk – moving beyond radical theory to radical practice.
To their credit, many of the world’s most powerful donors have begun to question the ethical underpinnings and best practicesof status quo philanthropy. In 2013,Peter Buffett, chairman of the NoVo Foundation, wrote a manifesto that, at its essence, was a call for more structural consciousness and less cognitive dissonance among wealthy altruists: “Because of who my father is, I’ve been able to occupy some seats I never expected to sit in. Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left.”
More recently, Darren Walker, the President of the Ford Foundation, has called fora “new ‘gospel of wealth’ for the 21st century” – one that addresses “the underlying causes that perpetuate human suffering. In other words, philanthropy can no longer grapple simply with what is happening in the world, but also withhow and why.”
The shift in zeitgeist is promising. A critical mass of people working within philanthropy is hungry to do work with more ethical rigor; more systemic, cultural, and emotional intelligence; less bureaucracy and hubris. There is a growing conversation about these shifts. On paper, the will is there.
But philanthropists need more than “big ideas” about how their profession could and should change. They need radically new habits or these ideas just become bold in theory.
As Vu Le, the Executive Director of Rainier Valley Corps, points out: “True Equity takes time, energy, and thoughtfulness. It requires us to reexamine everything we know and change systems and practices that we have been using for hundreds of years. This is often painful and uncomfortable.”
In part, this is about scale. Philanthropists must push themselves to give more, and in particular, give more to address American poverty. Only 12% of total giving in 2015 went to “human services,” according to Giving USA. Wealthy donors are more likely to support the arts and higher education and less likely to give to social service charities, according to the Chronicle of Philanthropy. And they’re not as generous as those with less income: “The wealthiest Americans – those who earned $200,000 or more – reduced the share of income they gave to charity by 4.6% from 2006 to 2012. Meanwhile, Americans who earned less than $100,000 chipped in 4.5% more of their income during the same time period.”
In 2014, the poverty rate in the US reached 15%. Photograph: Spencer Platt/Getty Images
How and where do you meet potential grantees?
If you don’t have genuine relationships with those outside of your racial or class category, you’re going to have a hell of a time finding out about the most interesting, powerful work going on to tackle poverty.
How do you approach general operating funds or capital campaigns?
Have you ever noticed that foundations feel justified in spending millions on beautifully designed headquarters, but frown on nonprofits using money to spend a fraction of that on dignifying spaces of their own? Poor people, and those that partner with them, deserve fair salaries and beauty, too.
How can grant reporting be redesigned so it doesn’t create such huge frustration and a misuse of time and energy on the part of grantee organisations?
Human-centered design is so often heralded by foundations these days, but too often their own bureaucracies are filled with soul-deadening detail that is anything but humanising.
Do you build relationships for the long, systemic haul?
Funding also shapes and dictates our work by forcing us to conceptualise our communities as victimsAdjoa Florência Jones de Almeida, The Revolution Will Not Be Funded
Gara LaMarche takes his peers to task for talking big game about sustainability, but then essentially treating grantees like “the right wing would treat single mothers on welfare, imposing strict time limits and cutoffs – the fact is that most sustainability strategies are aimed at helping grantees move from dependency on one foundation to another.”
This may all seem “in the weeds”, but it has a huge impact of the daily lives of those tackling poverty on the ground. How we treat one another every day, as cliched as it may sound, becomes the nature of our relationships, and the nature of our relationships, becomes the nature of our institutions and, ultimately, systems.
Perhaps the most profound question that philanthropists can ask themselves at this ripe time for reinvention is this: what stories do you want or expect grantees to tell you? What stories do you tell about yourself?
Adjoa Florência Jones de Almeida of the Sista II Sista Collective in Brooklyn, NY,wrote in the groundbreaking anthology, The Revolution will not be Funded:
In theory, foundation funding provides us with the ability to do the work – it is supposed to facilitate what we do. But funding also shapes and dictates our work by forcing us to conceptualise our communities as victims. We are forced to talk about our members as being “disadvantaged” and “at risk”, and to highlight what we are doing to prevent them from getting pregnant or taking drugs – even when this is not, in essence, how we see them or the priority for our work.
Six years later, organiser and activist Mia Birdsong, took the TED stage and furthered the paradigm-shifting narrative: “The quarter-truths and limited plot lines have us convinced that poor people are a problem that needs fixing. What if we recognised that what’s working is the people and what’s broken is our approach?”
The story we’ve told about the poor in America, the story that we continue to ask them to tell in order to get funding, is that they’re broken. In fact, we are.
The ultimate irony of the way the philanthropic sector is structured is that it is actually the recipients – people of colour, the working class, women – that may be the most masterful at creating and maintaining long-lasting, catalytic relationships. They are disproportionately poor in terms of dollars and cents, but rich with experience of making a way out of no way and persevering in the face of huge, intractable, sometimes downright exploitative systems. This usually involves relying on friends and extended family, nurturing people’s gifts for the betterment of whole communities and having grace through challenge.
We have an ethical imperative to acknowledge and build new systems around that intelligence. Carnegie’s one ask of the public libraries that he funded, to be built in communities across the country, was that they each be engraved with an image of a rising sun and the words: “Let there be light.”
That light, for him, was present in books, but in truth, it was sparked by an unlikely relationship. Long-lasting change so often is.
I spent Saturday morning at the public library with my 2.5-year-old daughter. She sat in the centre of a multi-racial, multi-lingual group of toddlers, spread her arms out as wide as they would go, and screamed: “He turned into a beautiful butterfly!” at the end of the consummate classic, The Very Hungry Caterpillar. The parents and grandparents giggled at the collective exuberance of little ones. The kids’ insanely spongy brains soaked up the sea of words surrounding them.
This may sound like a mundane scene, but it’s a surprising triumph for philanthropic equity – one of the few that exists at a meaningful, functional scale in our increasingly unequal country. At a time when early childhood has exploded as a lucrative market opportunity, no money is exchanged at the nation’s public libraries.
Why? Because in the 1850s, a wealthy guy invited a poor, 13-year-old immigrant boy to spend Saturday afternoons at his private library in Pittsburgh.
That boy grew up to be steel magnate Andrew Carnegie. Carnegie rememberedthat, as a child, “I resolved, if wealth ever came to me, that it should be used to establish free libraries.” True to his word, Carnegie’s funding built about half of the 3,500 public libraries that existed by 1920.
Philanthropy has come a long way since the “Patron Saint of Libraries” took a childhood experience and turned it into a national legacy. Too often, it feels like we’ve lost our core wisdom about how change actually happens.
As they say, money can’t buy love. It can’t, ultimately, buy equity either. Both start with the seed of relationship.
There would be no three-year-old black kid in Oakland screaming hungry caterpillar exuberance without Andrew Carnegie. And there would no Andrew Carnegie without that Pittsburgh bibliophile.
So what does this mean for philanthropy? It means that the only philanthropy worth engaging in – both ethically and strategically speaking – is the kind that honours the wisdom of relationships and the power of money.
In what organiser and human rights activist Ella Baker deemed the “foundation complex” in 1963, those with money usually call the shots. Typically, a foundation positions itself as the expert and judges the merits of a nonprofit to solve a particular problem, whether it’s childhood hunger, or deforestation, or homelessness.
A girl stamping her own book at the old Aberystwyth Carnegie-funded public library, Wales. Photograph: Keith Morris/Alamy
I’ve been on the phone myself, scrambling to feel worthy of a foundation officer’s attention and money; nothing has inflicted me with a more toxic form of impostor syndrome. The questions foundation representatives ask, like those little bubbles on a standardised test, seem to pop up one after the other. With each one, I feel my breath get shallow. I’m feverishly tap-dancing when what I want to be doing is have good faith, meaningful conversation.
With individual donors, the hierarchy is often softened with social graces – a cup of coffee, a chat about shared passions, the scent of camaraderie – but ultimately the power dynamic is no different. One of us has the means and therefore is in the position of judging the other’s “good works”. In some ways, these interactions can be even more demoralising because they are deeply confusing; sometimes it can feel like you are performing friendship.
In the midst of particularly demoralising experiences with wealthy philanthropists, I have often reminded myself of my own privilege – a white woman from an upper-middle-class background with an Ivy League degree. If these interactions make me feel this way, imagine how confusing and alienating they likely are for people even further afield of the social class of most philanthropists.
A note about philanthropists’ demographics: three-fourths of foundations’ full-time staff are white and nearly 90% are over 30. Women flourish at smaller foundations – about three of four fundraisers are female – but at those with assets of more than $750m, women comprise only 28.9% of CEOs and CGOs (chief growth officers).
Board leadership is even more demographically starved. “Fully 85% of foundation board members are white, while just 7% are African American and only 4% are Hispanic,” said Gara LaMarche, president of the Democracy Alliance. “Nearly three-quarters of foundations have no written policy on board diversity, and fewer than 10% of board members are under 40.”
This means a lot of people who are not white, male and older are hustling their asses off to understand the sensibility of those who are. They are spending energy being tactical about how they talk about their work and build relationships, however transactional or tokenising. I admire their commitment and acuity, but even if some get good at translating and tap-dancing for dollars, that should not comfort the philanthropic world about its own inclusivity or transparency.
It only means that some people are willing to put in the work to get good at the game, not that the game isn’t profoundly rigged or that it doesn’t distract from getting real work done.
And the truth is, I imagine it’s a disconcerting experience for most philanthropists, too. On some level, they must know that they’re not the wisest authorities on the issues they’re seeking to effect. Money doesn’t make you an expert on poverty alleviation; in fact, it can make you dumber with distance. And yet, traditional philanthropy is set up to put you – the one with financial wealth – in the position of playing god with something you deeply care about. Even if it strokes your ego to be the decider, it’s got to erode your sense of integrity.
How can we reinvent philanthropy with an eye toward true equity? How can we create new cultures and structures that allow resources – financial, experiential, energetic – to flow in ways that feel dignifying? How do we create paradigm-shifting shit together, not just send LinkedIn requests and push money and paper around?
One obvious thing we can do is work to change the demographics of those giving away money and sitting on boards. But even that isn’t a fix; it’s a good bet to slowly shift culture, but not a promise of radical restructuring. There has been a slight uptick in black executives at foundations, for example, but as soon as they arrive, many are looking for an out, according to the Association of Black Foundation Executives. They overwhelmingly cite as their reason for fleeing that they want to be “more directly engaged in creating community change.” Duh.
If we really want to reinvent philanthropy then we are going to have to look at the underlying historic and structural causes of poverty and work to dismantle them and put new systems in their place. It’s also about culture – intentionally creating boundary-bashing friendships, learning to ask better, more generous questions, taking up less space.
It’s about what we are willing to acknowledge about the origins of our own wealth and privilege. It’s about reclaiming values that privilege often robs us of: first and foremost, humility. But also trust in the ingenuity and goodness of other people, particularly those without financial wealth. And a more accurate sense of proportion – where and how are philanthropists really most crucial in the fight for a more just society?
Several groups are working to show us what this kind of giving might look like. An example: a group of trust fund kids, calling themselves the Gulf South Allied Funders, took their own inheritances, raised even more money from their own networks and then donated the sum to the Twenty-First Century Foundation, which has a long-standing presence in New Orleans. In the wake of Hurricane Katrina, they acknowledged their unfamiliarity with the community, and decided to funnel their resources to someone who could make a bigger difference.
Emergency response team volunteers clean up debris from a home destroyed by Hurricane Katrina. Photograph: Mark Humphrey/AP
Another: poor families in Boston and Detroit and Fresno track data about their own strengths and goals and then come together on a regular basis to talk about what they’re learning and the kinds of support they need. The families provide the moral support, while Family Independence Initiative provides the financial support in the form of scholarships, small business grants and other capital, on an as-needed basis.
And another: Self-Help, a family of nonprofit credit unions in North Carolina, California, and Florida, counter predatory lenders and high-fee check cashers in underserved communities by providing low-interest banking and loan services, financing community development projects and rehabilitating historic buildings with local partners. They celebrate the ways in which their current banking structure is significantly imprinted with the historic intelligence of African-American credit unions so critical during the Jim Crow era.
What makes these different than the average “foundation complex” experience? They have authentic, trusting relationships at the centre. They acknowledge history and local context. They walk their talk – moving beyond radical theory to radical practice.
To their credit, many of the world’s most powerful donors have begun to question the ethical underpinnings and best practicesof status quo philanthropy. In 2013,Peter Buffett, chairman of the NoVo Foundation, wrote a manifesto that, at its essence, was a call for more structural consciousness and less cognitive dissonance among wealthy altruists: “Because of who my father is, I’ve been able to occupy some seats I never expected to sit in. Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left.”
More recently, Darren Walker, the President of the Ford Foundation, has called fora “new ‘gospel of wealth’ for the 21st century” – one that addresses “the underlying causes that perpetuate human suffering. In other words, philanthropy can no longer grapple simply with what is happening in the world, but also withhow and why.”
The shift in zeitgeist is promising. A critical mass of people working within philanthropy is hungry to do work with more ethical rigor; more systemic, cultural, and emotional intelligence; less bureaucracy and hubris. There is a growing conversation about these shifts. On paper, the will is there.
But philanthropists need more than “big ideas” about how their profession could and should change. They need radically new habits or these ideas just become bold in theory.
As Vu Le, the Executive Director of Rainier Valley Corps, points out: “True Equity takes time, energy, and thoughtfulness. It requires us to reexamine everything we know and change systems and practices that we have been using for hundreds of years. This is often painful and uncomfortable.”
In part, this is about scale. Philanthropists must push themselves to give more, and in particular, give more to address American poverty. Only 12% of total giving in 2015 went to “human services,” according to Giving USA. Wealthy donors are more likely to support the arts and higher education and less likely to give to social service charities, according to the Chronicle of Philanthropy. And they’re not as generous as those with less income: “The wealthiest Americans – those who earned $200,000 or more – reduced the share of income they gave to charity by 4.6% from 2006 to 2012. Meanwhile, Americans who earned less than $100,000 chipped in 4.5% more of their income during the same time period.”
In 2014, the poverty rate in the US reached 15%. Photograph: Spencer Platt/Getty Images
How and where do you meet potential grantees?
If you don’t have genuine relationships with those outside of your racial or class category, you’re going to have a hell of a time finding out about the most interesting, powerful work going on to tackle poverty.
How do you approach general operating funds or capital campaigns?
Have you ever noticed that foundations feel justified in spending millions on beautifully designed headquarters, but frown on nonprofits using money to spend a fraction of that on dignifying spaces of their own? Poor people, and those that partner with them, deserve fair salaries and beauty, too.
How can grant reporting be redesigned so it doesn’t create such huge frustration and a misuse of time and energy on the part of grantee organisations?
Human-centered design is so often heralded by foundations these days, but too often their own bureaucracies are filled with soul-deadening detail that is anything but humanising.
Do you build relationships for the long, systemic haul?
Funding also shapes and dictates our work by forcing us to conceptualise our communities as victimsAdjoa Florência Jones de Almeida, The Revolution Will Not Be Funded
Gara LaMarche takes his peers to task for talking big game about sustainability, but then essentially treating grantees like “the right wing would treat single mothers on welfare, imposing strict time limits and cutoffs – the fact is that most sustainability strategies are aimed at helping grantees move from dependency on one foundation to another.”
This may all seem “in the weeds”, but it has a huge impact of the daily lives of those tackling poverty on the ground. How we treat one another every day, as cliched as it may sound, becomes the nature of our relationships, and the nature of our relationships, becomes the nature of our institutions and, ultimately, systems.
Perhaps the most profound question that philanthropists can ask themselves at this ripe time for reinvention is this: what stories do you want or expect grantees to tell you? What stories do you tell about yourself?
Adjoa Florência Jones de Almeida of the Sista II Sista Collective in Brooklyn, NY,wrote in the groundbreaking anthology, The Revolution will not be Funded:
In theory, foundation funding provides us with the ability to do the work – it is supposed to facilitate what we do. But funding also shapes and dictates our work by forcing us to conceptualise our communities as victims. We are forced to talk about our members as being “disadvantaged” and “at risk”, and to highlight what we are doing to prevent them from getting pregnant or taking drugs – even when this is not, in essence, how we see them or the priority for our work.
Six years later, organiser and activist Mia Birdsong, took the TED stage and furthered the paradigm-shifting narrative: “The quarter-truths and limited plot lines have us convinced that poor people are a problem that needs fixing. What if we recognised that what’s working is the people and what’s broken is our approach?”
The story we’ve told about the poor in America, the story that we continue to ask them to tell in order to get funding, is that they’re broken. In fact, we are.
The ultimate irony of the way the philanthropic sector is structured is that it is actually the recipients – people of colour, the working class, women – that may be the most masterful at creating and maintaining long-lasting, catalytic relationships. They are disproportionately poor in terms of dollars and cents, but rich with experience of making a way out of no way and persevering in the face of huge, intractable, sometimes downright exploitative systems. This usually involves relying on friends and extended family, nurturing people’s gifts for the betterment of whole communities and having grace through challenge.
We have an ethical imperative to acknowledge and build new systems around that intelligence. Carnegie’s one ask of the public libraries that he funded, to be built in communities across the country, was that they each be engraved with an image of a rising sun and the words: “Let there be light.”
That light, for him, was present in books, but in truth, it was sparked by an unlikely relationship. Long-lasting change so often is.
Sunday, 6 December 2015
The art of profitable giving - PhilanthroCapitalism
G Sampath in The Hindu
Not too long ago, public opinion was against philanthropy. A new book explains how attitudes have changed, and why we must scrutinise them.
Once upon a time there was charity. The haves gave some to the have-nots, and that was that. Sometimes the giving impulse was religious, sometimes guilt-induced. But charity was more about the soul of the giver than the welfare or rights or dignity of the receiver. This is why there can be no charity between equals. Or between friends. For all these reasons, charity had for long remained an activity rooted in the personal-private, quasi-religious sphere.
Then came philanthropy. Jeremy Beer, in his The Philanthropic Revolution: An Alternative History of American Charity, argues that the displacement of charity by philanthropy was “the result of a reconceptualisation of voluntary giving as primarily a tool for social change.” It also marks, according to Beer, a shift from a theological to a secular framework for giving, bringing with it all the baggage that secularisation entails – blind faith in the technological mastery of the social world, centralisation, and the bureaucratization of personal relations.”
And today we have ‘philanthrocapitalism’. The term gained currency after The Economist carried a report in 2006 on ‘The birth of philanthrocapitalism’. Noting that “the need for philanthropy to become more like the for-profit capital markets is a common theme among the new philanthropists,” the article explains why philanthropists “need to behave more like investors.”
Two years later came the book that today’s biggest philanthropists swear by: Philanthrocapitalism: How the Rich can Save the World by Matthew Bishop (a senior business editor from The Economist) and Michael Green. The title is not intended to be ironic. It is an earnest argument: in a world of rich men and poor states, who better to save the poor than the rich themselves?
The advent of philanthrocapitalism may have finally brought to the fore what is tacitly understood but rarely made explicit -- the symbiotic relationship between capitalist excess and philanthropic redress.
When philanthropy was shunned
It is no accident that the first great philanthropists were also the greatest capitalists of their age. Nor is it a coincidence that many of these men, remembered today by their philanthropic legacies – John D Rockefeller, Andrew Carnegie, Andrew Mellon, Leland Stanford, James Buchanan Duke – also figure in Wikipedia’s list of “businessmen who were labelled robber barons”.
If one is to make sense of the recent surge in the quantum of philanthropic funds sloshing around looking for worthy causes – the Bain & Co. Indian Philanthropy Report 2015 notes that foreign philanthropic funding in India more than doubled from 2004 to 2009, jumping from $0.8 billion in FY‘04 to $1.9 billion in FY’09 – then one needs to go beyond the numbers and look at the economic underpinnings of corporate philanthropic initiatives. This is precisely what sociologist Linsey McGoey sets out to do in No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy, which released last month.
No Such Thing… kicks off with a quick reminder of the shady origins of philanthropy. How many of us know, for instance, that not too long ago public opinion (and government opinion) was against philanthropy in general, and corporate philanthropy in particular?
In the early 20th century, philanthropic foundations were “viewed as mere outposts of profit-seeking empires, only cosmetically different from the corporations that had spawned them, a convenient way for business magnates to extend their reach over domestic and foreign populaces.” McGoey quotes US Attorney General George Wickersham, who had observed that they were “a scheme for perpetuating vast wealth” and “entirely inconsistent with the public interest.”
Yet what was common sense in 1910 would sound blasphemous in 2015. While no self-respecting economist today can deny the obscene economic inequality that characterises our age, not many would willingly acknowledge the connection between concentration of wealth and philanthropy. That is to say, an equitable society would suffer neither a club of the super-rich that seeks self-expression through philanthropy, nor a class of the super-poor that is dependant on philanthropic charity for survival. McGoey makes this point simply with a quote from the economic historian RH Tawney: “What thoughtful rich people call the problem of poverty, thoughtful poor people call with equal justice the problem of riches.”
If philanthropy is thriving in this age of extreme inequality, it is because it serves a dual purpose: one, to make inequality more acceptable ideologically and morally; and two, to define poverty as a problem of scarcity rather than of inequality. Hence the ultimate argument in favour of philanthropy, deployed when all else fails, is the one based on scarcity: ‘something (from a foundation) is better than nothing (from the government)’.
Philanthropy is the palliative that makes the pain of capitalism bearable for those fated to endure it. Philanthrocapitalism, on the other hand, is about transcending this palliative function to represent capitalism itself as a philanthropic enterprise.
In Bishop and Green’s formulation, such a philanthropic capitalism – also known as ‘venture philanthropy’, ‘social entrepreneurship’, ‘impact investing’ – would drive innovation in a way that “tends to benefit everyone, sooner or later, through new products, higher quality and lower prices.”
As McGoey reveals in her book (and Bishop and Green attest in theirs), no one does philanthrocapitalism better, or bigger, than Bill Gates, who helms the world’s largest philanthropic foundation, the Bill and Melinda Gates Foundation (henceforth Gates Foundation), with an endowment of $42.3 billion. For this very reason, the Gates Foundation is an ideal case study for understanding the social impact of philanthropic foundations.
Problems with philanthrocapitalism
McGoey enumerates three obvious problems with philanthrocapitalism, illustrating each with reference to the Gates Foundation.
First is the lack of accountability and transparency. McGoey points out that the Gates Foundation is the single largest donor to the World Health Organisation (WHO), donating more than even the US government. While the WHO is accountable to the member governments, the Gates Foundation is accountable only to its three trustees – Bill, Melinda, and Warren Buffet. It is not unreasonable to wonder if the WHO’s independence would not be compromised when 10% of its funding comes from a single private entity “with the power to stipulate exactly where and how the UN institution spends its money.”
Secondly, “philanthropy, by channelling private funds towards public services, erodes support for governmental spending on health and education.” With governments everywhere slashing their budgets for public goods such as education and healthcare, the resultant funding gap is sought to be filled by philanthropic money channelled through NGOs. But with one crucial difference: while the citizen has a rights-based claim on government-funded social security, she can do nothing if a philanthropic donor decides to stop funding a given welfare project – as has happened time and again in many parts of the world.
At the same time, even as it facilitates government withdrawal from provision of social goods, philanthropy paves the way for entry of private players into the same space. McGoey details how the Gates Foundation orchestrated this brilliantly in the American education sector, where it helped create a whole new market for private investment: secondary and primary schools run on a for-profit basis.
Third, the same businessmen who made their money through unhealthy practices that worsened economic inequalities are now, in their philanthropic avatar, purporting to remedy the very inequalities they helped create. In the case of the Gates Foundation, Microsoft’s illegal business practices are well documented in the US Department of Justice anti-trust case against the company. As McGoey puts it, the fortune now being administered through the Gates Foundation “was accumulated in some measure through ill-gotten means.”
Of course, none of this should detract from the undeniably good work that philanthropic bodies have done. The Gates Foundation has saved countless lives, especially in Africa, through its funding of immunisation programmes and outreach projects. Its several achievements, therefore, have been deservedly celebrated. Nonetheless, critical scrutiny lags far behind the lavish accolades.
Even the three issues discussed above barely scratch the surface. McGoey goes on to raise several more.
She asks, for instance, asks how the Gates Foundation’s interventions in global health tally with Bill Gates’ violent opposition to any dilution of the patent regime. The Gates Foundation was the largest private donor to the Global Fund to Fight AIDS, Tuberculosis and Malaria. At the same time, it “has continually lobbied against price reductions of HIV drugs and other medicines”, infuriating activists who “want a more equitable global patent regime” and “do not want charity handouts.”
She examines the Gates Foundation’s partnerships with Coca-Cola, not exactly popular among those who value public health. In the context of the Foundation’s work to help combat global hunger, she reveals how its financial ties with Monsanto and investments in Goldman Sachs “may be compounding food insecurity rather than mitigating it”.
She interrogates its skewed research portfolio. Of the 659 grants made by the Gates Foundation in the field of global health, 560 went to organisations in high-income countries, even though the problems being targeted were in low-income countries. How does excluding local scientists and programme managers who are best placed to understand the problems help the cause, asks McGoey.
While it is generally taken for granted that a philanthropic foundation would make grants only to non-profits, McGoey draws attention to the Gates Foundation’s non-repayable grant of $4.8 million to Vodacom, a subsidiary of Vodafone. In 2014, the Gates Foundation also announced a grant of $11 million to Mastercard for a “financial inclusion” project in Nairobi. Interesting how philanthropy has evolved to such an extent that in a world wracked by hunger, disease, war, and malnutrition, two entities found to be most in need include a multinational credit card network and a multinational mobile service provider.
Finally, not to be forgotten are the tax breaks that philanthropic foundations enjoy. Critics have pointed out that nearly half of the billions of dollars in funds that philanthropic foundations hold actually belong to the public, as it is money foregone by the state through tax exemptions. History has shown that progressive taxation is the most efficacious route to redistribution. But a strong case for philanthropy is another way of making a strong case for lower taxation of the rich – after all, it’ll leave them with more money to spend on uplifting the poor. Small wonder then that philanthropy’s biggest enthusiasts are political conservatives.
The Economist report on philanthrocapitalism cited above also quotes a young Indian philanthropist, Uday Khemka, who predicts that “philanthropy will increasingly come to resemble the capitalist economy.” That was in 2006. Nine years later, the publication of McGoey’s No Such Thing As a Free Gift marks the first systematic attempt to document this phenomenon.
sampath.g@thehindu.co.in
Not too long ago, public opinion was against philanthropy. A new book explains how attitudes have changed, and why we must scrutinise them.
Once upon a time there was charity. The haves gave some to the have-nots, and that was that. Sometimes the giving impulse was religious, sometimes guilt-induced. But charity was more about the soul of the giver than the welfare or rights or dignity of the receiver. This is why there can be no charity between equals. Or between friends. For all these reasons, charity had for long remained an activity rooted in the personal-private, quasi-religious sphere.
Then came philanthropy. Jeremy Beer, in his The Philanthropic Revolution: An Alternative History of American Charity, argues that the displacement of charity by philanthropy was “the result of a reconceptualisation of voluntary giving as primarily a tool for social change.” It also marks, according to Beer, a shift from a theological to a secular framework for giving, bringing with it all the baggage that secularisation entails – blind faith in the technological mastery of the social world, centralisation, and the bureaucratization of personal relations.”
And today we have ‘philanthrocapitalism’. The term gained currency after The Economist carried a report in 2006 on ‘The birth of philanthrocapitalism’. Noting that “the need for philanthropy to become more like the for-profit capital markets is a common theme among the new philanthropists,” the article explains why philanthropists “need to behave more like investors.”
Two years later came the book that today’s biggest philanthropists swear by: Philanthrocapitalism: How the Rich can Save the World by Matthew Bishop (a senior business editor from The Economist) and Michael Green. The title is not intended to be ironic. It is an earnest argument: in a world of rich men and poor states, who better to save the poor than the rich themselves?
The advent of philanthrocapitalism may have finally brought to the fore what is tacitly understood but rarely made explicit -- the symbiotic relationship between capitalist excess and philanthropic redress.
When philanthropy was shunned
It is no accident that the first great philanthropists were also the greatest capitalists of their age. Nor is it a coincidence that many of these men, remembered today by their philanthropic legacies – John D Rockefeller, Andrew Carnegie, Andrew Mellon, Leland Stanford, James Buchanan Duke – also figure in Wikipedia’s list of “businessmen who were labelled robber barons”.
If one is to make sense of the recent surge in the quantum of philanthropic funds sloshing around looking for worthy causes – the Bain & Co. Indian Philanthropy Report 2015 notes that foreign philanthropic funding in India more than doubled from 2004 to 2009, jumping from $0.8 billion in FY‘04 to $1.9 billion in FY’09 – then one needs to go beyond the numbers and look at the economic underpinnings of corporate philanthropic initiatives. This is precisely what sociologist Linsey McGoey sets out to do in No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy, which released last month.
No Such Thing… kicks off with a quick reminder of the shady origins of philanthropy. How many of us know, for instance, that not too long ago public opinion (and government opinion) was against philanthropy in general, and corporate philanthropy in particular?
In the early 20th century, philanthropic foundations were “viewed as mere outposts of profit-seeking empires, only cosmetically different from the corporations that had spawned them, a convenient way for business magnates to extend their reach over domestic and foreign populaces.” McGoey quotes US Attorney General George Wickersham, who had observed that they were “a scheme for perpetuating vast wealth” and “entirely inconsistent with the public interest.”
Yet what was common sense in 1910 would sound blasphemous in 2015. While no self-respecting economist today can deny the obscene economic inequality that characterises our age, not many would willingly acknowledge the connection between concentration of wealth and philanthropy. That is to say, an equitable society would suffer neither a club of the super-rich that seeks self-expression through philanthropy, nor a class of the super-poor that is dependant on philanthropic charity for survival. McGoey makes this point simply with a quote from the economic historian RH Tawney: “What thoughtful rich people call the problem of poverty, thoughtful poor people call with equal justice the problem of riches.”
If philanthropy is thriving in this age of extreme inequality, it is because it serves a dual purpose: one, to make inequality more acceptable ideologically and morally; and two, to define poverty as a problem of scarcity rather than of inequality. Hence the ultimate argument in favour of philanthropy, deployed when all else fails, is the one based on scarcity: ‘something (from a foundation) is better than nothing (from the government)’.
Philanthropy is the palliative that makes the pain of capitalism bearable for those fated to endure it. Philanthrocapitalism, on the other hand, is about transcending this palliative function to represent capitalism itself as a philanthropic enterprise.
In Bishop and Green’s formulation, such a philanthropic capitalism – also known as ‘venture philanthropy’, ‘social entrepreneurship’, ‘impact investing’ – would drive innovation in a way that “tends to benefit everyone, sooner or later, through new products, higher quality and lower prices.”
As McGoey reveals in her book (and Bishop and Green attest in theirs), no one does philanthrocapitalism better, or bigger, than Bill Gates, who helms the world’s largest philanthropic foundation, the Bill and Melinda Gates Foundation (henceforth Gates Foundation), with an endowment of $42.3 billion. For this very reason, the Gates Foundation is an ideal case study for understanding the social impact of philanthropic foundations.
Problems with philanthrocapitalism
McGoey enumerates three obvious problems with philanthrocapitalism, illustrating each with reference to the Gates Foundation.
First is the lack of accountability and transparency. McGoey points out that the Gates Foundation is the single largest donor to the World Health Organisation (WHO), donating more than even the US government. While the WHO is accountable to the member governments, the Gates Foundation is accountable only to its three trustees – Bill, Melinda, and Warren Buffet. It is not unreasonable to wonder if the WHO’s independence would not be compromised when 10% of its funding comes from a single private entity “with the power to stipulate exactly where and how the UN institution spends its money.”
Secondly, “philanthropy, by channelling private funds towards public services, erodes support for governmental spending on health and education.” With governments everywhere slashing their budgets for public goods such as education and healthcare, the resultant funding gap is sought to be filled by philanthropic money channelled through NGOs. But with one crucial difference: while the citizen has a rights-based claim on government-funded social security, she can do nothing if a philanthropic donor decides to stop funding a given welfare project – as has happened time and again in many parts of the world.
At the same time, even as it facilitates government withdrawal from provision of social goods, philanthropy paves the way for entry of private players into the same space. McGoey details how the Gates Foundation orchestrated this brilliantly in the American education sector, where it helped create a whole new market for private investment: secondary and primary schools run on a for-profit basis.
Third, the same businessmen who made their money through unhealthy practices that worsened economic inequalities are now, in their philanthropic avatar, purporting to remedy the very inequalities they helped create. In the case of the Gates Foundation, Microsoft’s illegal business practices are well documented in the US Department of Justice anti-trust case against the company. As McGoey puts it, the fortune now being administered through the Gates Foundation “was accumulated in some measure through ill-gotten means.”
Of course, none of this should detract from the undeniably good work that philanthropic bodies have done. The Gates Foundation has saved countless lives, especially in Africa, through its funding of immunisation programmes and outreach projects. Its several achievements, therefore, have been deservedly celebrated. Nonetheless, critical scrutiny lags far behind the lavish accolades.
Even the three issues discussed above barely scratch the surface. McGoey goes on to raise several more.
She asks, for instance, asks how the Gates Foundation’s interventions in global health tally with Bill Gates’ violent opposition to any dilution of the patent regime. The Gates Foundation was the largest private donor to the Global Fund to Fight AIDS, Tuberculosis and Malaria. At the same time, it “has continually lobbied against price reductions of HIV drugs and other medicines”, infuriating activists who “want a more equitable global patent regime” and “do not want charity handouts.”
She examines the Gates Foundation’s partnerships with Coca-Cola, not exactly popular among those who value public health. In the context of the Foundation’s work to help combat global hunger, she reveals how its financial ties with Monsanto and investments in Goldman Sachs “may be compounding food insecurity rather than mitigating it”.
She interrogates its skewed research portfolio. Of the 659 grants made by the Gates Foundation in the field of global health, 560 went to organisations in high-income countries, even though the problems being targeted were in low-income countries. How does excluding local scientists and programme managers who are best placed to understand the problems help the cause, asks McGoey.
While it is generally taken for granted that a philanthropic foundation would make grants only to non-profits, McGoey draws attention to the Gates Foundation’s non-repayable grant of $4.8 million to Vodacom, a subsidiary of Vodafone. In 2014, the Gates Foundation also announced a grant of $11 million to Mastercard for a “financial inclusion” project in Nairobi. Interesting how philanthropy has evolved to such an extent that in a world wracked by hunger, disease, war, and malnutrition, two entities found to be most in need include a multinational credit card network and a multinational mobile service provider.
Finally, not to be forgotten are the tax breaks that philanthropic foundations enjoy. Critics have pointed out that nearly half of the billions of dollars in funds that philanthropic foundations hold actually belong to the public, as it is money foregone by the state through tax exemptions. History has shown that progressive taxation is the most efficacious route to redistribution. But a strong case for philanthropy is another way of making a strong case for lower taxation of the rich – after all, it’ll leave them with more money to spend on uplifting the poor. Small wonder then that philanthropy’s biggest enthusiasts are political conservatives.
The Economist report on philanthrocapitalism cited above also quotes a young Indian philanthropist, Uday Khemka, who predicts that “philanthropy will increasingly come to resemble the capitalist economy.” That was in 2006. Nine years later, the publication of McGoey’s No Such Thing As a Free Gift marks the first systematic attempt to document this phenomenon.
sampath.g@thehindu.co.in
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