Philanthrocapitalism, by Matthew Bishop and Michael Green
Some say there’s no such thing as pure charity. All altruistic gifts are rooted in the self-interest of the giver, whether the goal is to increase your social status or your tax portfolio. If that’s true, the only thing new about philanthrocapitalism is that people such as Bill Gates and Warren Buffett are being more upfront about the need to make money out of charity. And they are confident that combining business acumen with philanthropy will improve the world that made them rich in the first place.
Worth an estimated $30 billion, the Bill and Melinda Gates Foundation had long been the largest charity in the world, with more money to battle global health inequalities than the UN’s World Health Organisation. Then Warren Buffett gave Gates another $31 billion. The gift marked the launch of ‘billanthropy,’ or, as Matthew Bishop and Michael Green call it, ‘philanthrocapitalism’.
Bishop’s and Green’s book explores the world of the celebrity philanthropist: the new breed of robber barons who want to rival the legacies of men such as Carnegie and Rockefeller. Whether you call it ‘venture philanthropy’, ‘for-profit philanthropy’, or ‘philanthrocapitalism,’ the motif is the same: in order to produce lasting change, philanthropic bodies need to be run less like charities and more like businesses. The new philanthropists argue they can give more effectively if they’re not hamstrung by the bureaucracies of traditional non-profit organisations or government departments.
When Buffett gave $31 billion to the Gates Foundation, he said he knew it would do more good than if the money were dropped into the US Treasury. That’s possible. The problem is, however inefficient it is, the treasury it still beholden to some semblance of democratic accountability. Gates and Buffett are accountable to no one, least of all to the people they claim to be helping.
Here is where the first problem emerges with Bishop’s and Green’s book, perceptive and well written though it is. The authors are unabashed fans of the philanthropists they profile, and sometimes their admiration prevents them from doing justice to the many criticisms of the trend.
They seem to have a particular crush on Bill Gates, relating a fawning anecdote of Gates’s addressing Harvard’s 2007 graduating class. ‘I do have one big regret,’ the IT genius reportedly confessed. ‘I left Harvard with no real awareness of the awful inequities in the world.’ A couple of decades and antitrust cases later, he apparently began to grasp the magnitude of global injustice, spurring him to set up the foundation named after him and Melinda.
Bishop and Green focus on Gates’s newfound social conscience and miss the more obvious question. The guy got through Harvard without realising there’s inequality out there? And now he’s the poster child of poverty alleviation?
Obviously, objections are abundant. The most vehement come from those who think capitalism has perpetuated the very problems Gates and others purport to be tackling. Capitalism, as a system based on the accumulation of private property, thrives through restricting profits to an ever more exclusive minority. As a result, it can’t help but widen inequalities between rich and poor. Now philanthrocapitalists want to export this system to the one realm that previously took pride in divorcing itself from profit motivations: the world of charitable giving.
To such critics, praising someone like Gates for trying to narrow economic inequalities is like praising an arsonist for trying to hose down the house he’s just set fire to, then offering him a tax break and inviting him to your next fundraiser. In short, you couldn’t have picked a worse time to launch a book praising capitalism’s ability to clean up the non-profit world than today, when capitalism’s failures have never been more evident.
Another criticism is that one of the hidden motives behind the new philanthropy is the self-interested desire to find new markets for products no longer being snapped up in the saturated West. The misconception of this motive is that it’s hidden.
In a recent issue of Time, Gates describes this new movement as ‘creative capitalism’, and suggests that a key reason to get involved is the potential for personal profits. He writes:
There are markets all over the world that businesses have missed; the poorest two-thirds of the world’s population have some $5 trillion in purchasing power … it would be a shame if we missed such opportunities.
A shame for whom? Gates would argue that it’s a shame for both investors and the poor they aim to help. Time will tell if the only real accomplishment of philanthrocapitalism is further to enrich the former.
If those on the left are wary of philanthrocapitalism, the right seems cautiously approving. Most remain staunchly confident that capitalism has something to offer HIV/AIDs orphans in Jakarta, but some, particularly in Britain, wonder if there couldn’t be more subtle ways of giving back than setting up eponymous foundations helmed by your in-laws.
Whether you’re feeling sceptical or charitable about their subject-matter, Bishop’s and Green’s book is the best overview so far of the new spirit of philanthropy.
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