April 24, 2008
Should Philanthropy and Business Mix?
The debate about so-called philanthrocapitalism has jumped the Atlantic.
In an opinion article in The Guardian newspaper, in London, Tristram Hunt, a history professor, writes that Google.org, the Bill & Melinda Gates Foundation, and other groups that mix philanthropy and business practices will not solve health inequities and global poverty.
Such donors have “little engagement with the kind of structural injustices — racial, economic, social — or broader environmental, demographic or strategic challenges that require political advocacy. Having made their riches from the existing free-market model, venture philanthropists see little need to confront its problematic aspects,” he writes.
But in a letter to the editor, Kurt Hoffman, director of the Shell Foundation, disagrees.
“Many of these new actors have been motivated precisely because governments and charities have failed for decades to deliver, particularly in the developing world, where the delivery of aid has an atrocious record. Do we want to continue with the status quo or apply some fresh, inherently efficient and potentially very effective thinking to find new solutions to old problems?” he asks.
What do you think?
— Ian Wilhelm
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I agree with Mr. Hoffman, and I would add that the tactics of philanthrocapitalism are not singularly driven by business and corporate acumen. The whole idea is for sectors to merge and build on what has already been accomplished. By blending business practices with the mission and commitment of the social sector, this formula is certain to affect a new kind of change.
— areaves Apr 24, 08:15 AM #
I also agree with Hoffman. The evidence is already in on this question. Half a century ago, Singapore, Taiwan, and Korea were as poor as many third world countries today. In the interim, strong pro-market policies have enabled them to vault into the ranks of first world countries, with high average annual incomes, etc. Meantime, the dictatorship-ridden nations continuing to be recipients of foreign aid are still poor. Their corrupt governments rip off the aid money, refuse to allow civil society and the rule of law to take root, and their people are still impoverished.
It is a collectivist myth that government to government aid can end poverty. It has never happened. Meantime, it always happens that a free market and rule of law ends poverty.
— Sam Davis Apr 24, 09:44 AM #
PS — Go to RealClearMarkets today for a story called Starving Nations Lack Free Markets, to back up my previous post.
— Sam Davis Apr 24, 09:49 AM #
I disagree with the Shell executive. Charities and nonprofit organizations do not dictate trade policies or working conditions for multi-national corporations – the very things that aversely affect quality of life in the developing world. Nor did the large giving institutions, the same ones that now champion micro-credit, do anything to evaluate or ensure proper use of money in the hands of puppet or corrupt leaders.
These countries weren’t always struggling as they are, it took many years of colonialism and neo-colonial attitudes to drive these cultures into the dirt.
The multi-nationals who give of themselves have a vested interested in maintaining the status quo. Woe be to those who place the future of the world’s poor in their hands.
— MWoe Apr 24, 01:50 PM #
A belief that “free markets” abolish poverty (still less achieve social transformation) is pure ideology. Neither Singapore, nor Taiwan, nor South Korea developed themselves through “free markets” -they did so through strong government intervention to re-distribute assets and opportunities and direct economic growth in ways that promoted social stability and broadly-shared prosperity. Even in the US, no great social cause was mobilized through the market in the twentieth century. The Civil Rights movement, the women’s movement, the environmental movement, the New Deal and the Great Society – all were pushed ahead by civil society and anchored in the power of government as a force for the the public good. The world needs more civil society influence on the market, not the other way around.
— Mike Edwards Apr 24, 04:14 PM #
Just in case anyone has the notion that they know what works best to pull a country from poverty, read “The Logic of Failure” by Dietrich Dorner. Mr. Davis may want to spend some time researching a concept called “confirmation bias” – and we should all consider that there has never been a “free market” anywhere at any time.
— Chris Casquilho Apr 25, 06:03 AM #
I stand by my statement that free economies are the only fundamental and lasting solution for poverty. Analysis of the New Deal, for instance, shows that by 1939, the United States was worse off economically than when FDR took office, after several years of New Deal programs. Eventually, the market did recover, aided unfortunately by World War II, and this drove the post-war boom.
Yes, there has never been a completely-free market, as Mr. Casquilho states. But the degree to which there is a command economy is the exact degree to which there is poverty and stagnation.
Eastern European nations such as Estonia, Hungary, Romania and the Czech Republic are now proving once again that the free market and rule of law are the surest route to the greatest good for the greatest number.
In case you may have forgotten, communism collapsed after seven decades because of its internal contradictions. Like all forms of collectivism, it failed to deliver either material prosperity or personal fulfillment. These can come only in an environment where individual liberty, respect for human dignity and the rule of law are paramount.
The New Deal and the Great Society were creations of government, Mr. Edwards, not “civil society.” Civil society is shorthand for the voluntary interactions of individuals as individuals, as groups, as businesses, etc., all taken together.
The civil rights movement was a non-government movement to compel the federal government to enforce the guarantees of the Bill of Rights and 13th, 14th and 15th amendments. It qualifies as an initiative of civil society since it arose spontaneously from many individuals working together voluntarily, led notably by the clergy and lay people of African American churches.
Guaranteeing civil liberties is indeed a positive thing for government to do. Ripping off resources to redirect to various special interest groups, including corporate ones, is not a positive thing, and that is precisely what the New Deal and Great Society were all about.
The legacy of the civil rights movement is, first and foremost, a positive change in culture. The legacy of FDR and LBJ government programs are festering problems that still cannot be fixed and won’t be until we figure out that government-as-national-savior-in-all-instances does not work ethically, morally or in practice.
— Sam Davis Apr 25, 09:03 AM #
To continue to learn about this debate, see The Chronicle’s recent opinion article about philanthropcapitalism
— Ian Wilhelm Apr 29, 03:41 AM #
Philanthropy and business do mix for the reason that it makes business sense. One oil company recognized the importance of healthy families in their third world location. They depend on the local workforce and took measures such as providing mosquito netting to control outbreaks of malaria.
When business and charitable organizations partner with each other, the charitable organization is better able to complete its mission. The positive impact on the community in turn is beneficial to a company’s bottom line. Strong families, wholesome youth, and healthy motivated employees are keys to corporate success today and tomorrow.
Businesses wisely place their philanthropy in the communities where they operate. And business donors are engaged with the “structural injustices”. Failure to deal with such issues is a drag on a company’s success whether it conducts business locally, regionally, or globally.
— Frank K. Simon, Jr. Apr 29, 01:14 PM #
Leslie Crutchfield and Heather McLeod Grant discuss the relationship between business and philanthropy in their book Forces for Good. I bog on the topic and even offer a free copy of the book at www.worldchangers.us.com. I think the most compelling example of a beautiful relationship between business and philanthopy is that of the non profit Environmental Defense. Rather than take corporations to task, Environmental Defense (while being attacked by other environment groups) partnered with McDonalds and other corporations to create a cleaner environment. True corporate involvement in philanthropy is far better than blank checks. Blank checks are for tax purposes. But when non profits can figure out how the work they do is a shared interest of business, the business will become a true partner.
— Clark Vandeventer May 1, 01:04 PM #