Mark Hannam
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Philanthrocapitalism
by Matthew Bishop and Michael Green
(A&C Black, 2008, pp.292.)

Printable version

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The timing of this book appears, at first, decidedly unpropitious. Just as a long period of global economic growth has come to an abrupt and painful end; just as the financial services sector is suffering from its worst setback for a generation; just as the state is starting to re-assert itself as the sole reliable guarantor of security and prosperity; just at this moment, Matthew Bishop and Michael Green have published a book that promises that "a new golden age of philanthropy is dawning".

The book's explicit claim is that a new generation of wealthy individuals are set to transform the activities of the charitable sector by the application of private-sector business methods and innovative funding techniques. A second, implicit claim is that this transformation is long overdue and much to be desired.

Appearances can be deceptive. Our current economic difficulties in fact provide the ideal context in which to test the argument of this book. First, because the idea that the methods of successful private business practice can and should be transplanted into the charitable sector looks less plausible today than it has for some time. Second, because the dividing lines between the business and charitable sectors are being re-drawn. Private sector firms that until recently were the source of much funding for the charitable sector have been forced to seek handouts for themselves from the public purse.

This, then, turns out to be an opportune moment to examine two separate but related questions about the future of charity. First, how should charitable organizations be funded? Should government aim to provide adequate resources to meet all social needs, once they have been identified, using charitable bodies where appropriate to deliver state-funded services? Or, should government concentrate on meeting a more limited range of needs, leaving private individuals to supply additional funds via charitable trusts to ensure that the wider range of social needs are met?

Second, how should charitable organizations be run? Is the charitable sector so different in nature and mission from the business sector that private sector methods are inappropriate? Or, does the complexity and persistence of many of the problems that need to be solved suggest that the good intentions of charities need to be matched by the more effective results-driven culture of business?

These are important and difficult questions and Matthew Bishop and Michael Green go some way towards answering them. They do so in two parts: first, with an argument about the way in which traditional philanthropy has been reinvented in recent years by the super-rich to create a new "turbo-charged" movement for good, which they call "philanthrocapitalism". Second, by providing a survey of the various different individuals and organizations that make up this diverse movement of "do-gooders".

The book does a good job of conveying the breadth and variety of the participants in the contemporary philanthropic world. Billionaires abound: some made their money from finance, some from information technology, yet others from media and entertainment. Their charitable causes and activities are likewise various: some give money, others give time and advice, and others offer their celebrity status to help with fund raising and lobbying. Most are from the United States and Europe, but Asia and Africa also have their share. Some are shy and retiring, others are not.

Few of the new philanthropists inherited their wealth. Mostly they became rich themselves, by taking advantage of the opportunities provided by the rapid growth in size and profitability of sectors such as finance, technology and entertainment. Their wealth is testimony to their own abilities, not to the abilities of their ancestors. Having proved themselves in business they believe they have a duty to try to replicate their success in charitable activities: not noblesse oblige, but richesse oblige.

Is it really that simple? Some social problems might be susceptible to an injection of cash and a dose of business acumen, but not all. Distributing mosquito nets throughout the malarial regions looks to be a straightforward matter of an appropriate budget and a decent logistics capability. (Although local manufacturers have not been helped by the bulk import of Western-made nets: the health situation has improved but the economic situation has deteriorated). Will the rehabilitation of teenage drug addicts - whether in the favelas of Brazil or the inner cities of the US - prove so easy?

Successful businesses are those that deliver goods and services in a form and at a price that consumers find attractive. Whatever the other attributes commonly associated with successful companies - innovation, rigorous cost control, the quality and commitment of staff, or the way the brand is marketed - all are peripheral to the central proposition of any business: do we provide things that our customers want and can afford? The reason why many social problems remain unsolved is - precisely - because many of those affected by them cannot afford the solution to their problem; and even if they could afford the solution they might not want it.

Traditional charities have many failings and no doubt many would be improved by an injection of money and skills from successful businessmen and women. Additionally, charities would benefit from reminding themselves that their principal goal should be to make themselves redundant: having identified a problem their aim should be to solve it, then move on to something else. Even so, the idea that all social problems can be solved on the model of for-profit business looks misguided: not because charities could not be much improved but because the problems themselves are intractable.

The current economic malaise is likely to reduce the funds available to charities; it is also likely to provoke an increase in the need for charitable goods and services, as the global economy slows. Demand will be up and supply will be down. This is the perfect opportunity for the new philanthropists to show what they can do. It is unlikely that they will be able to meet all of the euphoric claims made for them in this book. Nevertheless, it seems reasonable to expect them to make a significant and lasting difference, for which we should all be grateful.

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© Mark Hannam 2009

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