PHILANTHROPY

The Rise and (Potential) Fall of Philanthrocapitalism

Billionaires brought their business sense and ambition to charitable giving. Now what?

By Georgia Levenson Keohane
Posted Thursday, Nov. 13, 2008, at 6:42 AM ET

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Talk about unfortunate timing. With the global economy reeling from the excesses of Wall Street, Mathew Bishop and Michael Green give us the incredulously titled Philanthrocapitalism: How the Rich Can Save the World. Bishop, the chief business editor at the Economist, first described how the barons of the new economy were revolutionizing philanthropy by applying their business principles—and sweeping ambition—to their charitable endeavors in 2006. Now he has teamed up with Green, an international development expert, to chronicle how this "movement" of philanthropists has "set out to change the world." The world is indeed changed: This gilded age has come to an abrupt and hard stop, and with it, perhaps, has come a tempering of irrational exuberance about the potential of outsized philanthropists to be, in Bishop's words, "superheroes for solving some of society's problems."

Bishop and Green offer an exceptional synthesis of the influence of the private sector on the field of philanthropy, and this book should be required reading in any MBA or public policy program. But the authors fail to probe some hard questions thoroughly enough: Is the "new" philanthropy really even "new"? And is the private sector the best exemplar of corporate governance, accountability, or long-term investment savvy—particularly when it comes to complex and persistent social and economic problems? With the pillars of global capitalism quaking and government bailouts that will, inevitably, limit public spending for social needs, these are more than academic questions.

In their engaging—if incomplete—history of philanthropy, the authors cite the influence of Andrew Carnegie's Gospel of Wealth, in which he described the rich as merely stewards of their economic surplus and advocated giving wealth away in one's lifetime, rather than leaving it to heirs. The Gospel has inspired tycoons from John D. Rockefeller, the world's first billionaire, to philanthrocapitalist par excellence Bill Gates, who received a copy from Warren Buffett. So, what, exactly, is philanthrocapitalism, and how does it differ from the philanthropy of those earlier titans of industry? First, the scale is unprecedented. The wealth creation of the last quarter-century—adjusted for historical inflation and the recent collapse—dwarfs any other period in history. At the start of 2008, the United States claimed 1,000 billionaires and the world 2,500. And charitable giving in the United States has increased accordingly, more than doubling from $13 billion in 1996 to nearly $32 billion in 2006. Second, this wealth has been created by entrepreneurs in tech, finance, and other industries who now channel their energy, drive, and principles to philanthropic endeavors. According to Bishop and Green,

philanthrocapitalists are developing a new (if familiar-sounding) language to describe their business like approach. Their philanthropy is "strategic," "market conscious," "impact oriented," "knowledge based," often "high engagement," and always driven by the goal of maximizing leverage of the donor's money. Seeing themselves as social investors, not traditional donors, some of them engage in "venture philanthropy." As entrepreneurial "philanthropreneurs," they love to back social entrepreneurs who offer innovative solutions to society's problems.

To read the rest of article, go to <http://www.slate.com/id/2204525/>


Copyright 2008 Washingtonpost.Newsweek Interactive Co. LLC

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