The Rich are Saving the World: Philanthrocapitalism!
By James TS Chua
Philanthropy has long been a popular activity among the wealthy, especially in developed countries. They sincerely and unconditionally seek to improve the general state of their causes, which can range from education and hospitals to the arts. When combined with capitalism, philanthropy takes on an almost mercenary meaning, which probably defeats the true purpose of this act of giving back to society, whatever the philanthropist’s reason is.
Yet, far from sounding money-minded or even selfish, Philanthrocapitalism, written by Matthew Bishop and Michael Green, explains why the present generation of well-known philanthropists such as Bill Gates and Warren Buffett, believes that philanthrocapitalism helps generate more money for social causes in vastly creative ways, rather than just having passive investments in centuries-old foundations, particularly in America.
Many philanthropists’ businesses derive their great fortunes, either through meeting the demand of niche markets or astute investments made in the stock market. Bill Gates earned his wealth through Microsoft. Pierre Omidyar and Jeff Skoll founded eBay, through which they became billionaires. Ted Turner created a media empire including CNN and subsequently donated US$1 billion to the United Nations, and George Soros was a successful hedge broker.
These above-mentioned people are just a handful of philanthrocapitalists who have pledged to give most of their wealth away in their lifetimes to worthy causes. This is probably inspired by Andrew Carnegie’s book The Gospel of Wealth, still considered relevant today.
Because their clever strategies have brought them such businesses success, more and more philanthropists are applying these same tips to their philanthropic foundations, hence the term “philanthrocapitalism.”
At the same time, while foundations — especially in America and the United Kingdom — are still the bed-rock of philanthropy, it is a costly and time-consuming affair to run these institutions.
This means large amounts of money cannot be channeled to more pressing world issues, either because of constricting clauses in some founders’ wills (that the funds should only go to specific or even loosely-defined causes) or because the management remains inflexible to newer fund-raising initiatives.
In that sense, today’s philanthropic foundations are increasingly hiring top management people whose advice (despite fierce criticism) will guide them to better identify the most pressing needs and then to address them.
It may sound odd, but the same foundations which aspire to keep overhead low justify hiring experienced and knowledgeable staff (often at high expense) as a long-term investment. Effective personnel allow the foundations to direct more focus on selected causes, rather than taking on too many general causes and wasting money and time in the process. (Some foundations have overlapping social causes).
Thus, the reader gets a deeper understanding of jargon such as venture philanthropy, philanthropreneurship, and mission-related investing, as well as why these forms work better than just plain philanthropy.
Of particular note is Chapter 3, “The Spirit of Philanthrocapitalism,” which summarises the key concepts of philanthrocapitalism, and Chapter 11, “Enter the Celanthropist”, which touches upon the immense power of celebrity-philanthropists. Other interesting chapters worth reading are Chapter 4, “Billanthropy”, an insightful look at how Bill Gates views his foundation and Chapter 10, “The Good Company”, which discusses corporate social responsibility in relation to philanthrocapitalism.
Yet, it must be added that this book can be monotonous. It appears that the authors are trying too hard to cram in as many facts about philanthrocapitalism as they can. It does not help that the book is rather thick, almost 300 pages — rather daunting.
That said, if one perseveres, one will find that Philanthrocapitalism is written with skillful narration, filled with amazing nuggets of philanthropic facts culled from many sources, mixed with interesting characters whose beliefs and actions captures the readers’ attention. In fact, this reviewer is inspired to become a philanthrocapitalist, if only my business idea takes off someday!◊
James TS Chua is a freelance writer and an advocate for those who are living with disabilities.
