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Philanthrocapitalism: How Giving Can Save the World
For philanthropists of the past, charity was often a matter of simply giving money away. For the philanthrocapitalists-the new generation of billionaires who are reshaping the way they give-it's like business. Largely trained in the corporate world, these "social investors" are using big-business-style strategies and expecting results and accountability to match. Bill Gates, the world's richest man, is leading the he has promised his entire fortune to finding a cure for the diseases that kill millions of children in the poorest countries in the world. In Philanthrocapitalism, Matthew Bishop and Michael Green examine this new movement and its implications. Proceeding from interviews with some of the most powerful people on the planet-including Gates, Bill Clinton, Warren Buffett, Oprah Winfrey, and Bono, among others-they show how a web of wealthy, motivated donors has set out to change the world.
321 pages, Kindle Edition
First published September 30, 2008
About the author
Matthew Bishop
73 books7 followersMATTHEW BISHOP is the US Business Editor and New York Bureau Chief of The Economist, and the co-author, with Michael Green, of several acclaimed books, including "Philanthrocapitalism: How Giving Can Save the World" and "The Road From Ruin". His first e-book, again written with Mr Green, is "In Gold We Trust? The Future of Money in an Age of Uncertainty", which will be published by Amazon and The Economist in March 2012.
"The Road from Ruin" set out a bold agenda for improving capitalism following the crash of 2008 and subsequent economic downturn. It was described as "provocative and refreshing" by the New York Times. According to Professor Robert Shiller of Yale, "The Road from Ruin" will be "remembered as a serious, highly readable book of the broadest intellectual scope. Its insights will help all of us reshape the future and enable both citizen and policy maker alike to separate real reform from the grandstanding bluster so prevalent today."
"Philanthrocapitalism: How Giving Can Save the World" described the new movement that brings together the business and social sectors to solve some of the world's most pressing problems. With lots of original interviews with the leaders of this movement, including Bill Gates, George Soros, Pierre Omidyar, Bono and Angelina Jolie, "Philanthrocapitalism" has been described as "terrific" by The New York Times columnist Nicholas Kristof and as "the definitive guide to a new generation of philanthropists who understand innovation and risk-taking, and who will play a crucial part in solving the biggest problems facing the world," by New York's Mayor and leading philanthropist Michael Bloomberg. According to former U.S President Bill Clinton, "This is an important book. Our interdependent world is too unequal, unstable, and, because of climate change, unsustainable. We have to transform it into one of shared responsibilities, shared opportunities, and a shared sense of community. Bishop and Green show us how to do it."
"In Gold We Trust? The Future of Money in an Age of Uncertainty" is a lively look at the history and future of money, taking in the rise, fall and rise of gold, the crisis of the Euro, the seeming inability of America's politicians to tackle the country's ballooning deficit, the rising risk of inflation, the contrasting ideas about money of famous economists such as Keynes and Hayek, and the attempt by some of the world's leading innovators to invent the best ever technology of money using algorithms and sophisticated online games.
Mr Bishop is also the author of "Essential Economics", the official Economist guide to economics. He has also written several of The Economist's special report supplements, including most recently The Great Mismatch, about the future of jobs; A Bigger World, which examines the opportunities and challenges of the rise of emerging economies and firms; The Business of Giving, which looks at the industrial revolution taking place in philanthropy; Kings of Capitalism, which anticipated and analyzed the boom in private equity; and Capitalism and its Troubles, an examination of the impact of problems such as the collapse of Enron.
A regular participant in events such as the World Economic Forum and the Clinton Global Initiative, Mr Bishop is in demand around the world as a speaker, and has a growing following on Twitter, where he tweets as @mattbish
"The Road from Ruin" set out a bold agenda for improving capitalism following the crash of 2008 and subsequent economic downturn. It was described as "provocative and refreshing" by the New York Times. According to Professor Robert Shiller of Yale, "The Road from Ruin" will be "remembered as a serious, highly readable book of the broadest intellectual scope. Its insights will help all of us reshape the future and enable both citizen and policy maker alike to separate real reform from the grandstanding bluster so prevalent today."
"Philanthrocapitalism: How Giving Can Save the World" described the new movement that brings together the business and social sectors to solve some of the world's most pressing problems. With lots of original interviews with the leaders of this movement, including Bill Gates, George Soros, Pierre Omidyar, Bono and Angelina Jolie, "Philanthrocapitalism" has been described as "terrific" by The New York Times columnist Nicholas Kristof and as "the definitive guide to a new generation of philanthropists who understand innovation and risk-taking, and who will play a crucial part in solving the biggest problems facing the world," by New York's Mayor and leading philanthropist Michael Bloomberg. According to former U.S President Bill Clinton, "This is an important book. Our interdependent world is too unequal, unstable, and, because of climate change, unsustainable. We have to transform it into one of shared responsibilities, shared opportunities, and a shared sense of community. Bishop and Green show us how to do it."
"In Gold We Trust? The Future of Money in an Age of Uncertainty" is a lively look at the history and future of money, taking in the rise, fall and rise of gold, the crisis of the Euro, the seeming inability of America's politicians to tackle the country's ballooning deficit, the rising risk of inflation, the contrasting ideas about money of famous economists such as Keynes and Hayek, and the attempt by some of the world's leading innovators to invent the best ever technology of money using algorithms and sophisticated online games.
Mr Bishop is also the author of "Essential Economics", the official Economist guide to economics. He has also written several of The Economist's special report supplements, including most recently The Great Mismatch, about the future of jobs; A Bigger World, which examines the opportunities and challenges of the rise of emerging economies and firms; The Business of Giving, which looks at the industrial revolution taking place in philanthropy; Kings of Capitalism, which anticipated and analyzed the boom in private equity; and Capitalism and its Troubles, an examination of the impact of problems such as the collapse of Enron.
A regular participant in events such as the World Economic Forum and the Clinton Global Initiative, Mr Bishop is in demand around the world as a speaker, and has a growing following on Twitter, where he tweets as @mattbish
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Displaying 1 - 28 of 28 reviews
May 19, 2009
Bishop is very naive in some ways- he definitely sees through rose-tinted glasses, believing the super-rich are the potential saviors of the modern world. The book lacks any kind of depth of understanding of the other sides of the "philanthrocapitalist" equation- billionaires don't grow on trees and profits don't just happen- in most cases they are made by the exploitation of other people and/or the environment.
.
.
February 10, 2014
A decent introduction to the giving patterns of the 1%, but this book has several major failings. First, published in 2008 the book cannot take into account the changes in philanthropy due to the financial crisis, nor can it recognize the general population's frustration with the super rich. Second, the book's central thesis- the rich can make a big difference by giving away their money- isn't exactly rocket science. Bishop and Green rely too much on name dropping and a few case studies/interviews to make a not so unique point.
Overall the book does provide a decent introduction to some of the big names in philanthropy, but it doesn't make much of an argument and feels more like an attempt to feel self-important by dropping a bunch of names rather than a rigorous argument.
Overall the book does provide a decent introduction to some of the big names in philanthropy, but it doesn't make much of an argument and feels more like an attempt to feel self-important by dropping a bunch of names rather than a rigorous argument.
Read
July 27, 2011Perhaps because I just finished Zissner's "On Writing Well," I couldn't help but notice that this book needs a good edit. In particular, I almost stopped reading it right near the end when I found I just couldn't take another use of the word "whilst" when "while" would suffice. WHY??? Why would anyone EVER use the word "whilst," let alone OVER AND OVER AGAIN?? I sometimes found it hard to concentrate on the content when all those "whilsts" kept popping up all over the place. Also, there were a number of terrible run-on sentances, sentences with dual meanings, and just way too many commas. In my humble opinion, a book should never, ever be released until it has zero (or almost zero) grammar errors. Considering some of my second-year university courses had this requirements on papers, I don't think it's too much to ask. Also, it could have been about a third of the length. There was a chapter near the beginning which easily could have been made into a paragraph or even a single sentence.
But aside from these irritating errors and the attempt at "puffing up" the material, it had some interesting information on how big philanthropy works these days. I found the author to be too optimistic, but that's always nicer to read than the opposite.
But aside from these irritating errors and the attempt at "puffing up" the material, it had some interesting information on how big philanthropy works these days. I found the author to be too optimistic, but that's always nicer to read than the opposite.
August 1, 2012
This is like an encyclopedia of the world of philanthrophy. You cant help but admire the amazing work which is being done by billionaires like Bill Gates, Warren Buffett, Rockfeller Foundation, Oprah Winfrey, Rockstar Bono and many others. Amongst all the terrible newsflow that we hear these days, this book gives you an insight about the tremendous goodness that prevails in this world. The capitalists, mostly portrayed as evil are the ones who are trying to make a difference by adopting a business-like approach towards philanthrophy. This book encompasses all aspects of giving...from the attitude of different philanthropists, to their modus operandi, to innovative ways of giving....The book deals with history, present & future of philanthrophy. If even half of what the philanthropists are doing right now succeeds in achieving its stated goal, the world would be in much better shape than what it is today!
November 4, 2011
What an inspiring book! I knew a little of the philanthropy and activism of such famous folks as Bill Gates, Bono, Bill Clinton, and Oprah Winfrey, but this book gave real detail. The biggest surprises were that Goldman Sachs, one of the biggest "devils" in the financial crisis, has a solid history of philanthropy. One of its founders was a big supporter of the NAACP! Also interesting was the Robin Hood Foundation, a foundation run by hedge fund managers to fight poverty in NYC. Like with Social Entrepreneurship, I took plenty of notes and have been looking in on all kinds of interesting websites. This book made me want to get rich so I can give a fortune of money away and help solve the world's problems. But since I'm not, I'll be looking into the websites of these philanthrocapitalistic ventures to figure out my own role in changing the world. On to more research!
December 5, 2015
The "Oscars of philanthropy," the Clinton Global Initiative, took place last week in New York City. Here's a typical on-stage exchange:
If plutocratic celebrity shoulder-rubbing isn't your thing, then the Clinton Global Initiative isn't for you. Philanthrocapitalism: How the Rich Can Save the World by Matthew Bishop and Michael Green probably isn't for you either. The book is a fawning catalog of dozens of high profile billionaires — many are members of the Giving Pledge — who have launched philanthropic initiatives over the past ten years. For example, here's how Scotland's first billionaire, Tom Hunter got started in philanthropy:
It's impossible to say why some billionaires become philanthropists. According to tax lawyer William Zabel, "most philanthropy is tax-motivated." If the estate tax were eliminated, as was proposed by the W. Bush administration, Zabel and others say that most philanthropy would disappear. (Indeed, Andrew Carnegie, one of the leaders of modern philanthropy, favored heavy estate taxes to mark of the state’s “condemnation of the selfish millionaire’s unworthy life.") Adam Segal, head of strategic philanthropy at a PR firm, told Bishop in a 2001 interview that most philanthropists are driven by "self-promotion, taking credit, branding ... They are not acting out of a sense of obligation, but rather to be a celebrity."
When observers of philanthropy (and many employees of philanthropic foundations) say, "it's his money, he can do what he wants with it," they clearly don't consider that most of the money would otherwise go to the Internal Revenue Service to fund the following programs:
Indeed, many Europeans argue that it's not so much that Americans are pro-philanthropy, but rather that we are anti-tax. The wealthiest citizens of Sweden, Denmark and Norway pay income taxes of 50 - 70%. In the United States, the wealthiest one percent pay on average just 35% of their income on taxes (and that's up from 28% in 2010). It's probably worth pointing out that Sweden, Denmark and Finland rank well above the United States in education, employment, life satisfaction and work-life balance, according to the OECD's Better Life Index.
This leads us to the crucial question that is left mostly unaddressed by Bishop and Green: Is it better to live in a country that is low-tax and pro-philanthropy or vise versa? Another way to ask the question: Is government or philanthropy more effective at identifying and fixing social issues? These questions are at the heart of debates around the "Big Society" in the UK and "Creative Capitalism" in the US. The basic narrative of both ideas goes something like this:
High tax rates slow innovation and economic growth. Countries with competitive tax rates like Singapore attract entrepreneurs and wealthy investors that create businesses and thus create jobs. Also, local communities know their needs better than big federal governments. The ideal, therefore, is a relatively small government which encourages local community involvement, and works with philanthropists to encourage "social entrepreneurs" to come up with innovative solutions to social problems. Social impact bonds are one example of how governments could work with philanthropists to encourage social innovation: philanthropists give a loan to a government contractor that claims they can save the government money through an innovative approach to, say, decreasing recidivism. If the contractor does meet their established goal — say, reducing recidivism by 20% — then they are paid in full by the government and the philanthropic firm that gave the loan gets its money back (perhaps with some interest).
Such a framework, according to its proponents, encourages economic growth and innovation while still addressing social issues. It offers people "a hand up, not a handout." Though Bishop and Green rarely address whether philanthropy is more effective than government, it is clear that they are on the side of lower taxes and more philanthropy. U2 rock star and celebrity philanthropist Bono would certainly agree. One of the biggest names at the Clinton Global Initiative, his band moved their publishing operations offshore to avoid paying taxes in Ireland.
One hint offered by the authors to explain why philanthropists might be more effective than governments at addressing social issues is the so-called "hyperagency" of entrepreneurs-turned-philanthropists like Bill Gates, George Soros, Gordon Moore, and Michael Bloomberg. For Bishop and Green, "hyperagency" is the mix of 1) lots of money, 2) a willingness to take risks, and 3) the influence to get people to pay attention to what they otherwise wouldn't (for example, Gates' multinational, private-public partnership to eradicate Malaria).
While it's true that philanthropic foundations can take bigger risks than government agencies (voters don't offer many incentives for politicians to take risks), Bishop and Green probably over-estimate the degree to which these so-called "hyperagents" are involved in the day-to-day of their philanthropic foundations. Like most media coverage of philanthropy, the authors focus on the lives and speeches of the billionaires without taking a closer look at the program staff that actually develop, implement, and evaluate strategy.
Clearly I believe in the potential of philanthropy. I decided to work in philanthropy rather than government because it offers more flexibility. You're not restricted by the campaign cycles, lobbying and media circus of politics. There is more of an appetite for innovation and risk-taking. And for the region where I work, Latin America, social development by government is more often a tool to win political support than a serious endeavor to address social issues.
However, I am also realistic about the limits and occasional negative consequences of philanthropy. Compared to government spending, philanthropic spending is mere peanuts. In 2003, the US federal government spent $2.16 trillion dollars. That same year, according to the authors, "philanthropic foundations gave away $30 billion, but also collected $5 billion from tax breaks on the gifts they received and $15 billion through tax relief on their investment income." That is to say, all of the philanthropic foundations in the United States spent less than 1.5% of the federal government. And that doesn't take into account independent spending by states, counties, and municipalities. Furthermore, they received $20 billion in tax breaks for the $30 billion that was disbursed. For all the attention that philanthropic foundations receive, their collective spending amounts to a small drop in a very large bucket.
There are also some negative consequences of philanthropy, which have been explored in depth by Stanford professor Rob Reich — and, to be fair, are also addressed in Philanthrocapitalism's penultimate chapter, "The Age of Plutocracy?"
Much like government agencies, foundations suffer from a lack of collaboration, transparency and accountability. In the private sector, companies must make profits or they go out of business. Their customers, in the end, hold them to account. In the public sector — at least in theory — ineffective politicians are voted out of office. But there is no inherent mechanism that either rewards or punishes foundations for performing well or poorly. Similarly, in the private sector there is a culture of mergers and acquisitions in order to bring innovation to scale, but most philanthropists prefer to launch their own foundation rather than contribute to what already works (Buffet's $25 billion gift to the Gates Foundation is a notable and commendable exception.)
Plutocracy, "government by the wealthy," is derived from the Greek ploutos 'wealth' and kratos 'authority.' In contrast, meritocracy, "government by people selected on the basis of their ability" derives from mereō 'earn' and kratos 'authority.' The United States is still a meritocracy, one of the country's greatest achievements. Our rulers are generally competent, well educated, and middle-class. Our billionaires tend to prefer sports franchises more than politics (New York's outgoing mayor Michael Bloomberg is a notable exception, but while the 50 richest members of America's Congress are worth $1.6 billion. In China, the wealthiest 50 delegates to the National People's Congress control $94.7 billion).
However, while our politicians may be mostly middle class, the drafting of public policy and the distribution of political ideas are increasingly controlled by the wealthiest individuals and corporations through philanthropy, lobbying, and campaign financing. Whether it's the Koch brothers on the right or Soros on the left, these billionaires are spending the majority of their wealth to convince others of their worldview. Furthermore, as the ad-based business models that once supported journalism crumble, we should expect more billionaires to follow in Jeff Bezos' footsteps; that is, we should expect a return to the plutocratic press.
Philanthrocapitalism is a must-read compendium of insider baseball for those of us who work in philanthropy. It catalogs all the new entrants and the latest initiatives in the field, mostly with fawning praise. The book is less useful as an intellectual framework to judge when philanthropy is most effective, and which social issues should be addressed by tax-payer-funded government initiatives. The authors' most recurring piece of advice, that the social sector be "more businesslike," is repeated ad nauseum without offering any specifics.
I continue to believe in the potential of philanthropy to encourage and accelerate social innovations that improve the livelihoods of millions of people. The Rockefeller and Ford foundations are widely credited for accelerating the Green Revolution in developing countries. Open Society Foundations have protected the rights of the Roma people in Europe and spread the implementation of freedom of information (FOI) laws around the world.
"People do not die for lack of income. They die for lack of access to the wealth of the commons,” writes Kavita Ramdas in her criticism of Philanthrocapitalism. She's right. Philanthropy won't fix social inequality. We must increase taxes on the wealthiest members and corporations of our society in order to redistribute the wealth of the commons, provide basic services, and improve educational opportunities. But, in parallel, we should also encourage giving — not just from billionaires, but from everyone. In his 2009 book, The Life You Can Save , the philosopher Peter Singer reminds us that our every purchase has an opportunity cost. It's hard to escape the logic that the coffee and muffin I ordered this morning could have gone to feed a malnourished child. Right here in Mexico an estimated 90,000 lives were claimed by malnutrition between 2001 and 2011. Singer ultimately recommends that the richest .01% give away one-third of their wealth to philanthropy. The top .01% should give 25%, the top 1% should give 15% and the average middle class family should give away between 2 - 3% of their annual income.
True, 90,000 people didn't die from malnutrition in Mexico over the past decade due to a lack of philanthropy in Mexico. (Though Mexicans are notoriously stingy in their charitable giving.) They died due to poor agricultural policies and practices that have promoted mono-cropping and export-led agriculture without bringing down the prices of basic bulk foods for the poor. In order to deal with hunger at its root, the government must pass new agriculture and land title policies that raise agricultural productivity and lower costs of food production. But that doesn't meant that we are unempowered to make a small difference ourselves. Singer's website has an online calculator that suggests how much you should give each year depending on your income as well as a list of ten organizations that are reducing poverty around the world.
After Ben Affleck introduced Hillary Rodham Clinton, she heaped praise on his work as a humanitarian as well as a movie director. Clinton said she enjoyed working with Affleck at the State Department as he was researching “Argo,” which won the Academy Award for best picture in 2012.“I’m hoping that he films Argo 2,” Clinton joked. “I’m now available.”
If plutocratic celebrity shoulder-rubbing isn't your thing, then the Clinton Global Initiative isn't for you. Philanthrocapitalism: How the Rich Can Save the World by Matthew Bishop and Michael Green probably isn't for you either. The book is a fawning catalog of dozens of high profile billionaires — many are members of the Giving Pledge — who have launched philanthropic initiatives over the past ten years. For example, here's how Scotland's first billionaire, Tom Hunter got started in philanthropy:
When Hunter received his check for £252m, his most pressing concern was a looming visit from the tax man. Hunter's tax advisors suggested that he relocate to Monaco, but Marion [his wife] wasn't keen. And, so, the accountants suggested the next best thing - to set up a philanthropic venture. Hunter and his family stayed in Scotland, and the Hunter Foundation, initially worth £10m, was born. As was, indirectly, Tom Hunter the philanthropist.
It's impossible to say why some billionaires become philanthropists. According to tax lawyer William Zabel, "most philanthropy is tax-motivated." If the estate tax were eliminated, as was proposed by the W. Bush administration, Zabel and others say that most philanthropy would disappear. (Indeed, Andrew Carnegie, one of the leaders of modern philanthropy, favored heavy estate taxes to mark of the state’s “condemnation of the selfish millionaire’s unworthy life.") Adam Segal, head of strategic philanthropy at a PR firm, told Bishop in a 2001 interview that most philanthropists are driven by "self-promotion, taking credit, branding ... They are not acting out of a sense of obligation, but rather to be a celebrity."
When observers of philanthropy (and many employees of philanthropic foundations) say, "it's his money, he can do what he wants with it," they clearly don't consider that most of the money would otherwise go to the Internal Revenue Service to fund the following programs:
Indeed, many Europeans argue that it's not so much that Americans are pro-philanthropy, but rather that we are anti-tax. The wealthiest citizens of Sweden, Denmark and Norway pay income taxes of 50 - 70%. In the United States, the wealthiest one percent pay on average just 35% of their income on taxes (and that's up from 28% in 2010). It's probably worth pointing out that Sweden, Denmark and Finland rank well above the United States in education, employment, life satisfaction and work-life balance, according to the OECD's Better Life Index.
This leads us to the crucial question that is left mostly unaddressed by Bishop and Green: Is it better to live in a country that is low-tax and pro-philanthropy or vise versa? Another way to ask the question: Is government or philanthropy more effective at identifying and fixing social issues? These questions are at the heart of debates around the "Big Society" in the UK and "Creative Capitalism" in the US. The basic narrative of both ideas goes something like this:
High tax rates slow innovation and economic growth. Countries with competitive tax rates like Singapore attract entrepreneurs and wealthy investors that create businesses and thus create jobs. Also, local communities know their needs better than big federal governments. The ideal, therefore, is a relatively small government which encourages local community involvement, and works with philanthropists to encourage "social entrepreneurs" to come up with innovative solutions to social problems. Social impact bonds are one example of how governments could work with philanthropists to encourage social innovation: philanthropists give a loan to a government contractor that claims they can save the government money through an innovative approach to, say, decreasing recidivism. If the contractor does meet their established goal — say, reducing recidivism by 20% — then they are paid in full by the government and the philanthropic firm that gave the loan gets its money back (perhaps with some interest).
Such a framework, according to its proponents, encourages economic growth and innovation while still addressing social issues. It offers people "a hand up, not a handout." Though Bishop and Green rarely address whether philanthropy is more effective than government, it is clear that they are on the side of lower taxes and more philanthropy. U2 rock star and celebrity philanthropist Bono would certainly agree. One of the biggest names at the Clinton Global Initiative, his band moved their publishing operations offshore to avoid paying taxes in Ireland.
One hint offered by the authors to explain why philanthropists might be more effective than governments at addressing social issues is the so-called "hyperagency" of entrepreneurs-turned-philanthropists like Bill Gates, George Soros, Gordon Moore, and Michael Bloomberg. For Bishop and Green, "hyperagency" is the mix of 1) lots of money, 2) a willingness to take risks, and 3) the influence to get people to pay attention to what they otherwise wouldn't (for example, Gates' multinational, private-public partnership to eradicate Malaria).
While it's true that philanthropic foundations can take bigger risks than government agencies (voters don't offer many incentives for politicians to take risks), Bishop and Green probably over-estimate the degree to which these so-called "hyperagents" are involved in the day-to-day of their philanthropic foundations. Like most media coverage of philanthropy, the authors focus on the lives and speeches of the billionaires without taking a closer look at the program staff that actually develop, implement, and evaluate strategy.
Clearly I believe in the potential of philanthropy. I decided to work in philanthropy rather than government because it offers more flexibility. You're not restricted by the campaign cycles, lobbying and media circus of politics. There is more of an appetite for innovation and risk-taking. And for the region where I work, Latin America, social development by government is more often a tool to win political support than a serious endeavor to address social issues.
However, I am also realistic about the limits and occasional negative consequences of philanthropy. Compared to government spending, philanthropic spending is mere peanuts. In 2003, the US federal government spent $2.16 trillion dollars. That same year, according to the authors, "philanthropic foundations gave away $30 billion, but also collected $5 billion from tax breaks on the gifts they received and $15 billion through tax relief on their investment income." That is to say, all of the philanthropic foundations in the United States spent less than 1.5% of the federal government. And that doesn't take into account independent spending by states, counties, and municipalities. Furthermore, they received $20 billion in tax breaks for the $30 billion that was disbursed. For all the attention that philanthropic foundations receive, their collective spending amounts to a small drop in a very large bucket.
There are also some negative consequences of philanthropy, which have been explored in depth by Stanford professor Rob Reich — and, to be fair, are also addressed in Philanthrocapitalism's penultimate chapter, "The Age of Plutocracy?"
Much like government agencies, foundations suffer from a lack of collaboration, transparency and accountability. In the private sector, companies must make profits or they go out of business. Their customers, in the end, hold them to account. In the public sector — at least in theory — ineffective politicians are voted out of office. But there is no inherent mechanism that either rewards or punishes foundations for performing well or poorly. Similarly, in the private sector there is a culture of mergers and acquisitions in order to bring innovation to scale, but most philanthropists prefer to launch their own foundation rather than contribute to what already works (Buffet's $25 billion gift to the Gates Foundation is a notable and commendable exception.)
Plutocracy, "government by the wealthy," is derived from the Greek ploutos 'wealth' and kratos 'authority.' In contrast, meritocracy, "government by people selected on the basis of their ability" derives from mereō 'earn' and kratos 'authority.' The United States is still a meritocracy, one of the country's greatest achievements. Our rulers are generally competent, well educated, and middle-class. Our billionaires tend to prefer sports franchises more than politics (New York's outgoing mayor Michael Bloomberg is a notable exception, but while the 50 richest members of America's Congress are worth $1.6 billion. In China, the wealthiest 50 delegates to the National People's Congress control $94.7 billion).
However, while our politicians may be mostly middle class, the drafting of public policy and the distribution of political ideas are increasingly controlled by the wealthiest individuals and corporations through philanthropy, lobbying, and campaign financing. Whether it's the Koch brothers on the right or Soros on the left, these billionaires are spending the majority of their wealth to convince others of their worldview. Furthermore, as the ad-based business models that once supported journalism crumble, we should expect more billionaires to follow in Jeff Bezos' footsteps; that is, we should expect a return to the plutocratic press.
Philanthrocapitalism is a must-read compendium of insider baseball for those of us who work in philanthropy. It catalogs all the new entrants and the latest initiatives in the field, mostly with fawning praise. The book is less useful as an intellectual framework to judge when philanthropy is most effective, and which social issues should be addressed by tax-payer-funded government initiatives. The authors' most recurring piece of advice, that the social sector be "more businesslike," is repeated ad nauseum without offering any specifics.
I continue to believe in the potential of philanthropy to encourage and accelerate social innovations that improve the livelihoods of millions of people. The Rockefeller and Ford foundations are widely credited for accelerating the Green Revolution in developing countries. Open Society Foundations have protected the rights of the Roma people in Europe and spread the implementation of freedom of information (FOI) laws around the world.
"People do not die for lack of income. They die for lack of access to the wealth of the commons,” writes Kavita Ramdas in her criticism of Philanthrocapitalism. She's right. Philanthropy won't fix social inequality. We must increase taxes on the wealthiest members and corporations of our society in order to redistribute the wealth of the commons, provide basic services, and improve educational opportunities. But, in parallel, we should also encourage giving — not just from billionaires, but from everyone. In his 2009 book, The Life You Can Save , the philosopher Peter Singer reminds us that our every purchase has an opportunity cost. It's hard to escape the logic that the coffee and muffin I ordered this morning could have gone to feed a malnourished child. Right here in Mexico an estimated 90,000 lives were claimed by malnutrition between 2001 and 2011. Singer ultimately recommends that the richest .01% give away one-third of their wealth to philanthropy. The top .01% should give 25%, the top 1% should give 15% and the average middle class family should give away between 2 - 3% of their annual income.
True, 90,000 people didn't die from malnutrition in Mexico over the past decade due to a lack of philanthropy in Mexico. (Though Mexicans are notoriously stingy in their charitable giving.) They died due to poor agricultural policies and practices that have promoted mono-cropping and export-led agriculture without bringing down the prices of basic bulk foods for the poor. In order to deal with hunger at its root, the government must pass new agriculture and land title policies that raise agricultural productivity and lower costs of food production. But that doesn't meant that we are unempowered to make a small difference ourselves. Singer's website has an online calculator that suggests how much you should give each year depending on your income as well as a list of ten organizations that are reducing poverty around the world.
November 2, 2013
A book with some interesting stories, but really a book by liberals for liberals. The general tone is repeated amazement that capitalism and businessmen could actually help others.
They also misrepresent research showing that conservatives give more to charity. Quoting Arthur Brooks, they note that those who are religious give more to charity. What the authors ignore, however, is Brooks' primary conclusion, that conservatives give more.
At the end of the book, the authors demand that billionaires give at least one-third of their income to charity -- a demand they consider moderate. Although they admit billionaires like Bill Gates paid their taxes and made their money legitimately, they still think this level of giving should be demanded to be socially accepted.
A well-researched book, but one that is written primarily for those on the left who believe government is the only way to promote well-being.
They also misrepresent research showing that conservatives give more to charity. Quoting Arthur Brooks, they note that those who are religious give more to charity. What the authors ignore, however, is Brooks' primary conclusion, that conservatives give more.
At the end of the book, the authors demand that billionaires give at least one-third of their income to charity -- a demand they consider moderate. Although they admit billionaires like Bill Gates paid their taxes and made their money legitimately, they still think this level of giving should be demanded to be socially accepted.
A well-researched book, but one that is written primarily for those on the left who believe government is the only way to promote well-being.
July 14, 2019
I don't know about saving the world, but they can help a lot
Throughout most of human history the rich have used their money to make more money and, quite frankly, they have often done so at the expense of those without much. This has always been considered the way things are: the rich get richer and the poor get…well, you supply your own line. However in this, the age of the super rich, things are changing; and in this engagingly written book, Matthew Bishop, the New York bureau chief of the Economist, and Michael Green an economist on leave from the UK's Department for International Development, chronicle this change, and give us a look at what we can expect in the future.
The authors begin with a little history of philanthropy as they focus on some of the giants of contemporary philanthropy, most notably Bill Gates and Warren Buffet. These are men who have acquired such a staggering amount of money that it would be irresponsible to leave it all to their relatives or friends. The understanding is that when you have as much money as these guys have--literally billions of dollars--you have an obligation to use that money and the power derived from it for the betterment of humanity. Or at least that is the new way of thinking as this book clearly shows. Even corporate giants like the much criticized Wal-Mart have gotten into what the authors call "The Spirit of Philanthrocapitalism." Consider these words from Lee Scott, Wal-Mart's chief executive:
"What would it take for Wal-Mart to be…at our best all the time? What if we used our size and our resources to make this country and this earth an even better place for all of us: our customers, associates, our children, and generations unborn?...Is this consistent with our business model?" (p. 187)
Considering that corporations in this age of globalization are thought by some to be very much the problem and not the solution to humankind's challenges--see, for example, The Corporation: The Pathological Pursuit of Profit and Power (2004) by Joel Bakan--this is a refreshing point of view. And it makes sense when you think about it. Bill Gates and Warren Buffet now spend most of their time redistributing their wealth. Such work is more than a full time job; it's a new career. What if the heads of corporations realized the social and moral responsibility they have incurred by their very success, not through the persons of their retired executives, but through their present day business models?
Bishop and Green devote a chapter to the ideal of "The Good Company." It's obvious that they would like to see corporations do more, especially considering the great challenges that we currently face in terms of pollution, water depletion, global warming, food shortages, corrupt governments, etc. Google comes in for a bit of critical scrutiny from Bishop and Green who believe that the giant multinationals should go beyond the façade of good public relations to the wisdom of enlightened self-interest. They quote Klaus Schwab, founder of the World Economic Forum, as saying, "global corporate citizenship can be considered a long-term investment. Since companies depend on global development, which in turn relies on stability and increased prosperity, it is in their direct interest to help improve the state of the world." Unfortunately, Schwab further notes that "the pursuit of short-term profits at the expense of the long-term best interests of the firm may lead to 'corporate attention disorder,' whereby companies lose focus on the big picture." (p. 181)
The big picture of course is sustainability of your advantageous position in the world economy. I see on television night after night examples of how some companies think they can manage that with slick advertizing. Oil companies present commercials in which they urge people to use less energy. You might ask why they do that until you realize that the commercials have nothing to do with cutting energy use, but everything to do with promoting a positive public image for their company. This is NOT the way to assume social and moral responsibility, especially by companies that are not paying the full environmental costs of doing business while they garner record company profits.
I think in essence this is what this book is about on the deepest level: an attempt to demonstrate through the example of philanthrocapitalism a way for the corporation of the future to become a trusted and valuable member of the world society irrespective of whatever product or service they produce or perform. A corporation should be something more that an amoral entity blind to everything but its bottom line. What profits do the leaders of these giants have when they realize, soon or late, that they will leave this world, as everyone else does, the same way they came in?
Citing examples set by the Gates Foundation, George Soros's Open Society Institute, the Carnegie Corporation and others, the authors are plainly urging those with the wherewithal to take a leadership role in shaping society by funding not just established charities but through the founding and funding other worthwhile projects including those dedicated to educational reforms, disease eradication, and scientific research. They also want the philanthropists of today to influence others not involved in charity to work for the common good. They quote Bill Gates as saying insightfully, "Go get 0.1 percent of the scientists working on erectile dysfunction to come and work on malaria and you will be making a huge contribution." (p. 51)
So, perhaps more than anything, the authors are showing how today's great philanthropists are using their celebrity and their prestige as well as their cash to help make this a better world. Let's hope more of them get involved.
--Dennis Littrell, author of the mystery novel, “Teddy and Teri”
Throughout most of human history the rich have used their money to make more money and, quite frankly, they have often done so at the expense of those without much. This has always been considered the way things are: the rich get richer and the poor get…well, you supply your own line. However in this, the age of the super rich, things are changing; and in this engagingly written book, Matthew Bishop, the New York bureau chief of the Economist, and Michael Green an economist on leave from the UK's Department for International Development, chronicle this change, and give us a look at what we can expect in the future.
The authors begin with a little history of philanthropy as they focus on some of the giants of contemporary philanthropy, most notably Bill Gates and Warren Buffet. These are men who have acquired such a staggering amount of money that it would be irresponsible to leave it all to their relatives or friends. The understanding is that when you have as much money as these guys have--literally billions of dollars--you have an obligation to use that money and the power derived from it for the betterment of humanity. Or at least that is the new way of thinking as this book clearly shows. Even corporate giants like the much criticized Wal-Mart have gotten into what the authors call "The Spirit of Philanthrocapitalism." Consider these words from Lee Scott, Wal-Mart's chief executive:
"What would it take for Wal-Mart to be…at our best all the time? What if we used our size and our resources to make this country and this earth an even better place for all of us: our customers, associates, our children, and generations unborn?...Is this consistent with our business model?" (p. 187)
Considering that corporations in this age of globalization are thought by some to be very much the problem and not the solution to humankind's challenges--see, for example, The Corporation: The Pathological Pursuit of Profit and Power (2004) by Joel Bakan--this is a refreshing point of view. And it makes sense when you think about it. Bill Gates and Warren Buffet now spend most of their time redistributing their wealth. Such work is more than a full time job; it's a new career. What if the heads of corporations realized the social and moral responsibility they have incurred by their very success, not through the persons of their retired executives, but through their present day business models?
Bishop and Green devote a chapter to the ideal of "The Good Company." It's obvious that they would like to see corporations do more, especially considering the great challenges that we currently face in terms of pollution, water depletion, global warming, food shortages, corrupt governments, etc. Google comes in for a bit of critical scrutiny from Bishop and Green who believe that the giant multinationals should go beyond the façade of good public relations to the wisdom of enlightened self-interest. They quote Klaus Schwab, founder of the World Economic Forum, as saying, "global corporate citizenship can be considered a long-term investment. Since companies depend on global development, which in turn relies on stability and increased prosperity, it is in their direct interest to help improve the state of the world." Unfortunately, Schwab further notes that "the pursuit of short-term profits at the expense of the long-term best interests of the firm may lead to 'corporate attention disorder,' whereby companies lose focus on the big picture." (p. 181)
The big picture of course is sustainability of your advantageous position in the world economy. I see on television night after night examples of how some companies think they can manage that with slick advertizing. Oil companies present commercials in which they urge people to use less energy. You might ask why they do that until you realize that the commercials have nothing to do with cutting energy use, but everything to do with promoting a positive public image for their company. This is NOT the way to assume social and moral responsibility, especially by companies that are not paying the full environmental costs of doing business while they garner record company profits.
I think in essence this is what this book is about on the deepest level: an attempt to demonstrate through the example of philanthrocapitalism a way for the corporation of the future to become a trusted and valuable member of the world society irrespective of whatever product or service they produce or perform. A corporation should be something more that an amoral entity blind to everything but its bottom line. What profits do the leaders of these giants have when they realize, soon or late, that they will leave this world, as everyone else does, the same way they came in?
Citing examples set by the Gates Foundation, George Soros's Open Society Institute, the Carnegie Corporation and others, the authors are plainly urging those with the wherewithal to take a leadership role in shaping society by funding not just established charities but through the founding and funding other worthwhile projects including those dedicated to educational reforms, disease eradication, and scientific research. They also want the philanthropists of today to influence others not involved in charity to work for the common good. They quote Bill Gates as saying insightfully, "Go get 0.1 percent of the scientists working on erectile dysfunction to come and work on malaria and you will be making a huge contribution." (p. 51)
So, perhaps more than anything, the authors are showing how today's great philanthropists are using their celebrity and their prestige as well as their cash to help make this a better world. Let's hope more of them get involved.
--Dennis Littrell, author of the mystery novel, “Teddy and Teri”
April 1, 2012
Reads like the Reaganomics of philanthropic capitalism where it's up to the superrich to drive social good.
Many great points about the merits of applying capitalistic principles to nfp work, but I think loses sight of and offers little in the way of applying culture change at all levels of society.
Also, they seem to have a huge man-crush on Bill Gates. Not that the man isn't crush worthy for his efforts, but the book may have instead be titled:
"How Bill Gates will save the world with money."
Many great points about the merits of applying capitalistic principles to nfp work, but I think loses sight of and offers little in the way of applying culture change at all levels of society.
Also, they seem to have a huge man-crush on Bill Gates. Not that the man isn't crush worthy for his efforts, but the book may have instead be titled:
"How Bill Gates will save the world with money."
May 29, 2011
The authors have conducted and analyzed lengthy interviews with social entrepreneurs, wealthy individuals, successful business leaders and high profile global figures to substantiate a significant relationship between wealth entrepreneurs and business leaders taking the initiative in creating solutions to solving social problems.
This is a great read for anyone working in the NGO and/or fundraising world who are wanting to understand the relationship between capitalism and funding solutions to solving some of societies great problems.
This is a great read for anyone working in the NGO and/or fundraising world who are wanting to understand the relationship between capitalism and funding solutions to solving some of societies great problems.
July 9, 2011
Honestly I'm not certain how I feel about this book. It's certainly interesting, and the history is good, but now that I'm finished, I'm not sure that I learned anything new from it.
It is enjoyable though, you can tell while reading it that it was authored by a journalist, it kind of feels like a magazine piece if that makes any sense.
It is enjoyable though, you can tell while reading it that it was authored by a journalist, it kind of feels like a magazine piece if that makes any sense.
January 6, 2012
This book was well written, but too boring for me. It was an assigned book club book for my office, but we all agreed we didn't want to be reading this sort of thing on our down time. I don't think anyone finished it. The half I read was well done, and I liked the inside scoop. If I'm ever heinously bored I'll try and finish it.
March 17, 2010
Good overall summary about the changing role of philanthropy today, and excellent research regarding current main players in the field. Probably a must read if this is your field. If not, you can take it or leave it.
January 27, 2012
This is chock a block full of interesting data and examples of people or organisations doing 'stuff', but I found it a bit hard going. I know it is non-fiction, but a stronger narrative and possibly leaving some of the research in the drawer could have helped.
December 2, 2008
It was nice to read about historical, cultural figures; and the trend towards more business "rigor" in philanthropy. The book is more survey than analysis.
March 11, 2009
very interesting
April 30, 2011
Great and worth the read.
January 3, 2011
A very fast walkthrough of famous philanthropists, foundations and organizations -- a bit too detail oriented for me.
March 3, 2011
Not a page-turner, but interesting and informative. I read the 2008 version, which felt a little dated because the book relies heavily on facts and figures.
Currently reading
June 3, 2011great book.
August 3, 2011
I really enjoyed this book. It looked at a lot of different facets of the changing realm of NGOs and the philanthropists that support them.
August 2, 2012
Good as an introductory book, but a bit underwhelming.
April 28, 2013
Gave up on it 65% of the way through because it got extremely repetitive. Maybe I'll come back to it someday. We'll see.
Currently reading
March 13, 2010Inspiring...
November 13, 2012
Fantastic book!
March 29, 2022
i’m not usually the type to have very strong opinions (i think)… firstly, the contradiction of calling billionaires and the super rich “philanthropists” is ridiculous to me… the whole book made me cringe so much, especially the introduction and the opening… “many of the super rich interviews for this book seemed sincere”… “Buffet and Gates are leading a revival and reinvention of an old tradition that has potential to solve many of the biggest problems facing humanity today”… “Wealthy individuals who engaged in philanthropy typically gave away around 7% of their wealths, far more than the average citizen”… “the road to hell is paved with good intentions”… no thanks. there’s some attempt at showing different opinions of ideas, but the book is clearly heavily biased (i mean, it’s says “HOW THE RICH CAN SAVE THE WORLD AND WHY WE SHOULD LET THEM” on the cover) and pro-super-rich (which i am not) so it was definitely an interesting read for me.
at least it gave me ideas for my essay.
at least it gave me ideas for my essay.
March 23, 2018
This is a good introduction to philantrocapitalism. Some of the stories were interesting. For instance, Robert Reich saying that Corporate America spends more on lobbying politicians than on philanthropy or a consulting firm saying that the average grant of a foundation is $ 50 000 per project, which means it does not have much impact. Overall you get the impression that this is a very limited solution, but that we are still early in the game. The authors also presents many of the innovative or key players, which I liked.
October 6, 2020
Insightful, but glosses a lot of content very quickly.
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