Philanthrocapitalism: How the Rich Can Save the World
by Matthew Bishop and Michael Green
Bloomsbury Press, 2008
297 pp., $27.00
Just Another Emperor?: The Myths and Realities of Philanthrocapitalism
by Michael Edwards
105 pp., $11.95
Matthew Bishop and Michael Green end their new book, Philanthrocapitalism, by imagining a scene from the not-distant future. It’s October 25, 2025, and Bill Gates is celebrating his 70th birthday, far above the earth’s atmosphere, at Lord Richard Branson’s low-earth-orbit space mansion. He surveys a roomful of brilliant and accomplished social entrepreneurs, many of whom he funded. After U.N. Secretary General Paul Hewson (formerly known as Bono) finishes one of his old tunes, Mr. Gates raises a glass of champagne and offers a toast. “I am proud to tell you,” he says, “that this year’s World Development Report will confirm that malaria has been eradicated from the planet. So, what shall we tackle next?”
It’s an arresting image, and perfectly fitting for both the book and the idea behind it. The party, the buzz, the enthusiasm, the champagne—it’s lively, spirited stuff. So too is the intoxicating world of philanthrocapitalism, at least as Bishop and Green describe it.
What is philanthrocapitalism? Bishop (the chief business writer for the Economist) and Green (a former foundation official and freelance author) never give a concise definition, but it’s fair to say they think of it as a movement among the world’s wealthiest individuals to harness sound business principles for charitable purposes. Philanthrocapitalism has a healthy respect for the profit motive, and disdains the idea that nonprofits should be anti-profits. Altogether the movement is dedicated to focusing on results, achieving impact through leverage, moving quickly to scale up success and shut down failure, hunting for innovation, forging partnerships for success, and taking risks to deliver impact. Relentlessly putting these principles into practice distinguishes philanthrocapitalists from most traditional givers, even though the field as a whole has begun to speak in the philanthrocapitalist lingo.
Bishop and Green rather breathlessly subtitle their book, “How the Rich Can Save the World.” They offer a heady romp through the exciting realm of ultra-wealthy giving. The heroes of this tale are Bill Gates and Warren Buffett, but the authors describe a whole host of other technologists, investors, financiers, entertainers, celebrities, politicos, and consultants.
Bishop and Green are quite good at showing the diversity within philanthrocapitalism, a diversity that mirrors capitalism’s own internal capacity to create a seemingly infinite variety of goods and services. An entrepreneur like Gates drills into the research, identifies what’s doable, and sets to work changing the systems that impede solutions. An investor like Buffett finds the smartest guy to do all the legwork, puts his money behind him, then sits back and smiles. Venture capitalists like Vinod Khosla import a dogged attention to measurement into their giving. And a celebrity like Bono uses his attunement to “conscious consumerism” and the power of licensing to raise charitable money through consumption. The Google Guys try everything.
There’s a refreshing openness about philanthrocapitalism, which again mirrors capitalism’s own capacity for continuous re-invention. Of course, similar to Henry Ford, who said the customer can have a car of any color as long as it’s black, capitalism is open to anything as long as it makes money. Philanthrocapitalism draws a similar line, demanding measurable results.
Another hero of Bishop and Green’s book is not a businessman, at least not in the traditional sense, but a politician, former President Bill Clinton. Clinton has raised millions through his private foundation and the Clinton Global Initiative that he hosts each year, deftly tapping the wallets of his starry-eyed attendees. Clinton’s example allows the authors to point towards a particularly interesting and new development within philanthropy, the rise of (as they put it) “virtue’s middlemen,” or a class of professional advisors and consultants who help connect capacity with need. These middlemen help givers analyze their recipients’ activities, looking for fat to cut and impact to multiply. They also work with nonprofits toward the same ends. They manage funds to “invest” in different charitable “sectors.” They even conceive “investment banks” for charitable organizations seeking funding and scale. Finally, they increasingly bring together wealthy “investors” to learn from one another, to share stories of success and failure, and to invigorate one another’s passions.
It is, however, worth noting some unevenness in Philanthrocapitalism. With the exception of George Soros’ early success in promoting education and civil society in Eastern Europe before and during the collapse of communism, the philanthrocapitalists don’t have much to show for in terms of influencing politics or, even more importantly, culture. Bishop and Green do give a nod to the enduring impact of the John M. Olin Foundation, which invested in conservative ideas that took decades to incubate and flourish and then closed its doors 25 years after the death of its founder.
But it’s an exception that actually proves the rule, as Olin invested mainly in fusty academic types, eschewed most measures, and sought targeted effects rather than any watering down through “scale.” Bishop and Green several times approvingly mention Sir Richard Branson and Peter Gabriel’s plan to assemble a host of global “Elders” for our global village, including Nelson Mandela and Graça Machel, Mary Robinson, Desmond Tutu, Muhammad Yunus, and Jimmy Carter. (The group also keeps a place open for the house-bound Aung San Suu Kyi.) But the Elders appear to have had little effect on Iraq or Sudan, their two initial areas of focus, though the group is still developing. From a business perspective, it rather reminds one of the perennial roundtables of investment luminaries assembled by Barron’s that appeal to participants’ and readers’ egos, but don’t really ever change the way people do business.
In his new book, Just Another Emperor?: The Myths and Realities of Philanthrocapitalism, Michael Edwards sets for himself the task of taking away the punchbowl before the philanthropic party gets interesting. Politics and the inability to achieve social impact gets to the heart of Edwards’ criticism of the new movement of philanthrocapitalism. Edwards is a long-time global development specialist and officer at the Ford Foundation, one of the original bastions of philanthropy aimed at community change. Philanthrocapitalism, Edwards argues, is at best superficial, and at worst subversive. At its best, it treats the symptoms of the underlying illnesses of civil society. More importantly, it does not help to protect civil society from the powers that threaten it. Too many martinis really do make you sick.
Why can’t philanthrocapitalism do well by civil society, in Edwards’ view? First, it encourages distance between givers and those in need. Edwards particularly scorns the “middlemen” who keep philanthrocapitalists from the messy job of rubbing shoulders with poor folk. It is also, in his view, not truly “other-directed,” but rather oriented towards glitz, fame, self-promotion, and self-congratulation. Like business generally, he claims, it ignores the importance of government. For example, he gives evidence that global health outcomes depend much more on government spending on health care than on private or social enterprise. Private initiatives to address HIV/AIDS which do not attend to building strong public health infrastructure, he concludes, are like band-aids on a gushing wound.
This ignorance Edwards sees as the consequence of a deep antagonism between the marketplace and civil society. The marketplace, he claims, lives by the rules of social Darwinism; civil society, in his view, embraces equality. (Bishop and Green note that their ur-philanthrocapitalist, Andrew Carnegie, subscribed to a pretty stern version of social Darwinism, but they do not make much of this perhaps unpleasant observation.) The marketplace celebrates individualism; civil society understands collective power. The marketplace wants results now; civil society takes time. Market-men (and women) reduce “wrong” to “economic inefficiency”; citizens speak the language of justice. Finally, Edwards stresses that civil society offers no clear measures for success or failure. As a result, market-man just can’t see it.
This criticism does not mean that Edwards denies that philanthrocapitalism has any use. Quite to the contrary, he believes that it can produce stunning results in the important but limited areas of social service and environmental service delivery. He also acknowledges that market lessons can help improve the financial management of charitable organizations, though he adds that he does not see top-flight money management as among the foremost needs of organizations trying to do good. At bottom, though, Edwards sees the world as fundamentally divided between the market and civil society. In the past, philanthropy stood more or less within the realm of civil society. Now it is beginning to migrate to the other side. This, he believes, is a potentially huge loss.
Importantly, Edwards is not on the side of “politics,” so much as against the business folks. He and the philanthrocapitalists appear to agree on one thing: politics isn’t where it’s at. (For Edwards, politics—in the sense of electing and running a government—grows out of civil society, and often needs correction from it, as in the case of health care.) As a result, Edwards, like Bishop and Green, offers a fundamentally apolitical view of the world. One celebrates collective social action and the other celebrates individual market forces, but neither gives much attention to matters of justice, right, and the opinions that deeply divide citizens, as opposed to consumers or community-builders.
This commonality reveals an important area of shared concern for these authors, and an area deserving more thought by all philanthropists. Edwards, Bishop, and Green all want to see more connection within the philanthropic world. Edwards wants to see the focus on connection both among the poor and between the rich and the poor. His is a more traditional vision of community-building growing out of the activism of the early- and mid-20th century. It also subtly reflects a hard-nosed reality: in a democracy, the many rule, and the rich, by definition, belong to the few.
Bishop and Green offer their own celebration of connection—global connectivity among the rich. Where Edwards would like to see more camaraderie among the poor, Bishop and Green want to see greater solidarity among capitalism’s winners. And this isn’t a bad thing. Wealth-holders are people too. Like Richard II, they “feel want, taste grief, need friends.” In contrast to today’s philanthrocapitalists, in the past the wealthy gave anonymously, or through the guarded graces of hired hands and advisors. Even foundations like Ford have received the criticism that Edwards levels against the philanthrocapitalists, that it distances the wealthy power-holders from their poor subjects. The world is a richer place for the spirit that contemporary business, with its love of innovation and networking, brings to philanthropy.
At the same time, as the world’s current conflicts reveal, we have not yet reached the end of politics, when we all cease to be citizens and turn happily into full-time consumers or brothers and sisters. In the last seven years, politics has only grown in importance, on both the national and global scene. Yet in reading these two books, one gets the sense that the philanthropic sector—of both the capitalistic and civil society varieties—has not gotten that message, or at least does not know what to do with it. Capitalism is still not a value-neutral force in this world. The World Trade Center was a target for a reason. So are well-meaning Western aid workers. The relation between philanthropy and politics is a large and largely unresolved topic in the field.
In one of the fundamental works of Western political philosophy, Plato’s Laws, there’s a healthy attention to cocktails. In it, Socrates recommends that legislators try to blend the characters of the citizens, marrying the hasty to the slow and the angry to the gentle, the way the ancient Greeks mixed water and wine. It is a mix Michael Edwards might snub, as it dilutes both elements. Earlier in the book, Socrates also recommends that the city’s leaders should drink before gathering in council, as it reveals their true characters. Just imagine Nelson Mandela and Mary Robinson after a couple of beers—what a party!
But Socrates also has a deeper purpose: drinking can sink us to low activities such as boasting and showing off, and the philanthrocapitalists are rightly criticized for sometimes veering into such bombast. But, as dear old Jack Falstaff knew, it also elevates the spirit, making us braver, wittier, and more imaginative. Philanthropy can use all the courage, wit, imagination—and fun—it can get. And so, in reply to the toast that Bishop and Green imagine Bill Gates making 16 years hence, I can only say, “Bottoms up!”
Contributing editor Keith Whitaker is managing director of Calibre, a division of Wachovia Wealth Management.