A Critique
of Philanthropy
BY KENISHA MARTINS / 14 AUGUST, 2021
Examining the evolution of philanthropy over the years and its manifestation into contemporary times through a critical lens.
ith the surge of the COVID-19 virus causing a global pandemic and disrupting global economies, the world witnessed a stark increase in donations from philanthropists and numerous other corporations. In India alone, we saw a 175% rise which roughly equates to an increase of around INR 12,050 crore in the philanthropic sector according to the EdelGive Hurun India Philanthropy List 2020. The size of these donations have also increased quite drastically with Azim Premji donating INR 22 crores every day in financial year 2020 targeted primarily towards education and being labelled as ‘India’s most generous’ by various news publications.
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Illustration by Anirban Ghosh via Google
This kind of extensive reach within philanthropy has never been seen before and the response to such a massive undertaking has been overwhelmingly positive across the media and the general public. However, philanthropy is not devoid of criticisms, and has come under increased scrutiny over the past few years. As we continue to see, the billionaires and corporations behind these foundations continue to amass enormous amounts of wealth, with the world’s richest 1% owning more than twice as much wealth as 6.9 billion people. To understand this phenomenon better, we need to delve deeper.
Philanthropy is by no means a new concept, it has existed for millennia. The word ‘philanthropy’ is derived from the Ancient Greek phrase ‘philanthropia’, meaning “to love people”. This definition has evolved a lot throughout history reflecting the drastic changes that philanthropy as an ideology has undergone. Modern philanthropy that we see today has its roots in 19th century America. With the end of the Civil war and the rise of industrialization, philanthropy required a more systematic approach to social problems. Up until now, charities were mostly fragmented endeavours carried out primarily by religious groups which were characterized by volunteerism aimed at providing immediate assistance to the problems of the urban poor. During this time, we saw the rise of huge foundations like the Sage, Rockefeller, Ford and many more started by individuals and families who amassed a large amount of wealth during this period. This kind of philanthropy was however filled with controversy and critics examing and scrutinizing the practices that these entrepreneurs employed to build their fortunes.
Andrew Carneaie's philanthropy. Puck magazine cartoon by Louis Dalrymple, 1903
Former U.S. president Teddy Roosevelt’s statements on John D. Rockefeller reflected the general perception of philanthropists at that time, “No amount of charity in spending such fortunes can compensate in any way for the misconduct in acquiring them. ”One of the most notorious philanthropists of the 1900s was Andrew Carnegie, who built more than 3000 public libraries, making education more accessible to the general public. He was subjected to immense criticism by the general public due to his utilization of unethical practices like subjecting his steel workers to long working hours, low wages and dangerous workplace situations. He also did not allow the formation of worker unions and actively pushed to destroy them.
Despite extensive criticism, we saw that philanthropy grew to an even larger scale. A new kind of philanthropy operating on a global scale has come to be known as philanthrocapitalism. The term philanthrocapitalism was coined by Mathew Bishop in his article titled, ‘The Birth of Philanthrocapitalism’ published in ‘The Economist’. He, alongside Micheal Green, further expanded on the concept of philanthrocapitalism in their book ‘How the Rich Can Save the World’. The book explains how philanthrocapitalism employs strategies for profit maximisation that business corporations and elites have been using for decades in the free market. This philanthropy is no longer the act of giving money to a charity organisation. It involves building charitable organisations that use market-based approaches to benefit a larger community.
This philanthropy is no longer the act of giving money to a charity organisation. It involves building charitable organisations that use market based approaches to benefit a larger community.
According to Harvard University’s Global Philanthropy Report 2020, currently, there are approximately more than 260,000 philanthropic foundations in 39 countries and nearly three-quarters of identified foundations have been established in the last 25 years. The influence of these philanthropic foundations have also increased significantly. The Bill & Melinda Gates Foundation is the World Health Organisation’s second largest donor after the United States, which showcases the enormous impact a single private foundation has on such a global organisation.
The Bill & Melinda Gate​s Foundation is the World Health Organisation's second largest donor after the United States, which showcases the enormous impact a single private foundation has on such a global organisation.
By investigating the ‘Chan Zuckerberg Initiative’ we get a clearer idea of how philanthrocapitalism manifests itself in a contemporary context. The initiative founded by Mark Zuckerberg and his wife Priscilla Chan has had many philanthropic endeavours addressing social problems with a specific focus on education, science and innovation. However, the initiative, unlike how it was portrayed in the media, is not a Non-Profit initiative on paper but a Limited Liability Company (LLC).
pictured: Mark Zuckerburg and his wife, Priscilla Chan here
This legal status gives the couple complete control over the financial decisions of the company, allowing them to take on more than just charitable projects. The initiative on the behalf of the Zuckerburgs can invest in any company that they see fit and lobby for policies and political campaigns all while having significant commercial, tax and political benefits. This mirrors what we have seen in recent years; the Chan Zuckerberg Initiative has spent more on politics and policy reformation as compared to other philanthropies. The couple has enormous political and social power, as well as a lack of accountability to the stakeholders about the investment decisions made by organisations like the Chan Zuckerberg Initiative.
As more philanthropic individuals and foundations accumulate additional political and social power, they generate serious potential to directly influence funding for different causes. In the United States alone, which happens to be one of the most philanthropic nations, only a fifth of the money donated by wealthy individuals goes to the poor. The remaining donations are redistributed to the arts, sports teams, cultural pursuits, education and healthcare, all while having significant tax deductions. This ends up undermining a lot of social programs as they rely on taxation for funding. Instead, millions of dollars in tax-advantaged funds end up in billionaire-funded initiatives or foundations.
Illustration by Bratislav Milenkovic via Google
The biases of these foundations is what creates a consequential discrepancy between the targeted population and the actual vulnerable parts of our society. A report by Bain & Company shows that despite philanthropy having grown to 23% in 2020 alone, there are clear biases towards education and health funding exclusively. Additionally, it is apparent that less than 1% of the funding goes to other programs like gender equality, which NITI Aayog’s SDG India Index identifies as lagging. There is also a geographical mismatch, as we see Maharashtra receiving 34% of the largest proportion of philanthropic funding while states like Jharkhand receive less than 1% of the funding while having a much higher poverty rate than Maharashtra. This showcases why trickle-down philanthropy does not work as the funds and donations by a lot of philanthropic initiatives don’t even reach the most vulnerable parts of society.
The question still remains, how can philanthrocapitalism incorporate the two very distinct ideologies of capitalism and philanthropy? The short answer to that is that philanthropists view markets and charitable morals as the same thing. They believe that profit-making strategies are more effective in solving social problems and believe that capitalism at the end of the day is philanthropic. This idea is reminiscent of the works of Adam Smith, particularly his economic concept of the ‘Invisible Hand’ that states that the market and social responsibility are not opposites; individuals making a profit can be mutually beneficial to the society at large, and by regulating these businesses the government ends up undermining the goal of social responsibility. The problem lies in the fact that philanthropy at the end of the day benefits only the top 1%. It creates a state of plutocracy which means it allows power to be held in the hands of a select few without having the necessary democratic mandate.
The problem lies in the fact that philanthropy at the end of the day benefits only the top 1%
At the end of the day, philanthropy is a moral discourse. It shouldn’t just be another form of altruism for the ultra-wealthy to justify their massive share of wealth in the world. Despite the good intentions of philanthropy, they end up perpetuating a system that is rigged in favour of the rich and meant for the concentration of wealth on the top. In her book ‘No Such Thing as a Free Gift’, Linsey McGoey observes, “Private philanthropy is no substitution for hard-fought battles over labour laws and social security.” The act alone will never be able to solve world issues and bring sustainable change, as doing so requires systematic change which will be against the direct interest of the many present-day philanthrocapitalists. Instead, we should focus on taxing the wealthiest appropriately and having stronger social welfare programmes that are created by the government for the people most in need. Until then, we will continue to see the rise of philanthropists who are able to capitalise their altruism under the veil of charity and social justice and become indistinguishable from actual societal change.
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Keywords
philanthropists, billionaires, The Economist, philanthrocapitalism, Chan Zuckerberg Initiative, NITI Aayog, altruism
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References
Rhodes, C., & Bloom, P. (2018, May 24). The trouble with charitable billionaires. The Guardian.
McGoey, L. (2012). Philanthrocapitalism and its critics. Poetics, 40(2), 185–199. https://doi.org/10.1016/j.poetic.2012.02.006.
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Schleifer, T. (2020, June 26). Working for Mark Zuckerberg's philanthropy isn't always easy since it means working for Mark Zuckerberg. Vox. https://www.vox.com/recode/2020/6/26/21303664/mark-zuckerberg-facebook-chan-zuckerberg-initiative-philanthropy-tension.
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Barkan, J. (2013). Plutocrats at work: How big philanthropy undermines democracy. Dissent Magazine.
https://www.dissentmagazine.org/article/plutocrats-at-work-how-big-philanthropy-undermines-democracy.
Sheth, A., Ayilavarapu, D., Pandit, R., & Sinha, M. M. (2021, March 15). India philanthropy Report 2021. Bain & Company.
https://www.bain.com/insights/india-philanthropy-report-2021/.
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