This time last year we stuck out our necks and made ten predictions for philanthrocapitalism in 2012. So how did we do?
1. Greater scrutiny of the 1%. We were right that the US presidential election would focus attention on the role of wealthy donors in shaping the political agenda through their cash donations to electoral campaigns. According to the philanthropically-funded investigative news agency ProPublica, the biggest political funder of the year was casino owner Sheldon Adelson, who stumped up more than $100 million for Republican causes in 2012, followed closely by the Koch brothers. President Obama had his own super-rich backers but it is unsurprising that the liberal media was keener than the conservative media to point the finger at billionaire donors as a symbol of what’s wrong with America (though there was always George Soros on hand when the right needed a scapegoat). As we write this post, America stands on the edge of the ‘fiscal cliff’ where tax and the rich is one of the big issues dividing President Obama, who wants the wealthy to take the strain of repairing the Federal Government’s finances, and the Republicans who control Congress, who have rejected tax rises for anyone.
The debate about taxation and the role of the rich has also been lively in Europe. In the spring, the British Government was forced into an embarrassing u-turn when it tried to impose a cap on the tax subsidy for charity by wealthy donors. We backed the campaign to get Britain’s Chancellor the Exchequer, George Osborne, to change his mind but also rued the missed opportunity for fundamental reform of the messy, incoherent tax subsidies for philanthropy. A particularly telling part of the British story was that this swipe at the 1% came from a centre-right government. On the other side of the English Channel, however, France has been going through some old-fashioned bash-the-rich politics led by Socialist President Francois Hollande, who beat incumbent conservative Nicholas Sarkozy in this year’s election. President Hollande campaigned on and passed legislation to slap a ‘temporary supertax’ on those earning more than €1 million (a bit more than $1 million) a year. The move has reportedly sent France’s wealthy, including film star Gerard Depardieu, scurrying over the borders to protect their fortunes from the taxman. Might a bit more philanthropy from France’s notoriously tight-fisted billionaires have helped them in this debate?
2. Nation-building is back. We thought that the Arab Spring might herald a wave of donors putting their cash into helping countries looking for a new start to develop into democratic and prosperous states. We seem to have been over-optimistic. The year’s main philanthrocapitalistic effort at improving geopolitics was the viral social media campaign about Joseph Kony, the tyrannical leader of the Lord’s Army, which has generated an impressive amount of buzz but has yet to deliver real change on the ground in Africa. The favourite African leader of many philanthrocapitalists, Paul Kagame of Rwanda, has also lost his halo as international attention has focused on his human rights record in neighbouring Congo. Yet the case for nation-building as high-impact philanthropy is still compelling. Indeed, Russia’s President Putin, disappointingly returned to power this year, provided evidence of this with a new NGO law that forces nonprofits receiving money from overseas to register as ‘foreign agents’. Why bother if they don’t make a difference? So why have philanthropists shied away from the nation-building challenge? Too controversial? Lack of knowledge of abroad, especially the Middle East? Answers on a postcard please.
3. Crunch time for Muslim philanthropy. Hmmmm. Crumble rather than crunch, we fear. Sadly there were few signs of Muslim philanthrocapitalism booming during 2012 – although there are rumours of mostly humanitarian donations to Syrian rebels by wealthy Gulf arabs, which have necessarily taken place below the radar. We remain optimistic that Turkey’s entrepreneurial wealth creators, helped by groups such as the diaspora-led Turkish Philanthropy Fund, will step up and hopeful that the problems of countries like Pakistan and Afghanistan will become a priority for Muslim donors. An excellent cause for Muslim donors would be the anti-polio capaign in Pakistan, which has been hard hit by the horrific murders of health workers taking part in the vaccination drive. Sadly, Pakistan’s war on polio has been tainted by association with the war on terror. Could public support by Muslim donors erase that taint and get this crucial job back on track?
4. Occupy philanthropy. We thought that the #occupy movement would shift gear from protest to become a real force for change within capitalism and, although this is an issue that has not grabbed the headlines, as the main occupy campaign faded, 2012 has nonetheless seen some real progress. Early in the year, in Britain and to some extent elsewhere, we saw the shareholder spring as the owners of companies revolted against executive avarice. The innovative campaign incubator Purpose.com has also launched a new campaign, therules.org, which is mobilising citizens to challenge financial institutions, among others, to clean up how they act. And our old philanthrocapitalism friend Sir Richard Branson has launched a movement of socially and environmentally responsible CEOs known as the ‘B Team’, as Matthew reported for the Economist.
5. Steve Jobs, Philanthropist. No, not philanthrocapitalism from beyond the grave but, we predicted, a vigorous new commitment to giving from Mr Jobs’ widow, Laurene Powell Jobs. So far, nothing spectacular has happened, but we remain optimistic on this one.
6. Celathropy’s New Stars. We were off the mark in thinking that Ashton Kutcher might seek to mend his reputation with philanthropy – although he and Demi Moore did give their joint anti sex trafficking charity a new name, to distance it from their broken marriage – but our other predictions for celebrity philanthropists were pretty good. Ben Affleck has kept up his work on Africa and may do even more in the future now that his political career is on hold. Lady Gaga too has kept up the push in her campaigns against bullying and Chelsea Clinton, as predicted, stepped up to a central role at this year’s Clinton Global Initiative meeting. Another heir to a political dynasty, Barbara Bush (daughter of George W.) has continued her work with Global Health Corps and finance heir Howard Buffett (grandson of Warren) launched his new, philanthrocapitalist Global Impact Institute. Heirs were also much on the mind of the Duke and Duchess of Cambridge this year, with the announcement of a royal pregnancy to see the House of Windsor into the next generation, but there was also time to get a few grants out of the door from their new Royal Foundation.
7. Deep Impact. We expected some big moves in impact investing this year and, without doubt, the social impact bond has been the social innovation of the year, spreading quickly from the UK to other countries including the US. Indeed, a particularly welcome development in 2012 has been investment bank Goldman Sachs’s role in one of the American pilots of this socially useful financial innovation. Goldman has a distinguished history of philanthropy and yet, we have argued, such generosity means little if this revered finance house does not take the lead in remaking capitalism. So, well done Goldman Sachs. Elsewhere in the impact investing world, Britain continued to blaze a trail, with the launch of Big Society Capital and a new commitment from the UK Government to impact investments in the developing world. The billionaire signatories of the Giving Pledge are also taking a serious look at what they can do to move impact investing forward. So, lots of green shoots, yet still a question mark over whether impact investing can draw in significant private investment. We remain optimistic. As we reported recently, there is still a lot of innovation in this space that will hopefully bear fruit in 2013.
8. The Great Extinction. There were not, as we predicted, any headline grabbing cases of high-profile charities going to the wall in 2012. Even the scandal over Lance Armstrong’s alleged doping does not appear to have done much damage to Livestrong, the cancer fighting charity he founded. But that may be no good thing. The nonprofit sector is not sheltered from the chill economic winds blowing through the rest of the economy, reflected for example in the latest World Giving Index. Yet, in the absence of an effective charity capital market, nonprofits have strong incentives to soldier on rather than face up to reality and merge with, or be taken over by, other organisations. We are hearing plenty of stories about financial distress in the nonprofit sector and many organisations will need to restructure. We believe that there is still a real opportunity for philanthrocapitalists to help this process by playing the role of activist investors and by funding mergers.
9. Philanthrocapitalism the Chinese Way. We did not just mean the publication of the Mandarin edition of Philanthrocapitalism, which came out in June of this year, but also a new wave of Chinese givers and social investors. There are plenty of promising signs, including a pending pilot experiment in making it easier to start non-profits in one region of China, though like everything else in the country, the difficult change of leadership in the Communist government slowed down change severely this year.
10. Some good news. The fight against epidemic disease has been one of the big successes of philanthrocapitalism, led by the Gates Foundation, and we expected good news this year. One big victory was the announcement that India has joined the list of polio-free countries. There was, however, a warning from the World Health Organisation that funding for malaria prevention has hit a plateau, largely because of a tailing off of government funding. Expect to see redoubled efforts on malaria from Bill Gates and others in 2013, backed by the good news that malaria deaths continued to fall dramatically in 2012.
Overall, then, we were more right than wrong about 2012, though we were guilty perhaps of over-optimism. Hopefully, we will fare better next year. We will be back soon with our predictions for Philanthrocapitalism in 2013.