Philanthropy under attack! Circle the wagons!

So, we are philanthropy’s “dangerous and destructive” assailants, accuses Phil Buchanan in his recent blog at Philanthropy Central, a new site from the Sanford School of Public Policy at Duke University. It seems that celebrating the wave of successful entrepreneurs and big corporations that are getting into giving back, what we call philanthrocapitalism, is a threat to “the nonprofit sector’s distinctive identity and purpose” – according to Phil.

We are used to the accusation that nonprofits should not be turned into businesses, or the claim that the failings of capitalism in the last couple
of years mean that the business sector has nothing to teach nonprofits. But that usually comes from people who have not read our book, or thought much about about the issues. Neither of which is true of Phil, whose Center for Effective Philanthropy does a great job in getting foundations to up their game. Indeed, CEP is one of the philanthrocapitalist intermediaries that we celebrate in the book.

Philanthrocapitalism is about two trends: one is about how the new entrants in the philanthropic marketplace – from Bill Gates to – are bringing competition, innovation and new ideas about how to do good. For the successful philanthrocapitalists this is about applying the same attention to impact as they did to profit in their businesses, which means learning and adapting, not imposing models that don’t work.
The other trend is the way that the wealthy and corporate leaders are realising that successful capitalism is about more than quarterly profit figures. They understand that capitalism does not exist in a vacuum, that capitalism cannot turn a blind eye to the wider social and environmental problems of our world. Which means they are increasingly paying attention to, learning from, and partnering with nonprofits and government. As President Bill Clinton says in the foreword to the new paperback edition of the book, this is about transforming the world into one of “shared responsibilities, shared opportunities, and a shared sense of community”. Perhaps the saddest thing about the financial crisis is that so many on Wall Street have opted for denial and decided that they can go back to business as usual. Since Philanthrocapitalism was first published, the day after Lehman Brothers went down, we have argued that this is an opportunity for capitalism to think about its values, not just in terms of giving away a share of its proceeds but also in how it makes money in the first place.
Unlike capitalism, the government and the nonprofit world are not exposed to the same risk of catastrophic collapse. This means that the opportunities to learn and change must come from new ideas and new players. That is why we are excited about the potential of philanthrocapitalism to help government and the nonprofit sector to become even more effective.
In the same article Phil also attacks Uncharitable, Dan Pallotta’s book, which we disagree with because it argues for abolishing the idea of charity yet is a great read and an important contribution to the debate. We should not expect everyone to agree but we should all welcome the opportunity that the debate presents rather than defensively dismissing other points of view. With tax dollars and donations likely to be in scarce supply for the next few years, as we struggle with the consequences of the financial crisis, denial is not an option.

Circling the wagons just delays the journey. Hitch up the horses, Phil and let’s get moving again.