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Is ‘Philanthrocapitalism’ Disrupting the Third Sector?

By Michelle Wright, founder and CEO of Cause4

Having your own charitable foundation, it seems, is as much a part of being a 21st century business leader as TED talks and flashy product launches. Most of the multi-billionaire CEOs of Silicon Valley based their company origin stories around their motivation to ‘make the world a better place’. Once these beneficiaries of the digital revolution reach a certain level of ultra-wealth, many are keen to apply their innovative, ‘fix it’ problem-solving mindset and business acumen to achieving that goal in the charity sector. This solutions-focussed approach, known as ‘philanthrocapitalism’, can also bring with it the added bonus of greater influence on Government policy, as well as improving the public perception of these highly profitable companies and their CEOs. What are these high profiles initiatives, though, doing for – or indeed to – the charity sector as a whole?

The Bill & Melinda Gates Foundation was one of the first of this new generation of Benefactor 2.0. It’s currently the largest privately-owned foundation in the world with an endowment of over $50bn. The charity is committed to finding cures or solutions to some seemingly intractable problems, from eradicating polio (their launch mission in the late 1990s) to ending malaria and preventing HIV/AIDS in India. Facebook founder Mark Zuckerberg with his wife Priscilla Chan have gone one step further, creating a Limited Liability company, dedicated to ‘fix it’ style philanthropy, to which they intend to donate 99% of their Facebook stock (valued at $45bn). The Zuckerbergs have pledged to “cure, prevent or manage all human disease before the end of the century”, underpinned by an initial donation of $3bn.

That’s a welcome development, and if anyone can afford it, it’s the 0.01% wealthiest. According to current figures from Oxfam, “billionaire fortunes increased by 12 percent last year – or $2.5 billion a day – while the 3.8 billion people who make up the poorest half of humanity saw their wealth decline by 11%”. The question is, are these well-meaning, private individuals, sweeping in with big budgets and ambitious targets, in danger of influencing – or worse, replacing – Government initiatives and long-established non-profit organisations to become the principal agents of change in society? This disruptive philanthropy model leads us to believe that intractable issues of mankind are innately fixable – possibly with a productive design sprint or business incubator. Philanthrocapitalism asks us to trust that anything is possible if we have the best minds, resources and funding available. But fixing world problems is considerably more nuanced than building a company – as is a philanthropic response to addressing global inequality – so this approach raises many questions. What are the pros and cons of a system built on this kind of largesse? It undoubtedly puts decision-making in the hands of the elite and that, by its very nature, is anti-democratic. With all the focus on problem solving, sectors like the arts and local poverty initiatives miss out. Social change and issues of humanitarian development are complex, arguably more so than designing the best software or social media platform. Would society be better served by such profitable companies paying higher taxes and wages, that could in turn raise living standards and improve social welfare and infrastructure? Not the kind of redistribution initiative that usually features in CEO TED talks about ‘making the world a better place’…

Whilst billionaire benefactors are in many ways a good problem to have, their benevolence is inevitably limited in scope – and there simply aren’t enough of them to go around. Here at Cause4, we look at ways to inspire and support the beneficiaries of charities and the charities themselves to be more entrepreneurial and find ways to finance and build sustainable, income-generating businesses.

That’s not to say we don’t look for takeaways and best practices in the ‘fix it’ philanthropy model. Thinking big – as entrepreneurs like Zuckerberg did with his clarity of vision and ambition to ‘connect the whole world’ with Facebook – is a great inspiration for any charity looking to innovate with its donor programme. Bringing donors ‘inside the tent’ when it comes to solving your own challenges can be an effective way to increase engagement and buy in. Ensuring your organisation has a relatable figurehead – your own Steve Jobs or Richard Branson – can create a stronger connection with your funders, as well as making it clear how an investment or donation will make a fundamental change to the sector or the individuals that it supports. Bill Gates has a genius phrase – ‘impatient optimism’ – that highlights him as the ultimate doer. Global issues such as malaria cannot be solved instantly, but the convening of stakeholders, government and funders around major issues can create real change urgently and quickly. Gates’ foundation is not successful on its own. Independent charities can achieve similar huge ambitions by bringing influential partnerships around urgent needs.

The rich, it seems, are still getting richer, even Bill Gates has gone from $54 billion in 2010 to $94 billion today. It’s no wonder super-philanthropy, and initiative like the The Giving Pledge, where the ultra-wealthy can commit to donating the majority of their fortunes, are on the rise. When all’s said and done, you can’t take it with you…

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