Just Another Emperor: the Myths and Realities of Philanthrocapitalism

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In Just Another Emperor: the Myths and Realities of Philanthrocapitalism, author Mike Edwards says: “A new movement is afoot that promises to save the world by revolutionizing philanthropy, making non-profit organizations operate like business, and creating new markets for goods and services that benefit society. Nick-named “philanthrocapitalism” for short, its supporters believe that business principles can be successfully combined with the search for social transformation.”

There is no doubt that this is an important phenomenon. Very large sums of money have been generated for philanthropy, particularly in the finance and IT industries. But despite its great potential, this movement is flawed in both its proposed means and its promised ends. It sees business methods as the answer to social problems, but offers little rigorous evidence or analysis to support this claim, and ignores strong evidence pointing in the opposite direction. Business will continue to be an inescapable part of the solution to global problems, and some methods drawn from business certainly have much to offer. But business will also be a cause of social problems, and as Jim Collins, author of “Good to Great,” concluded in a recent pamphlet, “we must reject the idea—well intentioned, but dead wrong—that the primary path to greatness in the social sectors is to become more like a business.”

Philanthrocapitalism’s other promise is to achieve far reaching transformation by resolving entrenched social problems. Yet its lack of understanding of how change occurs makes it unlikely that this promise will be achieved. There is a huge gulf between the hype surrounding this new philanthropy and its likely impact. Some of the newer philanthropists have come to recognize this—and have shown both humility and a readiness to learn about the complexities of social change. But too many remain captivated by the hype.

Philanthrocapitalism has seized on an important part of the puzzle of how to square democracy with the market, but is in danger of passing itself off as the whole solution, downgrading the costs and trade-offs of extending business and market principles into social transformation. I argue that:

  • The hype surrounding philanthrocapitalism runs far ahead of its ability to deliver real results. It’s time for more humility.
  • The increasing concentration of wealth and power among philanthrocapitalists is unhealthy for democracy. It’s time for more accountability.
  • The use of business thinking can damage civil society, which is the crucible of democratic politics and social transformation. It’s time to differentiate the two and re-assert the independence of global citizen action.

“Philanthrocapitalism is a symptom of a disordered and profoundly unequal world. It hasn’t yet demonstrated that it provides the cure.

The stakes are very high. Fifty-five trillion dollars in philanthropic resources are expected to be created in the United States alone in the next forty years. It matters whether these vast resources are used to pursue social transformation or just to address the symptoms of global problems. And for the philanthrocapitalists themselves, it matters that they are seen to be serious about engaging with this question. If they aren’t, they may find themselves on the receiving end of the same kind of backlash that greeted previous concentrations of private wealth and power. It is time for a different kind of conversation, less dominated by hype, more critical, and more open to evidence and dissenting voices. The result could indeed be a world transformed.”

The Nonprofit Quarterly has found Edwards’s argument compelling and worth examination. We invite you to download the full document here [PDF]  and bring your comments to the NPQ Forum to do as the author urges by engaging in dialogue “between philanthrocapitalists and their critics, on condition that they shed the mock civility that turns honest conversation into ‘jello.’ Deep-rooted differences about capitalism and social change are unlikely to go away, so let’s have more honesty and dissent before consensus, so that it might actually be meaningful when it arrives.