Peter Buffett Calls Charity a “Perpetual Poverty Machine”

Print Share on LinkedIn More

July 27, 2013; New York Times


There is nothing new in the term “charitable industrial complex.” It’s been in use for at least a decade among organizers on the left, so Peter Buffett’s use of it should be no revelation, but…well, he is a Buffett, after all. And actually, some the challenges he mounts in the article are on the mark and worth hearing from many different mouths but his strokes are so broad that they are nothing short of flat-footed. In short, he says, unfettered capitalism is robbing the world with one hand, giving back pittances with the other, and then expecting to be thanked for it—not only thanked, but forgiven to be allowed to pillage another day. This is true, by the way. There may be nothing more grotesque in this world than a robber baron setting himself up as beneficent savior, and philanthropy has played host to a lot of this kind of behavior over the years. And nonprofits have often played along. NPQ published a piece by Joan Roelofs in 2006, entitled “The Third Sector as a Protective Layer for Capitalism,” and it was not a new thought then.

In this op-ed in the New York Times, Buffett references his own discovery of Philanthropic Colonialism, also not a new concept, along with the fact that such interventions have sometimes bizarre and horrific unintended consequences. He wrote, “I noticed that a donor had the urge to ‘save the day’ in some fashion. People (including me) who had very little knowledge of a particular place would think that they could solve a local problem. Whether it involved farming methods, education practices, job training or business development, over and over I would hear people discuss transplanting what worked in one setting directly into another with little regard for culture, geography or societal norms.”

Right—sometimes otherwise referred to as strategic philanthropy. But, he adds, because he is a Buffett, he often sits in philanthropic rooms where people who are creating world-class problems are claiming to be serious about solving them. (Inequality, for one.)

That’s also not a new notion, and I am with him on everything so far, but then he takes something of a turn, referring to growth in the nonprofit sector, which he says outpaces business and government sectors. “It’s a massive business,” he says “with approximately $316 billion given away in 2012 in the United States alone and more than 9.4 million employed.” I am not sure what this last has to do with his argument. I would like to see more nonprofits and more small businesses active in our communities: food co-ops, theater projects, museums and poetry clubs, locally owned corner stores, and surf shops. But his point is not these kinds of entities, but the colonializing ones that impose solutions on communities whose problems they may have had a hand in causing.

What Peter Buffett really focuses on is “conscience laundering,” which allows the “existing structure of inequality” to remain firmly in place. That conscience laundering, he implies, comes complete with a kind of mass brainwashing that papers over structural injustices and abuses of people and environment. He ends by saying, “Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market…(but) as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine.”

Again, Peter Buffett is mostly right, but we are not right if we act like this is a new notion or if we accept that all nonprofits are somehow complicit in giving capitalism a pass in return for a grant. (Though, frankly, our sector has been structurally dependent, and therefore at risk for keeping silent when we should be loud—for acting like addressing the symptoms of injustice is the same as challenging injustice). Until we see that wealth gap start to close, women making as much as men, and the health indicators in communities of color begin to move decisively to the good nationwide…until our jails and prisons start to empty out and people with mental illness are not incarcerated for their illness on the street or in jails or prisons…we should not go home at the end of any day feeling self-satisfied. I believe that Buffett is attempting to say that this sector has been bought off, and indeed that is somewhat, though not as completely as he claims, the case.—Ruth McCambridge

  • Michael Wyland

    Thanks, Ruth! Peter Buffett’s column is provocative and unsatisfying.

    How does his proposed “humanism” differ from capitalism as he sees it? He doesn’t tell us. He rails against the current mindset and advocates for a new mindset. He claims unnamed others are working on such a new mindset or model. However, he doesn’t indicate the elements of the new mindset or model, except to imply it’s less unequal than the present capitalist model.

    Is he an advocate for socialism, whether utopian or otherwise? To what extent is his mindset part of the paternalism problem rather than the solution to the problem? Does he see “the answer” more clearly than those he seeks to help? I’m reminded of Barbara Eherenreich’s book on the working poor in America where she notes that, contrary to public perception, poor people in the US are often great money managers, given the range of limited choices they have.

    As to income inequality, there needs to be several levels of “why”-based inquiry before meaningful solutions can be explored. It’s intellectual laziness to blame greed by the “haves” for the poverty of the “have nots,” as though a capitalist economy is a zero-sum win-lose game. Especially in an age where hard assets matter far less than intellectual capital, and where individual effort can produce great wealth without either massive labor or significant capital investment, we need to talk about what creates wealth and what consumers value. Ironically, the information age may place greater responsibilty on individuals to identify their own path to economic sustainability rather than relying on the employer markets to supply opportunities for long-term jobs. This is not a new thought, of course, but it’s been slow to become integrated into the disucssion.

    One aspect of the international philanthropic interest by US philanthropists that deserves discussion is the extent to which major philanthropists and social entrepreneurs have soured on the US nonprofit sector. They eschew the structures and restrictions on their philanthropy in the US and focus on the wide-open frontiers available to them in Africa and elsewhere. They revel in addressing basic needs abroad rather than attempting incremental change at home. It’s often a clumsy effort, as Buffett notes, but it allows them to *do* something and be known for *doing* something, rather than merely contributing.

  • Terry Fernsler

    While not a new notion, thank you Ruth for constantly reminding us of this important issue. When one is seeking remedies to social ills, complacency shifts from benign to a major obstacle.

  • Keenan Wellar

    To me these comments relate well to the many NPQ articles and discussions about the evaluation of charitable organizations. Most of the popular measures tell us little about how effectively or ineffectively an organization is actually solving a problem. A charity can be an “A+” according to various measurements but they could in fact be doing harm to their community – by operating programs that are either neutral or counterproductive to positive outcomes. A given program operating within certain spreadsheet parameters tells us nothing about whether or not it has useful outcomes, or how well it fits with other organizations and systems in the community.

    In my own field (in my jurisdiction of Ontario, Canada but this is rather common now nationally and internationally) we are supposed to be supporting the social inclusion of people with intellectual and developmental disabilities – homes, jobs, citizenship, social life…and yet, the dominant programmatic model (and allocation of funding resources) remains that of segregation and congregation: special education, group homes, day programs…but many of these various organizations that are perpetuating the opposite of what they are called to do continue winning awards (and cash) for the wonderful work they are doing – a great example of the “charitable industrial complex” and there are no algorithms that will allow us to pick that up and assign the “C, D, or F” that is actually deserved.

    I know my sector is not alone in this experience and the larger charities that are most likely to be involved in “philanthropic colonialism” may often experience enormous barriers to change – not the least of which is their existence may be threatened. These are hard conversations, but they are appropriate – we cannot in good conscience leave people in need out in the cold simply because organizational inertia has perpetuated the taking dead end pathways.

  • Arlene Spencer

    Well done, Ruth! 250 foot view of the nonprofit sector, though not black and white. I appreciate the inference that we in the sector need to use more “I statements” in regards to the larger system.

  • Jeffrey C. Walker

    Peter Buffet’s comments appear skeptical that a true partnership can be built between those with money and those that bring other resources to the table. He needs to experience a higher level of collaborative giving. That is the whole point of the generosity networks that are being built ( ) …that everyone brings unique resources to the table (time, network, money, creativity, etc.) to address the causes that no one person or entity can address alone. Many people from all parts of life joined together with us to end deaths from Malaria from corporations like Sumitomo Chemical, ExxonMobil to Foundations like Bill & Melinda Gates Foundation to individuals like Ray Chambers and Peter Chernin from Fox, like multi-lateral organizations such as the Global Fund, Department for International Development, USAID, to non-profits like Save the Children UK to UN agencies like UNICEF and US Agencies like The Peace Corps, small firms like A to Z funded by Acumen Fund and religious organizations like World Vision and many other individuals in each country to walked miles carrying bed nets. They all focused on a common goal, ending deaths from Malaria and have cut deaths in half in four years…amazing. We can do more collaborations across all income and stakeholder groups like these.