The “Second Golden Age” of Philanthropy: Hype or Hope?

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October 6, 2015; Fortune

“As philanthropy enters a second golden age, real social change is getting lost in the hype of market-based giving,” writes sociologist and author Linsey McGoey.

The first “golden age,” McGoey reminds us, was the 19th century, the time of Andrew Carnegie and John D. Rockefeller, Sr.:

From Carnegie’s spending on public libraries to Rockefeller’s investment in biomedical advances, their giving helped to shift charity from the dispensing of alms in a largely unsystematic manner to a business in itself, overseen by paid philanthropic advisors.

One trend in the “second golden age” she suggests is significant is “philanthrocapitalism,” which she summarizes as “a more muscular philanthropy that seeks to combine profits with poverty alleviation.” In this, she is not entirely accurate. Matthew Bishop and Michael Green, who coined the term, described the concept succinctly as “philanthropy led by the world’s wealth creators…applying business techniques and ways of thinking to their philanthropy.”

Paul Schervish, cited several times by Bishop and Green, is the scholar who has, more than any other, studied the philanthropy of U.S. wealth creators. He described one of the characteristics wealthy philanthropists share as “hyperagency,” which means, “being able to construct a self in a world that transcends the established institutional limits and, in fact creates the limits for others.” Schervish also points out that these hyperagents are the “producers” of philanthropy in a market where the currency is not money but emotions, and the producers are not troubled by competition.

Another trend in this “second golden age,” according to McGoey, is the effective altruism movement, championed by Peter Singer. Singer has declared Warren Buffett and Bill and Melinda Gates “the most effective altruists in history.”

McGoey’s concern is that the hype around the second golden age ignores questions about its effectiveness. “Its progress,” she says “often seems to be measured and underpinned by self-sustaining feedback loops.” Giving in the U.S. has remained stubbornly around two percent of GDP. Foundations are a growth industry in the U.S., yet extreme poverty, for example, continues to rise.

“Today’s philanthrocapitalists see a world full of big problems that they, and perhaps only they, can and must put right,” Bishop and Green wrote. Another commentator, Michael Edwards, sets that notion to rights in Small Change: Why Business Won’t Save the World, his rebuttal to Bishop and Green’s book. Edwards believes that “business thinking and social transformation operate on entirely different logics.”

Finally, McGoey points to an alarming paradox from the first golden age, which, hopefully, is not destined to be emulated in the second. She quotes from David Nasaw, Carnegie’s biographer: “Carnegie…became, if anything, more ruthless in pursuit of profits once he had determined that those profits would be distributed during his lifetime.” Then, she juxtaposes this tweet from Martin Shkreli: “I donated a total of $5,000,000 to various causes recently. Looking forward to telling you all about it.” Shkreli is the former hedge fund trader who was vilified for raising the price of Daraprim—a drug that fights parasitic infections in AIDS and other immune-suppressed patients—by five thousand percent.—John Godfrey

  • John, this is a very good article! You are right in quoting, “business thinking and social transformation operate on entirely different logics.” I use the metaphor of someone looking at their reflection in the mirror. Business and social transformation can look the same, but be totally different. Social transformation needs to take time and work in small increments. That method is usually not how business conducts itself.
    Please keep writing these articles and I would love to talk to you about your research of Philanthropy in India sometime 🙂
    Sarah Childers
    Bare Philanthropy LLC