The Great Debate: Philanthrocapitalism vs. Non-profit

In a previous post I explored the ideas of using social networks to promote non-profit charities. What is currently a hot topic in the non-profit world is how and should charities join the businesses world in a time when capitalism seems to be the only successful economic model. The book Philanthrocapitalism: How the Rich are Trying to Save the World by Mathew Bishop and Michael Green is an examination of how today’s leading philanthropists are revolutionizing the non-profit world by using the concepts and techniques from venture capital finance and high technology business management and applying them to achieving philanthropic goals. Traditionally, philanthropists were people who gave money away, but a new generation of givers presently called philanthrocapitalists are redefining the way they give, more like it a business. Most of those who have earned this label are trained in the corporate world and are “using big-business-style strategies and expecting results and accountability to match”.

This new wave of giving has sparked much debate, in terms of the morality of creating a business out of philanthropic goals. The root for this type of giving, as well as questioning whether a business model will work in the non-profit sector, is completely the opposite of those in the capitalist sector. This week I have explored two blog posts that address the issue of Philanthrocapitalism in contrast to the ideals of Non-profit organizations and charities. The first post I found was on the Upleg blog that is an online giving service that combines social networking with charitable giving. I commented on the post by Jeff Crean, titled: “Philanthrocapitalism vs. Nonprofit, debate.” The second post I commented on was titled “For-Profits vs. Non-Profits” written by Sean Stannard-Stockton who is Director of Tactical Philanthropy at Ensemble Capital Management, a wealth management firm that serves philanthropists. This post is from the Tactical Philanthropy blog, which is an open space for discussion on philanthropy and a chronicle of The Second Great Wave of Philanthropy.

“Philanthrocapitalism vs. Nonprofit, debate.”

First, I would like to thank you for your post and opinion of the topic of Philanthrocapitalism. I found your post extremely helpful on a topic that is difficult to understand. I was impressed that you began your blog by giving the definitions as you found them online of the terms Philanthrocapitalism and Nonprofit. Although you did mention that there was no clear definition for the word “Philanthrocapitalism”. I felt that in order to fully understand what this term means there is more information available than you had in your post. I agree that the main motivation for these businessmen who offer their learned skills to the non-profit world is because they know it will their lower tax bill. But what I think is also important to understand is the foundation behind this idea, to create a capitalist business model for non-profit companies rather than create a way to “re-generate” what they already have.

The arguments you supplied in your post for both sides allowed the reader to really understand both of sides of the debate, without being biased by your personal opinion, I was very grateful for this. After reading what your opinion was on the debate I can see how you fall somewhere in the middle, and I agree that discriminating against individuals who are giving becomes a difficult position to be in. With the overwhelming statistics you supplied from 2007 I wonder how they will compare to 2008, in term of the economic crisis. I am unsure that non-profit without the help from “big business” will be able to survive. As the number of donations are dwindling due to budget cuts in personal finances and in governmental finances, I am beginning to think capitalism might be the only way for these organizations can survive long term to continue helping people.

“For-Profits vs. Non-Profits”

Thank you so much for your post on the ongoing debate of capitalists joining, or as some people believe, taking over the non-profit world. At the start of 2008, the United States claimed to have 1,000 billionaires and worldwide there are a total of 2,500 of them. I agree with your parts of the argument and you did make me rethink the debate in general when you described there were two different types of philanthrocapitalists. I would have to say personally I fall into the second category you described yourself in. It is hard to really take a side when both non-profits and profit organizations responsible for social change, regardless of the amount of money spent to create this change. But money does talk in some cases. The amount of charitable giving in the United States has more than doubled from $13 billion in 1996 to nearly $32 billion in 2006. So, at some point I do think that it is inevitable for these worlds, the for- profits and the non-profits, to collide.
In the book Philanthrocapitalism by Green and Bishop, I believe the authors are trying to explain by using philanthrocapitalism as an example is a way for the corporations of the future to become a trusted and active member of the world society regardless of whether it is for a product or service they produce or perform. I can’t help but think that the act of labeling the concept has caused half the argument given that this topic seems to be changing day to day. I personally think this debate opens up a space for ideas and reinforces that there are other ways to begin to solve the world’s problems. I do think that it is counter productive to speak badly of those whose who have donated their time and effort. I do see major benefits in the emergence of philanthrocapitalism but I am not sure if the definition of capitalism prompts a negative opinion of this idea. I feel that the word philanthrocapitalism begins to mean much more than adding business objectives to the world of nonprofits. I think the question isn't what can philanthropy learns from business but rather, what can philanthropy learn from itself, from business, from government?

The Next Generation: Kids Inspiring Change

Children today often volunteer without knowing it. For example, teachers allow students to read aloud to younger classes and parents encourage teens to help a neighbor in distress. Of course, these my seem simple, but they lay the groundwork for later commitments to long-term volunteer work. The impacts of these children who want to change the world are not only helping those in need, but the future of their own society. Children learn in practice that it is better to give than to receive and volunteering develop these ideas by teaching lesson of social equality; addressing problems they witness in childhood. While volunteering is a wonderful act, many high schools are now requiring that community service hours are mandatory to graduate. This is a debate in many states, making many wonder if this is the best way to get the younger generation involved. It may seem like a wonderful idea, but by placing a consequence on those who do not volunteer has made some worry that giving to others has lost it original purpose yet volunteering is not only changing those who need help, but also giving to those who are donating their time.


In 2007 about 28% of the population from the ages of 16-24 was involved in charitable volunteering according to the United States Bureau of Labor. There are no official statistics for those under the age of sixteen yet there are many of these children who have changed their communities and reached out. The youth have been involved in giving to the non-profit world for years. Many church groups, temples and youth groups have joined in doing projects for charity. But what is more remarkable are the children who are not involved in any groups, but who are individually inspiring change and giving to their communities. One young member for the Calabasas community was inspired by the charity Locks of Love . Locks of Love is a public non-profit organization that provides hairpieces to financially disadvantaged children under age eighteen suffering from long-term medical hair loss from any diagnosis. There mission is to return a sense of self, confidence and normalcy to children suffering from hair loss by using donated ponytails to hair prosthetics to financially disadvantaged children. The children receive hair prostheses free of charge or on a sliding scale, based on individual financial needs. Moriah. at age 13, to get others involved by inviting everyone after her Bat-Mitzvah service to come to the hair salon and donate their hair with her. Moriah had gotten almost fifteen of her girl friends to come cut ten inches off their hair, and all these girls (besides me) were under the age of sixteen years old. Because of her advocacy, I was one of thirty people to donate hair in honor of Moriah to Locks of Love. What is remarkable about this is story is that Moriah is one of hundreds of young girls, who have created events in their neighborhoods for the same cause. Moriah's individual contribution allowed her to teach young girls like herself about giving to these less fortunate and in return, receiving the feeling of helping someone in need. Entertainment Tonight did a special on Moriah's efforts and can be seen here.

Moriah’s efforts reflect those who have not been required to donate time or hair to charity, but when she is in high school she might be required to do hours in order to gradate... In Maryland, it's even the law--a high-school student must log 75 hours of community service in order to graduate. The Obama president-elect’s website changed all that with the announcement–just three days after the 2008 election–that students will be “required” to “serve” and perform “community service”. Although it is great for everyone to be involved in their community it can be seen as a sad reflection on society that has to legislate or force its young people to volunteer in community service projects.

Others argue that when community service is required for graduation it sparks creativity in students and propels them to create projects that may have a profound impact on the local community. Researcher Diane Hedin indicates that the biggest problem students must overcome in school is a lack of motivation He says that "[b]oredom is probably a function of what seems to many students an unfathomable gap between the curriculum and their everyday lives...Community service [learning] provides the critical missing link for many students, an opportunity to apply academic learning to real human needs and to make the knowledge gained usable in one's thinking beyond the situation in which the learning occurred.” When students work with community leaders in public service they start to make connections that may help them later in their careers or life. Overall, according, Peggy Thoits and Lyndi Hewitt students have shown increases in positive feelings and mental health, and decreases in depression and stress.


I believe that the more the younger generation gets involved, the more change that can occur. Requirement may help spark someone’s interest in leadership position but there always be those, like Moriah, who have no laws stipulating what they can do, who will work to change the world. Volunteering promotes and helps young children who will become compassionate adults who are willing to see that they can change the world.

The Virtual World And The Non Profit World: Facebook Causes

As discussed in a previous post, the non-profit community is in danger of losing donors and volunteers because of the recent economic crisis in the United States. Now non-profits and charities are looking for another outlet to raise awareness and get funds. The obvious turn is the online social networks, most notably Facebook. According to comScore, Facebook is the leading social networking site based on monthly unique visitors, having overtaken its main competitor, MySpace, in April 2008.ComScore reports that Facebook attracted 132.1 million unique visitors in June 2008, compared to MySpace, which attracted 117.6 million. With America’s population all in the same network and connected, Facebook has created a way for charities and non-profits to use their online empire to help out those in the business of philanthropy. Facebook calls this application “Causes” and it has generated a lot of opportunities and publicity for non-profit companies. It has generated a number of blogs across the web to comment on the idea of Internet based donations and fundraising. This week I commented on two blogs that focused on this issue. The first was on the Newsweek.com blog titled “Facebook-ing Philanthropy.” This blog addresses those who have used the Facebook “Causes” application and how it has helped various charities as well as the Facebook Brian Braiker who is a Newsweek web writer is the author of this post. The second post that I commented on was titled, “Nonprofits Must Embrace, Share Online Civic Space” found on the blog Inside Philanthropy. This blog focuses on nonprofit and philanthropy news and is run by the Philanthropy Journal. This particular post evaluates the amount of online networks that are available for non-profit organizations looking for new ways to promote their cause. The author of this post, Todd Cohen expresses that he believes all non-profits and charities should be taking advantage of this feature that Facebook offers.

“Facebook-ing Philanthropy” :

Thank you for your excellent post on Facebook and its connection to philanthropy with the application added called, “Causes”. I found it very helpful that you started off your post explaining how many different organizations have entered the virtual world of giving such as Breast Cancer and Darfur. As an avid user of Facebook it did shock me that he Breast Cancer Research ‘cause’ has over 2.2 million subscribers. Also, not usually included in many posts about Facebook applications, is the business motivation and growth of the company. In this time of economic crisis, I find it ironic, that the Internet based social networks seem to be in the clear, and unlike most are making money in a time when the world market is in bad shape. I feel this shows the power that the Internet has created: a virtual world almost completely separate from the real world. By adding the Facebook “Causes”, it appears to be a smart move by both Facebook and those organizations who have used this program to reach out to where to public is-- on their computers.

As a member of Facbeook, I have seen the application in use by some of my friends and other subscribers of the network. Although I am someone who feels strongly about being active in the non-profit world, I was skeptical to use this application, not fully understanding its point. As a user, it seemed useless, because I felt this was just another way for these organizations to get my information and ask for money. I strongly believe that active rather then monetary help is the most effective way to change the world’s most pressing issues. After reading your post, I did realize that for these organizations, the motivation is not purely to get donations. Discussing the support and awareness was something I had not originally thought of. Looking at Facebook “Causes” after reading your post; I did realize how much press a single organization can get on the social network. As you had mentioned the donation’s coming from Facebook subscribers is small, the connection that this program fosters might make difference. I am interested to see where Facebook “Causes” goes in the future. I have more faith in this approach after reading what you wrote that it might get more people involved, and hopefully with the publicity some will start to move out the virtual world and into the one that needs help.

“Nonprofits Must Embrace, Share Online Civic Space” :

Your post was insightful on the issue of non-profit organizations using the online social networks as an avenue for reaching out to the public. The post was helpful and I felt made the point that non-profit companies should be using applications, such as Facebook “Causes” in this time of need. I agree with your argument that social networks should be seen as a “common ground” for the non-profit organization who are trying new marketing solutions for future involvement in their causes to raise awareness and ultimately to raise money.
In the post you did mention that setting up a Facebook “Cause” can difficult to do technically. I agree. Technically it is difficult and it is not as easy as just signing up and soon everyone will see the cause. The network for Facebook is extremely large and the number of users is now over 50 million. Facebook “Causes” lets you build your own cause by choosing an organization to support, writing a short brief on why they deserve your support, and picking a category. What is also a great feature, but adds to the overwhelming amount of causes, is that average person can set up their own causes .So it doesn't have to be simply big name non-profits that advertise their causes. What I feel the problem is now on Facebook is that non-profit companies are becoming lost in a sea of charities, and the key for using this program is promoting the organization to the public. This seems to be a difficult and important piece of information that I think the non-profit companies should be aware of when they start their online venture on Facebook. Some of the most popular causes, like the ONE campaign and Save Darfur, have grown exponentially, with 9,203 and 44,506 members respectively. Others, like Net Neutrality is Bogus and Simplify have garnered only 13 and 18 members. There are over 150 causes tagged as public advocacy (one of nine categories), ranging from presidential candidates to political issues both mainstream and obscure. I am not sure the way best way to go about promoting a cause on Facebook is, but the Wild Apricot Blog, gives those who are interested “5 Easy Ways” to promote their causes on Facebook.

What is also different about using Facebook “Causes” is that donations can be but not the contact information of those who donate is not available to the organization or charity who sponsors the cause. Facebook is known for being very careful with users’ privacy. I feel as a user of Facebook this is one of the best features, but for those companies who think solicitation will work on Facebook, it will not.

I do hope more organizations use the social network, Facebook for publicity, but I think the trick is knowing the best way to use to program and know its not the miracle answer for charities seeking attention.