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?
