The Billionaire, Bill Gates, a self styled ‘card-carrying member of the capitalism fan club’ recently made a call out for ‘crazy ideas‘ on how to harness the advances of science in ways that benefit the poor.
In a civilized community, although it may be composed of self-reliant individuals, there will be some persons who will be unable at some period of their lives to look after themselves, and the question of what is to happen to them may be solved in three ways – they may be neglected, they may be cared for by the organised community as of right, or they may be left to the goodwill of individuals in the community.
Social change is a messy process but the willpower of a determined and influential person can often tip the balance. So why do people support charities? Often it has much more to do with feeling good about yourself – or even looking good to others- rather than in helping a worthy cause. It has also been argued that charity can be self-defeating if it allows the state to escape some of its responsibilities In Against Philanthropy Neil Levy writes:
“…large-scale philanthropic activity carries with it serious risks of changing the balance of funding from the public to the private sector, thereby exposing those most in need to the vicissitudes of the market. To the extent that private funding of essential services becomes the norm, the vulnerable become the recipients of (at best) uncertain aid, which is liable to fluctuations and constant reduction.”
However philanthropy can be a powerful tool for social progress. The variety in types of philanthropy is one of the reasons for the nonprofit sector’s vitality, and society would be dramatically worse off were it not for the billions of dollars in annual charitable contributions from conventional donors. Conventional philanthropy serves an essential function in supporting major nonprofit institutions, enriching many lives, and providing assistance to countless individuals in need. Venture philanthropy and social entrepreneurship also play important roles by helping effective organizations and talented leaders expand the scale of their impact.
There is obviously a ‘feel good’ factor to charitable giving. Donors, not unreasonably, choose to give to causes that appeal to them. But these are not necessarily the causes where there is the greatest need. Another example given by Reinhold Niebuhr, in The Moral Man and Immoral Society, 1932, was the way charitable help for black education didn’t deal with the roots of the problem.
“His generous impulse freezes within him if his power is challenged or his generosities are accepted without suitable humility.”
Clement Richard Attlee, 1st Earl Attlee who was Prime Minister of the United Kingdom from 1945 to 1951 questioned the idea that looking after the poor could be left to voluntary action. Coming from an upper middle class background, Attlee was converted to socialism through working in the East End of London. In 1920, Attlee wrote his first book, The Social Worker, which set out many of the principles that informed his political philosophy and that were to underpin the actions of his government in later years.
“A right established by law, such as that to an old age pension, is less galling than an allowance made by a rich man to a poor one, dependent on his view of the recipient’s character, and terminable at his caprice.”
However, donors who are serious about solving social problems take a catalytic role, mounting a campaign and knitting together the pieces of a solution in ways that the fragmented nonprofit sector cannot do for itself. For example rather than writing a check to a local nonprofit, Bill and Melinda Gates founded Grand Challenges, an organisation that has its roots in catalytic philanthropy. It’s designed to fix market failures—places where capitalism and government fails to meet the needs of the poor.
Bill Gates writes:
“Why is there so much more research done on baldness than on malaria? Because rich people go bald, and they don’t die of malaria. Grand Challenges is like a venture capital fund in the sense that it backs a lot of ideas, knowing that many will fail, but a few could have a big impact. I’ll be delighted if five years from now, 20 percent of the initial projects are being deployed and saving lives.”
Mobilizing and coordinating stakeholders is messier and slower than funding a compelling grant request. Systemic change depends on a sustained campaign to increase the capacity and coordination of an entire field, together with greater public awareness and, often, stronger government policies. Catalytic philanthropists have the wherewithal to heighten awareness, raise expectations, and coordinate the many disparate efforts of other funders, nonprofits, corporations, and governments.
However, actionable knowledge can also have an impact on government spending priorities. For example, in 2004, Pew commissioned a study showing that extending preschool to the 4 million children under age 5 living below the poverty line would produce a net benefit to the economy of more than $511 billion—a $16 return from higher earnings and fewer welfare payments for every dollar spent. This study enabled advocates to make a compelling case for increased state spending. Between 2005 and 2008 total state spending in the United States on prekindergarten programs grew by 66 percent from $2.9 billion to $4.8 billion; seven states have pledged universal preschool for all 4-year-olds, and three other states have promised preschool for all children in low-income families.
Bill Gates explains:
“I’m a card-carrying member of the capitalism fan club. Capitalism is the best system ever devised for harnessing self-interest to drive innovation and fuel economic growth. But let’s face it: Capitalism is not good at meeting the needs of the very poor. Entrepreneurs and investors generally don’t sink their time, treasure, and talent into developing products for people who can’t afford to pay for them. Government can offer services where the market does not and thus offer a safety net. But many governments do not take the long view, because of the short length of election cycles. And it’s hard for rich governments to justify big investments in research that may only benefit people in far-off countries—and they’re not well suited to bringing successful ideas to market. When you come to the end of the innovations that business and government are willing to invest in, you still find a huge unexplored space of innovation where the returns can be fantastic. This space is a fertile area for what I’ve called “catalytic philanthropy.” There are innovations out there that could generate earth-shaking returns. But if you’re in the private sector, you can’t even look at these investments because the returns won’t come to the innovator; they’ll go to poor people or society generally. The magic of philanthropy is that it throws off that constraint.”
We should not pretend that Capitalism is the best system to meet the needs of everyone. In point of fact it often creates the situations of poverty that allows disease to flourish. A society that meets the basic needs of its citizens- first of all by providing a living wage will do far more than any single person or group of philanthropists. Charity is wrong when it’s used to patch up the effects of the fundamental injustices that are built into the structure and values of a society. Charity, from this viewpoint, can sometimes be seen as actually accepting the injustice itself, while trying to mitigate the consequences of the injustice.
However we should never look a gift horse in the mouth. We should also not pretend that criticism of Capitalism or conventional philanthropic contributions will change the status quo. A smaller set of donors who have the desire and opportunity to achieve change—whether professionals at foundations and corporations or individual philanthropists with the time and resources to become personally involved— need to step forward to become catalytic philanthropists. If they do, they will begin to see measurable impact from their efforts and the potential to change social conditions meaningfully. And perhaps in the process, move beyond the arbitrary ‘feel good in the moment’ to a deeper level of sustained commitment and in the process change society as well as themselves.