Today’s philanthropy enthusiasts are never short on
hyperbole. But it’s clear that rises in global giving over the past 10 years
have not made a dent in reducing economic inequality in rich nations such as
the United States or Britain. Individual philanthropic foundations have grown
at a fast rate in the U.S. over the past 15 years: In that span, the number of
individual foundations has doubled from about 40,000 to over 85,000. But this
surge hasn’t helped alleviate extreme poverty. A 2012 report from the National
Poverty Center at the University of Michigan points out that within the U.S.,
“the prevalence of extreme poverty rose sharply between 1996 and 2011.”
Philanthrocapitalism seeks to combine profits with poverty
alleviation. The effort to do a good deed while at the same time making a good
deal is the driving impetus behind the new philanthropy. ‘Today’s
philanthrocapitalists see a world full of big problems that they, and perhaps
only they, can and must put right,’ Matthew Bishop and Michael Green write in
Philanthrocapitalism: How Giving Can Save the World,
Buffett and Gates have gained a reputation for the most effective
altruists in history. It’s true that in dollar terms, their generosity is
jaw-dropping. Joel Fleishman points out in The Foundation that Buffett’s 2006
announcement of a gift of $31 billion to the Gates Foundation represented, in
2006 dollars, more than Rockefeller Sr. and Carnegie gave away combined.
But as a proportion of the overall U.S. Gross Domestic
Product, the size of today’s foundations pales next to their predecessors. The
Ford Foundation’s endowment in the early 1960s represented more than double the
share of U.S. GDP in comparison to the Gates Foundation 50 years later. Ever
since the 1970s, overall charitable giving in the U.S. “as a share of GDP has
rarely strayed far from 2 percent,” Suzanne Perry points out in the Chronicle
of Philanthropy, “despite the huge growth in the number of charities and
fundraisers and periodic crusades to encourage greater giving.”
Corporations have become far stingier. Mark Kramer and
Michael Porter pointed out in the early 2000s that corporate philanthropy as a
proportion of corporate profits dropped since the 1980s. Since then it’s sunk
even further, from 2.1% of pretax profits in the mid-1980s to 0.8% in 2013.
The presumption that Buffett and Gates are more effective
than earlier philanthropists isn’t backed by data. Some of the Gates
Foundation’s work has led to measurable gains. Vaccination rates are rising;
global child mortality has fallen—the foundation’s work in global health has
contributed to these gains. But in comparison to government donors, Gates
Foundation grants are a small drop in the global health landscape: The U.S.
government has committed over $65 billion to global HIV/AIDs programs alone.
That’s double the amount of overall giving by the Gates Foundation toward U.S.
education, global health, and global agriculture since its inception. To date,
there has been far more hype than hard evidence about effective altruism’s
achievements; its progress often seems to be measured and underpinned by
self-sustaining feedback loops. Donors privilege what critics see as
low-hanging fruit: aid projects where measuring the effect is relatively easy
to do.
We hear a lot about the positive effects of different
programs, such as the benefits of de-worming efforts worldwide that were once
thought to have contributed dramatically to education attainment in developing nations,
until a recent review from independent health research group Cochrane cast
doubt on that link. Far less attention is paid to counterfactuals, such as the
cost to welfare programs when tax revenue is lost as a result of
philanthropists receiving lucrative tax exemptions for pet projects.
One of the biggest ironies facing 19th-century philanthropy
was the question of whether growing charity simply exacerbated economic
inequality by thwarting demands for better wages and the right to unionize. Carnegie
published his first “Wealth” essay, in which he urged the rich to share their
spoils, just a few years before the Homestead battle of 1892, one of the
bloodiest labor standoffs in U.S. history, where he brutally stamped out
burgeoning union efforts even while liberally dispensing charity to his
workers. “Paradoxically,” David Nasaw, Carnegie’s biographer, has pointed out,
“Carnegie … became, if anything, more ruthless in pursuit of profits once he
had determined that those profits would be distributed during his lifetime.” Nasaw
adds, “In remonstrating that only the millionaire could be trusted to dispense
his millions, and that whatever that millionaire thought ‘best’ was best. Carnegie
was promulgating a profoundly antidemocratic gospel, almost feudal in its
paternalism.”
And just as in Carnegie’s day, philanthropy is often upheld
as justification for gross profiteering.
“I donated a total of $5,000,000 to various causes recently.
Looking forward to telling you all about it,” Martin Shkreli, the CEO of Turing
Pharmaceuticals who was vilified for raising the price of Daraprim by 5,000%,
tweeted in mid-September.
“The best among the poor,” Oscar Wilde wrote in his essay, The
Soul of Man Under Socialism, “are never grateful. They are ungrateful,
discontented, disobedient, and rebellious. They are quite right to be so … Why
should they be grateful for the crumbs that fall from the rich man’s table?
They should be seated at the board, and are beginning to know it.”
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