Month: November 2016

Philanthrocapitalism: the future of ‘doing development’?

We know about philanthropy, where very rich people give away vast amounts of money for social good, and we also know about capitalism; defined by The Dictionary of Human Geography as “a historically specific form of economic and social organization […] a class system, that labour and capital were central to its operations, and that capitalism as a system was expansive, dynamic and unstable.” But what exactly is philanthrocapitalism? A relatively recent idea not even recognised by the spell-checker on my computer? Well, yes, but it describes the combination of business-related methods of success with philanthropy.

This has come about since the ‘golden age of capitalism’, when the number and value of the super-rich rapidly increased. Most philanthropists, like their forefathers Andrew Carnegie and J.D. Rockefeller, made their fortunes through business and entrepreneurship. The two key players in this shift from philanthropy to philanthrocapitalism were the then two wealthiest men on the planet, Bill Gates and Warren Buffett, who work closely to apply their profit-making business know-how to charitable giving. Much of their work is done through the Bill and Melinda Gates Foundation which aims to end poverty and eradicate disease, while in the US improving the state-funded school system. To encourage more of the wealthy to donate to charitable causes they established the Giving Pledge in 2010, whereby at least half a person’s wealth must be given away during their life or in a will. According to an article by The Guardian in 2015 they had 138 subscribers.

There are many advantages to this style of ‘doing development’ – not least of which because it redistributes some of the surplus money held by the richest and uses it for the good of the poorest (or that’s the idea, anyway). Philanthrocapitalists use their experience in business by transferring their money-making strategies, language and ethics to the giving sector. Being some of the world’s richest individuals, philanthrocapitalists also have the risk capital required to pilot new initiatives before they are rolled out large-scale. (Bishop, M. & Green, M., 2008)

An example of philanthropy improving development in a specific way is explained in The Influence of Elite Philanthropy on NGO Development in China by Guosheng Deng. Deng emphasises the involvement of China’s wealthy in aiding the rapid development of Chinese NGOs by bringing autonomy to the previously government controlled NGO sector, as well as their influence over the “sustainability and social impact of the NGO sector as a whole”.

Of course there are other successful methods of development, so we must consider the disadvantages of philanthrocapitalism to see the whole picture. There is the obvious problem that only a very small proportion of the global population are ‘very rich’. Although the majority of us are excluded from partaking in philanthrocapitalism directly, we could get involved with such foundations and campaigns by working or volunteering with them, or donating what we can.

Conversely, philanthrocapitalism involves some of the wealthiest and most influential people on the planet in ‘doing good’, who then encourage their rich and famous friends to join in, thus creating a small group able to make a big difference. Another recently emerging term linked to philanthropy is ‘celanthropy’, on which I could write a whole other post. Essentially, it describes the rise in celebrity involvement in development. Examples include Emma Watson and Angelina Jolie (actresses and UN Goodwill Ambassadors) and Bob Geldof (part of Band Aid in 1984). I include this point because celebrities can expand the audience of campaigns and encourage those who would not normally think about development to get involved.

The video below challenged my opinion of philanthropy, arguing that philanthropists should treat employees better during their professional lives (even if that means reducing profits) rather than giving money towards art galleries or other niceties in retirement. Although not directly about giving or development, it makes a good point that if problems are avoided in the first instance they won’t need fixing later on.

 

Another limitation of philanthrocapitalism is mentioned in Philanthrocapitalism by Matthew Bishop and Michael Green, a book which really guided this post. It is the notion that philanthrocapitalists cannot solve the world’s problems alone; Warren Buffett is quoted saying he has only given enough for “one dollar each per year for the poorest half of the world population”, and Gates adds “given the scale of the problems […] we will only be a small part of the solution.”

There is so much work to be done that the world needs a range of development methods to cooperate, including NGOs, ODA, foreign investment and philanthrocapitalism. I do believe that the growing number of very rich globally should enable a new age of development opportunity.

Sources:

Bishop, Matthew, and Michael Green. Philanthrocapitalism : How the Rich Can save the World and Why We Should Let Them. London: A. & C. Black, 2008.

Deng, Guosheng. The Influence of Elite Philanthropy on NGO Development in China. Asian Studies Review 39, no. 4 (2015): 554-70.

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The Guardian – Givers that keep on giving: the world’s top philanthropists

 

 

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Should the British be happy with the work of DfID?

In recent years they have immunised 67.1m children against preventable disease, reached 64.5m people with at least one of water, sanitation or hygiene promotion and supported 11.3m children in primary and lower secondary education (DfID Dev Tracker). But should the British public be happy with, or even proud of the work of the Government’s Department for International Development (DfID)?

difd-uk-aid-logo
DfID and UK aid logos

It was the Liberal Democrats who brought the bill for the UN’s target of 0.7% of GNI to be spent of foreign aid to the British Parliament, which has been met for the last 3 years (The Week, May 2016). This seemingly minute proportion of our country’s income is  actually 5th in the world by percentage and 2nd to the US in value, so I would say that we are doing pretty well in the aid spending league tables. But considering that only 5 countries are meeting the UN target it starts to beg the question of why other countries, especially those who are highly developed, are not doing the same? Are there/should there be punishments for countries who don’t meet the target?

Aside from the UN target, there is a domestic debate around whether Britain should increase, reduce or continue current levels of foreign aid spending, which is organised through DfID as ODA (Official Development Assistance). To put foreign aid spending into context 8.8% of GDP in 2013 was spent on Healthcare (ONS) and 2.2% of GDP in 2014/15 was spent on Defence (gov.uk). Personally, I think it is important to get the balance right between helping those in our own country and abroad. Although we can say that British citizens are much wealthier on average than those in less developed countries, there are still plenty people in need on our doorsteps; Britain currently has 1.66m unemployed, whole families who rely on Food Banks, and is still recovering from the economic downturn of 2008 and the government austerity which followed. At the same time, I feel it is our duty to try to reduce global inequality – often referred to as the North-South Divide – to create a more equal post-colonial world.

It has been found that the majority of the British public would like the Government to spend more on foreign aid, and in fact are shocked at the small proportion of GNI spent on it, as shown in the video UK Aid: View from the streets (YouTube video) .

But if we agree on how much is spent, do we agree on how and where it is spent?

I was somewhat surprised to learn that Pakistan is the top receiver of DfID aid at £414.83m, while Syria id 5th, receiving £181.86m. I asked myself why I was so surprised; was it because I expected the UK to send the most aid to the countries I hear most about on the news? I then questioned whether there are problems in Pakistan that we should be more aware of, or if DfID have got their priorities wrong? We would hope not.

The biggest share by sector is spent on Disaster, followed by Health, then Education, but is DfID’s top achievements are Health and Education related what does Disaster spending achieve? Perhaps it is unfair to be so critical of disaster spending, as it will usually be unplanned emergency aid with the aim of keeping people alive and helping them rebuild their lives. It is also extremely difficult to gather data following a disaster, so it would be unrealistic to expect published statistics about numbers of people saved from the rubble after an earthquake, for example. Also, in the current situation of “climate change, urban migration, population growth and increased scarcity of natural resources”(DfID Defining Disaster Resilience) we can only expect disasters to be more frequent and more intense.

Returning to Pakistan for a moment,

“[t]he UK is already helping to build resilience to disasters. Following the catastrophic Pakistan floods of 2010, for example, we are helping communities and national authorities prepare for future events. This includes: developing safety plans in schools and communities; helping farmers to use crops that can cope with flooding; and providing communities with the skills and tools they need to maintain their food self-sufficiency.”(DfID Defining Disaster Resilience)

This begins to explain why British Taxpayers’ money is important to Pakistan, although we hear little about on the news. Therefore, it is important not to jump to conclusions about where our money is best spent based on media coverage, but instead to do some research and be more open-minded.

DfID do a lot of good work, it must be said, and I have struggled to find substantial faults with their work yet. When examining their accounts of August 2016 (DfID August 2016 accounts) I raised an eyebrow at the number of entries for travel expenses, assuming lots of money was being wasted here. But when compared to the total spending for August, travel makes up less than 1%.

Let me leave you with one final question: Should DfID be held to account on exactly where their 33.42% of  “Unallocated” spending goes?

Sources:

DevTracker by sector

DevTracker by country

DfID and UK aid logos

DfID annual accounts 2015/6

DfID August 2016 accounts

DfID Defining Disaster Resilience

DfID official website

Gov.uk defence spending

Official DfID blog

ONS healthcare spending

ONS unemployment

Provisional UK ODA as proportion of GNI 2015

The Week, May 2016

UK Aid: View from the streets video

UN Millennium Project, The 0.7% target: An in-depth look