A recent book Philanthrocapitalism: How Giving Can Save the World by Matthew Bishop and Michael Green argues that philanthrocapitalists (rich people who apply business techniques to their philanthropy, e.g., strategically targeting resources to activities likely to have a high impact and forming productive partnerships) are better-positioned than many others to help solve some of the biggest problems facing our world. According to Bishop and Green, politicians have elections to worry about, company bosses have their shareholders, and most NGOs are forced to spend a lot of time fund-raising. By contrast, philanthrocapitalists have no one to answer to and can take big risks, disregard conventional wisdom, and pursue strategies that bring no quick returns and only yield benefits in the long-run.
The authors argue that if philanthrocapitalism succeeds it will be because philanthropists take impact seriously and apply their business talents just as rigorously as they did when they made their money. But, according to the authors, there are challenges--philanthropy lacks many of the market forces that keep businesspeople disciplined, focused on success, and willing to make the tough decisions necessary to survive and succeed. Philanthrocapitalists must, therefore, rely on self-imposed discipline and focus for their success.
Can philanthropy and profit-making be
combined? The authors point out that
philanthrocapitalists are increasingly trying
to find ways of harnessing the profit motive
to achieve social good, and note that this is
controversial – “isn’t philanthropy supposed
to be about giving away money, not making
more of it?” The authors argue that as
philanthrocapitalists see it, if they can use
their donations to create a profitable
solution to a social problem, it will attract
more capital and thus achieve a bigger
impact than would a solution based entirely
on giving away money was. According to the
authors, philanthrocapitalism is about being
a businesslike giver but they point out that
people can easily confuse being
“businesslike” with becoming more “like a
business” and oppose philanthrocapitalism.
Are celebrities good for addressing social problems? The authors say “yes!” Recently, celebrities and philanthropists have increasingly come together in support of a common cause. Rock star Bono and entrepreneur Bill Gates have joined forces on health in Africa. Television personality, Oprah Winfrey, has financed a school in Africa also in collaboration with the Gates Foundation. Celebrity involvement is particularly good on issues in which mobilizing public opinion is important.
Should one question where and how the rich made their philanthropic millions? The authors, once again, say “yes!” They point out, as billionaire George Soros has himself opined, that the public should hold philanthropists accountable. The authors drive home the point by citing the example of a Russian oligarch who stands accused of stealing assets from the public and who then uses the money to make philanthropic donations. According to the authors, the onus in the social contract should be on the rich to be transparent and accountable.