Book review: Philanthro-capitalism: How the Rich Can Save the World

Book by Matthew Bishop and Michael Green, published by A & C Black,

London, 2008. Paperback edition published 2010.

Reviewed by Elena Douglas

In politics, most debates focus on two questions: What are you going to do? And how much money are you going to spend on it? Too little attention is given to what is often the most important question: How are you going to do it?

President Bill Clinton, Foreword to 2010 paperback edition

‘Philanthrocapitalism’, ‘venture philanthropy’, ‘catalytic philanthropy’, ‘momentum philanthropy’ are all new descriptions of an ancient practice – giving wealth in the service of humanity – now being combined with the mental models, frameworks and processes of the investment of financial capital.

Bishop and Green take us deep inside the world of the ‘philanthropreneurs’ whose mission is to transform philanthropy and the creation of social benefit and public goods just as they have disrupted other traditional markets. This is the world of Bill Gates, Warren Buffett and George Soros, with Bill Clinton as cheerleader. These are the plutocrats who have taken the ‘gospel’ of Andrew Carnegie to heart, and believe as he did “the day is not far distant when the man who dies leaving behind him millions of available wealth, which was free to him to administer during life, will pass away ‘unwept, unhonoured and unsung,’ no matter to what uses he leaves the dross which he cannot take with him. Of such as these the public verdict can be: the man who dies thus rich dies disgraced”.

So the race is on by these givers to find the ways to spend at least half of their wealth before they die as the new pledge, which already has more than 70 billionaire adherents, requires. But just as Carnegie discovered and as did Aristotle two millennia before him, “To give money is an easy matter and in any man’s power. But to decide to whom to give it, and how large and when, and for what purpose and how, is neither in everyman’s power nor an easy matter.”

‘Philanthrocapitalism’ acutely observes this new incarnation of a now century old theme. It takes us behind the scenes in the vast world of 70,000 plus foundations. It explains for us the new ecology of giving in the US where the art and science of philanthropy are practised at all levels of society from the middle-class up and in all regions of the country. Observers have often accounted for this phenomenon by noting the absence of an aristocracy or royalty which left philanthropy as the ticket to social elevation. It is certainly hip to be a philanthrocapitalist, or a ‘celanthropist’, celebrity-giver or cause-highlighter like Angelina Jolie.

Brickbats are also in order here as well. First published in hard back in 2008 in the middle of the GFC, some of the observations jarred with the reality. The promotion of the investment banking industry, for example, as a paragon of ‘rigorous research underpinning investment decisions’ was ripe for ridicule in 2008 as the sub-prime scandal unfolded. And the book never really grapples with the proper relationship between philanthropists and the State in public good provision. Global philanthropy is dwarfed by global spending by governments. In the US, the world centre for philanthropy, total giving is approximately USD300billion per year, compared to a total annual government budget spend of well over USD1 trillion. Philanthropy can inspire and catalyse activity by the State, but to think it will ever replace it is a plutocrat’s pipe-dream which this book does little to dispel.

Many will be sceptical of the new world dawning as far afield as Australia of ‘MBA-enabled executives in suits into the Birkenstock world of charity’. However there is no doubt that the trend to a far bigger role for different professional skills in all aspects of the giving, asking and investing philanthropic lifestyle will continue to gain momentum. As the authors put it, what the new generation of donors seek is ‘the sort of transparency and accountability that exists in financial markets’. Of course, those of us on the ground know that we are a long way from having genuine, robust measures of ‘social value’ to enable real comparisons to be made. As happens from time to time in the investment world, the pitch gets ahead of the analysis, but we know we are moving in this direction, and fast.

As a window into the new ecology of philanthropy, especially for an Australian online casino reader for whom this is likely to be a window into the future, this book can’t be beaten.

(An interview with the authors, Bishop and Green, was the focus of a Knowledge Connect article in our first edition in Spring 2008 – see the article here)

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