Should saving the world be profitable?
Shifts in philanthropy
Billionaires like Bill Gates and Mark Zuckerberg are shaping the face of philanthropy with a business-first approach. But critics say that leaves them with too much power.
Last week was not a good one for billionaires’ new vision of global philanthropy.
Mark Zuckerberg, founder of Facebook, argued that he just wanted to provide bare bones Internet access, free of charge, to poor, unconnected communities in India.
The problem was that the service, called Facebook Free Basics, would let users visit certain sites for free, then bill them for others. That’s not do-gooding, Indian authorities decided, it was a way for Facebook to monopolize the shape of Internet access in the developing world, effectively controlling which websites people could visit.
Yet when they killed the deal, Mr. Zuckerberg was undeterred in his conviction that this was not just profiteering but part of a nobler goal.
“We are committed to keep working to break down barriers to connectivity in India and around the world ... we will keep working until everyone has access to the internet,” Zuckerberg wrote in a Feb. 8 Facebook post.
Admittedly, Zuckerberg’s India plan wasn’t a purely charitable project. But the difference between how Zuckerberg saw his efforts and how Indian authorities saw them underscores the controversy surrounding how many of today’s prominent billionaires want to help the world: their way.
The Gilded Age legacy of public institution-building is out. Helping people through financially sustainable projects that make business sense is in.
On one hand, the appeal is obvious. To some of the world’s most successful businessmen, why would you not want to leverage the corporate world to help solve society’s biggest problems? If agricultural giant Monsanto makes money along the way to helping engineer better crops, so be it. Under the ideals of “philanthrocapitalism,” a win-win for business and the needy is a sign that the process is working.
But concerns are growing that, at worst, billionaires’ pet projects can end up doing more for the capitalism side than the philanthropy side. And even when intentions are good, some vital philanthropy involves long, messy, inefficient processes that simply don’t look good by the measure of corporate balance sheets. That means critical philanthropic projects don’t get done or are done badly, critics say.
“Older practitioners of philanthropy were far more responsive to the needs and desires of the public, supporting projects that were controlled largely by local communities or even government,” writes Garry Jenkins, a professor at The Ohio State University Moritz College of Law who focuses on philanthropy and corporate governance, in an e-mail. “Today’s philanthrocapitalists are much more controlling, more directive, more confident that they have all the answers to the social problems.”
That doesn’t mean they don’t care. Increasingly, billionaires like Zuckerberg, Bill Gates, Warren Buffett, and more are throwing vast sums of their money toward the social good, in ways charitable or otherwise. All three men, for example, pledged to help fund clean energy innovation at the Paris climate talks late last year as part of the Breakthrough Energy Coalition.
But Mr. Gates’s Bill and Melinda Gates Foundation has become a model for a new breed of top-down, business-minded approach to charitable giving among the ultra-rich. Now in its 16th year, the Gates Foundation is the largest charitable foundation on earth, with approximately $43.8 billion in assets.
Tactically, there are advantages to a hard-nosed, business-minded approach. People like Zuckerberg and Gates have the financial means to take risks on innovative solutions. Unlike a traditional charity, private foundations funded independently by wealthy individuals can work on long-term problems without having to hit fundraising benchmarks or prove yearly results to donors. Proponents also argue that pooling public resources with private aid mean a diverse array of some of the world’s brightest minds working on a particular problem.
The Gates Foundation, for instance, has been particularly successful in its third-world public health initiatives, helping reduce measles cases in Africa by 90 percent in 25 years and playing a big role in eradicating polio in India.
But as the power and influence of this type of charity work grows, many in the philanthropy and social development world have begun calling for more accountability.
Helping the poor ... and Monsanto?
The Gates Foundation’s efforts directly benefit corporate interests, “in particular in the fields of agriculture and health,” says a January report by Global Justice Now, a nongovernmental organization focused on global inequality issues.
For instance, the foundation has given approximately $100 million since 2007 to to research genetic modification (GM) in crops in the global south – the development of which would be a huge boon to biotech companies like Monsanto and DuPont.
Apart from the report, the Gates Foundation has long been criticized for investments in corporations that exacerbate problems of poverty and inequality, including retailer Wal-Mart. The foundation has long defended such investments, arguing that its chief goal is to maximize initial returns so it can then divert the money to causes that need it.
“We wanted to call into question the increasing predominance of policies that argue that the solution is a tighter relationship with global corporations,” says Polly Jones, head of policy and campaigns for Global Justice Now. “It doesn’t work. They build the programs, projects, to tie people into a growing economic model. Resources are pulled out of poor countries. There’s a lack of agency and power for the countries engaged in the process, and it won’t ultimately help alleviate poverty.”
The Gates Foundation gives more aid money than any government in the world, the report points out, but it doesn’t draw anywhere near the level of scrutiny or third party oversight that government-run aid programs do.
Should billionaires get an 'A' for effort?
In addition to those worries, high-profile misfires have raised questions about the effectiveness of such top-down infusions of cash. In 2010, Zuckerberg donated $100 million to the public school system in Newark, N.J., a gift that was doubled by pledges from other charitable sources. Five years later, many aspects of the reform are considered failures, as detailed in the book, “The Prize: Who’s in Charge of America’s Schools,” by Dale Russakoff.
A plan to restructure teacher pay to include more merit pay met with opposition from local lawmakers and teachers’ unions. The addition of several charter schools led to disarray in residential rezoning, since many kids in Newark walked to school, and walking to their new schools could take them through dangerous areas, Mr. Russakoff told NPR in September, The plan spent millions on paying outside consultants, while teachers and administrators saw little of the extra merit pay they had been promised. Graduation rates have improved, but scores on state reading and math tests have been mixed.
“Gates, Zuckerberg, [the founders of] Google, they all share a similar worldview on how to fix things,” says Deborah Doane, a prominent Britain-based writer and consultant on development and social justice issues. “They come from a business background, so they business plan to death to come up with a single solution. But social change is messier than that.”
Of course, no one argues that a billionaire who wants to solve world hunger or failing schools is a bad thing. But that doesn’t mean it should be immune from scrutiny, says Ms. Jones of Global Justice Now. “In any other area of work you wouldn’t just say, ‘They’ve done good things and you can’t critique that.’ We want to make sure they getting the best possible results.”
Global Justice Now recommends that that Gates Foundation, for instance, submit to outside evaluation from the Organization for Economic Cooperation and Development (OECD) on its international relief efforts, or at least have its efforts at transparency informed by some objective third party.
Additionally, more emphasis on community voice and experience is needed, says Professor Jenkins of Ohio State. That line of thinking isn’t unheard of among today’s ultrarich philanthropists: Salesforce founder and CEO Mark Benioff made community engagement a touchstone of his charitable efforts from the start, having employees donate 1 percent of their time to local service in the San Francisco area and speaking widely about the need for the tech industry to help the city’s poor.
In a November Facebook post, Zuckerberg acknowledged that some of the mistakes in Newark were born from a lack of initial communication with those at the local level.
"It's very important to understand the desires of a community, to listen and learn from families, teachers, elected officials and other experts," he wrote. "We now better understand why it can take years to build the support to durably cement the changes needed to provide every student with a high quality education."
The goal, says Jenkins, is to make sure all forms of philanthropy build up the institutions that are the most capable of getting results on the ground.
“We often think that any philanthropy is positive for society and that all charitable giving is invariably good,” he says. “And, usually, it is good and a cause worth celebrating. But ... it can be done in ways that reinforce relational hierarchies, place the voice and expertise of operating nonprofits in the background, and leave those closest to the problems on the ground ... disempowered.”