Is Philanthropy a Charade?

I’m a do-gooder. It’s part of my identity, as an individual and as a professional. I’ve worked in the nonprofit and philanthropic sector my entire career. So, when someone directly challenges whether all the hard work my colleagues and I have put into effective philanthropy is worthwhile, I sit up and pay attention.

That’s exactly what happened when I read the provocative and challenging new book Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas. For someone like me, it was a difficult read. Giridharadas has personal connections with many high-profile philanthropists and was selected as a fellow for the Aspen Institute, which aims to advance social good. As a journalist, he asked some hard questions and came up with some equally hard answers. I won’t attempt to provide a review of his book here—I would not do it justice. But I do recommend reading it.

My main takeaway was his assertion that the philanthropists attempting to advance a better world are not likely to address the fundamental systems and structures that have created and sustained our problems because they are the very ones that benefit from the status quo. Perhaps the easiest way to explain his main point is the axiom, “The same thinking that got us into this mess is not likely to get us out of it.” In his harshest criticism, Giridharadas argues sharply and persuasively that philanthropy is merely a charade to look like we are doing good without addressing any of the fundamental issues that perpetuate the problems we face.

His answer? Make democracy work for the common person; use government to fix the problems. Don’t let governments off the hook of creating a just and equitable society by saying that business or philanthropy should do that. Good points. Government should work better for the common good, but does that mean philanthropy has no role? That it is merely window dressing?

I’ve seen first-hand so much good done by the social sector. I’ve seen lives changed, health restored, art collections saved, parks built, communities strengthened; yet, at the same time, I’ve been painfully aware of the limitations of the social sector, of what it cannot accomplish.

I helped grow an international non-governmental organization to become one of the largest in the world. Even with that incredible growth, it was clear that we could not address the problems on a massive scale. To truly impact whole societies almost always requires a public (government) and/or a private (business) solution.

3 Levers of Social Improvement: The Social Sector, Business Sector, and Government Sector

Healthy societies are created and sustained by a balance and an ongoing ebb and flow between three powerful levers of social improvement: the private sector (business), the public sector (government), and the social sector (nonprofit/philanthropy). Each of these levers needs to be, and can be, improved to create the healthy and sustainable society that we want and need.

The social sector provides models for social change that business and government can adopt and scale. Philanthropy is essential in the areas where there is no sustainable business model and where the government has chosen not to provide these services for the public good. The social sector can innovate, pilot, iterate, prove, and advocate for adoption by the public and private sectors.

Philanthropy is needed for what governments and businesses can’t or won’t do—at least not yet.

Take education, for example. I’ve worked on programs for decades that are aimed at improving educational outcomes for young people. I was recently in Uganda and Ethiopia where Geneva Global has been working on behalf of several clients to help figure out how to solve a massive “out-of-school” problem. Working alongside the public-school system, we have been testing and piloting innovative approaches to accelerate learning to help children get back into formal schooling. We have developed a highly-effective model that has achieved great results as evaluated by an external university.

But we won’t be able to scale the program sufficiently to significantly impact the number of out-of-school children in those countries without the support of the public sector. That’s why we are partnering with the government education ministries to adopt these models to have national impact. It is obvious that the social sector could never scale sufficiently to meet the full needs for country-wide childhood education on its own. But we have been able to experiment and innovate—in ways that the government isn’t suited to do—and to provide models that the government can now adopt in a way that works for them and creates large-scale change.

In another case, the social sector took the lead years ago in providing micro-loan and banking services to the poor. These populations were not profitable for the business sector to invest in. However, with the development of mobile phones and their amazing popularity and availability throughout the developing world, profitable business applications have now accomplished far more, much more quickly than the charitable sector could have ever dreamed.

Not only does cellular technology provide digital access to online banking services, but cellphones have become key tools in all sorts of localized commerce as well as access to the global library of information. The amazing success of this product developed and honed by some of the biggest companies on the planet may lead us to think that business is the solution to all our problems.

Yes, business is a very successful and powerful tool for development and innovation, but on its own, it will not address inequality issues and meet basic developmental needs. It is abundantly clear that unrestrained capitalism consistently concentrates wealth in the hands of the relatively few. And it is equally clear that for some social problems and some social advancement, there are currently no viable business models. But with the new wave of social impact investing and social benefit corporations, there are promising approaches that blend charitable intent with profitable business models.

Philanthropy is not a charade. It is an essential element to meet unmet needs and opportunities in our societies. It can be on the vanguard of social change that spurs government and business to enter in and make changes at scale. The current enthusiasm for greater philanthropy should be encouraged—not discouraged—as, together with the business and public sector, we change society for the better.