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The Poor as Customers?

Entrepreneurs contribute lots of money but offer limited social change.

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About a decade ago, a new energy in organized philanthropy began to emerge. Dot-com entrepreneurs from Seattle and Silicon Valley, armed with buckets of money, public relations acumen, and unflagging self-confidence, were asserting themselves where East Coast- and Midwest-based foundations such as Ford, Rockefeller, and MacArthur had long dominated. And in a very short time, the upstart West Coast philanthropists became major players.

They are an enormously ambitious lot—most are keenly interested in global issues, for example, and they bring to the table a very different set of assumptions and theories of change than most of the foundations that came before them.

Just Another Emperor? The Myths and Realities of Philanthrocapitalism is Michael Edwards’ short but thorough—and often critical—exploration of this business-oriented trend in philanthropy. Edwards makes a compelling case that, despite a great capacity to throw money at the world’s most compelling problems, “philanthrocapitalists” have little capacity to fundamentally address them.

Edwards, a fellow at Demos and two universities, spent nine years as a program manager at the Ford Foundation. His book explores the language associated with the field—“social enterprise” and “social entrepreneurship,” “venture philanthropy,” “corporate social responsibility”—before examining a few core elements. These include a belief that methods drawn from the business sector are superior to those used by government and civil society, and a claim that these methods will do more than just deliver goods and services: They will also bring about a transformation of society.

To these I would add two more core beliefs, not included on Edwards’ short list but made fairly explicit throughout the book: First, it is individuals, not communities or social movements, that philanthrocapitalists believe are the prime catalysts of change. Second, harnessing the power of the marketplace, not taming or transforming it, will achieve the most powerful results.

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Brochure advertising an Ashoka France conference last year.

What’s more, these philanthrocapitalists often have different views of the kind of change that’s needed. Their strategy is to focus on change within the existing system, not on upending the system itself. Cure a particular illness, not the conditions that helped the illness thrive.

Peppered throughout the book are rich quotes that help shed light on how prominent voices and practitioners in the sector view progress and their relationship to it: “The most pressing environmental issues of our time will be … solved when desperate governments and NGOs finally surrender their ideologies and tap the private sector for help” (from Richard Morais, senior editor at Forbes magazine); “The profit motive could be the best tool for solving the world’s problems, more effective than any government or private philanthropy” (Larry Ellison, founder of Oracle); and “We should see every poor person on the planet as a potential customer” (Jacqueline Novogratz, founder of the Acumen Fund).

Edwards notes that philanthrocapitalists’ use of the term “social” “usually signifies a target group, not a method of collective action.” This is an extremely important point. Attending one of the sector’s lavish conferences, one comes away with a sense that low-income and disempowered communities are objects, not subjects, done “for” or “to” rather than “with.” Community organizing and movement building don’t appear to be a major part of the sector’s theory of change.

The most important chapters in the book explore the potential of philanthrocapitalism to live up to what its advocates promise, in theory and in practice. From neither standpoint does Edwards see much to celebrate. In fact, he expresses some fear that the field could do more harm than good.

The field is young, he notes, and is not known for humility or self-reflection. What’s more, those who write about it tend to be evangelists who argue by anecdote. The overall evidence, Edwards writes, is that while philanthrocapitalism may make certain goods and services more readily available, few efforts if any have been socially or politically transformative.

He reminds us that businesses are legally structured to make money for shareholders—that’s their bottom line—and that individualism lies at the core of markets. Civil society, on the other hand, faces many bottom lines—opportunity, empowerment, happiness, sustainability—and demands collective action and mutuality. In markets, we are consumers; in society, we are citizens.

Edwards doesn’t deny that business has something to teach the non-profit sector, but he raises a number of red flags. He fears a focus on providing services at the expense of structural change. He also warns of inequality between well-resourced “high-performing” service providers and under-resourced community-based advocacy groups, whose successes can be real but are hard to measure using business-type metrics.

Ultimately, Edwards sees little hope that philanthrocapitalism will harmonize the domains of business and civil society. He finds an important ally from within the business sector: Jim Collins, author of the widely read Good to Great, argues that “we must reject the idea—well-intentioned, but dead wrong—that the primary path to greatness in the social sectors is to become more like business.”

In the final chapter, Edwards suggests how philanthrocapitalists might better achieve their ambitious and important goals. These include making a commitment to modesty and a culture of learning, and funding structural and systemic change rather than service delivery. Edwards argues that philanthropy has achieved far less than governments committed to equality and justice and strong social movements. Furthermore, “No great social cause was mobilized through the market in the 20th century,” he writes. “Business and markets play a vital role in taking … advances forward, but they are followers, not leaders, ‘instruments in the orchestra’ but not conductors.’”


John Harvey wrote this review for Learn as You Go, the Fall 2009 issue of YES! Magazine. John is executive director of San Francisco-based Grantmakers Without Borders.

 

 

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