30 March 2008

Philanthropy, Capitalism, and Social Change: Can there be stranger bedfellows?

Michael Edwards has a fascinating, and important, article in openDemocracy: Philanthrocapitalism: After the goldrush. He describes the latest trend in globalized philanthropy, namely, how recently wealthy entrepreneurs - many from the tech sector - invest their vast fortunes in ways that draw from ideas promoted in social enterprise, social entrepreneurship, venture philanthropy, and corporate social responsibility. Its promoters "claim that methods drawn from business can solve social problems, and are superior to the other approaches used in the public sector and in civil society." As well, they "claim that these methods can achieve the transformation of society," notably without effecting "deeper changes in the distribution of power and resources across the world."

Philanthrocapitalism uses capitalist rubrics of competition, market dynamics, quantitative accountability, the ability to scale, and the imperative for growth, and applies them to social and charitable causes. If these methods work to quickly achieve wealth for private individuals, why not employ the same, proven-successful methods for the collective benefit of those who cannot access traditional capitalistic venues for their own benefit?

Marshall McLuhan actually thought about this issue way back in 1972, in his almost undecipherable book, Take Today: The executive as dropout. He asks - and answers - the question, "Why is a kingdom not a business? Because it’s a service. In business, money is the measure. In kingdoms, man is the measure. Every service is paid for by huge disservices to the community. Count your blessings, but don’t try to evaluate them!"

Edwards frames the same observation this way:
The most important results measure impact at the deepest levels of social transformation, and there is a wealth of evidence showing that they are generated by social movements that rarely use the language or methods of business management. Yet, to repeat, there is already evidence that those who do use these techniques encounter trade-offs with their social mission.

It is easy to identify quick fixes in terms of business criteria, only to find out that what seemed inefficient turns out to be essential for civil society's social and political impact - like maintaining local chapters of a movement when it would be cheaper to the central office to combine them. And although solutions have to work economically this doesn't necessarily imply the raising of commercial revenue. Philanthrocapitalists sometimes paint reliance on donations, grants and membership contributions as a weakness for civil-society organisations, but it can be a source of strength because it connects them to their constituencies and the public - so long as their revenue streams are sufficiently diverse to weather the inevitable storms along the way.
He goes on to warn that, despite the best of intentions (isn't it always the way?) philanthrocapitalism might well be harming social movements and the vibrancy of civil society. The reason? Because the methods and metrics used by each are polar opposites:
Business metrics privilege size, growth and market share, as opposed to the quality of interactions between people and the capacities and institutions they help to create. When investors evaluate a business, they ultimately need to answer only one question - how much money will it make? The equivalent for civil society is the social impact that organisations might achieve, alone and together, but that is much more difficult to evaluate.
For me, I see this as articulating the difference between organizations founded on an Industrial Age foundation, as opposed to those created with a UCaPP sensibility. Reading each through a Valence Theory informed lens highlights the differences. Like most traditional BAH-organizations, the predominant focus is strictly on quantifiable outcomes measured in economic terms, with all other valence relationships taking positions of secondary or less priority. But just, social transformation in a contemporary context requires balance among all the five valences: Edwards points to the civil rights movement in the U.S., and asks, "Would philanthrocapitalism have helped to finance the civil-rights movement in the US? I hope so, but it wasn't "data-driven", it didn't operate through competition, it couldn't generate much revenue, and it didn't measure its impact in terms of the numbers of people who were served each day, yet it changed the world forever."

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avi said...

The quotation from McLuhan is brilliant. Thanks for this.

mrG said...

Can I add this to the mix? I'm keen to read your comments because in one sense it seems very congruent with your thinking, and in another sense it seems quite complementary: Future Positive: Ortegrity is the story of Tim Wilken and Arthur Coulter Jr:
"The purpose of our meeting was two-fold, first to share our research findings about human relationships, behavior, and thinking, and then to design or at least establish criteria for designing a 'conflict-free' organizational system for humankind."