December 09, 2015
In No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy, Linsey McGoey, senior lecturer in sociology at the University of Essex, excoriates what she sees as the historical illiteracy of many of today's philanthropists. Armed with good intentions, wealth, and (as they would have you believe) inerrant business acumen, the new breed of "philanthrocapitalist" applies terms like impact, theory of change, and social entrepreneurship to their philanthropic activities and are intently concerned with generating "shared value." In reality, however, these "TED heads" (as McGoey calls them) are simply following in the footsteps of their philanthropic predecessors.
Indeed, the main difference between the new breed of philanthropist and their robber-baron forerunners is rhetoric, argues McGoey. Like their modern progeny, Carnegie, Rockefeller, and Ford each earned their fortunes through anti-competitive practices, aggressive lobbying for favorable legal treatment, and risky financial engineering; each used his philanthropic benevolence as public cover for the ethically dubious (and often illegal) means used to amass his wealth; and each claimed his business acumen made him a better custodian of the public good than government or traditional charity. Or, as Carnegie famously put it: "[T]he millionaire will be a trustee of the poor, intrusted [sic] for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself."
McGoey will have none of it. The billionaire-knows-best style of philanthropy is as paternalistic as it is ineffective, she argues, and the simple truth of that observation is as lost on today's philanthropists as it was on Carnegie and Rockefeller. The typical philanthrocapitalist insists, for example, that philanthropy has, until now, been ineffectual — a claim made without any acknowledgment of the difficulty inherent in measuring social impact, or that the actual influence of any one foundation’s grantmaking on a social problem is nearly impossible to isolate. One case is particularly instructive for McGoey: former President Bill Clinton has said in the past that microfinance is responsible for lifting more than a hundred million people out of poverty. But while it's true that more than a hundred million people have received a microcredit loan, she writes, most studies indicate that even for "successful" microfinance programs, insufficient evidence exists to demonstrate a link between their activities and poverty alleviation. Moreover, the few studies that were able to demonstrate a statistically significant link showed only very modest increases in the income of loan recipients, while several studies have found that the high interest rates attached to such loans — and favored by microfinance investors — often exacerbate rather than alleviate poverty among loan recipients. Investors, on the other hand, have seen consistently positive returns on their investments; little surprise, then, that microfinance advocates are adamant in their opposition to interest-rate caps and other regulations that would stifle the “success” of microlending.
McGoey herself further argues that today's TED heads are different from their more modest progenitors in the way they shamelessly leverage their charitable donations to advance private economic interests. Whether it's a wealthy mining magnate using a generous donation to the Clinton Global Initiative to earn himself an introduction to the foreign minister of a resource-rich developing nation, or the Bill & Melinda Gates Foundation supporting agricultural initiatives in Africa and South America to increase the economic influence of U.S. agribusinesses, she details how modern philanthrocapitalists consistently blur the line between charity and business. While there may be nothing legally wrong with using charitable largess to reap financial rewards, for McGoey such practices raise important ethical questions about the use of philanthropy to advance a corporation's (or nation's) economic interests.