Good-bye Philanthrocapitalism, Hello Citizen Philanthropy?

Given the rise of neoliberalism over the last twenty years—the extension of the market into every sphere of life—it’s no surprise that civil society has begun to receive the same attention. Large parts of politics and government, health care and education, knowledge production and the media have already been overtaken, but civil society, one could argue, is a more important case because it’s the ground from which alternatives can grow.

When philanthropy is seen as another transaction surrounding money (usually with some strings—sorry, "advice"—on the side), the rest of "philanthrocapitalism" follows with a logic of its own: social capital markets, induced competition, donor control or direction, and the magical neutrality of "data."

But from a civil society perspective, philanthropy is an exercise in human solidarity, in which financial resources happen to play some role. "Citizen philanthropy"—broad-based, deep-rooted, bottom-up, passionate, and uncontrolled—is a much healthier and more democratic model for the future.

Can philanthropy be transformed “from a top-down process into an invitation for the grassroots to speak up and make something happen”? Yes, through citizen philanthropy, says Peter Deitz, the founder of Social Actions. “Philanthropy doesn’t require millionaires, corporate social responsibility programs, or large endowments to run. Instead, it runs on the resources and passions of real people. No one owns it, but everyone can participate.

That’s an attractive proposition, reflecting (let’s hope) a wider change in the economy to democratize how goods and services are produced (for example, open source software) and potentially underwriting a rebirth of civil society activism by diffusing power and responsibility away from a few giant foundations.

So here’s a radical idea: why not reorganize philanthropy around the one thing that civil society needs—as much support as possible with the fewest strings attached, so that the people can get on with doing what they do best?

That means:

  • Promoting the long-term financial independence of civil society organizations through unrestricted or core support, reserve funds, and endowments controlled by disadvantaged groups themselves—like the Dalit Foundation for so-called untouchables in India, or the First Nations Fund for Native Americans here in the United States.
  • Reforming and expanding community foundations and local social investment funds that can get resources to where they are most needed and build bottom-up accountability for results (a much better option than the government’s Social Innovation Fund,  which I’ve criticized elsewhere).
  • Generating more economic security for those on the front lines of social change, by dramatically expanding health care and pensions for community organizers and other civil society activists.
  • Providing more tax breaks for small contributions in large numbers, and for groups that raise money from their members, since that would encourage civil society to return to its roots. Evidence suggests that this is a good way to link philanthropy to civic and political activism, rather than just writing checks or clicking on a Web site.
  • Scaling up support for free communications and the infrastructure of the public sphere—the community radio stations, newspapers, investigative journalists, electronic media, and face-to-face debates that are essential to stir up the world of philanthropy and get more people involved.
  • And removing tax exemption from any foundation that declines to include some representation on its board from the communities it claims to serve (see—now I’ve got your attention!). After all, they are the subjects, not the objects, of social transformation.

Can philanthropy give as much credence to empathy and intuition, community and joy, and wild and wacky ideas as it does to the dull utility of the calculator and the spreadsheet? Can it value experience in social movements and other forms of civil society activism as much as it values management consultants and MBAs? Can it open itself up to the lessons of history and social science as well as to randomized trials and experimental design evaluation? Can it give support to meeting grounds where people talk as equals, not just social capital markets that divide givers and receivers and pit one charity against another?

I certainly hope so, and I think it would be a lot more fun. I hope you think so too.

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Better than 3%

Mr. Edwards,

Thanks for a series of interesting posts.

I’m particularly intrigued by this last one with its six bullet point list of radical ideas. The first five might be summarized as 'get more money to the right people' while the sixth, presumably, is how you’ll try to find all that money to get to those right people.

I confess I’m a former Fortune 500 finance guy with a (yikes!) MBA who works for a foundation. So I hope you’ll not just take what follows with a grain of branded, premium Morton Salt. But part of my simple attraction to the idea of social capital markets is that they may serve as a means to expand resources so that your right people (or anyone’s) have a better chance of acquiring the funds they need.

The facts are that 75% of charitable giving comes from individuals, far outstripping that from foundations and any other source. But that charitable giving represents less than 3% of household income. Why so little from our citizen philanthropists? I’ll posit that’s due in part to the incredibly inefficient process an individual must experience to invest in the non-profit sector.

If social capital markets – or some component of them – begin to facilitate a more efficient connection between individual donors and non-profit organizations, then they may also catalyze a behavioral change such that 3% will grow to 4%...and to 5% and beyond. While that occurs, I expect your vision of a civil society will come closer to reality.

Even then, however, many of us will still be clinging to our calculators and spreadsheets. But the decimal points will be somewhat farther to the right.

or further to the left?

thanks Clark, I liked your post, though I wonder whether those decimal points should be further to the left! I completely agree that we need to encourage more giving (and acting) from citizen philanthropists and that more information will help that process along the way, but I'm unconvinced that social capital markets are the best way to do those things, for reasons I expressede in other posts. I think we could accomplish what we need to do in "meeting grounds, not markets", basiclaly because I see this as an opportunity for sharing and learning rather than for allocating resources between competing groups. And underlying that conviction is my view that philanthropy is not a 'cold' transaction, but a 'warm' expression of solidarity with others. I may be unusual, but I'm quite happy to give my dollars to organizations that are doing their bit in difficult circumstances, even if I can't prove that they're the best.

to the left, to the left

I think Frumpkin hits the nail on the head in his book - the key is balance between the expressive and instrumental axis on one hand and the supply - demand axis on the other. Philanthropy is definitely not a cold transaction, but neither are many market transactions.

Social Capital markets that focus solely on funding the most "efficient" organizations are bound to fail for normative reasons that can be gleaned from the historical foundation of civil society. Social Capital markets are a niche concept when focused on just that idea. They do not have to be stuck in that niche. A market is, after all, a place that facilitates voluntary exchange. It is not just a place to transact in dollars and cents; measuring profit and loss with the precision of calculators and spreadsheets.

The very fact that you are happy to give your dollars (and I presume time) to organizations shows that there is a demand for a marketplace to facilitate those exchanges. Who knows what measures will become important to the mass of social market participants. Will it be the percentage of donations coming from the top-10 donors (I won't donate to a firm that gets more than 80% from its top-10 funding sources). Will it be the percentage of funds received from government grants (I won't donate to any firm that receives more than 10% of its revenues from government grants or service fees).

Unfortunately, I don't think we will see the percentage of income given to charity expand above 3%. This is a belief simply based on the history of giving across over 500 years of sporadic records (Shutz-Duncan, W. Jordan, Kerr, PD Hall).


interesting post, tks Kevin. I'm with you all the way except for the market analogy, but I like the idea of talking much more creatively about the "measures that will become important to the mass of....participants." "Authenticity" would be my number one.