Welcome to Philanthropy’s "Pandora"—A Land Free of Trade-Offs and Contradictions

January 27, 2010

Much of the "new philanthropy," it seems to me, inhabits a world like Pandora of Avatar—James Cameron’s new film that is now the biggest blockbuster of all time. Pandora is a place whose inhabitants live in perfect harmony with their environment, with no hint of conflict until those nasty corporate mercenaries start bulldozing their trees. It’s the same with philanthropists who see no contradiction between civil society and the market—between competition and cooperation, self-interest and sacrifice, social impact and the financial bottom line. Despite all the evidence to the contrary, this is a land where only positive blends are possible in the "theory of blended value."
Such a world is a fantasy, of course, and fantasies are a dangerous distraction from the real world of trade-offs in decision making between different goals, interests, and agendas. Unless these trade-offs are acknowledged and dealt with honestly and openly, philanthropy is unlikely to get at the root causes of problems like inequality and injustice, which will always be compromised in the search for quick, material results. To put it bluntly, how can a philosophy rooted in money and self-interest give rise to societies ruled by love?
Let’s take one example to illustrate the point. Civil society operates on solidarity and commitment—the willingness to hang in there for the long haul even if results don’t go your way. Markets work on the opposite principle, "exit": consumers are free to move from one supplier to another whenever and wherever they like. Otherwise the efficiency of resource allocation would suffer.
The "philanthrocapitalists" seem not to recognize this fundamental difference, assuming that competition will have the same results outside the market too, a curious form of social Darwinism that has no basis in reality. Members of the NAACP are unlikely to switch their allegiance to the Puerto-Rican Legal Defense and Education Fund on the grounds that it offers a more cost-effective outlet for their energies.
There’s a good reason why businesses don’t invest in activities that fail to make a profit, or surrender their self-interest to the needs of the community, or reduce consumption as a deliberate objective, or encourage greater regulation and public accountability of corporations—all things that are central to civil society and its work.
Or take recent research on Teach for America, one of the icons of the new philanthropy and a favorite of "social entrepreneurs." Studies by Stanford University show that, while TFA teachers score highly in some areas of their performance, they are less likely to vote, give to charity, and engage in civic action than those who declined to enter the program or who dropped out early—“their dedication to improving society does not seem to extend past their service with TFA,” as Rick Cohen puts it. This suggests a trade-off between different aspects of the program, a trade-off that may be rooted in the fact that many TFA teachers seem to regard their service as a stepping-stone to more lucrative careers outside of education.
Such trade-offs are not unique to Teach for America, of course—nor are all TFA alumni disengaged from civic action. Conflicts and contradictions are a constant in the not-for-profit world, where social and financial criteria collide, short- and long-term goals conflict, and the interests of donors and "recipients" must be continuously juggled. So why aren’t they more widely recognized and debated?
Is it because this would cloud the rosy-tinted view of "blending" that animates the new philanthropy? Or because trade-offs between individual advancement and systems change, asset building and collective action, are just too difficult to resolve?
The truth is that markets are rarely, if ever, the "best" way to promote social change, because they are not designed to tackle that task. The real question is whether the trade-offs involved are worthwhile, or can be mitigated and managed. And that requires much greater honesty and self-reflection, especially in philanthropic circles where power relations distort learning and accountability.
I would much rather have full-throated debates about these issues than the soft-shoe shuffle of the Council on Foundations and its ilk. That way, when consensus arrives it might actually mean something beyond the disguised disagreements that haunt the corridors of foundations.
Any offers of where and when to start?
Monday's post: Should Civil Society Be Reduced to a Subset of the Market?
Tuesday's post: Why "Social Capital Markets" Could Be a Really Bad Idea
Tomorrow: Philanthropy and the Path of Least Resistance

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Michael Edwards


Nov 14

Join Professor Joel Fleishman and the Executive Vice President for Program at the Ford Foundation, Hilary Pennington - for the Foundation Impact Re