Charity needs to start to resemble a capitalist economy in which benefactors become consumers of soc
Tuesday, March 14, 2006
“The problem is not in the spirit of the people; it is in the nature of the charity. Philanthropy needs to become philanthrocapitalism. Charity needs to start to resemble a capitalist economy in which benefactors become consumers of social investment. The fact is that Americans, and people in general, are not greedy. Many wealthy Americans are looking for ways to make a difference in the world. It’s time for charitable organizations to start to compete for their money.
First, benefactors must be given something to “invest” in, something created by “social entrepreneurs.” Second, the philanthropy market requires an infrastructure, something like a stock market, investment banks, research houses, management consultants, and so on. Third, benefactors themselves need to behave more like investors, seeking to maximize the “social return” of their investments, some by diversifying their “social investments,” others by becoming hands-on, engaged “venture philanthropists.” Fourth, the market needs to abandon its stigmatization of for-profit philanthropy. For example, one form of philanthropy could be “socially responsible” investment, where an investment company makes sure that your money is put in companies whose business will have a beneficial effect on poorer countries. Fifth, the market needs to innovate. As I said before, poverty is systemic. You can put a Band-Aid on hunger by buying ten tons of wheat for a starving region, or you can build a sturdy highway between more productive areas and less productive areas to make sure that people don’t get hungry in the first place.”
