What are the cons of philanthropy

"Entanglement of Philanthropy and Capitalism"

Philanthro capitalism - what is it?

Frank Adloff: Philanthro capitalism is a term that has been used for about 15 years. It is documented differently, sometimes it is taken up positively, sometimes to mark certain problematic developments. First of all, it denotes a new entanglement between the field of philanthropy and capitalism. The basic idea is that philanthropy has to become more like business, for example by increasing the effectiveness and efficiency of philanthropy. Philanthro-capitalism is aimed primarily at the large foundations, such as the Bill and Melinda Gates Foundation.

Do you have any other examples of prominent philanthropist capitalists?

Adloff: The Chan Zuckerberg initiative of Facebook founder Mark Zuckerberg and his wife Priscilla Chan, for example. The initiative was founded in 2015 and has the special feature that it is actually no longer a classic foundation. Zuckerberg chose a limited liability company, a limited liability company. As a result, this organization has fewer tax breaks. But it has the advantage that there are no restrictions on doing business yourself, such as investing in other companies. Political lobbying is not restricted either. This shows that the line between philanthropy and market-based, profit-oriented companies is becoming blurred.

Isn't it generally to be advocated first of all that people should spend their money on charitable purposes instead of using it for their own consumption?

Adloff: First of all, that touches on another question, namely whether a foundation is useful and whether it should receive tax advantages. How the foundation is then structured looks quite different from a historical perspective. The term philanthro-capitalism describes a certain type of foundation that comes from the USA.

In one of your publications you criticize the fact that philanthropic capitalists want to improve philanthropy through more and more effective philanthropy. How can “more” philanthropy be a problem?

Adloff: The “more” is a problem when it is accompanied by a position of power that is no longer controllable. We have the same phenomenon in the economic field: we call it monopoly formation. Monopolies are detrimental to the economy because they can set prices which they cannot under competition. In the world of philanthropy, we have to see it in terms of democracy theory: when actors have such a position of power, they can of course make a lot of things happen quickly, on the one hand. On the other hand, it is uncontrollable and actors can assert their private interests. The Gates Foundation, for example, has been critically monitored what influence it has on certain medical developments around the world, without this being democratically controlled. Large organizations are also less inclined to cooperate with small civil society organizations, because they can set the agenda with their own resources.

We have now talked about the great American foundations. Is there a similar trend in Europe?

Adloff: We don't have these big foundations here in Europe that you could compare to Zuckerberg and Gates. But the whole idea of ​​effectiveness - there were terms like strategic or effective philanthropy that were popular for a while - is present in the foundation sector. This has to do with the idea that we have to learn from business, we have to measure and evaluate. And that has a positive side, because you know better what you are doing and what has a positive effect. But that goes hand in hand with a technocratic belief in the measurability of social phenomena. I believe that there is too little discussion about this.

Philanthro capitalists want to increase effectiveness and measure success. What's wrong with that?

Adloff: At first glance there is nothing wrong with that. Of course, it's better to help effectively. Only it leads to the fact that a certain idea of ​​effectiveness was put into the world, which also has a downside: namely the idea that everything must be immediately measurable. Effectiveness should initially only mean effect, so that is actually a causal assumption. But we know that causalities in social life are extremely difficult to measure - the whole of sociology is basically about this question. The social sciences are relatively in agreement that this is very time-consuming, complicated and context-specific. If one believes that social reality can be measured in its causal chains, then one has to develop measuring instruments that are so simple that they do not really depict the social complexity. That is the core problem of measurement.

Can you give an example of this?

Adloff: For example, if a foundation pursues the goal of building and strengthening civil society in an authoritarian country - one would have to estimate a time horizon of 30, 40 or 50 years. And then, too, the question would be: How can you measure that? Because of this fixation on measurability, there is a shift towards simple instruments. And it becomes shorter: so that I can prove that it works and has an impact, I have to measure regularly, and the effectiveness has to be shown in the short term.

For a long-term project, you could stipulate that a measurement should take place over a longer period of time.

Adloff: Right, you just don't do it. But it's not about saying that you shouldn't measure. However, the previous form has brought certain problems with it. If these are corrected, a balance can certainly be created.

How does self-interest play a role in philanthro capitalism?

Adloff: This can be seen in the interconnections between entrepreneurial and philanthropic action. I'll stick with the example of Zuckerberg's foundation: it invests philanthropically - you can hardly call it philanthropy any more - which ultimately benefits the parent company. Or the Gates Foundation: It is not for nothing that it focuses on education policy. It's about digitization of schools and educational concepts. Ultimately, one can no longer clearly distinguish: is it about philanthropic educational projects or is it ultimately about supplying the parent company with orders?

There was the same criticism of foundations in Germany.

Adloff: Exactly, there is a great similarity. The Bertelsmann Foundation has had to accept such criticism again and again. But this also shows that these things denote processes over the past 20 years. So you don't have to use the term philanthro-capitalism either. It is about the broad field of change in the philanthropic sector.

Do you also consider impact investing to be problematic, since profit and impact are at the same time the motive for the investment?

Adloff: There are different models, so you would have to take a closer look at how they work. But you can already see from the semantic shift that economic ideas have been adopted here. If you invest something in social investing, then this investment has to generate a surplus. The added value of profit is in there. Too little has been considered that an economization of society is taking place here through foundations that actually follow or should follow a different logic. Critics would say: Philanthro-capitalism is part of the great trend of the last 30 or 40 years, neoliberalization. This has led to criticism in civil society itself, because it was more of the opinion that everything should not be economized and aligned with neoliberal principles.

But don't these big corporate foundations just complement previous philanthropic efforts?

Adloff: I believe that the existing foundations will also change as a result of philanthropic capitalist developments. That is a legitimation pressure that is built up. The moment I mention something Effective Philanthropy, others are put under pressure. This creation of words implies that others are not effective.

About the author:
Frank Adloff holds the professorship for sociology, in particular dynamics and regulation of economy and society, at the University of Hamburg.