Venture Philanthropy & the Backlash

Several years ago venture philanthropy—also known as philanthrocapitalism—became an influence in the philanthropic field, and it is a trend I think has great value, built on the best ideas from the forprofit and nonprofit sectors.

There has been a backlash, and this article from Stanford Social Innovation Review reviews a backlash book, Small Change: Why Business Won’t Save the World.

An excerpt.

“Small Change is a follow-up to, and an amplification of, Edwards’ 2008 monograph, Just Another Emperor? The Myths and Realities of Philanthrocapitalism, which was a hives-like reaction to the book Philanthrocapitalism: How Giving Can Save the World, by The Economist’s Matthew Bishop and Michael Green (who interestingly enough has had a career similar to Edwards’).

"Edwards makes no bones about what Small Change is about: “The claim that business thinking can save the world is a convenient myth for those who occupy positions of great wealth and power; and the constant celebration of rich and famous individuals is a dangerous distraction from the hard, public work of finding solutions, all of us together.” Edwards further states in the preface, “Social transformation is not a job to be left to market forces or to the whims of billionaires.”

“Clearly, Edwards has a bee in his bonnet about Bono, Bill, and Buffett, and their role in the world—especially in the developing world. Edwards also sees the issue in black and white: Either you believe that business thinking is good and will save the world or you don’t. The reality is that the world is quite complex and is also quite gray. Given his vast experience, it is shocking that Edwards sees the world as starkly as he does.

“Edwards wants the reader of this slim volume to firmly believe that business and business leaders have little to no role in solving social problems. Business leaders are too tactical; are far too focused on outcomes; and really don’t, well, feel. “The profit motive is not a dirty word,” writes Edwards, “but is it a different word from solidarity and caring with no expectation of return.” He goes on to describe this division and relies on stalwarts like Adam Smith and Milton Friedman to reinforce his point of view. For a seasoned reader this all feels a bit “been there, done that.” We have heard these antibusiness arguments before, and in 2010 they just don’t resonate as they once did….

“Edwards wants you to believe that philanthrocapitalism is completely misguided. He also wants business-minded donors to leave the messy work of social change to the professionals—that the mandarins of the NGO world can take care of it. Edwards wishes business and its leaders would just leave civil society alone. And he wishes that business would stay within the boundaries of its sector and reform and behave itself.

“Perhaps it is only fair then to have the last words of this review come from Bishop and Green: “If philanthrocapitalism is to succeed, it will be because these philanthropists take impact seriously and apply their business talents just as rigorously as they did when they made their money. That is easier said than done, not least because philanthropy lacks many of the market forces that keep businesspeople disciplined, focused on success, and willing to make the tough decisions necessary to survive and prosper.”