The perils of ‘philanthrocapitalism’

Are corporations profiting from philanthropy? Do mega-donors acquire too much influence? Linsey McGoey on ‘saint’ Bill Gates and the downsides of giving away $16 billion

October 15, 2015
Nate Kitch illustration (15 October 2015)
Source: Nate Kitch

For many on the political Left, Bill Gates is “the saint of Seattle”. He has long been in favour of gun control and access to contraception, and is unafraid of offending the powerful Christian Right. He is plainly well-intentioned and, through the Bill and Melinda Gates Foundation, has donated vast sums – about $16 billion (£10 billion) – to global health initiatives. He has urged his fellow billionaires to give at least half their fortunes to charity.

Some such peers pursue overtly right-wing causes such as crusades against ObamaCare. Peter Thiel, former chief executive of PayPal, has made a stand against death, or what he calls “the ideology of the inevitability of the death of every individual”, and has complained that developments since the 1920s such as “the vast increase in welfare beneficiaries and the extension of the franchise to women have rendered the notion of ‘capitalist democracy’ into an oxymoron” (although he later clarified that he was not opposed to female suffrage).

In such company, it is hardly surprising that Gates is something of a hero to liberals. The rapper Puff Daddy once strode up to him in a bar and told him – in the most complimentary way possible – “You are a motherfucker.” Bono praised him for “getting shit done”.

Yet this is only one side of the story – as Linsey McGoey, senior lecturer in sociology at the University of Essex, discovered while researching her first book, No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy.

The Gates Foundation now contributes about 10 per cent of the total budget of the World Health Organisation, leading to allegations that it has undue influence on the organisation’s policies: a worry all the more serious given the contentious positions it has taken on, for example, the right balance between treatment and prevention in addressing HIV/Aids. There are studies, McGoey’s book reports, indicating that “voluntary contributions to the WHO are far less aligned with the actual global burden of disease than assessed contributions [from member states]”. Yet some health researchers are said to be reluctant to criticise the Gates Foundation’s priorities too openly for fear of being put on a funding blacklist, even though there is scant evidence that this has ever happened. In venturing into this territory, McGoey – who has never received Gates Foundation funding – was sometimes told that she was “very brave” or “very foolhardy”. At one conference on global health, she told a fellow delegate that she was doing “a qualitative, interview-based study of how other stakeholders perceive the Gates Foundation”. This might not seem particularly inflammatory or controversial, but the woman responded in all seriousness: “You’ll never get funding again!”

In the event, McGoey found the foundation to be fairly open and responsive to her queries. Although she never secured an interview with Bill or Melinda Gates, or a senior figure working in global health, press officers arranged for her to speak to both the foundation’s head of advocacy and policy for US programmes and its deputy director for the charitable sector. She also had an off-the-record conversation with a senior official working on HIV policy. But although she was never particularly worried on her own behalf, the sociologist in her was intrigued by some of the reactions that her project provoked.

So why has one man and one foundation attracted such a divided response, and how did McGoey get interested in the subject? After studying journalism and English literature at Carleton University in Canada, she went on to a master’s in social anthropology and a PhD in sociology at the London School of Economics. The latter focused on the regulation of antidepressant drugs, the manipulation of clinical trial results and how organisations exploit scientific uncertainty to serve their economic goals. She spent a year as a fellow in the University of Oxford’s School of Geography and then transferred to the Saïd Business School, where she worked with the science and technology studies group.

It was at Saïd that she became aware of the “philanthrocapitalism” movement, which is studied and promoted at the business school’s Skoll Centre for Social Entrepreneurship – and defined in her book as “a novel way of doing philanthropy, one that emulates the way business is done in the for-profit capitalist world”. She even got a chance to attend the glitzy and exclusive Skoll World Forum, held at Oxford each year, which in 2012 included talks and performances by Arianna Huffington, Annie Lennox and George Soros. Through such experiences, she says, she “gained a very close perspective on the growing trend of social entrepreneurship and social impact investment”.

But while the students and other enthusiasts for social entrepreneurship were “engaged with exciting new developments”, McGoey recalls, these were “often not rooted in an understanding of the history” or detail of development issues (one student even asked her, “What’s the IMF?”). Their solutions for eradicating world poverty seldom reflected the insights or concerns of those actually working on the ground. Here, she thought, was “a phenomenon which required academic observation and analysis”.

One approach she adopts is historical. Some of the early industrialists turned philanthropists – Andrew Carnegie, Henry Ford and John D. Rockefeller – attracted vigorous “critiques which are still central to debate today over public welfare. The canonisation of people like Carnegie has eroded consideration of the ways that his labour policies were very contentious at the time. I wanted to bring historical context to today’s arguments.”

Nate Kitch illustration (15 October 2015)
Nate Kitch

It was Rockefeller who once declared that “not even God himself can stop me from giving my money to the University of Chicago”. We might think such beneficence all well and good until we remember that Ford had a notorious history of publishing viciously anti-Semitic tracts that were greatly admired by Hitler. If we accept the right of philanthropists to fund causes we happen to like, do we also accept their right to support things we detest? If we don’t, as No Such Thing as a Free Gift points out, it is a bit like “professing you believe in democracy but only if your preferred party is the sole candidate”.

The “charitable” activities of Gates’ most obviously reactionary fellow billionaires have been well scrutinised, but he himself has received much less critical attention – and is often cited as the good mega-rich philanthropist compared with people such as US industrialists the Koch brothers, who oppose policies to redress climate change. “I saw a need for some engagement,” explains McGoey. “Any powerful organisation should be subject to critical investigation.” Although there was evidence that the Gates Foundation had sometimes (admirably) changed its mind, such as in relation to HIV/Aids, “that’s not to say that criticism is now irrelevant – they’ve only moved in response to external criticism”.

More than this, however, McGoey “wanted to pick the hardest case. The Left has been very unquestioning in support of Gates, Soros and other liberal funders. Yet any time we commend an organisation for doing whatever it wants, we have no pressure or very limited pressure for reining in foundations that are doing quite serious things we don’t like. There has to be a rule of law that applies equally to funders of different ideological stripes.”

The publisher’s press release describes No Such Thing as a Free Gift as a “scathing take-down of philanthrocapitalism”. The book is not nearly as polemical (or luridly readable) as that might sound, but it does raise some key questions about “transparency and accountability” and about whether “many philanthropists, both today and in the past, earned their fortunes through business strategies that greatly exacerbate the same social and economic inequalities that [they] purport to remedy”. It also looks at whether “philanthropy, by channelling private funds towards public services, erodes support for governmental spending on health and education”.

Turning to the Gates Foundation itself, McGoey examines the hard line it takes on patent protection, its support for private initiatives within the US school system and its lack of interest in “mission-related investment” (where foundations attempt to align their investment decisions with their core values). Yet, when asked about her area of greatest concern, she declares herself “most outraged” by the money that goes directly from foundations to for-profit corporations.

“It is a long-standing trend”, she admits, for “philanthropic organisations to give money to for-profit media outlets, as a way of recognising the difficulties they face in the current climate or creating alternative perspectives”. But support for businesses has now spread well beyond that.

The Gates Foundation, for example, provides non-repayable grants to Scholastic Inc, a large publisher of education material. And the book describes an extraordinary project, called M‑Pesa, for which Vodafone and its subsidiaries built, in Kenya and then Tanzania, a system that allowed villagers access to mobile phone banking. This may well be a good thing in itself, but the UK’s Department for International Development and the Gates Foundation both provided major donations to Vodafone, which was then praised in articles for its entrepreneurial flair without any reference to the money it had received.

Most importantly, the case raises issues about whether hugely profitable companies really need financial support from public and philanthropic sources. Meanwhile, the US Treasury lost out from the tax relief that the Gates Foundation has been granted – and London-based Vodafone managed to avoid paying any UK corporation tax for three years in a row.

“Corporate philanthropy” once meant money given by corporations. That is now in decline in the US as a proportion of gross national product and McGoey worries that the new trend is for philanthropic funding to be given to corporations instead.

“I don’t believe it is justifiable for for‑profits to receive tax-deductible foundation resources,” she stresses. “That’s my main concern right now. The push from business schools for philanthrocapitalism…and social entrepreneurship has opened a door towards direct enrichment of corporations by philanthropic foundations that we simply didn’t see in the past.”

Linsey McGoey’s No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy is shortly to be published by Verso Books.


Print headline: Generous to a fault

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Reader's comments (1)

If these corporations all paid their fair share of taxation, there would be no need for philanthropic initiatives such as those mentioned in the article above. They could just hand over the money anonymously to registered charities working to eliminate poverty and ill-health in the less developed world. However, they would not then be able to claim any kudos, would they? It is all very suspect, in my honest opinion.