not-just-for-profit.com Blog

I have just been reading “Just Another Emperor? – the Myths and Realities of Philanthrocapitalism” by Michael Edwards. Is philanthrocapitalism really all hype and with little hope of delivering real impact? Well it is still early days so in that case I suppose claiming victory or failure is simply too early. Philanthrocapitalists have real and good intentions, and are generating huge sums to do good with, and are doing a lot of good with it already. This must be applauded, appreciated and leveraged successfully. Michael seems to suggest that most (not all) philanthrocapitalist are blind to their belief that running NGOs like businesses will solve the world’s problems. This is probably not entirely true. Andrew Carnegie’s well know quote, “It is more difficult to give money away intelligently than it is to earn it in the first place” is increasingly something that many new philanthropists and philanthrocapitalists would agree on today.  

However there is some risk of failure to the model as there appears to be a need for a better understanding of how change occurs in a development context. Meanwhile, I do believe that here is a real place for business as well as the adaptation of some business practices by NGOs in international development. However we must remember that there are different financial and human resources available to businesses and NGOs and that they are motivated and driven by different forces (one is for profit the other is for “well-being”). Pure philanthrocapitalism I would think works better when some development has already taken place and is more difficult when targeting the really marginalized.  

What is noteworthy however is that a truly inefficient business will go out of business whereas this is not necessarily true for a government department or NGO – and I think that this is the real gist here – it is not about whether or not philanthrocapitalists can solve some of the world’s poverty issues more efficiently through social entrepreneurship, or whether civil society groups best represent the marginalised, or whether governments are best at delivering large scale infrastructure – because I believe that all the above can be true as there is a role for everyone according to their core competency in international development– just as all of the above, if undertaken poorly, can fail.  However what this entire debate is really about in my mind and what we are all really seeking is well run organisations and initiatives achieving greater impact. Whether that is measured through social-return-on-investment or number of smiles – well that depends on who is measuring and personal values attached.  To me being result-oriented in some way is not only crucial but something I truly believe is important (a definite negative trait of philanthrocapitalism according to Michael) – because how else do you even know where you are going – not to mention what you are trying to achieve?   To me being more strategic and result-oriented definitely includes taking advantage of business practices and methodologies but it also includes incorporating experience and lessons learned from the development field, understanding the legal, social, economic and political contexts, and working closely with donor and recipient. Although he raises some important issues I think that Michael gives philanthrocapitalists too hard of a time. His conclusion about dialog and better understanding is however a sensible one.  

Finally – perhaps the real gem to be further leveraged off philanthrocapitalism is its potential to change mindsets, build an entrepreneurial spirit and the empowerment that comes from getting yourself out of poverty versus receiving aid.  

Michael’s book can be downloaded for free from http://www.justanotheremperor.org/