Faith in Charity Is Hopeless: Philanthrocapitalism Has Failed Us

“When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist.”―Hélder Câmara (Catholic Archbishop from Brazil)

The philanthropy practiced by capitalist corporations through foundations they create has a mixed outcome. It rightfully boasts its success, for example, the eradication of malaria and tuberculosis, which saved many lives. But that success has limitations because this philanthropy is a child of capitalism, a system that places profit and economic growth ahead of the environment and people’s needs. In capitalism, the ownership of the means of production, distribution and exchange of wealth is maintained by private individuals or corporations — the 1%. They extract profit out of the labor of the masses by paying them less than the value they create.

This unbalanced dynamic ends in inequality. This inequality generates a frustrated populace that could potentially disrupt society and stop the flow of profits. So, what are the capitalists to do? The 1% cannot rule the rest by force alone; it must convince its victims to consent and be submissive. To accomplish this feat, the capitalist class presents itself as the champion of society and does this partly through touting its philanthropy.

Andrew Carnegie, an early capitalist philanthropist, promoted this approach in his 1889 article, “The Gospel of Wealth.” He argued that the wealthy can reduce social protest through philanthropy. It was better to squeeze money from workers’ paychecks, collect it, and, in his case, give some back to the community. This advice led to the beginnings of “the nonprofit industrial complex,” when capitalists (Rockefeller, Carnegie, Ford) tried to deflect growing anger over their harsh labor policies by giving to philanthropy. Later, in 2012, Tony Blair said: “We need philanthropy to lessen hostility towards the rich.” These same corporations also established foundations to protect the long-term interests of capitalismand worldwide access to resources, markets and labor. They funded organizations designed to promote and defend capitalism.

Capitalism requires a system of social relationships based on assumptions like private ownership, individual initiative, profit and competition, which promote an “everybody for themselves” attitude and a fundamental belief that human nature is unchanging and places self-interest above all other concerns. We are immersed in those assumptions. We are shaped by them and recreate them every day. This allows us to uncritically and regrettably endure a reality where many people are left fighting for scraps and desperate for the necessities of life. But we are so culturally and psychologically embedded in the values and assumptions of this system that we often try to explain away our guilt over the pain of the dispossessed around us by joining with many capitalists to blame the victims for their problems (as we see in people’s ambivalent feelings about homeless people). As capitalism grows, we also have growing inequality, environmental destruction and instability, which disrupt our connection to other values like family, friends and community, making us less empathetic and caring, and more focused on instant gratification.

The rapid growth of profits in the IT and finance sectors during the 1990s and 2000s brought forth the New Gilded age of Philanthropy, with its own buzzword, philanthrocapitalism. These capitalists believed that business methods are better able to solve social problems than the methods used in the public sector. They advocated a “kinder capitalism,” where you can get rich while helping others. This new group includes people like Bill Gates, Warren Buffett, Michael Bloomberg, George Soros, Mark Zuckerberg, the Koch brothers and others (representing both conservative and liberal ideologies that can live within capitalism).

Philanthrocapitalists believe that their money can help raise the world’s population out of poverty. For example, Microsoft chairman Bill Gates claimed that foreign aid from wealthy nations and philanthropy showed that equity in the world is “closer than we think.” But evidence shows that philanthropy hasn’t merely failed to meet its goals: it made the situation worse. In Oxfam’s latest report, income inequality has grown so much that currently, eight men own half the world’s wealth. Additionally, the wealth gap between the Global North and the Global South, where much of foundation money is spent, has grown from 3:1 in 1820 to 167:1 in 2010. An IPS Report stated that, “The growth of inequality ismirrored in philanthropy.” The Foundation Center estimates the combined assets of grant-making bodies grew from $30 billion in 1975 to $525 billion in 2005. Even some rich insiders, for example, Peter Buffett (Warren’s son) recognize that the growth of elite money has done little to reduce economic inequality. He said, “Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market … as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine.”

Given capitalism’s priorities of profit and growth, as well as its assumptions about human nature, we can expect that when capitalists create new ventures, there are strings attached; they must receive some benefit from that creation. For example, The Washington Post discovered that most of Donald Trump’s philanthropy was tied to his business, political or personal interests.

Below are 10 points about the “benefits” that accrue to philanthrocapitalism. It:

1. maintains the fiction that we are a cooperative community helped by corporate saviors, as they convert the ongoing class war into a series of social problems. For example, that tradition began with Carnegie’s, above cited, use of philanthropy to cover up his attack on his striking workers while claiming he supported the community by creating libraries.

2. deflects and corrupts grassroots social movements that fight against neoliberal capitalism, and directs potential revolutionaries into comfortable nonprofit careers that promote reform; for example, Teach For America, LIFT and the attempt by the Ford Foundation to control INCITE! Women of Color Against Violence, by denying already promised funds because it didn’t approve of one group they were assisting.

3. strengthens the belief that many of our basic needs, especially education, ought to be controlled by capitalists. For example, the charter school movement argued that public schooling was in crisis (due to loss of funds in the 2008 recession), so schools needed to be privatized. This view was promoted by capitalist foundations like the Gates Foundation and the Walton Family Foundation. Combined with effective PR and films like Waiting for Superman, it became a growing phenomenon. It was challenged by educators, with supportive evidence demonstrating that privatization didn’t work.

4. has amplified the voice of those who already hold influence, access and power (primarily white male corporate executives — calling to mind the “white man’s burden“). For example, white men’s control of corporate boards remains dominant, as demonstrated in a report issued by the Alliance for Board Diversity.

5. offers a way for corporations to reduce their taxes, while the taxes of the citizens increase. For example, for every $10 Bill Gates gives, the government loses about $4 in taxes, thus giving more power to the corporate sector.

6. supports authoritarianism and devalues democracy when foundations are allowed to create, control and define social problems and foist their solutions on the common people without their input. For example, in 2010, Mark Zuckerberg gave $100 million to fix the public school system in Newark, New Jersey. Along with Newark Mayor (now Senator) Cory Booker and New Jersey Gov. Chris Christie, they planned to use the money to transform a failing school system from the top down. After five years, that plan was in tatters. The community, parents and teachers were never consulted in the plan’s construction and implementation.

7. has corrupted the political sphere by turning politicians into “philanthropists” who benefit from the goodwill that their corporate-financed philanthropy generates among voters. A strategy, described by ethicists as one of the last major unregulated fronts inthe “pay-to-play” culture of Washington. For example, Rep. Joe Baca created the Joe Baca Foundation, a corporate-funded charity that helped him run a permanent political campaign.

8. is minimally evaluated and regulated, thus giving it more flexibility (but also the possibility of corruption). For example, the Clinton Foundation didn’t have to prove that it was making good use of billions of dollars of tax-subsidized funds and didn’t have to identify its donors.

9. strives to make capitalism acceptable, through patching up some potential problems. For example, funding for arts and cultural activities designed by the CIA, to keep artists, writers and musicians away from generating radical critiques of the system.

10. reduces human well-being to money and markets, central components of the capitalist system’s values. A system which caused the crises we now face — of ecology, of global markets, of austerity, of war, of alienation, of dislocation, of food and water, of education, of incarceration — now uses a small portion of its profits to resolve the massive problems it created.

Philanthrocapitalism is among the least democratically accountable, most politically influential and under-regulated entities that control power and wealth. It claims to address the root causes of poverty. But it ignores the fact that before you give all this wealth away, you must take it from those who created it. It is capitalism that is the real root cause of inequality and injustice.

Despite the public statements of the generosity of its proponents and the fact that it does immense good, philanthrocapitalism has become a weapon in the class warfare of the 1%. It is the carrot used to win the public over to its ideology, which accompanies the stick used to induce the rest of us to accept the status quo. It is up to the public save themselves. The 99% must imagine, organize and work towards the revolutionary goal of reconstructing society on such a basis that poverty will be impossible.