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Traditional philanthropy

What’s wrong with traditional philanthropy?

There is a long history of charitable giving by individuals and through foundations and government bodies, this generosity has helped to alleviate suffering across the world and without it society would be a much scarier place. However, there are a number of issues within the world of philanthropy which need to be resolved and a lot more we need to learn if we are to create a world where charity is no longer needed.

Addressing only short-term needs

Most charitable giving is responsive to a desire to directly alleviate suffering; this results in most donations being used for very short-term goals rather than aiming to bringing an end to the problem entirely. For example, we continue to donate millions to solve homelessness yet still millions remain homeless. This is because we continue to invest the bulk of funds on feeding and housing homeless people, rather than addressing the economic and social injustices that cause homelessness and thus creating the change needed to end it. Rather than charity, as Oscar Wilde said many years ago “The proper aim is to try and reconstruct society on such a basis that poverty will be impossible“. Of course, both aid and change are needed but the disproportionate amount of funding going to the former is problematic.

In recent years certain trends have developed which exacerbate this problem. Philanthro-capitalism for example, which promotes using business strategies in philanthropy including expecting measurable outcomes, again directs the donor to practical, tangible projects addressing short-term needs rather than the work of changing opinions, behaviour and policy which is necessary to create change in society. As Michael Edwards said “Would philanthro-capitalism have helped fund the civil rights movement in the US? I hope so, but it wasn’t ‘data driven’, it didn’t operate through competition, it couldn’t generate much revenue, and it didn’t measure its impacts in terms of the numbers of people who were served each day. Yet it changed the world forever“.

Reluctance to fund social change work is also due to a lack of courage, will, existing models and leadership and also partly due to foundations often being registered charities and a misunderstanding as to the extent that they can support campaigning work (Just Change, 2007). However, it is now more crucial than ever that philanthropic thinking goes beyond aid. If we can start to address the root causes of problems, we can start to look forward to a world where aid no longer exists or is necessary – and in creating a new fairer world, with a fairer distribution of wealth, philanthropy will no longer exist in the way it does now either.

Lack of accountability

When making decisions on funding, there is often very little consultation with, or participation of, the people and communities that donors wish to help. Often decision-makers are based in offices far from those they aim to help, which makes it difficult to make decisions that are both effective and appropriate for that community. There are many examples of how funding has failed, particularly international aid, where often ‘experts’ from the West are flown in to implement projects at huge cost (not least the flights, hotels, interpreters and consultancy fees) without the sound local knowledge to ensure the project works (more).

The people making decisions on funding are often unrepresentative of the groups and communities they aim to support. Sadly there’s little specific data on foundations, but since most are registered charities it’s likely the data on charities applies. Research shows that only 3.3% of charity trustees are African-Caribbean and 1.4% Asian, with two thirds over 50 years old (NCVO). The boards of the 100 largest UK charities are 67% male, 92.2% white, 93.9% non-disabled, with the typical chair being age 62 (Civil Society). Other research has shown only 16% of trustees to be women (Ecclesiastical) and others that it is more like 55% (New Philanthropy Capital). Whilst there are some differences in the data the Charity Commission describes the average UK trustee as male, white and age 57 – actually very similar to your average MP!

Foundation board members in the US are also most likely to be white, male and over 50 (Foundation Center). Foundation CEOs and boards do not reflect the diversity of the nation’s professional workforce or the overall population, for example people of colour make up 34% of programme officers and 21% of the professional workforce but only between 8-14% of CEO and board members at foundations (D5 Coalition). Similarly, women make up only 38% of trustees, the LGBT community only represents 2% and disabled people somewhere around 1%.

The communities who are themselves facing injustice, and sometimes also the activists who embed themselves in the community’s struggles, are those who are more likely to have the solutions and yet they do not make the decisions about funding and thus the projects that are implemented. But this is not just an issue of effectiveness, but one of equality and justice. If we seek to create an equal world, free of the unjust power structures in society that maintain and increase the divide between rich and poor, people must be in control of their own lives and resources. Philanthropy that gives power to one over another, especially where it relates to people who already have great power and privilege in society making decisions about those who do not, is counter productive to creating an equal world. Whilst it is near impossible to break down power dynamics involving the distribution of resources completely, there are steps that can be taken to minimise it as much as possible.

Who benefits from ‘charity’?

Some argue that philanthropy exists only to perpetuate the status quo for the elite classes, supported by the fact that only a very small proportion of funding (less than 5% in the US) goes towards projects that create progressive social change rather than aid, and more shockingly, that only a quarter of US social service NGOs estimate that more than half the people they help are poor (Clotfelter, 1995). When you consider where the money comes from in the first place and who is in control of it, the claim that charity serves the rich is hard to ignore.

According to Ken Stern the US charity system is “fundamentally regressive, and works in favor of the institutions of the elite”. He states that “not one of the top 50 individual charitable gifts in the US went to a social-service organisation or to a charity that principally serves the poor and the dispossessed… the wealthy prefer to support colleges and universities, arts organizations, and museums”. Over twenty years earlier Terry Odendahl came to the same conclusion: “philanthropy of the wealthy serves many purposes, but primarily it assists in the social reproduction of the upper class. Private contributions by the elite support institutions that sustain their culture, their education, their policy formulation, their status—in short, their interests” (Odendahl, 1990).

Here in the UK, the Coutts Million Pound Donor Report also shows the most popular causes of the rich philanthropist to be higher education, arts and culture and international development. A total of 191 organisations received donations worth £1m or more in 2010/11. The report states ‘organisations that received multiple million pound donations are primarily well-known universities or national arts and cultural organisations… the only organisations in need of ‘two hands’ to count their million pound donations are the universities of Oxford and Cambridge’.

Major philanthropists, like those almost in the realm of Bill and Melinda Gates, who have donated millions to charity, sometimes use their incredible power to force through their own strategies and agendas which often would never happen through a democratic process.

For example, whilst the Gates’ charitable work has achieved some good, they are also investing millions in genetically modified crops in countries where there is widespread protest and people’s movements opposing GM. The same can be said of corporations which often use their foundations to create goodwill to conceal or distract from their unethical practices (greenwashing) or who use relationships with charities to manipulate communities living where they wish to operate (who may be an obstacle to their profiteering). The mining company, Vedanta, have recently embarked on a PR campaign to clean up their bad image which includes funding community centres across India and a TV campaign named Creating Happiness. Arguably the charitable projects are a small price to pay for a good image for this $11.4 billion company which has faced mass protests that have successfully stopped some of their mining operations going ahead. Greenwash works; despite BP’s Deepwater Horizon Spill which leaked millions of barrels of oil in to the sea, investment in tar sands and various other destructive projects, sponsorship of the Olympics has benefited the company image, helping to give them the social licence to operate.

Low public financial support for grassroots groups/ movements

Public support continues to go towards supporting the big international NGOs. NGOs can be unduly influenced by government, media and donors (especially corporate donors) and also often take direction from directors in the Global North instead of from people on the ground. Whilst undoubtedly the work of many NGOs is vital in assisting those suffering due to poverty and injustice they are often criticised for failing to address real need by implementing ineffective aid strategies and even for exacerbating the root causes of injustice.

In People vs Empire Arundhati Roy points out another problem with NGOs and how they affect social movements, “Most large, well-funded NGOs are financed and patronized by aid and development agencies, which are in turn funded by Western governments, the World Bank, the United Nations and some multinational corporations. Though they may not be the very same agencies, they are certainly part of the same loose political formation that oversees the neoliberal project and demands the slash in government spending in the first place. NGOs give the impression that they are filling the vacuum created by a retreating state. And they are, but in a materially inconsequential way. Their real contribution is that they defuse political anger and dole out as aid or benevolence what people ought to have by right“. In a more recent article she continues “Armed with their billions, these NGOs have waded into the world, turning potential revolutionaries into salaried activists, funding artists, intellectuals and filmmakers, gently luring them away from radical confrontation“.

Grassroots groups tend to stay true to their original values and push for more radical change than NGOs. They are not reliant on large-scale funding which can so easily result in a watered-down approach, and the fact that they’re rooted in the community means they can more effectively and appropriately voice their demands and address their needs. Funding grassroots groups is an injection of funds right in to the centre of the community and is almost always the most effective strategy. Also, buy-in needed to create change can only happen when presented from people within that community or culture, not from the outside. However, there is a lack of public support and understanding for grassroots organisations, in part because they often do not have the formal structures of NGOs.

Lack of funding for environmental causes

Donations are very much centred on a few issues, such as health, medical research, children and young people. Only around 5% of all funding goes to environmental causes, even less to projects that address more systemic causes of environmental devastation, such as climate change or natural resource exploitation. Since the state of the environment affects us all, and often particularly the most vulnerable communities, it’s shocking that still so little funding from foundations and individuals is given in this area.

What needs to be done?

Through Edge Fund we hope to provide a more just, democratic model to replace traditional forms of philanthropy by funding projects that address the root causes of environmental and social injustice and thus create long-term social change. We also strive to be inclusive and transparent in our decision-making. At the same time we hope to raise awareness of the critiques of traditional philanthropy and advocate for more just, effective methodologies that will result in a world where philanthropy is not needed (or even is able to exist).

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