Uncategorized - Written Monday, January 5, 2009 by Don Tapscott - 1 Comment

Review of Philanthrocapitalism

I’m generally disappointed by business books, and for that matter non-fiction books in general. It’s rare to get a fresh idea, let alone one that is argued well. I’ve followed Mathew Bishop’s work (he is New York bureau chief of The Economist) over the years and confess to some skepticism when I saw he had co-authored a book (with Michael Green, an international development expert) entitled: Philanthrocapitalism: How the Rich Can Save the World. When I look at the many problems confronting the world today it seems to me that the rich, more than any other group, have messed it up. And what a mess it is.

However, Philanthrocapitalism is a great book, and I can’t think of any category of educated person who should not read it. The authors argue that philanthropists can be critical to helping solve society’s large problems because of their unique perspective.

Philanthrocapitalists are “hyperagents” who have the capacity to do some essential things far better than anyone else. They do not face elections every few years, like politicians, or suffer the tyranny of shareholder demands for ever-increasing quarterly profits, like CEOs of most public companies. Nor do they have to devote vast amounts of time and resources to raising money, like most heads of NGOs. That frees them to think long-term, to go against conventional wisdom, to take up ideas too risky for government, to deploy substantial resources quickly when the situation demands it—above all, to try something new.

The authors clear away much of the mud on the windshield when it comes to social investing, venture philanthropy, philanthropreneurship, social innovation, social entrepreneurship and the like. Every chapter is packed with interesting stories about the players who are making this happen, leveraging their wealth to improve the state of the world. I learned about the ecosystems of social investing, and was stunned to discover how business principles were being transferred so successfully.

[P]hilanthrocapitalists are developing a new (if familiar-sounding) language to describe their business like approach. Their philanthropy is “strategic,” “market conscious,” “impact oriented,” “knowledge based,” often “high engagement,” and always driven by the goal of maximizing leverage of the donor’s money. Seeing themselves as social investors, not traditional donors, some of them engage in “venture philanthropy.” As entrepreneurial “philanthropreneurs,” they love to back social entrepreneurs who offer innovative solutions to society’s problems.

For some time there has been the expression among the Corporate Social Responsibility community “You do well by doing good.” I don’t think this has been true. Many companies have done well by being awful – by having terrible labor practices, bad products bolstered by good advertising, externalizing costs (such as industrial emissions) on society and the like. However increasingly in the age of transparency everyone is being held to higher standards. And a new generation of people with wealth are beginning to understand that you can’t succeed in a world that is failing.

My hope is that wealthy people will read this book and follow the lead of their most progressive peers. How ironic, should the rich actually end up being key to making this smaller world a better and more sustainable one?