The Wealthy Can Do More

Posted by: Don Tapscott on January 28, 2009

Editor’s Note: Author Don Tapscott will be guest blogging daily from Davos.

I attended a luncheon hosted by Matthew Bishop, co-author of 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. But Philanthrocapitalism agues 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. 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.

According to Bishop, Philanthrocapitalists 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. And I’m keen to know what readers of BusinessWeek think. Can the rich be a big part of the solution to achieving sustainability and justice in the global economy?

Reader Comments

Liz R

January 28, 2009 3:04 PM

Can the rich be part of the solution?

Not while they silently tolerate --indeed, cheer on!-- corporate behavior in their investments such as laying off workers right before declaring a jacked-up dividend, or electing to defer capital investment that would benefit consumers bcause the shareholders would rather see a bigger profit bump.

Get real. The rich make their money via their investments. To help us achieve global sustainability and justice, they need to take a much harder look at the underpinnings of their wealth accumulation process, not just find nice PR-worthy ways to practice their "philanthrocapitalism."

If the rich were part of the solution, oil stocks would long since have gone begging and alternate forms of energy would have become old hat (and high priced securities) by now. Just one example!

George

January 28, 2009 4:05 PM

I figure if you can't beat'em, join'em. Instead of being poor and attacking 'the system' with little to no effect, why not use the system to become rich (without sacrificing your ethics and morals). Then, with more clout and control you can make a bigger impact.

Ann

January 29, 2009 2:10 PM

Where does philanthrocapitalism leave nonprofits who are feeding and housing the poor, working on complex issues with multiple causes whose solutions take time--and may not be all that innovative? Venture philantropists are applying wall street's short-term horizons and benchmarks and fail to take into account the political context.

Ian

January 29, 2009 5:02 PM

RE: George's Comment

George the bigger question is can you become "RICH" in the current system WITHOUT sacrificing your ethics and morals. My answer to you is no.

Anne Ellinger

January 30, 2009 2:43 PM

We are certain the uber-wealthy of this world can be a part of the solution. Research shows that affluent Americans could easily afford to donate $100 billion more per year, with no reduction of their lifestyle or security. As the founders of an organization that promotes the inspiring stories of high-net worth donors who give to foster social change, we can tell you that there are many wealthy people truly committed to making a difference with their wealth. We're working to ensure that their bold giving inspires others to do the same. --Anne and Christopher Ellinger, Bolder Giving in Extraordinary Times, www.boldergiving.org

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