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Philanthropy in the spotlight


Shelagh Gastrow provides advisory services to the philanthropy sector, higher education advancement and non-profit sustainability. She works with individuals and families on how to integrate their wealth and their values into meaningful and effective philanthropy. From 2002-2015 she was founder and executive director of Inyathelo and focused her efforts on strengthening civil society and universities through programmes to develop their financial sustainability whilst promoting philanthropy in SA. Her work has gained public recognition locally and internationally.

Civil society in South Africa has, in the past, been criticised by the government in particular as being ‘foreign agents’ and other nasty epithets. However, its role has been recognised within the country as critical to a thriving democracy, rather than a hindrance to change.

Having just gone through an election where the focus has been on political parties and power, with a significant focus on who funds political parties and demands for greater transparency, it could therefore be opportune to explore other points of power in our society such as civil society organisations, with their relationship to philanthropic funding that has provided support, particularly since the formation of our democracy.

There has recently been substantial criticism of the role philanthropy plays in the body politic. Unfortunately, if the philanthropy sector is expected to make a contribution, it will always bump into the political terrain as that is where systemic change happens.

Criticism in the US has emerged through the publication of two books.

First, a book entitled Just Giving: Why Philanthropy is Failing Democracy and how it can do better by Rob Reich of Stanford’s Centre for Philanthropy and Civil Society. Reich implies that big philanthropy could undermine democracy as it is a way of converting private assets into “public influence” through the funding of civil society organisations, particularly those that engage in research, advocacy and policy change.

There is general agreement that levels of accountability in the philanthropy sector are low and that this is a two-edged sword. The benefits of low levels of accountability are that philanthropy can take more risk and support all kinds of innovation that can advance society. For many in the philanthropy sector, the risk is a “calling card” and failure, a learning opportunity, rather than a disaster for shareholders.

The government cannot take the same level of risk and therefore it has been incumbent on philanthropy to pilot new ideas and assess their success or not. However, the lack of accountability also has drawbacks. Besides being able to experiment and then walk away, sometimes leaving behind some serious unforeseen negative outcomes of their giving, many donors receive tax benefits. but are not accountable to the public who are therefore subsidising those donations.

In South Africa, many donors claim an 18A tax certificate that affects the bottom line of their tax returns, while others establish tax-exempt foundations, even though they personally receive no tax benefit for setting them up.

Reich points out that as wealth accrues among a relatively small number of individuals and families, so their decisions as to which organisations receive their support could have an impact on democracy way beyond what their voting capacity would be.

Social justice organisations that undertake research, policy development and forms of advocacy are part of our civil society that engages fully with the government. The funding of such organisations could be seen as political influence beyond the individual’s voting capacity.

In addition to Reich’s book, a hard-hitting book by Anand Giridharadas entitled Winners Take All: The Elite Charade of Changing the World has also been published. In this book, the author criticises the wealthy in-crowd who meet and rub shoulders in mutual admiration at forums such as Davos.

He maintains that despite their public declarations about philanthropy, they are in fact concerned only with maintaining the system that led to their prosperity, while leaving most of the global population in poverty. The billionaires that form part of this influential and privileged group, with their acolytes, believe that they are the only people who have appropriate solutions to the world’s problems and position themselves as trailblazers for justice in the fight against the crooked institutional establishment. Governments are seen as ineffectual and the line is that dependence on market forces is the only way for society to advance.

In a small group awash with money, the reality is that very little actually goes into philanthropy. In essence, Giridharadas indicates that:

The entrepreneurs were willing to participate in making the world better if you pursued that goal in a way that exonerated and celebrated and depended upon them.”

Giridharadas has become somewhat of a celebrity himself and is taking his criticism of the wealthy global set across the world.

As some of his critics have pointed out, the business does encourage new technologies that can be of significant benefit to humankind and provides work for millions of people whose lives have improved as a result.

However, the issue he addresses is that when individual financial power works in a global context, those individuals have greater influence while evading the payment of appropriate tax. They essentially work a system that creates massive wealth and they will ensure that the system is sustained before they champion philanthropy.

Reliance on that system to accumulate wealth does little to change the underlying economic structure that also creates mass poverty. Giridharadas calls this the “market world” consisting of an elite that appears to sincerely want to do good, and who are surrounded by those who benefit from their largesse, including a coterie of important civil society organisations, international NGOs, academic thinkers and elements of the media who gather at global events fashioning their own language and values. Any funding that emerges ensures that the world is built in their own image. Ironically, many of the issues they claim to address have resulted from market failure itself.

For many, there is the strong belief that in order to shift the economic paradigm and to enhance social justice and equality, the wealthy should be paying a greater proportion of tax rather than entertaining philanthropic generosity. However, how does this apply in countries where governments and ruling parties, frankly, steal tax money?

Then we have the critics of the critics. In a recent article in The Chronicle of Philanthropy, Phil Buchanan, president of the Center for Effective Philanthropy in the US accepts that philanthropy “deserves scrutiny”, but maintains that some views “veer into the absurd”. He agrees with Giridharadas that imposing “ill-fitting frameworks from the business world on to a very different landscape” often results in “disappointing results”. The non-profit sector is significantly different from the market and requires different approaches.

He points out that the view put forward by Giridharadas that “Philanthropy launders bad reputations” or that “philanthropy can also be central to purchasing the immunity needed to profiteer at the expense of the common welfare” has an element of truth, but is basically inaccurate when viewing the whole philanthropic landscape.

Even in South Africa, civil society is conscious of the sources of philanthropic funding. Some organisations that have made a Faustian agreement with a questionable donor find it difficult to operate in the civil society space.

Giridharadas’s ire goes beyond philanthropy into the civil society space. He has claimed that non-profits are part of a rigged system “as enablers for plutocrats to continue to harm society”. Buchanan maintains that this “is an insult to the country’s vast and diverse nonprofit world, supported in significant part by philanthropy, which employs one in 10 Americans”.

The role of civil society in South Africa has, in the past, been criticised by the government in particular as being “foreign agents” and other nasty epithets. However, its role has been recognised within the country as critical to a thriving democracy, rather than a hindrance to change. Buchanan points out that in any sector there are the villains and the heroes and that the discourse should be more nuanced than the explosive viewpoints presented by Giridharadas, directed at both philanthropy and the non-profit sector.

Buchanan believes the “instinct to give” should be encouraged, rather than scorned, as it is an important way to make a difference.

Despite the hard-hitting critiques of philanthropy, in South Africa we see less “big philanthropy” and more individuals who have a real concern about the future of the country.

There is a sea change and increasing numbers from all sectors of our society are playing a philanthropic role. While our new democracy surges and falters, philanthropy has provided opportunities for civil society to ensure our democracy stays on course through advocacy, service delivery, investigative journalism and a range of other causes that contribute positively to our complex society.

At this moment, the contribution in South Africa by a relatively small private philanthropic community has an impact beyond measure. In essence, individuals are transferring some of their wealth to entities over which they have no control, despite contractual agreements.

The partnerships developed help to build the starting blocks of a new South Africa and the efforts of such individuals should be respected with the proviso that, in time, the power of elites should be monitored and checked. DM


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