Philanthropy, divestment, and a holistic economy

I’ve been uneasy for a long time about the way we glamourise entrepreneurs who make bucket loads of money and then give it away (however generously) via philanthropy. Before we celebrate them we need to ask ourselves how their fortunes have been made; was it ethical? Safe for the environment? Good for humanity?

The post industrial revolution business model AKA contemporary capitalism glorifies rich entrepreneurs. It glorifies and encourages private capital creation, consumerism, and self interest at the expense of social and environmental capital; and as a society I argue we are worse off for it. In short, if you made your money damaging the earth and its inhabitants, your money is dirty money. My entrepreneurial mantra has for a long time been “social capital over private capital”, by this I mean the fundamental goals of any business I am involved in must have a symbiotic relationship between the creation of social or environmental capital and private capital.

The glorification of rich entrepreneurs and their money in any case ignores the truth that trickle down doesn’t work; “The richest 85 people in the world have as much wealth as the poorest 3.5 billion – or half the world’s entire population – put together” (1). Not much is trickling down from their pockets. This is Thomas Picketty’s central theme after all, that money is so concentrated in the hands of a few wealthy families that it cannot work its way out into the larger economy. Picketty “argues that the world today is returning towards “patrimonial capitalism”, in which much of the economy is dominated by inherited wealth: Their power is increasing, creating an oligarchy” (1. reported in the Guardian 21.Jan2014); see also Inequality for All.).

The vast majority of well meaning wealthy people who give so generously to charity have made their money as they only know how; using the same system that keeps billions of people in poverty. They have made their money in manufacturing, IT, and the stock market where sub-standard labour conditions for the worlds poorest have helped them become rich. Where the Rana Plaza factory disaster in Bangladesh claimed 1,133 lives and injured 2,500 more.

We celebrate these rich folk, the ones that have realised the American / Western  dream, but should we continue to celebrate wealth which is made and then given away, if it is made with no regard to how ethical or otherwise their supply chain is? I argue no.

What’s the point in paying to fix societal and environmental breakdown (unsafe work places leading to death, fracking on farmland, oil spills in the gulf) with your hard earned dollars if we could do things differently; things that don’t break the systems in the first place?

On a panel at a social enterprise conference last year I said something along the lines of ‘if a philanthropist gives away their money after chopping down the rain-forest its dirty money’, and was promptly told by a prominent Australian entrepreneur and philanthropist who was also on the panel that this doesn’t happen, and that those businesses (who destroy the environment) aren’t interested in giving money away.

However I beg to differ. Witness the divestment strategy of the Rockefeller Brothers Fund (RBF), half of those on the fund’s board are direct descendants of John D Rockeller, the founder of the empire that became ExxonMobil. Valerie Rockefeller Wayne, Chair of RBF said “We all have a moral obligation, the money that is for our grant making and that helps fund our lifestyles came from dirty fuel sources”.

And they aren’t the only big business or fund that is divesting; in June 2014 in New York, 800 investors and institutions committed to divest more than $50 Billion US from dirty fuel sources.  Stephen Heinz RBF President said that for a fund which gives over 50% of its money to fight climate change to continue to be “invested in fossil fuels actually causing climate change just was morally hypocritical and unacceptable”. He went on to say “I think largely the feeling has been ‘make as much money as you can and then give it away’. So the symbolism of saying actually we can have much more impact if we in fact align our investment and grant making, that’s an important symbol” (2).  This ten year battle by members of the Rockefeller family to encourage the fund to divest proves my point that the rich do still have a “make as much money as you can – then give it way” mind-set, but also shows thankfully that many are changing, as evidenced by the RBF divestment strategy.  (2. “Rockefeller oil heirs now aiming to leave a green legacy for the planet” the Guardian 28.3.15 pg 20)

I believe we should start celebrating entrepreneurs who share my view of caring more (or as much) about social capital than private capital. We should celebrate them at every opportunity. We should encourage every business school, every awards ceremony, every investor to celebrate them.

This can be the new economic paradigm. We do not need a private profit motive to encourage us to work hard and make money, just like we do not need a religion to make us behave well or to be ethical.

The new conscious, collaborative economy should always put social/community capital before private capital. The time for fear is over, we need not be afraid that we ‘won’t make it’; there is abundance in the world, there is plenty to go round, we just need to re-learn how to share it.

However, the super rich of course may need to forgo a private jet or two in favour of enabling someone to have a roof over their heads – according to the film Inequality for All, the dollar value of a single ‘top income’ could buy housing for every homeless person in America. Now that’s social over private capital.

Social business models are built on this:
It’s ok to be rich, private wealth creation is ok, diverse incomes across a society are ok; but of fundamental importance is how the wealth is created, and how diverse the income distribution is.

Ethical wealth creation which causes as little harm as possible in the  process is the future. This way we can still enjoy the challenge of business, the thrill of entrepreneurialism without causing fear and misery in the process.

The world is connected by more than just the internet and every action has a reaction, if you made money by selling, or investing in companies that manufacture cheap T-shirts made in Rana Plaza therein lies the problem. Admittedly we cant all live 100% ethical lives starting tomorrow, I’m sure I’ve bought clothes made in Rana Plaza or one of their ilk over the years, and I probably continue to do so. But if we change the dominant economic paradigm and do away with the growth for growths sake, profit at all cost mentality then we may not have clothes made in sweat shops anyway.

So let’s stop celebrating wealth created in contemporary capitalism being  gifted to the poor, and to the repair of a damaged ecology; and instead celebrate future focused ethical wealth creation where the poor are lifted from poverty, and the planet is healed by a safe, secure, and connected economy.

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About stevewilliams1901

Social entrepreneur based in Australia.
This entry was posted in A Social Entrepreneurs Diary and tagged , , , , , , , , . Bookmark the permalink.

One Response to Philanthropy, divestment, and a holistic economy

  1. lachlan says:

    fantastic! great to see these veiws…especially from an australian!

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