The act of giving through providing financial assistance and different types of support to people and communities in need can often transform the lives of people for the better. This policy brief looks at the different forms of philanthropy, its benefits, and risks.
Given the failure of the state, continuing deep levels of poverty, unemployment, and inequality, the act of giving by business, wealthy and skilled individuals can make important contributions to solving our pressing problems.
Philanthropy could be divided into three basic forms: giving by companies, wealthy individuals, and ordinary citizens. Philanthropy can strengthen democracy by giving the poor a voice in decision-making, giving the issues of the marginalised greater prominence and strengthen civil society (White 1993; Appelbaum 2017; Davies 2017). It can help with coming up with new ideas for complex problems, better policies and deliver services where governments fail.
It can help educate citizens to understand their rights, strengthen democratic institutions and strengthen the organisations representing the poor. It can strengthen the state itself, to deliver better quality services, decisions, and policies. Philanthropy, essentially the act of giving, can itself be described as a form of active citizenship also. Nevertheless, philanthropy can strengthen democracy, reduce inequalities and promote social justice.
It can lead to greater social solidarity between the well-off and the poor, trigger positive social change, and overall, make citizens more resilient in the face of state collapse.
Funding from philanthropists improves public service delivery where the state fails. It can improve policy-making, provide new ideas to tackle complex problems and give the issues of the poor, marginalised and minorities’ greater prominence.
It can help reduce economic, social and political inequalities – across race, class, and gender. But it can also reduce civic inequalities of voice, access, and participation, between the poor and the better-off.
It can potentially strengthen civil society – a strong civil society strengthens democracy, public service delivery and accountability of public and elected representatives (White 1993; Katz 1994; Hadzi-Miceva 2007). Philanthropy can fortify the overall resilience of individuals, communities and public and civil society organisations.
Big philanthropy can undermine democracy
The Centre for Global Prosperity (2012) estimates that in 2011 philanthropists gave US$58.9bn worth of money to development projects around the world. Over the same period, the OECD countries gave US$134bn for development (OECD 2012).
Philanthropy has its critics: they are often accused of having more influence over country policies than ordinary citizens, of bending policy to their will because of their deep pockets and even of using philanthropy to escape taxes (Barkan 2013; Lamarche 2014; Callahan 2017; McWilliams 2017).
In many emerging democracies and markets such as South Africa, corporates and rich individuals may sometimes have acquired their riches on the back of exploitation of the poor, through state capture and even corruption. Their “philanthropy” is therefore often seen as an insult: taking money from the poor, which could have genuinely uplifted the poor, and then giving crumbs back to the very people they have robbed, and expected to be heralded as heroes.
Naturally, philanthropy, especially big philanthropy, giving by large companies and very wealthy individuals also potentially has its drawbacks (Barkan 2013; Callahan 2017; McWilliams 2017). The unequal power, influence, and money between the wealthy and the ordinary citizen could lead to the marginalisation of the ordinary citizens in civic life.
In fact, the disparities in wealth, in especially new democracies, such as South Africa, between the rich and the poor, could cause, “civic inequality”, the inequality between the ability of the rich and the poor to get their voices heard, to participate in public life and access resources.
Such “civic” inequality comes on top of the already economic, social and racial inequality between the wealthy and the poor. The wealthy can disproportionally influence society’s priorities. Wealthy donors can often side uncritically with corporate interests, which may be inimical to that of the poor.
As a case in point, big global philanthropists – who have more money in many cases than individual developing countries, now often determine the policies, priorities of individual African and developing countries. Such big global philanthropists in some cases support groups, forms of democracy and market economies, which are palatable to Western governments and interest groups, but which are not necessarily useful to recipient countries.
Unlike governments, wealthy donors are often beholden to the public, democratic institutions’ and civil society scrutiny. This means that wealthy donors are often not adequately held accountable. It is often difficult for the public to surmise the funding motives of wealthy donors.
Many wealthy donors are often not responsive to the needs of the communities they purport to fund. Ironically, Peter and Jennifer Buffett, the son and daughter-in-law of the US entrepreneur Warren Buffet, and wealthy philanthropists in their own right – have warned that philanthropists like themselves may engage in “philanthropic colonialism”. This is the tendency by wealthy donors to think they know the needs – and solutions – of the communities they fund better than the recipients.
Citizen philanthropy through civic engagement
Nevertheless, while the focus is often on big philanthropy, giving by ordinary citizens, or citizen philanthropy, are as important. Citizen giving involves ordinary citizens giving amounts they can afford to good causes. But citizen philanthropy does not only mean giving money but offering one’s time and skills to help the destitute.
South Africa needs to reinvigorate a culture of citizen philanthropy – which was there in the 1970s and 1980s during the apartheid era. Then, in many poor communities, conscientious local community members selflessly helped others, sharing the little they have with others more destitute, and providing a shoulder to lean on to those in despair.
In the democratic era, many citizens have withdrawn from philanthropy, arguing the ‘legitimate’ state should now step in to help the vulnerable. Yet, as state failure increases, leaders that promised much are now becoming increasingly self-serving and many democratic institutions that are supposed to protect the vulnerable are blunted. Big corporates, wealthy individuals, and citizen philanthropy are now more needed than ever.
Many citizens feel they do not matter, have little impact, and cannot contribute to change. This is not true. Every little bit helps.
The black middle class whether professionals should get more engaged in philanthropy. The black middle class entered the market economy in 1994, after having been prohibited from owning property, deprived of quality education and high-end jobs because of Bantu education and the apartheid jobs Colour Bar.
They build their post-apartheid assets – mortgages, vehicles, and furniture using debt. However, state failure has meant that they are paying an additional premium for private schooling, health, and security, as well as paying higher interest rates on everything from insurance to car loans because most had no credible financial history, collateral, and income in the pre-1994 era.
In addition, many black middle-class individuals have to pay a black tax – paying for the upkeep of poorer cousins. Not surprisingly, many will balk at providing more “philanthropy” to those unrelated to them. Nevertheless, South Africa needs a new generation of black middle-class philanthropists.
Young black professionals should also get more involved in civic engagement – donating to, volunteering in charities and civil society organisations, and helping the vulnerable outside one’s immediate family circle. Older, but lapsed activists, who were involved during the struggle, and who may now have become disillusioned, should re-engage – sharing their skills in helping others.
Transforming philanthropy to boost democracy
Big corporate and wealthy individual philanthropists who give, must do so in more effective ways. In South Africa currently, many of them have not often focused on social justice issues, causes, and organisations. They often also shy away from supporting programmes strengthening democracy, for fear of being seen to anger government. Often they also do not focus on reducing inequalities – of opportunity, race, gender, class and opportunity.
Yet, boosting social justice initiatives, democracy institutions and reducing inequality, are at the heart of strengthening citizen and society resilience. But big corporates and wealthy individual philanthropists sometimes side uncritically with “big” interests – such as organised business, on policies which may undermine the poor.
They are often also not responsive to the communities they purport to serve. Yet, philanthropy must help people who have identified their own needs to come up with their own solutions. Furthermore, they are also not transparent about why they chose certain priorities which they fund and the reasons for not supporting others. In a democracy, big corporate and wealthy individual philanthropists must also be publicly scrutinised. This will improve the impact of their philanthropy.
Currently, solidarity across race, class, ideology is often absent in South Africa. Some white middle-class citizens either argue there is now a black government that should be looking after its “own”, black capitalists should help, or feel its “patronising” to help poor blacks. Some black capitalists also say now that there is a black government, individual black people must pull themselves up by their own boot strings. The lack of social solidarity between the rich and poor undermines social cohesion.
Black political capitalists, many of whom ironically, made their money through political connections in the ANC and the state, through BEE and state tenders, are rarely giving. Furthermore, increasingly black political capitalists and traditional white traditional capitalists are moving money to “safe havens” abroad.
Encouraging big and citizen philanthropy in Africa
Africa now has more than 16 000 US dollar millionaires (New World Wealth 2015). In many African countries, outside South Africa, rich individuals also rarely give to their country-men and women, bar the exemptions, such as Mo Ibrahim. There are of course many super-wealthy Africans who do give, such as Nigeria’s Aliko Dangote, Zimbabwe’s Strive Masiyiwe or Kenya’s Manu Chandaria. However, their giving is often less than many of their peers in industrial countries and emerging markets. Moreover, many African rich appear to fund causes in industrial countries, rather than in their own countries.
They also rarely focus on social justice issues, causes, and organisations; and also shy away from supporting programmes strengthening democracy, for fear of being seen to anger their home governments. The black middle-class in many African countries also rarely give money, nor offer their time and skills to help the destitute.
Young African professionals are also less involved in civic engagement – donating to, volunteering in charities and civil society organisations, and helping the vulnerable outside their own immediate family circle. Philanthropy from Africa’s diaspora – whether super-wealthy, middle class, professional and young – in industrial and emerging market countries are also not as regular as it could be.
Yet, Africa needs a new generation of big, middle class and young philanthropists, to strengthen the resilience of citizens, communities, and societies – and to strengthen democracy itself.
Yoni Applebaum (2017) Is big philanthropy compatible with democracy? The Atlantic, June 28
Joanne Barkan (2013) Plutocrats at Work: How Big Philanthropy Undermines Democracy, Dissent Magazine, Fall
Lucy Bernholz, Rob Reich and Chiara Cordelli (2013) Democracy and Philanthropy. Stanford Center on Philanthropy and Civil Society, February 19
David Callahan (2017) The Givers: Wealth, Power and philanthropy in a new gilded age. Knopf
Center for Global Prosperity (2012) Index of Global Philanthropy and Remittances 2011. Hudson Institute
Sarah Davies (2017). Philanthropy and Democracy. Probono Australia. October
Katerina Hadzi-Miceva (2007) Legal and Institutional Mechanisms for NGO-Government Cooperation in Croatia, Estonia and Hungary”. Paper presented at the conference on October 25-26 in Warsaw, ECNL and Institute for Public Affairs (IPA), Poland
Stanley N. Katz (1994) Philanthropy and Democracy: Which Comes First? Advancing Philanthropy, National Society of Fund Raising Executives, Summer 1994 (pp. 34-39).
Ingrid Harvold Kvangraven (2016) Philanthropy in Development: Undermining Democracy? Developing Economics, October 16
(https://developingeconomics.org/2016/10/16/philanthropy-in-development-undermining-democracy/)Gara Lamarche (2014) Is Philanthropy Bad for Democracy? The Atlantic. October 30.
Susan McWilliams (2017) How philanthropy threatens democracy. LA Review of Books, April 29
Mfonobong Nsehe (2013) The Most Generous Philanthropists in Africa in 2012. Forbes, January 20
New World Wealth (2015) The Africa Wealth Report 2015. New World Wealth & AfrAsia Bank, Johannesburg, July
Organisation for Economic Cooperation and Development (OECD) (2012) Development: Aid to developing countries falls because of global recession. OECD, Paris, April 4
Perpetual Impact (2017) Philanthropy and Democracy. October 1
Valerie Strauss (2013) The influence of new philanthropy on democracy. Washington Post, October 5
Fatima van Hattum and Arianne Shaffer (2015) Transforming philanthropy: it’s time to get serious, Open Democracy Net, February 2
William S. White (1993) Advancing Civil Society in an Emerging Democracy. Advancing Philanthropy, Winter 1993
*This is a Policy Brief prepared for the Inyathelo Philanthropy Forum, Inyathelo, The South African Institute for Advancement.