Is it time to challenge the power of philanthropy? - Centre for Public Impact (CPI)

Is it time to challenge the power of philanthropy?

By and large, philanthropy has historically been seen as a force of good. It offers a way of redistributing wealth and can also be seen as a way to build momentum for issues that are too complex, controversial or would otherwise take too long to be taken on by government or the private sector. Philanthropy – it has been argued – is a pillar of democracy: it gives a voice to people who might otherwise not be heard; it is a guarantor of pluralistic voices in society. So far the theory.

But is this view of philanthropy still valid today? Is philanthropy strengthening our democracy or – in fact – is philanthropy undermining it? And what of the increasing power of philanthropy thanks to the growing list of billionaires and Giving Pledge signatories? Critics of philanthropy, like American political scientist Rob Reich, have been arguing for many years that:

Philanthropy is an exercise of power by the wealthy that is unaccountable, non-transparent, donor-directed, perpetual, and tax-subsidised.

Anand Ghiradarads’ recent book, Winners Take All, mainstreamed the idea that foundations are yet another vehicle to reinforce existing social orders, ensuring that the rich and the powerful keep their positions atop it. And yet, philanthropy is booming: across the world, the number of philanthropic foundations is growing rapidly – more people of a variety of ages and backgrounds are entering the sector, often bringing with them new ideas and methods of bringing about change.   

Alongside this criticism and the “boom” of philanthropy comes a growing recognition that we are living in a time of complexity. Governments and societies are grappling with uniquely complex and systemic challenges – climate change, disruptions associated with the ‘fourth industrial revolution’, a loss of trust in democratic institutions, and demographic pressures to name a few. In this context, the next decade promises to be a transformative one for the sector. 

What does today’s criticism mean for the foundation of the future? What is the future role of philanthropy? How can foundations effectively respond to the growing concerns around their legitimacy and impact? Should they be bothered by them at all? 

Over the past six months, we’ve partnered with Nesta to explore some of these questions. In the “Foundation Horizon Scan,” unveiled at an event today with sector leaders, we take the long view to explore the future of philanthropic giving. In compiling the report, we reviewed relevant literature and spoke to over 30 foundation leaders and critics internationally to understand what the challenges to foundations’ legitimacy and impact mean in practice and how foundations are responding to them today. 

An activity sheet used at the report’s launch event outlining the characteristics of tension, stabilisers, modernisers and transformers.

We learned about new grantmaking practices that give more power to grantees and/or beneficiaries and leverage the power of digital technologies. We heard about alternative governance models to address power imbalances and saw many more collaborative efforts (big and small) to address today’s complex challenges. We spoke to funders who prioritise place-based giving in order to ensure that beneficiaries’ voices are heard.

Alongside these practical responses, we also identified eight strategic areas where foundations face difficult trade-offs:

  • Power and control
  • Diversity
  • Transparency
  • Role in public sector delivery
  • Time horizons
  • Monitoring, evaluation and learning
  • Assets
  • Collaboration 

There are no simple solutions. When devising future strategies, foundations will inevitably have to make tradeoffs between different priorities. Pursuing one path might well mean forfeiting the benefits afforded by a different approach. Near-term vs. long-term? Supporting vs. challenging government? Measuring vs. learning?

The “Foundation Horizon Scan” is an invitation to explore these issues – it is directed at foundation leaders, boards, grantees and beneficiaries. What do you think is the role of philanthropy in the future and what share of power should they hold in society?