CNBC Business | Next in: Philanthrophy

Next in: Philanthrophy

The business of charity

A new book has coined the term ‘Philanthrocapitalism’ to bang out the view that “the rich can save the world.” Written by Matthew Bishop and Michael Green, the book surveys the new fashion for becoming so filthily rich that there is literally nothing left to buy, thus propelling the wealthy to contemplate their souls and turn back to charity.  

Plus ça change. But what’s new and will continue — if anything being intensified by the recession — is the growing disparity between the ultra-rich and the merely wealthy. Secondly, philanthropists such as Bill Gates,  Warren Buffett and eBay founder Pierre Omidyar are increasingly applying pure business principles to social problems in the belief that private money will always yield a more efficient return than public. Behind that trend is a degree of cynicism about traditional charities, which in return for generous government tax breaks stay away from political criticism and are rarely efficient at solving problems. Across a whole range of issues, particularly the environment, activists are increasingly asking why they are so manifestly failing to achieve even modest goals. Like the poor, charities are always with us.  

The new breed of multibillionaire promises to change that. The authors warn however that only with the zeal and burning focus that allowed the  super rich to accumulate their wealth in the first place will their foundations achieve any measure of success against often intractable problems. And there lies the rub, because, by definition, success usually leads to relaxation. Worse, warn the authors, for every dollar yielded up by private capital, governments are likely to cut back. That’s bad for democracy because it gives away too much power to a handful of oligarchs.