The Downside of Market-Minded Philanthropy

By David Campbell, Associate Professor of Public Administration, Binghamton University, State University of New York. Originally published at The Conversation

Billionaires made some eye-popping donations in 2018.

Amazon founder Jeff Bezos announced plans to spend US$2 billion to help the homeless and create a network of free preschools. Media mogul and former New York City Mayor Michael Bloomberg pledged $1.8 billion to Johns Hopkins University, his alma mater. Those were just the biggest of the nearly 800 donations of $1 million or more from very rich people over the course of the year, the Chronicle of Philanthropy reports.

While it might seem ungrateful for the rest of us to do anything but cheer about boatloads of money being given away, there are legitimate reasons for concern, as the journalist Anand Giridharadas raises in his provocative new book “Winners Take All.” In particular, he makes a compelling argument against the increasingly dominant way of thinking about philanthropy that emphasizes the impacts that givers expect from their donations.

When the Winners Take All

Learning whether their giving achieves the results they want is front and center for charities and their funders, as many scholars of philanthropy, including me, have found. Many of the largest givers are increasingly reporting results information on their websites and sharing what they’ve learned.

But perhaps all the focusing on data misses a larger point. Giridharadas questions whether these well-intentioned donors have diagnosed the problems correctly. If what he calls “solutions peddling” is focused on the wrong thing, he suggests, the results they seek will inevitably fail to address the most pressing issues of our times.

The book Anand Giridharadas wrote about the limits of modern philanthropy grew from a controversial talk he made in 2015.

Giridharadas contends that the wealthy philanthropists and other prominent social change leaders co-exist in a parallel universe he calls “MarketWorld,” where the best solutions to society’s problems require the same knowhow used in corporate boardrooms. That is because MarketWorld, as he sees it, ignores the underlying causes for problems like poverty and hunger.

Its virtual inhabitants do this, he argues, because inequality causes many of these issues. And taking on inequality directly threatens the status and power of elite donors.

Paradox of Privilege

“Winners Take All” is one of several recently published books raising difficult questions about how the world’s biggest donors approach their giving. As someone who studies, teaches and believes in philanthropy, I believe these writers have started an important debate that could potentially lead future donors to make make a bigger difference with their giving.

Giridharadas to a degree echoes Ford Foundation President Darren Walker, who has made a stir by denouncing a “paradox of privilege” that “shields (wealthy people) from fully experiencing or acknowledging inequality, even while giving us more power to do something about it.”

Like Walker, Giridharadas finds it hard to shake the words of Martin Luther King Jr., who spoke of “the circumstances of economic injustice which make philanthropy necessary.”

To avoid changes that might endanger their privileges, mega-donors typically seek what they call win-win solutions. But however impressive the quantifiable results of those efforts may seem, according to this argument, those outcomes will always fall short. Fixes that don’t threaten the powers that be leave underlying issues intact.

Avoiding Win-Lose Solutions

In Giridharadas’s view, efforts by big funders, such as The Bill and Melinda Gates Foundation and the Walton Family Foundation, to strengthen public K-12 education systems by funding charter schools look past the primary reason why not all students learn at the same pace: inequality.

As long as school systems are funded locally, based on property values, students in wealthy communities will have advantages over those residing in poorer ones. However, creating a more equal system to pay for schools would take tax dollars and advantages away from the rich. The wealthy would lose, and the disadvantaged would win.

So it’s possible to see the nearly $500 million billionaires and other rich people have pumped into charter schools and other education reform efforts over the past dozen years as a way to dodge this problem.

Charters have surely made a difference for some kids, such as those in rural Oregon whose schools might otherwise have closed. But since the bid to expand charters doesn’t address childhood poverty or challenge the status quo – aside from diluting the power of teacher unions and raising the stakes in school board elections – this approach seems unlikely to help all schoolchildren.

Indeed, years into the quest to fix this problem without overhauling school funding systems, most public schools in poor communities have less money than those in wealthier ones.

Paying for Tuition

Bloomberg’s big donation raises a similar question.

He aims to make a Johns Hopkins education more accessible for promising low-income students. When so many Hopkins alumni have enjoyed success in a wide range of careers, what can be wrong with that?

Well, paying tuition challenges millions of Americans, not just the thousands who might attend Hopkins. Tuition, fees, room and board at the top-ranked school cost about $65,000 a year.

Only 5 percent of colleges and universities were affordable, according to the Institute for Higher Education Policy, a nonpartisan global research and policy center, for students from families earning $69,000 a year or less.

Like Giridharadas, the institute argues paying for college is “largely a problem of inequity.”

Bloomberg’s gift will certainly help some people earn a Hopkins degree. But it does nothing about the bigger challenge of making college more affordable for all in a country where student debt has surpassed $1.5 trillion.

One alternative would be to finance advocacy for legislative remedies to address affordability and inequity. For affluent donors, Giridharadas argues, this could prove to be a nonstarter. Like most of what he calls “win-lose solutions,” taking that route would lead to higher taxes for the wealthy.

Subsidies for Gifts from the Rich

Similarly, who could quibble with Bezos spending $2 billion to fund preschools and homeless shelters? Although he has not yet made clear what results he’s after, I have no doubt they will make a difference for countless Americans.

No matter how he goes about it, the gesture still raises questions. As Stanford University philanthropy scholar Rob Reich explains in his new book “Just Giving,” the tax break rich Americans get when they make charitable contributions subsidizes their favorite causes.

Or, to phrase it another way, the federal government gives initiatives supported by Bezos and other wealthy donors like him preferential treatment. Does that make sense in a democracy? Reich says that it doesn’t.

The elected representatives in democracies should decide how best to solve problems with tax dollars, not billionaires who are taken with one cause or another, the Stanford professor asserts.

That’s why I think it’s so important to ask the critical questions that Giridharadas and Reich are raising, and why the students taking my philanthropy classes this semester will be reading “Winners Take All” and “Just Giving.”

Editor’s note: Johns Hopkins University Press provides funding as a member of The Conversation US, which also has a grant from the Walton Family Foundation. The Gates Foundation is a funder of The Conversation Media Group.

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  1. Samuel Conner

    A couple of days ago a link trail (related to the interstellar object Oumuamoua) led me to a (stale, I think) news item about the LSST (“Large Synoptic Survey Telescope), which may be worth a read. The technology of the telescope and the science it will permit are interesting. The primary/tertiary combination mirror was funded before the rest of the project got government support by 8-figures donations from some “big names.” Good for them.

    One doubts, though, that they would be interested in finding 6-figures to get the MMT University off the ground.

    Public-spiritedness may only go so far.

  2. tongorad

    In education, philanthropy means Billionaires buying the policies they want. Re Bill Gates, Eli Broad, DeVos, etc, etc.

    1. Adam Eran

      None of the common tactics of the “reformers” have scientific backing. So (union-busting) charter schools, merit pay (because teachers are motivated by money), and testing kids until their eyeballs bleed are all bogus, and do not have an impact on educational outcomes.

      The plutocrats have even funded a propaganda film called “Waiting for Superman” in which Michelle Rhee applies “tough love” to reform failing Washington D.C. schools, firing lots of teachers because their students’ test scores didn’t make the cut, etc.

      Waiting for Superman touts the Finnish schools as the ones to emulate…and they are very good ones, too. Omitted from their account is the fact that Finnish teachers are tenured, unionized, respected and quite well paid.

      So…what does correlate with educational outcomes? Childhood poverty. In Finland, only 2% of their children are poor. In the U.S. it’s 23%.

      The problem is systemic, not the teachers, or the types of schools.

      1. Carla

        Another thing perhaps not mentioned about the Finnish educational system: private schools are outlawed in Finland.

      2. Anon

        Well said.

        And Finland is culturally very different than the U.S. Finlandia takes care of ALL of its mostly homogenius society. (Although immigration may be testing their fortitude.)

        In general, comparing education in the US to Finland is laughable. The LAUSD (school district) has a student population that resides anywhere from Bel Air to Watts (very rich to very poor), and 25% are ESL learners, 80% get meal (food) assistance, and many are psychologically scarred from early life experiences (gun fights: on TV and the streets). The LA Teachers Union is threatening to Strike on Monday and 500,000 students will be affected along with thousands of families that depend on public schools for day support while they are at work.

        Maybe we should model our society, not just our public schools, after Finland.

      3. Adams

        No sports in Finnish schools. No “Saturday Night Lights” stupidity. Club and competitive sports are after school and out of school. Schools are for learning. Also very, very limited standardized testing, no teaching to the test, and no weeks of no learning. Teachers must be very well qualified in their fields before they can study to teach, and teaching is highly competitive. Lots of rest/play/exercise periods during the school day, especially in primary school.

        That the “reformers” would choose the Finnish schools as examples shows precisely how transparently hypocritical they are.

  3. L

    In some sense this is nothing new. Back when Pittsburgh was a network of steel mills and mine tailings Carnegie funded meuseums, libraries, arboretums, and strike-breakers who shot workers that complained. He was public about the need to “give back” and made a point of demanding that the places were open on Sundays because he forced his workers to do 12 hour days six days a week.

    No doubt he may have felt he was helping, and no doubt the institutions have been and still are a positive benefit, but they also did nothing to attack the root cause of the suffering nor did they make any fundamental change in society. That would upset his apple cart. By the same token the fact that private donors needed to fund public institutions was based upon the simple fact that they had all the money.

    It is also notable that some of the more recent endeavors such as Gates’ tech-driven charter schools, or Facebook’s donation to the same, or for that matter Apple’s donation of iPads to LAUSD have a direct commercial component. The intial gift may be free but in the end it is market-making as much of the cash routes back to the company. They may genuinely believe in the solution but the financial connection is also clear.

    More interesting though Pierre Omidyar who combined his business and “philanthropy” more directly by putting money into a foundation that then invests in startups he runs which “do social good” or which sell technology to those that do so.

    Ultimately Bill Gates and Jeff Bezos may have more to play with than Carnegie ever dreamed of but at the end of the day much of what they are doing is the same, starving necessary institutions of funds, smoothing out the rough edges of their PR (especially when, like Bezos, they are in the crosshairs), and then peddling “solutions” that look good but only reinforce the conditions that make them rich.

    1. JerryDenim

      “…have a direct commercial component. The intial gift may be free but in the end it is market-making as much of the cash routes back to the company.”

      How true, but you might not even be cynical enough. Back in 2012 (I believe) there was reportage about large banks quitely lobbying Bloomberg to make big cuts to the New York City’s funding of local charities and non-profits. Several million dollars were cut as a result of the austerity lobbying by the banks. The same week the food pantry where I volunteered, which lost $40,000 of City funding if memory serves me correctly, received a “generous” gift of a folding table from Citibank. My wife who at the time worked at a large non-profit dedicated to community issues in the South Bronx, had to attend a presentation by a Citibank employee with a name like “How the Nonprofit Community Has Failed the Community”. Her attendance was a courtesy demanded in exchange for a several thousand dollar donation from Citibank to her nonprofit. Her non-profit lost much more in funding from the City due to the banks’ lobbying efforts, and surprise surprise, what was the main thrust of the Citibank presentation? How micro-finance lending can help historically marginalized communities of course! My wife’s organization was engaged in several programs aimed at encouraging and aiding entrepreneurship and financial literacy. Citibank saw local non-profits that were helping the community keep their collective heads above the water as competition. Their programatic work was harmful to the bank’s business model of luring people into odious debt by promulgating an environment of despair and desperation.

      Beware of billionaires and bankers bearing gifts. Their vast fortunes should be trimmed down to size with taxation/force and distributed democratically according to the needs of the community, not the whims of the market or the misguided opinions of non-expert, know-it-all billionaires who have never lived nor worked in the communities they claim to care about.

  4. Susan the Other

    We subsidize homelessness at every turn. Our billionaires are like the EU. Only worse because they (EU) already had good social structures in place when they went full neoliberal. We on the other hand just blew it off. When financialization for all did not produce viable capitalism for the wealthy we shut it down by cutting off credit and repossessed 10 million homes. This is what we call “government.” The situation has not improved in over a decade and we tsk-tsk at the people sleeping rough and scrounging in dumpsters. It will not fix their sense of betrayal to give them new homeless shelters with daycare centers. (Why should they even give a shit?) By the grace of Bezos. While he siphons off many more billions with CIA contracts and NYC inducements. It is structural violence. It will never function as a democracy. The refusal to do medicare for all is likewise structural violence. The refusal to regulate pesticides and pollutants and CO2 is structural violence. Making drugs illegal and then profiting by being a trafficker is extreme structural violence. Having to commute to your lousy job but can’t afford gas? Structural violence. But there are bags and bags of cheap tube sox in Walmart, so not to worry. Education is important but it won’t fix the problem.

    1. lyman alpha blob

      $2 billion isn’t nearly enough. At $50K per annum, $2 billion would pay 40K workers for one year only. Bezos owes the public a lot more than that – on top of those thrown out of work or working at reduced salaries because of Amazon, how many billions in taxes alone has he got away with not paying in the last 20+ years?

    2. Adams

      Susan, you might be interested in looking at the HUD-mandated Homeless Management Information System (HMIS). Hundreds of millions (some in unfunded mandates to recipients of McKinney and other HUD funding) spent collecting intrusive date on the homeless. The effort, of course, is to quantify the homeless so that high level philanthropists, policy makers, and PhD candidates who have never spoken with a homeless person can design programs to “help.” Dollars that could be used to provided badly needed housing or services to the homeless, or at least to fund research based on contact with actual people.

      It is the homeless version of “reformers'” public school obsession with standardized testing, where people who have spent little or no time in a classroom use data to dictate curriculum and teaching methods and “incentivize” teachers without ever evaluating their “on the ground” teaching environment. And, of course, the same in the medical field where my doc’s training seems to have been focused on entering my symptoms into a computer program to get the latest “evidence based” treatment.

      Big data: best practice to dehumanize all life, and justify the increasingly unlivable status quo.

  5. Burritonomics

    It baffles me that there’s no mainstream “command economy” critique of large philanthropy. Trying to solve a multifactorial problem with top down solutions driven by a small cabal of do gooders. Doomed from the start…

  6. Montanamaven

    Charity makes people supplicants which is a form of servitude. “Thank you kindly, sir, for you gracious gift.” That is not a “free” society. We should have a society where no one needs some good folks’ trickle downs. A basic guaranteed income might work better than the system we have now especially with an affordable heath care system. It would eliminate food banks and homeless shelters and jobs involving making lists and forms and graphs for the Medical Insurance Business. And it would eliminate a lot of other stupid and bullsh*t jobs. Yes, I’ve been rereading David Graeber’s “Bullsh*t Jobs.”

  7. lyman alpha blob

    Giridharadas questions whether these well-intentioned donors have diagnosed the problems correctly.

    This brings to mind an interview I read with Warren Buffet’s son a few years back. Buffet heads his father’s charitable foundation and was having second thoughts about the benefits of philanthropy himself. He noted that in gatherings of wealthy philanthropists, the rich people on one side of the room would be trying to solve problems that were caused by the businesses owned by the rich people on the other side of the room.

  8. Oh

    An excellent speech by Giridhardas and well delivered too. Some, if not most of the audience at the Aspen Institute will discuss it for a day or two and then go on about their business of being rentiers – buying more rental homes, stocks and helping their local government to enact laws to keep the homeless and the deplorables away from their neighbourhoods and therefore out of sight. And, before the end of the year they will search for and “donate” to causes that will maximize their tax avoidance. They’ll join Resist (or at least get the bumper sticker) or march for a day dressed in pink. Finally, they will vote for their DImrat or Repig critttercongressman who will once again take ordersdonations from the big corporations whose CEO’s and Boards will continue their plunder and drive to cause further inequality.

  9. chuck roast

    Several years ago I collected signatures for Move to Amend, an organizations which advocates for an anti-corporate personhood amendment to the US Constitution. I learned two things:
    1. ordinary citizens ‘get it’ about corporations running the show, and they are enthusiastic about bringing them to heel, and
    2. ordinary citizens who work in 501(c)3 non-profits are far less enthusiastic about the possible withering away of their cozy corporate dole.
    So, while the giant vampire squids of the world drift lazily along on a fine current of their own making, keep in mind that there are huge schools of pilot fish that depend on their leavings for survival. All of these small fish will surely resist any effort to tenderize this calamari.

  10. tongorad

    A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play the Good Samaritan on life’s roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring.”

    —Dr. Martin Luther King Jr.

  11. drHampartzunk

    No one said it better than William Jewett Tucker, a contemporary critic of Carnegie:

    “I can conceive of no greater mistake, more disastrous in the end to religion if not to society, than of trying to make charity do the work of justice.”

      1. Don

        Exacto! If all the do-gooders from the philantrophy business could put their efforts to the construction of a just tax and wealth redistribution system every little cause of theirs would most likely be solved.

  12. rosemerry

    Carnegie was very against Unions and the rights of workers to decide for themselves what issues were important.
    At least one town refused his “gift” of a library as charity.

    1. Bob Simmons

      This isn’t quite true. Carnegie supported unions until the late 1880’s, when his robber baron brothers started their little war games with each other. Then he flipped, years later became guilty about it, started his little “post-baron” gift tour.

  13. David in Santa Cruz

    This was a terrific post on a very important issue.

    Even in my insignificant little burg we have experienced this problem first-hand. A local Charter School was doing a very good job of “keeping out the brown people” and publishing a “walk of shame” of all who made “voluntary” contributions to their coffers, thus “outing” those who didn’t (the California constitution forbids schools that spend public money from requiring fees). They even went so far as to hire a Head of School from one of the last Mississippi Segregation Acadamies, just in case their “mission” wasn’t clear. Admission was by lottery (“because lotteries are fair!”), unless you happened to be on their massively bloated and self-appointed Board (including influential local officials, quelle surprise!). Those with learning differences or languages other than English were “strongly discouraged” from even applying.

    The Charter covered their operating budget with all those “voluntary” contributions, and had sequestered all the cash squeezed out of the local public schools, in order to buy an office building (because kids just love preparing for the world of work by going to school in office buildings!). A local billionaire whose name rhymes with “Netflix” bailed them out with a $10M donation for the building when it appeared that some in authority might look askance at who would be the beneficiaries of this insider real estate deal using skimmed-off public monies.

    Scratch a Charter School and 9 times out of 10 there’s a real estate deal underlying it (“Because, the children!”). Billionaires should have no more influence than any other individual voter in making public policy.

    1. orange cats

      Grrrrr, Charter Schools are making me angry. The real estate deal(s), you mention are absolutely true. Here’s another sweet scheme in Arizonia: “The Arizona Republic has reported that Rep. Eddie Farnsworth stands to make about $30 million from selling three charter schools he built with taxpayer money.
      The toothless Arizona State Board for Charter Schools approved the transfer of his for-profit charter school to a new, non-profit company. He might collect up to $30 million — and maybe even continue running the operation in addition to retaining a $3.8 million share in the new for-profit company.

      The Benjamin Franklin charter schools operate in wealthy neighborhoods. The 3,000 students have good scores and the schools have a B rating. But that’s not surprising, since most of the parents have high incomes and college educations. If the schools are like most charters in the state, they’re more racially segregated than the campuses in the surrounding school districts. The state pays the charter schools $2,000 per student more than it pays traditional school districts like Payson — which is supposedly to make up for the charter’s inability to issue bonds and such.

      However, converting the charters to a non-profit company will enable the schools to avoid property taxes and qualify for federal education funds. Taxpayers will essentially end up paying for the same schools twice, since taxpayers have footed the bills for the lease payments to the tune of about $5 million annually. Now, the new owners will use taxpayer money to finance the purchase of buildings already paid for by taxpayers.”

  14. drHampartzunk

    Stevenson school in Mountain View CA, a public school with PACT (parents and children together), has a lottery. Its students are 70% white. Across the street, Theuerkauf, which does not have PACT, is 30% white and no lottery. And a huge difference in the two schools test scores. Smells illegal.

    Also, Google took the former building of the former PACT program hosting school, which resulted in this grotesque distortion of the supposed public service the school district provides.

  15. Michael Fiorillo

    As a former NYC public school teacher who fought against the billionaire-funded hostile takeover of public education for two decades, I’m gratified to see the beginnings of a harsher critique of so-called philanthropy, in education and everywhere else.

    But the next hurdle is to overcome the tic of always qualifying critique and pushback with talk of the “good intentions” of these Overclass gorgons. Their intention are not “good” in the way most human beings construe that word, and are the same as they’ve always been: accumulation and establishing the political wherewithal to maintain/facilitiate the same. This hustle does the added trick of getting the public to subsidize it’s own impoverishment and loss of political power (as in Overclass ed reformers funding efforts to eliminate local school boards).

    When there is near-total congruence between your financial/political interests and the policies driven by your “philanthropy,” the credibility of your “good intentions” transacts at an extremely high discount, no matter how much you try to dress it up with vacuous and insipid social justice cliches. For a case in point, just spend five minutes researching the behavior and rhetoric of Teach For America.

    Malanthropy (n): the systemic use of non-profit, tax-exempt entities to facilitate the economic and political interests of their wealthy endowers, to the detriment of society at large. See also, Villainthropy.

  16. Mattski

    The critical thing, I have found, is to see “philanthropy” and charitable endeavor as a cornerstone of capitalism, without which the system would–without any doubt–fail. Engels and others documented, contemporary scholars have continued to document, the way that the wives of the first factory owners established almshouses and lying in hospitals where the deserving poor were separated from the undeserving, dunned with religion and political cant, and channelled into various forms of work, including reproductive labor. A very big piece of the neoliberal puzzle involves the rise of the NGO during the Clinton/Blair period, and its integration with works of the like of the IMF and USAID, the increasing sophistication of this enterprise which has at times also included union-busting (see Grenada in the aftermath of the US invasion) and worse. As a State Department function, the Peace Corps integrates the best of charity, grassroots capitalism, and good old Protestant cant.

  17. Spring Texan

    I’ve read the Winners Take All book and it’s terrific! Even if you understand the general outlines, the author will make you see things differently because of his intimate knowledge of how this ecosystem works. Highly recommended! Also recommend his twitter account, @AnandWrites ‏

    He’s really good on “pinkerizing” too, and “Thought Leaders” and how they comfort the comfortable.

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