Professor Cathy Pharoah's speech notes from "Philanthropy: The City Story" opening debate on Philanthropy and Power at the Charterhouse September 2013

1. Charterhouse ‘Philanthropy: The City Story’ seminar
Philanthropy and power
31.11.2013
Speech Notes: Cathy Pharoah
Power is a very difficult notion to get into perspective, multi-faceted, both good and
dark. When I made a trip to Moscow in 1998 for my first time, while on an
international voluntary sector study programme, not so long after the wall came
down, I was obviously interested to see at first hand what decades of socialism had
meant. Visiting the Kremlin with a young NGO leader from Kenya, I saw, in its
beautifully preserved Archangel Cathedral, the tomb of Ivan the Terrible. Royal,
celebrated for his cruelty, and ruthless self-preservation, his gleaming coffin had
survived not only for 600 years, but an era of socialist rule dedicated to the
elimination of aristocratic status and privilege. ‘That,’ breathed my companion in
awe, ‘is power’.
The issue of the power of philanthropy and philanthropists has been simmering
away in the public mind, I think, since George Osborne’s unsuccessful attempt to
introduce a cap on the total amount of personal tax relief which the wealthy
could claim.
The whole debacle unleashed controversy about how tax-breaks were being
used:
are donors using tax-breaks to promote their own self-interests through
philanthropy?
supporting things they enjoy themselves, buying status and reputation and
access?
should such huge sums of public money be spent without public
accountability, and wouldn’t the government spend the money better and
more fairly? shouldn’t they just pay more tax?
For example, in the recent book, ‘Giving is good for you’ by John Nickson, Polly
Toynbee, the influential Guardian journalist, is quoted as saying,
‘There is an awful lot of vanity in big donations. I don’t mind what people give to, as
long as I and other taxpayers are not paying for someone to sit in the Royal Box, and
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2. have a lovely time in the Royal Opera House, in return for having their names all over
the place and being loved and admired.’
Well, personally opera is one of my ‘passions’, and I’m quite happy to have it, and
any opportunity to sit in the Royal Box, subsidised!
And isn’t that the point – philanthropy is a space within which, historically, we allow
individual citizens discretion to make their own choices about public spending
priorities?
This is well summed up by Evelyn Brody, a legal scholar in the US where research on
major philanthropy and foundations is much more developed than it is here. She
says ‘there is no public desire for greater control over foundation
philanthropy……the law is a relatively weak force in the realm of charity operations
….within broadly bounded charitable purposes…no laws tell (the foundation or
philanthropists) how to “do” charity’.
‘We do not want the state to run charity’, an observation which applies equally well
in the UK. (Brody, in Steinberg, 2006)
The tax cap foray, which you may have noticed was resurrected recently by Nick
Robinson at a charity seminar, was a most unfortunate and unhelpful way for issues
around philanthropists’ power, to erupt - it led to slanging matches, and a lot of
inappropriate discussion of tax fraud and tax dodging etc.
BUT, in an open and democratic society, as the scale and expectations of
philanthropy grow, in the UK and globally, major philanthropy needs to be viewed in
the clear light of day – up for debate, discussion, influencing – and so also that its
huge contribution to social well-being is properly understood and valued.
It is time to stop shying away from issues of philanthropic power.
The 2013 Cap Gemini World Wealth Report claims that high net worths are worth
$46 trillion dollars (£27 trillion or thereabout), and that increasing numbers of them
have ‘more complex wealth needs’, whose definition includes the management of
their philanthropy. Barclays Wealth too reports that increasing numbers of the
global wealthy want to get involved in philanthropy. So philanthropic power is going
to increase.
But wealthy people have a huge amount of power in many ways, as key producers,
consumers, investors and influencers in the global markets which determine our
lives today, and actually their philanthropy is a very tiny part of this – in the UK high
net worth giving is worth around £1.7 -2 billion, so should we be worrying about it at
all?
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3. Well, one body which worried is the Parliamentary Select Committee on
International Development which, particularly influenced by the scale of the Gates
Foundation operations, carried out an enquiry into the power of foundations in the
UK. Its report concluded
‘It is important that large bodies such as the Gates Foundation do not create parallel
structures, or skew the priorities of other donors and importantly, recipient
governments. Both DFID and Gates denied that either of these risks pose a current
problem. ….However, as foundations continue to grow in size and influence, this is a
situation that needs watching. (Paragraph 64).
Although however, this recommendation was fairly low-key, the increasing power of
philanthropy to influence public policy is also making waves in another area – that of
primary and secondary education. Philanthropists have played a significant role in
the development of academy schools in the UK. And in the US, for example,
commentators such as the academic Rob Reich and Valerie Strauss in the
Washington Post, have drawn attention to the role of carefully targeted
philanthropic funds in funding and influencing the ethics and programmes of needy
state schools.
Other voices are actively promoting the need for philanthropy to become active in
public policy at this time, including the voice of government.
In the US, for example, New York’s Attorney General recently said ‘foundations have
an important role to play in “transformational politics”—namely, gradually changing
the way citizens view social issues, and opening their minds to better public policies.
The fact that this appeared to lead to a quick spat on the relative merits of right or
left-wing influences shows how important this issue is: and in the UK too, (as noted)
the question of charities’ role in lobbying has become a hot political issue.
In another example this year, this time from Australia, the fourth annual
Philanthropy and Ethics debate was entitled: Mind the Gap: Philanthropy, Social
Policy and Government. An issue it considered was whether ‘Australia is moving in
the US direction of philanthropy dictating social policy’.
Much of this debate, in the US, UK and Australia, involves the role of support for
think tanks of different policy persuasions, rather than the direct giving of
philanthropists who are more often individualist, sometimes have feet of clay – and
have huge power to promote the good, the innovative, the bad and even the weird.
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4. Some examples of all of these:
Pierre Omidyar challenged the myth that social change could only generated by
non-profits, reserving the right to support either for-profit or non-profit, and is
now exploring social media power, so watch this space
Azim Ibrahim, the Glasgow-born self-made successful financial entrepreneur, set
up a non-charitable independent grant-making trust to provide support to some
of most the highly marginalised and disaffected communities in the UK, an
independent trust model also followed by the Joseph Rowntree Reform Trust to
pursue political reform
The African telecoms entrepreneur and philanthropist Mo Ibrahim has taken
over what might be considered core governmental functions, establishing a
leadership prize to foster good governance in Africa
The Dutch philanthropist Marcel Boekham supported a photography project
which became controversial when seen as a modern attempt to romanticise the
fate of the American Indians
The US Peter Thiel (founder of Paypal) offers young people support to skip
college time in favour of pursuing their entrepreneurial zeals and talents
Michael Green and Matthew Bishop told us in 2012 that giving was about to
become ‘more dangerous’ – though sadly provided few specific examples…..
In conclusion, the role of individual private passions in driving major philanthropy is
increasingly emphasised, and that fundraisers need to start from this point. Private
passion and choice may indeed be at the heart of much major philanthropy, as other
forms of consumption, but surely what needs to be at its heart is what is good for
the beneficiaries? Yes, it has too much power – but I’ve tried to argue here that this
is no bad thing where individual resources have been the source of so much public
good, as long as increasing transparency and open debate conspire to bring private
and public spheres ever closer together.
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