Philanthrocapitalism

I was reading an interesting article in evonomics.com about the concept of philanthrocapitalism. It is supposedly a new way of how the rich can save the world. It is supposedly about running philanthropic foundations more like for-profit businesses… being more results-oriented and more efficient than earlier philanthropic donors.

It is all about Bill Gates devoting his time and donating most of his wealth to a foundation that’s managed in a results oriented manner to cure diseases and cut down the miseries afflicting mankind. It is about making sure philanthropy creates the most social benefits possible. What matters is getting the cost-benefit calculus right.

The evonomics article observed that it’s remarkable how philanthropic foundations grew in number over the past two decades. But, “increased giving hasn’t made a dent in reducing growing levels of economic inequality. In fact the opposite appears to be the case.

“What to make of the fact that growing philanthropy and growing inequality seem to go hand-in-hand? Does philanthropy actually make the rich richer and the poor poorer?”

While the evonomics article admits it is difficult to establish causality, it is easy to note “a number of reasons why growing levels of philanthropy might exacerbate growing inequality rather than mitigate it. One is that charitable donations deprive treasuries of tax revenues that could be spent on redistributive welfare policies.

“The second is that a surprisingly small proportion of foundation giving is geared at offering economic relief for low-income individuals. Yearly reports from organizations such as the Giving Institute show that only a small percentage, typically less than 10 percent each year, are spent on initiatives labeled as for ‘public-society benefit’ in contrast to far greater spending on religious pursuits or gifts to wealthy universities.

“Another concern is that philanthropy is used to thwart demands for higher taxation, protecting and expanding assets rather than redistributing wealth.

Philanthropy often opens up markets for US or European-based multinationals which partner with organizations such as the Bill and Melinda Gates Foundation in order to reach new consumers.

“Philanthropists themselves are often the first to admit that their philanthropy is aimed at preserving rather than redistributing wealth. Carlos Slim is, perhaps, the most candid about this fact, summarizing his own approach to charity with the comment, ‘Wealth is like an orchard. You have to share the fruit, not the trees.’”

The evonomics article tries to understand why even if more giving is happening on paper, the world seems as miserable as ever. I do not have space to dwell on most points raised. Besides, we still have a more primitive understanding of what philanthropy ought to be in this country. We have not quite gone beyond basic charity…abuloy.

Even so-called Corporate Social Responsibility as it is practiced here have mostly been nothing more than public relations gestures… tokens to be able to publicly boast that our elite is not as socially cold hearted as we suspect. And yes, our CSR activities coursed through corporate or family foundations are mostly about tax breaks too.

During the years when I had the ability to influence the direction in the development of CSR here, I always advocated going beyond tokenism. I believe that unless the CSR activity is integrated in the way the company or the family does business, it will do little good and will not be sustainable.

Examples: a big social problem we have is housing. Yet, we have one of the region’s most robust property sectors. But we have assigned social housing to government. And we have a housing agency whose corruption and incompetence is legendary. Hence, nothing moved for the better.

If successful property giants like Ayala Land and Megaworld, among others, developed socialized housing alongside their property developments, something good for society may have happened… true CSR in action. I know they are required to produce some token low cost housing units, but they do it in far flung areas when affordable housing is needed right in the city to make jobs and schools within easy reach.

It would have been nice if in that vast area we know as BGC, they had set aside areas for socialized housing. Government should have specified it when Fort Bonifacio was privatized. Ayala, Megaworld, Federaland and other developers should have been required to develop decent affordable housing for the workers whose services will be needed in all those condos, hotels and other commercial businesses.

Since both Ayala and Megaworld know their property development business and how to build housing units, they would have done something we can never expect from the National Housing Authority. It is a pity this idea did not enter their mind when NHA gave Ayala the right to develop the Trinoma area. The informal settlers were just thrown out to uninhabitable relocation areas like they had no human right to decent housing.

The big business taipan who seems to understand how to integrate corporate business with social responsibility is San Miguel’s Ramon Ang. Indeed, he understood the concept of helping farmers during that Sumilao controversy. He knew better than the do-gooders, including the Catholic Church hierarchy who were egging the farmers to assert their rights under land reform.

Simply, Mr. Ang understood that the best way to help the farmers get out of poverty is not to simply give them a few hectares of land. He guaranteed a market for all their produce. San Miguel Purefoods will buy all their pork and other farm produce and will even provide jobs in the processing plant to be set up near their farm area.

Jollibee is also another good example. They have organized farmers in Nueva Ecija to plant all the potatoes and other farm products they need. Jollibee will buy all their produce at verifiable prevailing market prices. Farmers are freed from the clutches of middlemen who normally dictate everything. Jollibee even provides technical support so their produce will be of the desired quality.

Unless our corporate sector can integrate CSR in their operations in a way that can support struggling communities, they don’t even have the right to talk of social responsibility. Much can be done, if they just think hard enough. 

Training, for instance, is urgently needed by our perennially underemployed and unemployable workforce. 

We are now finding out that we do not have enough trained workers to carry out Build Build Build so that they are thinking of bringing in foreign construction workers. In the light of our unemployment problem, that is simply untenable.

Congress should pass an appropriate apprenticeship law. But even before that happens, there should be more support to initiatives of companies like DMCI to train workers. Plantation Bay in Mactan continues to run training programs for hotel staff even if they quickly lose successful trainees to cruise ships and other foreign jobs. This is what integrating CSR to operations is about.

In the meantime, having stricter rules in the accreditation of foundations seeking tax privileges should be part of tax reform. Unless local companies can have truly useful CSR activities (DSWD can set priorities), we are better off letting government collect the taxes and redistributing it to those who need it through such programs like CCT. 

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco