Yesterday the Wall Street Journal ran an article (subscription required) about the lack of interest in US based micro lending programs – because they aren’t profitable.
Last month the NY Times published a story about a UK based hedge fund called the Children’s Investment Fund that charges higher than average fees and then passes part of their revenue on to charities.
Is this philanthropy? Phil Cubeta doesn’t think so. He recently called micro lending, “micro-loan-sharking”. Tom Watson wondered in September if recent decisions by Google and Virgin are philanthropy, while Susan Raymond declared, “the End of Definitions is upon us”. Lucy Bernholz has written a whole book about the coming future of dynamic “philanthropic capital markets”.
So what’s the deal? The exploration of this argument is a key piece of the development of The Second Great Wave of Philanthropy. Let’s think through what it means to “give” something and/or to “help” someone.
If you need a place to live and I give you a house, that is clearly a gift. What if I give you a no interest loan? What if I give you a loan at a below market interest rate? What if I agree to make the down payment in exchange for an equity interest in the house? What if I buy a house and let you live there for free or at a below market rent? What if I devise a development company that will build low-income housing and fund the organization through a combination of philanthropic grants, government backed loans and below market rent payments from residents?
What if a museum sells overpriced trinkets in their gift store, charges a high entry fee and then uses the proceeds to make their artwork available to the “public” (or at least those who can pay the entry fee)?
What if I give you $100 and the increased self-worth and pride I feel is more valuable to me than anything I could ever buy with the same money?
I don’t know what philanthropy means. In fact, when I first started blogging, I immediately had to define the philanthropy because readers wanted to know what I meant when I used the word. I think the argument is an important one. Note that my blogroll lists “Giving” blogs, not “Philanthropy” blogs (hat tip to Gift Hub).
Maybe what everyone involved in this rapidly changing field should agree on is that we are all involved in “helping”. Clearly, what micro lenders, charitably minded hedge funds, corporate philanthropy, social entrepreneurs, hybrid nonprofit/profitable organizations, and philanthropic capital markets have in common is that they all “help” people (or are trying to). Isn’t that what matters?
I’m all for the debate. Regardless of who’s right and who’s wrong, the debate itself forges stronger concepts and better ideas. It’s going to be a fun ride.