Carla Javits on Philanthrocapitalism

At the Center for Effective Philanthropy conference, the most highly anticipated event was the debate between Matthew Bishop (author of Philanthrocapitalism) and Michael Edwards (the author of Just Another Emperor, a rebuttal to Matthew’s book). While the two had debated online (on this blog and elsewhere), this was the first time they met in person.

But while both men made their points well, it was Carla Javits, the president of REDF and a panelist at the debate, who managed to reconcile the two sides and provide the most insight. Below is a shortened version of Carla’s speech:

By Carla Javits

Matthew Bishop’s and Michael Edward’s writings are welcome because, by staking out their ground, they’ve inspired debate, forced people to think critically, and hopefully spurred positive action.

But as it’s been framed, the debate at hand reminds me of the 1980’s when I worked for the City of San Francisco. Every other week someone came up with a silver bullet that they argued — often fiercely — would be the solution, the elixir to solve the problems we confronted. But the one size fits all suggestions – thick and fast as they came – were a complete mismatch with the complexity and durability of the problems at hand.

There is not one simple answer – it’s not business or philanthropy; capitalists or civil society. Progress on social issues will require every entity to contribute — business, government, philanthropy, nonprofits, labor unions, academia, groups that organize, advocate and educate – and individual citizens.

One sector, one method won’t work. There is pressure on governments around the world to keep taxes relatively low, the NGO/philanthropic sector is still relatively small, there are myriad challenges to civil society of inclusion and effectiveness, and business fundamentally focuses on financial profitability.

While all have contributed to social progress, the truth is that neither the market, nor the social sector, nor civil society, nor government is immune to the pressure of big money, human foibles, bankrupt values, or dysfunction.

The critical question is not “is philanthrocapitalism good or bad?”. But how to harness all sectors and their methods to contribute to the improvement of social conditions for everyone – not just for a few. And, in those instances where institutions choose to position themselves in the crossroads between public good and private benefit, to assess how to balance specific private interests with broader social goals

The notion of philanthrocapitalism has really become a proxy for other tensions such as the merits of the application of business practices to philanthropy or social goals. What’s been most beneficial about business practices influencing philanthropy? Primarily the implementation of practical approaches that solve problems – social enterprises that earn income to create jobs for people who have been incarcerated or homeless, or dropped out of high school; public-private capital investment vehicles to create affordable and supportive housing.

What’s less beneficial is when ‘business practices’ drive nonprofits to prioritize ‘net revenue’ over other important goals, to deemphasize the importance of collective social action and the development of culture and social networks, or constrain challenges to mainstream business or government practices that have themselves had negative effects on the human condition.

While business practices’ can help cure or solve problems by working more efficiently and effectively, they have limitations when it comes to root causes or systemic transformation. Of course missing root causes is not the sole provenance of business – nonprofits and philanthropy can and often are also caught up in short term Band-Aid solutions rather than longer term transformation.

Or as Paul Brest and Jacob Harold in their recent publication eloquently described it, without a real theory of change, or a way to measure whether or not they are making progress.

A major area of vulnerability has been the promotion of earned income strategies as a savior for nonprofit revenues in the face of constrained public and philanthropic resources – an even greater hazard now. The most viable earned income strategies are generally those that align with the organization’s core mission and theory of change; rather than the ‘let’s start a restaurant to support the day care center’ school of earned income.

A more central, urgent unresolved tension is the persistent suspicion, hostility or indifference with which one sector views the other; ultimately leaving the whole world blind.

To work together, however, it is not useful nor possible to conflate sectors. Each has different basic motives, goals, constraints. And methods from each must be adapted, not swallowed wholesale.

We can inject new vitality into our efforts to solve basic human problems by more consciously finding and actively seeking out the intersections of interests and leverage points across sectors for aligned, coherent action. “Forces for Good” – the Crutchfield, McLeod Grant book makes a forceful case that the highest impact nonprofits actively pursue such cross-sector alliances.

Additional benefits include increased transparency, accountability, and challenges to orthodoxy that result from exposure to diverse people and methods. And of course the fundamental values challenge made by the social sector through its insistent focus on the common good and the public interest.

What can we do to foster cross-sector work?

• Convene across sectors – fewer sessions w/ only one sector at the table;
• Become “multilingual”;
• Tolerate and understand sometimes clashing interests and motives;
• Be prepared to walk away without burning bridges;
• Suspend disbelief and prejudice,
• Don’t assume the silver bullet.

President Lincoln was walking in a dark and stormy evening when a huge lightning bolt struck the ground near him. He fell to his knees and prayed for “a little more light and little less noise”. Amen.