Private Resources and the Public Interest: How can Philanthropy Enhance Social Good?

February 21, 2018 | Philanthropy

This is an edited version of Rohini Nilekani’s talk on how philanthropy can enhance social good given at CSDS, New Delhi. According to Credit Suisse, India’s richest 1% own 58% of the country’s wealth. Structural inequity is historically embedded in India, but it seems to be worsening. With this in mind, what is the public responsibility of private wealth in such a scenario? How can private resources be better harnessed for the public good?

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In the past three decades, it feels as though the super wealthy have pulled far ahead from the rest of the world, and we’re acutely aware of this today. So it is imperative that we start thinking about how this happens and what kind of a responsibility those few have to the many. How do Finite Resources and the Public Interest collide, and what are the implications to the larger social fabric?

The New Class of Wealth

We know that globally, the richest 1% own something like 50% of the global wealth. Credit Suisse has also reported that 70% of all money generated is used up by a very small percentage of human beings. We can see the proof of this everywhere, as the so-called middle classes that were evolving have started to stagnate. Since the early ‘80s in India, we have been able to pull a significant number of people out from absolute poverty, but our middle class itself is not much of a middle class. Instead, we have an unattainable class of the super-rich. Since the days of fabled emperors and kings, we have not seen a super class that is quite as distinctly separate from the rest, until now. And when people get rich fast, it makes our society stop and think about what it all means. What is the responsibility of that wealth created in private hands? My theory is that modern nation states allow such rapid private wealth creation with an optimistic premise, that wealth in private hands will be as useful to society as if it had been taxed by government.

Now, is that optimism belied or is it working? It’s still unclear, but let us go with the premise that it is optimism which allow this kind of wealth creation. There are obviously other reasons involved that are structural, like the over-financialization of the global economy, a buccaneer-style globalisation, rapid technological innovation in a winner takes all format, and poor taxation regimes. All these things together has resulted in a kind of wealth accumulation we’ve never seen before. Of course, we’ve also witnessed pushback, with Occupy Wall Street, Tardif Springs, the Tea Party movement, etc. Recent movements in India also suggest a backlash again this new class of elites that seems to be separate from the rest of us.

One outcome of this super wealthy generation has been extreme philanthropy, at a scale we’ve never seen before. This philanthropy is separate from the kind of philanthropy that most people in the world do when they have a little excess. This kind of big, large-scale giving is quite separate from the normal charity or giving that most other people or institutions are set up to do.

Of course, this isn’t entirely new. Thinkers like Galileo and da Vinci were supported by the Medicis, as a kind of philanthropic contribution to institutionalization of their thinking. In the late 1800s and early 1900s, the Carnegies and Rockefellers set up their large philanthropic arms as early as 1905 to 1930, and the Tatas were already doing a lot of work. Sir Ratan Tata was channelling money to Gandhi in South Africa, and then IISC was set up in 1911. So it’s been more than 120 years now that big philanthropy has existed. In 1936, the Rockefeller foundation was set up. All these organizations have created institutional reforms, and tried to affect public policy.

For example, without the Ford and Rockefeller foundations, the Green Revolution would not have happened. So many of these big philanthropic arms, that were set up a long time ago, did have a vast vision of improving society in whichever way their ideology saw fit.
But in the last 30 years, something very different has happened. The new wealth that has been created in this gold rush of the last three decades has yielded entrepreneurs who are older, more audacious, and willing to give away a lot of their wealth. Whether we agree with the way they give away their wealth or not, the fact is that today, if you have a Ferrari, you better have a foundation. If you’re wealthy, there is no way you can avoid being generous. Through my work, I happen to travel and meet a lot of the super wealthy, and I’m surprised by many of them, and their willingness to die without anything in their pockets. They really do subscribe to what Carnegie said, “To die wealthy is to die disgraced.” So we are seeing a very new kind of philanthropy, enabled and rocket-fuelled by the tech entrepreneurs from Silicon Valley and other parts of the world who seem to have a rather different way of looking at the world.

The numbers we are talking about are truly staggering. The Bill Gates foundation has to spend $5 billion a year. It’s not easy to spend $5 billion a year. There’s The Giving Pledge, which Warren Buffett and the Gates started a few years ago, to which there are 172 signatories, including Nandan and I, along with three other Indians. The pledge is for signatories to promise that we will give away at least half our wealth, hopefully during our lifetime. If you look at the net worth of those people, it’s at least a trillion dollars and growing, which means that they have publicly committed to give away half a trillion dollars, and that money is on the table for societal good. That’s how much wealth is sloshing around in this big philanthropy bucket today.

So where is it all going? It’s going to all the traditional channels that there used to be, but it’s also going into very audacious things. One of stated goals of the Gates Foundation is to “stop child deaths,” i.e. prevent as many child deaths around the world as possible, by eradicating diseases and providing medical care around the world. Michael Bloomberg, who gives away billions of dollars, wants to stop global traffic deaths, and to stop coal plants from firing up around the world. Depending on where their heart is, these super wealthy philanthropists are taking really big bets and assembling actors to be able to move the needle on issues of their choice. In India too, we are seeing the rise of big philanthropy recently. Apart from the Tatas, who have been doing this for a very long time, Azim Premji, some of the Infosys founders and many of the new tech companies, the pharmaceutical companies, and the old industrialists have publicly committed to spending crores of rupees annually on societal good.

A recent report by Bain claims that, at this stage of the country’s economy, India’s wealthy are being more philanthropic than others were at the same economic stage. These philanthropists are talking to each other and learning how to do their philanthropy better, by continuing to take risks to solve some of the most vexing problems we’re facing. We know that education and healthcare problems are complex and ever-changing, and yet these philanthropists are committed to solving them. At the same time, the state seems less competent and less imaginative in the way they are solving these increasingly complex problems to do with climate change, emerging pandemics, and new job creation. So while we’re working on these new issues of scarcity of water, clean air, and clean energy, our civil society is also facing tremendous new challenges.

When the state is reducing its capacity and its budgets to solve these complex, and inter-connected problems, and civil society is facing its own new challenges, this new group of philanthropists are emerging in new institutional and societal mechanisms to address these problems. I know that there are a lot of risks to allowing the accumulation of both market power and philanthropic power in a few hands, and I think that society is also becoming very aware of this. So if you want to simply ask, “Is philanthropy a force for social good?” I think the answer would have to be “Maybe,” because the jury is still out. Is it really about generosity and innovation alone or is it about acquiring power by other means and in more and more anti-Democratic ways?

The Need for Checks and Balances

I appreciate the position taken by some, who say that big money can’t really create equality. Donor-driven agendas cannot replace a watermarked, participatory, democratic, civil-society-based approach to resolving social problems. But increasingly, we are seeing that these large organizations formed by big philanthropists are able to move public policy more rapidly than civil society organizations. For example, the Polk Brothers have consistently worked to support the gun lobby or to support the Tea Party. George Soros, whom I admire for many reasons, has spent billions of dollars and decades trying to work behind the Iron Curtain to create what he calls “open societies.”

Depending where you are on the political spectrum, you might see this as encouragement for your vision of society or an absolute threat. The fact is the money of these big philanthropists is the thing that is making these public policy needles move. Of course, other donors also share the blame for public policy. We know how the Rockefeller Foundation’s work on The Green Revolution looked very good at one stage, and today we realize that we need a much greener revolution, and that we have to pay the cost for the first Green Revolution. Nothing is a permanent solution, and some solutions often create another set of problems. But we are seeing these new, big philanthropists try to shape public policy at high levels, including the ability of governments to tax them.

So we can seriously say that the accumulation of this kind of influence over public policy must be taken seriously. Even if they’re only supporting art and culture institutions, those are the birthplace of ideas, and ideas rule over our public sphere. We must question whether the funding of museums and public sphere places should be privatised in a democratic society. There are risks, and many of these philanthropists may be the first to acknowledge that. It is up to civil society to help create new checks and balances on big philanthropy and its increasing power.

The future holds a lot of possibilities. People are talking about colonizing space, and preventing climate change through technological fixes. While I think these are bold, innovative ideas that deserve a chance, we also need new checks and balances on this power. Because I do believe that neither sarkaar nor bazaar nor the super wealthy should be allowed to undermine the basic building blocks of successful society – which is samaaj-based. This means the right to collective action, individual freedoms, public discourse, control over local resources, the ability and agency to solve one’s own problems, and the ability to hold the local government accountable for its public policy for the larger public interest. Governments should be able to speak for most of their citizens and not just for the privileged few.

There are checks and balances that can be put on private power, even on the power of giving. For example, just raising taxes on the wealthy may reduce their need to be super philanthropic in the first place. India’s tax GDP ratio could certainly do with the change. The great philanthropic foundations could be asked to be much more transparent, so that people have more data on what these organizations are doing. When people’s donations are going towards philanthropic causes and not the government, they have the right to know what impact their having and the societal benefit they are receiving from it.

There also needs to be a larger media focus on what the wealthy are doing, and what the responsibility of wealthy classes are to society. Civil society groups need to take this much more seriously because we are coming into a digital age for which I believe civil society is completely unprepared. We’re living in a technology-based world, and civil society needs to not only enter that age on its own terms, but it also needs to be able to develop the capacity to influence how the digital world benefits samaaj more than sarkaar and bazaar. That’s a long journey, and there’s a rapid learning curve.

All these things will form the kind of checks and balances that we are talking about. Having said that, I think philanthropy can be a beautiful thing. I think most philanthropy comes from love of humankind, the love of wanting to do something better for society, to leave the world a better place than you found it. Many of the super wealthy, including myself, feel a great responsibility because of this wealth. We believe that we are lucky, and a lot of things have to come together before the wealthy can realise that they are mostly owed back as Gandhi-ji would say, in a form of trusteeship. We need big philanthropy when government and civil society are struggling to be able to bear the extreme high risk for innovation in every sphere of society. Whether it is fighting disease, doing research, building the thousands of new institutions that the developing and developed world need in today’s circumstances, taking risks and innovating is crucial to finding a solution.

Even when it comes to climate change, if disasters should arise, we need the kind of philanthropic actors who will take action because governments will not be able to rise to the challenge rapidly enough. While we talk about the risks, philanthropy is voluntary and very diverse. It’s not concentrated in bulk, so the risk is less. There are people who follow every idea from every part of the political spectrum and deploy it.

Sometimes I fear that civil society movements are getting reduced to more identity-based groupings. The broad universalist, humanist utterances of Ambedkar and Gandhi are heard mostly in the sphere of religion and spirituality, from the Dalai Lama and the Pope, rather than from civil society leaders. Meanwhile, these super wealthy people that I meet are articulating universalist goals and putting their minds, their hearts and their pockets behind them. I believe very strongly in the power of intent, and for that reason alone we need to give big philanthropy a chance. There’s always good and bad in everything. I see a lot of good and potential in the ability of people to say, “I don’t need to keep everything that I earn because society’s allowed me to earn it. I need to give it away.” Taking on that responsibility is not an easy task. So three cheers to the power of that intent. We need to give it a chance while, as civil society members, all of us, improve the checks and balances on that power.

Private Resources and the Public Interest: How can Philanthropy Enhance Social Good?

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