This week we bring you a batch of short articles on the shifting nature of philanthropy in our current moment.

Last week, Facebook founder and CEO Mark Zuckerberg and his wife, Priscilla Chan, announced that they would dedicate 99% of their shares in Facebook—about $45 billion—to the establishment of the Chan Zuckerberg Initiative. In their own words, that Initiative will “join people across the world to advance human potential and promote equality for all children in the next generation.” In this, Zuckerberg and Chan are following in the footsteps of a number of the world’s wealthiest who have taken the Bill Gates-led “Giving Pledge” to give away a majority of their wealth to philanthropic causes.

Is there a difference between philanthropy and charity?

Quickly after the announcement was made, numerous commentators noticed that, as Jesse Eisinger put it for ProPublica, “Mark Zuckerberg did not donate $45 billion to charity.” Rather, Eisinger clarifies, by creating an LLC Zuckerberg “created an investment vehicle” capable of investing in for-profit companies, making direct political donations, and lobbying for changes in the law. While this is undeniably generous, it is not, in Eisinger’s view, charity. In fact, Eisenger describes the founding of the Chan Zuckerberg Initiative as moving money from “one pocket to another.” While this is clearly overstating the case, Eisenger’s intuition about the difference between philanthropy and charity was confirmed when Facebook sent a letter to Fast Company explaining that the Chan Zuckerberg Initiative was to be understood as philanthropy and not charity.

To understand this distinction, two recent pieces are worth consulting. In a special report on Wealth and Philanthropy in 2006, the Economist termed the emergent norm of philanthropic giving “philanthrocapitalism.” Whereas traditionally, philanthropy has been measured by inputs—money raised, clients served, etc.—philanthrocapitalism (or “venture philanthropy,” as it is sometimes called) is interested primarily in outputs—return on investment. On this picture, rather than giving out of obligation or adherence to a religious tradition, philanthropists are motivated by the principle of maximum effectiveness. This has some resonance with what the founding president of Facebook Sean Parker described as “Philanthropy for Hackers” in an extended op-ed for the Wall Street Journal. According to Parker:

Hackers share certain values: an antiestablishment bias, a belief in radical transparency, a nose for sniffing out vulnerabilities in systems, a desire to “hack” complex problems using elegant technological and social solutions, and an almost religious belief in the power of data to aid in solving those problems.

In addition to an emphasis on effectiveness and data, in Parker’s view, “this new generation of philanthropists wants to believe there is a clever ‘hack’ for every new problem,” which has led them to a number of “radical experiments” as well as the avoidance of particularly “unhackable” problems.

Voluntary giving was once a theological and local phenomenon; it is now technological and global.

The emergence of social impact investing has served as a very useful corrective to the dominance of “mere relief” as the goal of voluntary giving. Being clear-eyed about philanthropic aims, subjecting investment plans to rigorous critique, and balancing measurable outcomes against inputs all seems prudent and wise. When private citizens, community foundations, or even corporations give their time, resources, and energies, they do so with particular objectives in mind, and whatever tools can be utilized to better achieve those objectives should be welcomed.  

And yet, as Ian Tuttle’s review of Jeremy Beer’s recently published The Philanthropic Revolution indicates, sweeping philanthropic initiatives have brought both very real benefits (support for basic research, disease prevention and cures, etc.) and the kind of “social experiments” we’d rather forget (like the American eugenics project). The central claim of Beer’s book, as Tuttle rightly notes, is that an overemphasis on “systems” can produce two unfortunate outcomes: first, a kind of willed inability to see the person as the center of philanthropic effort and, second, an almost unavoidable strand of technologically driven utopianism.

“Philanthrolocalism” aims not at changing the world, but at improving a given place.

Beer’s recommendation for avoiding these outcomes is something he (half-heartedly) calls “philanthrolocalism.” Rather than “hacking systems,” philanthrolocalism focuses on the thriving of local communities and the kinds of relationships that can be developed among neighbors and friends. Unsurprisingly, this means that Beer has more to say to community foundations doing local work than the more “systems-oriented” international philanthropic organizations that folks like Bill Gates and Mark Zuckerberg are now establishing. The worry here is that if not all social problems are “hackable” at a systems level, the dominance of philanthropy will have a kind of crowding-out effect, leaving social service providers in local communities struggling to justify their existence. In this way, “philanthrolocalism” is a modest ambition—one that aims not at changing the world, but rather improving a given place—and, as such, serves as a useful corrective to the emergent consensus among purveyors of philanthrocapitalism.