More blessed to give than to receive?
The concept of “The Philanthropist” brings to mind a rather colonial image: a portly gentleman who has made his pile of money and now, in top hat, waistcoat and tails, his luxuriant sideburns creeping down his whisky-reddened cheeks, he dispenses largesse to “The Poor”: barefooted children in ragged clothes.
This image emerged during the early history of modern philanthropy, when the industrial era and the slave trade laid the foundations of great fortunes but at the same time saw the growth of massive human rights abuses, such as child labour in the mines and factories. Philanthropists, many of whom had earned their riches directly or indirectly through the very system that created and maintained these abuses, set out to ameliorate their effects, tackling child welfare, working and housing conditions and much more.
This push and pull persists to this day: the brash newcomers of IT and the scions of great dynastic families who amass untold wealth from shady industries (sweat shops and conflict minerals and palm oil, and others that squeeze human or natural resources unmercifully) pause for thought, at some pinnacle in their careers, and look at the world of poverty and environmental degradation beyond Malibu or St John’s Wood. “Let us create a legacy,” they say. “Let us put something back.”
And some small percentage of the money they’ve garnered becomes the huge building block of a new industry: the philanthropy industry, one in which this new injection of wealth is significant, enough maybe even to shape policy in the chosen area of giving – such as how a country or even a region chooses to treat an endemic disease or feed its people or educate its children.
But, as Tom Watson asked in a July article in Forbes magazine, “do the billionaires really know how to change the world?” What guides their choices — whim, advice or just a desire to make change happen? Or some less righteous agenda, perhaps.
In the 21st century, their giving happens in the developing world in countries far removed from their own, begging the question: should they be regulated, guided, advised, given parameters, policed, or simply left to their own devices?
Since there may be questions asked about the way their wealth was created (wealth often directly or indirectly taken from the developing world), should they be held to account for any acts that could be called “crimes” in their pasts or those of their companies? Should attention be given to if and when philanthropic initiatives facilitate or provide a gloss for illicit financial flows out of this continent — a massive loss for some of the world’s poorest countries?
How do the recipient communi- ties get to grips with the concept that they are being given, with one hand, only a very small proportion of what has been taken from them by another powerful hand in the not-so-distant past? How do you cope with the idea that the same companies which are now mining your rocks or felling your trees are the ones whose eponymous foundations are educating your children or providing for your health in childbirth?
And what exactly is philanthropy? If a company does good deeds to shine up the annual report or to earn some sort of brownie points with a government, does it qualify as phi- lanthropy or is it actually some kind of marketing tool?
Philanthropy from the recipient’s point of view
With so much to think about and question, it seems strange that Africa, a continent at the sharp end of much of the global North’s philanthropic projects since the first women’s institute knitted caps for the poor little children in the Natal Colony, has never had a university course focused on the subject. If you want to do academic studies in this area, you can go to any number of universities and colleges in the UK and the US, from St Mary’s in London to Maryland in the United States.
It’s possible, of course, that some of these courses do take the recipient point of view into account, but it does seem time and to spare that the societies that receive should take a long hard look at the who, what, where, when, why and how of the giving.
Or at least, so it seemed to TrustAfrica, an organisation interested in strengthening and developing indigenous forms of giving, and aligning external philanthropy with the continent’s real democratic and developmental needs. It commissioned three papers on aspects of concern around philanthropy and, with the Southern African Trust, it recently convened a meeting to discuss these issues in Johannesburg, drawing together a powerful set of voices from across the region and inside South Africa.
The aim of the meeting was to “deepen the discourse on African philanthropy and resource justice, including exploring the intersections between African philanthropy and illicit financial flows; critically analyse the nexus between the extractive industries and tax justice; and [interrogate] natural resource governance priority issues for African philanthropy”.
In an interesting process that could be called the ultimate in peer review, the three academics presented their draft papers for discussion and an energetic session of panel-beating, which attracted some very engaged commentary.
Clever accounting or simply stealing?
Professor Sarah Bracking, who holds the University of KwaZulu-Natal SARCHi Chair in Applied Poverty Reduction Assessment, has tackled the issue of how philanthropy inter- sects with illicit financial flows.
Globally, two years ago, illicit financial flows stood at $1.2-trillion, with a lot of that originating in Africa. These are funds that are being stripped out of economies that need them desperately. About 30% or so of that is criminal (drugs, trafficking in humans and the like), as well as government corruption (which accounts for some 5-7% of the total). The rest is corporate, funds that are lost in tax avoidance through creative accounting, selling commodities on to a chain of offshore entities at ever-inflated prices and other such tactics. This represents tax money lost to impoverished countries that could use it for urgent development purposes.
As a result, “there have been increasing numbers of people calling for a steep change in both how we view the problem of economic justice, and of how activists and the giving movement then respond and advocate for it,” said Bracking.
There’s an incredible, almost surreal difference in scale between the value that multinational corporations strip out of economies in this way, and the amount that is com- ing back into them as philanthropic giving.
Philanthropy is (and has always been, if you scan the history) little more than a palliative that makes things a bit better for the people on the ground, the vulnerable who have suffered the shocks that accompany economic loss – for example, the community in Ghana whose vital water catchment has been bulldozed of everything that makes it func- tion as such by a foreign mining company.
The company will leave, once the commodity is mined out; the government will have had a short-term and very thin bonus in taxes; the community will live with the consequences for food security for generations.
So the question becomes, said Matshidiso Kgothatso Semela-Serote, of the International Institute of Democracy and Electoral Assistance: “What are the opportunities for philanthropy to catalyse incentives for different kinds of behaviour at the state level?” Instead of seeing philanthropic efforts as a plaster on a wound, can they become “a more proactive philanthropy that can produce significant structural change on behalf of the wellbeing of the poor and excluded”, as Bracking put it?
The power of money
The power of the multinationals and the governments (and global systems) of the global North that back them is difficult to counter. As Farai Maguwu of the Centre for Natural Resource Governance said, African countries have only had 50 or 60 years to build systems and institutions: “Our governance systems are still in their infancy, laws are still very weak, we’re dealing with powerful nations whose governance systems have evolved over centuries.”
It’s particularly hard to tease out the good and the bad that is being done in a country or region by multinationals engaged in the extractive industries that play such a dominant role in Africa, and the philanthropic institutions associated with them, as post-doctoral fellow at the Centre for Civil Society, University of KwaZulu-Natal, Shauna Mottiar noted when presenting her draft paper on philanthropy and resource governance.
Mining companies use the common terminology “corporate social responsibility (CSR)” when talking of their “strategic philanthropy”, and that sounds a note of caution: “It is especially important to interrogate the assumed benevolence of corporate philanthropy and CSR because it may be used to divert attention from environmental and human rights violations and as a marketing tool, particularly when looking at mining companies, for example,” said Nicolette Naylor of the Ford Foundation.
“An obvious concern for social justice scholars and development scholars alike is that massive profits accumulated from resource extractive initiatives in Africa are seldom reinvested in communities directly impacted on or even more broadly in the development agendas of countries that house these resources,” said Mottiar.
Why? Is CSR simply a business decision? Mottiar quoted a scholar named S Banerjee, who suggested that CSR may simply give the company a “licence to operate”.
The question of exactly how you define philanthropy kept coming up from delegates during the course of the day, and one thing was very clear: it’s not philanthropy if there’s a quid pro quo. There’s a big difference between a tycoon setting aside monies to fund a philanthropic foundation (which, while it might initially align itself quite closely with his world-view, may over time sheer off and create its own set of values) and a corporate whose foundation is dedicated to achieving a range of goals on behalf of that corporation (brownie points with a government, a pass on certain human rights or environmental violations, a marketing tool, an accounting tool, leverage to push governments or institutions into espousing policies that suit the corporate objectives).
Stefan Gilbert of the Institute for Security Studies issued a clear reminder of the simple facts around corporates, which answer to shareholders: “We seem to see businesses as being a social actor. They’re not. They’re amoral actors whose primary function is to produce services and goods for profit.” Thus their philanthropic activities must make business sense — and should be subject to some sort of governance.
To some extent, governance of the extractive industries, at least, has been privatised — moved out of the hands of governments seen as too corrupt and into the hands of private organisations such as the Extractive Industries Transparency Initiative (EITI), Transparency International and the Kimberley Process, as Khadija Sharife, of the African Network of Centres for Investigative Reporting, pointed out in her draft paper on phi- lanthropy and tax justice, which focused on the immense losses tax avoidance represents.
“But through these processes, you don’t see any measure of tax justice. Because in fact these systems are constructed to embed tax injustice.” The processes focus on state-led corruption — the tip of the iceberg — and ignore the massive corporate abuses sailing beneath the ocean surface.
“They’re constructed to allow multinationals to continue to engage in thin capitalisation, tax avoidance, and the ways that have deliberately impoverished these countries,” she added. “The systems providing for illegal and illicit corruption, the tax havens, are sovereign-backed spaces protecting everyone from dictators to corporate avoiders, and they’re very respectable countries, ranking top of Transparency International’s list. How come?” she asked.
“Philanthropy is there to allow for the appearance of a balancing effect. It’s not there to correct the causes of socio-economic injustice. Big philanthropy creates a virtue economy where the invisibilised vanguards are those whose right to govern comes from wealth that legitimates itself, and is portrayed as external to the problem. The product sold here is believability designed to co-opt political engagement.”
These processes (and she pointed out that the EITI, for example, is funded by the fossil fuel industry) are mechanisms to manage reputational risk, rather than to deal with the real causes of real problems.
That job, said many voices at the meeting, should really rest in the hands of the state — although perhaps a re-imagined state. Many spoke out about putting the management of issues now in the hands of philanthropic foundations back into the hands of government and of local communities, local giving mechanisms, local governance. By focusing constantly on what the big five or 10 foundations are doing, said Tendai Murisa, of TrustAfrica, “We run the danger of missing out on other trends — the emergence of what they call community foundations, for example — both in the global North and in Africa.”
Said Savior Mwambwa, of the Tax Justice Network-Africa in Kenya: “We wouldn’t really need philanthropy if our governments did their job and collected sufficient tax revenues.”
It is they we should hold to account, said Gilbert. “CSR is an excuse for governments not to do what they’re supposed to do. It is the government’s purpose and role to ensure that [corporations] do not take advantage of people. The natural resources belong to the people and the governments are there to represent the people and act in their best interest. We need to hold the leaders and their governments to account.”
But obviously, if that’s the road we have to take, we have to do some serious work on the states we have, as Briggs Bomba of TrustAfrica said: “How do we imagine the evolution of a state architecture that would protect the interests of those around the margins, those who are vulnerable?”
This article forms part of a series in partnership with the Southern Africa Trust on how poverty affects the daily lives of South Africans