News and analysis
August 05, 2013

Responding to Peter Buffett: What Philanthropy Experts Say

Peter Buffett’s opinion article in The New York Times last week calling for a new approach to philanthropy touched off a wave of comments. Following are excerpts from the conversation:

Philanthropy Shouldn’t Deter Wealth Creation

Howard Husock photo

Buffett would better have reflected on the possibility that the problem with too much of contemporary philanthropy has not been the fact that it provides little more than a Band-Aid for big and intractable problems—but that it has become unfriendly to the creation of wealth that provides the resources to solve such problems. In other words, the problem Buffett identifies may not be that philanthropy is inadequate-but that its resources are not being well-directed.

Howard Husock, director of the social entrepreneurship initiative, Manhattan Institute; in Forbes.


Charities Need Higher Giving More Than ReinventionTom Watson photo


There are thousands of worthy charities that don’t need re-invention, don’t need a new model, don’t need an entirely new mindset. What they need is more capital, to serve more people, with the successful models they have. But philanthropy itself as a sector does indeed need the kind of re-thinking Peter Buffett is talking about—and it’s a rethinking that can happen if the U.S. sector can break through the [giving as] 2 percent [of] GDP ceiling.

Tom Watson, president of the consulting firm CauseWired; in Forbes.


Blame Teachers Unions, Not Philanthropy

Matthew Bishop photo

Inequality is arguably a big problem—though poverty is a bigger one. Yet one way to reduce inequality/poverty is to ensure that everyone has a decent education. It is clear from our research that philanthropists have been focused for decades—even centuries—on improving the education system, especially for poorer people. It has been others (such as, in recent years in America, some teachers unions) who have blocked their efforts, and who arguably are more deserving of Mr. Buffett’s criticism. Yet Mr. Buffett seems to go further, apparently arguing that philanthropy itself contributes to harm…Not a single piece of evidence is offered in support of this claim.

Matthew Bishop, U.S. business editor of The Economist and co-author of Philanthrocapitalism: How Giving Can Save the World; on LinkedIn.


Criticism Shows Lack of Economic Understanding

William MacAskill photo

Peter Buffett’s argument belies an astonishing lack of understanding of both economics and of the extremity of global poverty. He admonishes a condom-distribution program he was involved in because that led to a higher price for unprotected sex from prostitutes. But let me get out my economics 101 textbook: higher price means lower demand, which means fewer instances of unprotected sex… He argues for the futility of microlending and financial literacy, claiming that though that will help the poor rise above $2 earnings per day, all that results in is that they can “buy more.” But if you’re making $2 per day, being able to “buy more”—that is, to buy goods such as decent meals, medicines and education—is a matter of life and death.

William MacAskill, president of 80,000 Hours, an ethical careers advisory service; on Quartz, a global-economics news outlet.


New Philanthropy Must Challenge Status Quo

Chris Jochnick photo

There was in fact a time when the philanthropic titans like Rockefeller, Carnegie, and Mellon were openly challenged for trying to whitewash their business dealings through philanthropy, and when large foundations were suspected of simply propping up the status quo. Today, those sorts of challenges rarely make it out of the isolated musings of leftist academia, making Buffettt’s mainstream blast so startling. We would do well to consider whether the big foundations—especially in this era of “philanthrocapitalism”—are truly able to challenge the status quo with any conviction. Are the market moguls driving new philanthropy, with their business-like focus on efficiency and market approaches to development, capable of the kind of structure-shattering imagination that Buffett rightly calls for?

Chris Jochnick, director of the private sector department at Oxfam America; on Oxfam America’s Web site


Where Are Buffett's High-Risk Investments?

Wayan Vota photo

We yearn to find a true philanthropist, one who loves his fellow (wo)man so much he is willing to take the risks you talk about…Can we start with you? Where are the high-risk investments by NoVo Foundation? Yes, you bet half your funds on Nike Foundation’s Girl Effect. Cheers to that they are pushing the envelope with big ideas that make even the most ambitious of us sit back in awe. But where are the other high-risk bets? The moon shots that look like imminent failure, but could just make a real difference?

Wayan Vota, international-development communications technology expert,“Open Letter to Peter Buffett.

Capitalism and Charity Both Offer Imperfect Solutions

Linda Raftree photo

There are problems with the NGO/nonprofit model, which creates dependency and a whole host of other issues. There are problems with the “charity” model in that it is a Band-Aid and never addresses the root causes (because addressing root causes entails structural changes which most often end up being bloody because they require power shifts). There are also problems with the straight-up capitalist model in that capitalism does not serve everyone. One reason that civil-society and human-rights organizations exist is because the market and government are not working for the most marginalized. However, there is not much purity of motive in any of these models, as they all become self-serving institutions/organizations at some point.

Linda Raftree, international-development communications technology expert; in a Google Plus discussion of Mr. Vota’s open letter.


Buffett Responds: No Easy Answers

Peter Buffett Photo

To me, The Emperor Has No Clothes story is about illumination, not shaming the emperor. I’m glad people feel a sense of truth telling as opposed to name calling. Part of that truth (because you can only get so much in with 800 words) is that Jennifer [Mr. Buffett’s wife] and I and our staff are learning as we go. Constantly trying to adjust—as gracefully as possible—in a world that sees a foundation with money as some sort of potential savior….I think my piece worked because I didn’t actually say I had an answer. The minute I do, I’ll start that wonderful downward spiral of polarization.

Peter Buffett; in a Google Plus discussion of Mr. Vota’s open letter.

Photo: ChinaFotoPress/Getty Images