They go round and round

Barry Knight

Barry KnightWho sets the agenda – funder or grantee? This question is as old as funding. Recently, however, the form of the discussion has changed. The impetus for the latest round of discussion is the emergence of philanthrocapitalism or ‘new’ philanthropy – a debate that has been re-energized by the publication of Michael Edwards’ book Just Another Emperor. In this article, we look at donor control in the light of these developments. It seems that we may have a new emperor but he is wearing old clothes.

Caroline Hartnell‘Who sets the agenda?’ is a rhetorical question. As Firoze Manji, editor of Pambazuka News, says: ‘Only funders have any doubts about the answer to this question.’ Julia Unwin, in The Grantmaking Tango,[1] shows that funders’ decisions play a vital role in shaping civil society. Fears that public funders will undermine the independence of civil society are driving a heated debate in the UK about whether non-profits should fulfil public service contracts. When push comes to shove, there is little doubt that funders are in the driving seat. After all, they pay for what happens, so it is their decisions that count.

So maybe the real question is whether current funding trends – which are not the preserve of ‘new’ philanthropy alone – are skewing decision-making even further towards northern funders and away from developing countries? Are more established foundations also adopting the rhetoric and practices of new philanthropy? Michael Edwards quotes Gates’ alleged fear of becoming like the Ford Foundation, but it seems likely that their approaches are moving closer together.

Towards a more strategic philanthropy

It is clear that the tendency towards a more strategic philanthropy has been in the ascendant for some time. This has been driven partly by foundations thinking more about the impact of their work, leading to greater focus, clearer goals, and programmes relying on a smaller number of bigger grants. Reactive grant programmes have become fewer – though there are notable exceptions such as the Esmee Fairbairn Foundation, one of the UK’s largest foundations, which moved to a more reactive open grants programmes in January 2008 – and some foundations have become more like ‘operating foundations’ on the German model where there are no grants at all, only contracts.

Philanthrocapitalism is an extreme form of strategic philanthropy. This ‘new’ philanthropy, as described by Michael Edwards, has three main characteristics. First, it involves the expenditure of very large sums of money derived largely from profits earned in the finance and IT sectors in the last two decades. Second, it relies on a belief that business methods can solve social problems since these are claimed to be superior to other methods in use in public sector or civil society. Third, it claims that these methods can achieve social transformation as well as increased access to socially beneficial goods and services. Edwards challenges the last two claims in Just Another Emperor.

Philanthrocapitalism and donor control

While the critics of philanthrocapitalism have tended to focus their complaints on its unsuitability for creating long-term social change or social justice, an unforeseen consequence of philanthrocapitalism may be that the recipient of the money becomes merely an agent of the donor and their perspectives on the world count for little – a danger that is forcefully highlighted in Sheela Patel’s article on p36, tellingly titled ‘Subcontractors or visionaries?’

Yet, the issue of who controls what is vital in society. It matters because people who are oppressed or marginalized want to be in control of their own destiny and do not want to be treated as objects of charity or pawns in a grand chess game of solving the world’s problems.

How compatible is local control with the goal-driven, focused, ‘strategic’ philanthropy that is increasingly the norm? Not very, according to Tade Aina, Ford Foundation Representative in East Africa, speaking at a meeting in Nairobi in May (see p17), where he outlined some characteristics of what he calls the ‘new aid architecture’. Grants tend to go only to the larger, more formal, better resourced institutions that possess structures acceptable to donor consortia, while funds are mostly project- or programme-related. ‘They do not support investment in endowments or property of local institutions.’ This will also mean ‘less flexible support for issues that are determined and adopted autonomously by local institutions’, as they will ‘have to fit either the national development agenda or the increasingly narrow focus of the big private donors’. He talks of an ‘emerging consensus on procedures and methodologies, predominantly business and market driven and led by the philanthrocapitalists, who are being joined by the old philanthropies such as the Rockefeller Foundation in their insistence on narrow focus, high impact, clear and measurable results.’

The waxing and waning of donor control

From Bretton Woods to community development

These issues are far from new. With philanthrocapitalism there is a sense that we are going back 60 years to recreate Evan Durbin’s 1949 dictum that ‘we are all planners now’. Such an approach found expression in the 1944 Bretton Woods Conference, which planned the post-war world, displaying immense confidence that the world could be ruled from the top down through a combination of goodwill, international cooperation, and new financial institutions. This ethos of planning, deriving originally from the Fabian socialism of Beatrice and Sydney Webb, rapidly spread around the world not only in Europe but also in much of Africa and the newly independent India.

In the 1950s, this top-down approach was challenged by the Third World Community Development Movement. This was driven by ‘populist theory’ in which virtue resides in the simplest people who are in the overwhelming majority in their collective traditions’ and who know best what they want and need. Such a perspective led to a range of different approaches, though common to all of them was the idea that ordinary folk are badly done to.

Although populist theory owes much to the self-organizing perspective deriving from the ideas of 19th century anarchists such as Peter Kropotkin and the practice of political activists such as Mahatma Gandhi, many of the first active proponents of participatory approaches were missionaries and colonists. Indeed, the British Colonial Office Advisory Committee on Native Education produced a report in 1944, Mass Education in the Colonies, which promoted local control as a means of delivering agriculture, health and social services. By the 1950s, the idea of community development figured prominently in United Nations documents and by the end of the decade a fully articulated theory had been developed.[2]

Community development reached its apotheosis during the War on Poverty in 1960s America. The leitmotif of the approach, set out in the 1964 Economic Opportunity Act, was ‘maximum feasible participation’. The theory was that participation of the poorest in society would create opportunity, which would reduce poverty, which would in turn lead to the Great Society. However, as we will see later, it all ended badly.

From growth to the associational revolution

In the 1970s participation declined as an intervention strategy. In some countries, expectations were too high, leaving too much room for disappointment, even among those who were actively involved. In other countries, corruption, maladministration and inefficiency meant that resources designed to foster the participation of ordinary people never reached them. The result was that participation was replaced by an emphasis on growth, transfer of capital, heavy industry and economic modernization. In Africa, many governments continued to use the rhetoric of participation, yet failed to provide resources to make this a reality, while in India the government abandoned its community development programme in 1978.

Ten years later, we saw the opening up of South America, South Africa, and Central and Eastern Europe, and the focus changed all over again. A clear victor of the 1989 revolutions and the dismantling of Apartheid in South Africa was ‘civil society’. People power was seen to play a key part in the changes, and the idea was given formal shape by Lester Salamon’s ‘associational revolution’. Salamon said that the growth of non-profits at the end of the 20th century might be of comparable political significance to the growth of the nation state at the end of the 19th century. Foundations, non-profits, university departments and government departments swiftly changed the language of their non-profit programmes to pursue this new secular ideology of supporting people in their own institutions.

The rise of ‘new’ philanthropy

At the turn of the millennium, this new optimism started to fade. It was not clear what civil society was delivering, and a number of key funders pulled back from it. One of these was Atlantic Philanthropies, which, following a decision to spend down its endowment in a period of 12-15 years, decided to focus its grantmaking in just four highly focused and ‘strategic’ programmes where it was felt it could have maximum impact and achieve a visible ‘legacy’. A series of books and articles drew attention to the woolliness of civil society and the difficulty of harnessing it to develop a funding strategy to deliver measurable outcomes.

In 2001, the Bertelsmann Foundation began the International Network on Strategic Philanthropy. Although this programme was short-lived, the idea that funders should be strategic as opposed to reactive gained ground. The rise of ‘new’ philanthropy, with its concomitant features of top-down planning, has completed the circle that started with Durbin.

Fashion in philanthropy

So there we have it: the role of fashion in philanthropy. As Ian Smillie puts it, echoing the lyrics of Joni Mitchell’s The Circle Game, ‘The painted ponies, they go ’round and ’round.’[3] In the realm of philanthropy, the role of fashion shows most clearly in its language. New terms are constantly invented. Hardly anyone would champion ‘top-down’ approaches these days – they seem self-evidently undesirable while ‘bottom-up’ sounds good. But replace ‘bottom-up’ with ‘reactive’ and ‘top-down’ with ‘proactive’ and the shape of things changes. ‘Reactive’ sounds ineffective and unenterprising. ‘Proactive’ has a more positive ring to it.

Similarly, think about ‘new’ philanthropy, with its persuasive cohort of effective, entrepreneurial, impact-oriented, goal-oriented, results-driven, strategic approaches. Who would want to be associated with ‘old’ or ‘traditional’ philanthropy? Increasingly, it seems, not even the ‘old’ and ‘traditional’ foundations. ‘New’ is a clever way of re-packaging an old and continuing debate. Fashion is bound to repeat because, like hem lengths or heel heights, there is only so much possible variation – if heels get too high, you fall over. Over the past 60 years we have always been somewhere in a cycle that swings from Chairman Mao’s exhortation to ‘Let one hundred flowers bloom’ to the most corporatist form of French dirigisme. An earlier generation talked about ‘planning’ versus ‘laissez-faire’.

Is the new language designed merely to mask the fact that old and seemingly intractable problems have still not been resolved? Or is it that old and familiar attitudes are emerging in a new disguise? A positive take on this is that the adoption of new terms gives renewed life and energy to a debate that we still need to have. The old philanthropy/new philanthropy framing can be seen in this light.

No magic bullet

In Table 1, we aim to set out two sets of positions: one where the paradigm is ‘proactive and new’ intervention; the other where it is ‘reactive and old’.

Table 1

Table 1 deliberately sets out extremes. One moment of reflection should be sufficient to see that it represents a parody of the two positions – and that there are positive attributes in both columns. It is vital that the two types of intervention intersect. It is clear that there is no single frame of reference that will deliver unambiguous social progress in a linear fashion. There are far too many variables for that.

Anyone who is tempted to think that there is a single right answer to the balance of power between funder and funded should read Marris and Rein’s classic Dilemmas of Social Reform.[4] If there was one time in history when funders really tried to get this right, it was during the ‘War on Poverty’ in 1960s America.

Here top-down resources, combined with rational analysis and scientific evaluation, led to the development of programmes from the top down, but the design allowed local people a big say in how programmes were implemented on the ground. For example, both the Community Action Program and the Model Cities Program aimed to empower the poorest in American society and to enable transformation from the bottom up.

However, it all went wrong. Many African American communities disliked the programmes because they felt that the slogan ‘maximum feasible participation’ was tokenistic and patronizing, enabling funders to escape from the very real issues of structural disadvantage and discrimination. City Hall didn’t like the programmes because they felt that they enabled community organizations to usurp their rightful powers. Professional workers didn’t like them because they felt that the ‘New Careers for the Poor’ programme threatened their jobs. Without basic agreements in place about what a programme is for and who it will benefit, it is likely to fall apart, just as the US War on Poverty did.

Anyone trying to create change, whether from the top down or from the bottom up, has to deal with the realities of life on the ground. That is why no simple formula or magic bullet will work. Both funders and funded have to deal with vested interests, established working practices, agency muscle, entrenched attitudes, and different cultures if they are to succeed in their ambitions. In his article on p46, David Hulme looks at the role of what he calls ‘material capabilities, institutional processes and norms’ in determining the past and future of official development aid.

A combination of approaches

So reliance on a single form of intervention – whether it is a model derived from business or a model derived from community development theory – is insufficient for almost all social circumstances where funders want to make a difference. A combination of approaches is called for, and the bottom line is that any intervention will need to be politically and culturally sensitive to local conditions. It is axiomatic that such local conditions will vary so that there can never be a magic formula. This doesn’t mean, however, that we can’t learn from what works and what doesn’t.

In this issue of Alliance, we set out some promising approaches whereby southern organizations are beginning to find ways to set their own agenda and negotiate on equal terms with northern funders. Sheela Patel explains how SPARC is working with Mahila Milan and the National Slum Dwellers Federation to develop what she calls ‘trusteeship’ – ‘the capacity of the leadership of the poor to make accountable choices, to reflect on these choices and make course corrections when necessary, and to maintain a focus on the goal of equity’. Sheila Richards, Oscar Rojas and Santosh Samal (p35) describe how southern foundations, working in divided societies, can act as a useful bridge between North and South. These ‘activist funders’ are part of the marginalized communities that northern donors may be trying to reach, so investing in them shifts the burden of decision-taking from North to South. TrustAfrica, according to Bhekinkosi Moyo (p40), has already begun levelling the playing field between North and South by engaging in continent-wide agenda-setting meetings that are giving TrustAfrica the legitimacy to engage with northern donors on equal terms, and the African Women’s Development Fund is taking a similar approach, shaping a feminist philanthropy agenda through its grantees.

On the northern donor side, the Leichtenstein-based LGT Venture Philanthropy (p38) offers an interesting combination of business approaches to its investments and local agenda-setting, with very broadly defined programme areas and staff on the ground in the countries in which it plans to work. The Ford Foundation too looks set to combine different approaches. While continuing to focus on social justice and eschewing ‘narrow quantitative measures’, the upshot of the review currently going on at Ford is likely to be the increased focus that is so characteristic of ‘new’ philanthropy, as Ford President Luis Ubiñas explains in an interview in this issue of Alliance. Ford will become ‘much more focused on the issues that have been most central to its history’, he says, and ‘that focus will allow us to bring substantially more resources to the things we do’. 

1  Julia Unwin (2005) The Grantmaking Tango The Baring Foundation, London.

2 P Kuenstler (1960) New Community Organization Faber and Faber, London.

3 I Smillie (1995) The Alms Bazaar: Altruism Under Fire – Non-profit organizations and international development Intermediate Technology Publications, London.

4 P Marris and M Rein (1972) Dilemmas of Social Reform Penguin Books, 2nd Edition.

Barry Knight is Secretary of CENTRIS. Email
Caroline Hartnell is Editor of Alliance. Email

And the seasons they go round and round
And the painted ponies go up and down
We’re captive on the carousel of time
We can’t return we can only look behind
From where we came
And go round and round and round
In the circle game.
Joni Mitchell, The Circle Game

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