Capitalist Philanthropy: Good, Bad or Gray?

Reid Hoffman, founder of LinkedIn, has an interesting interview in The Atlantic today. Hoffman is a fan of what’s known as Capitalist Philanthropy. To some, it’s a term of derision. But what does the Dragon think?

I think Hoffman makes some solid points.

Today’s interview is in response to another article which questioned the outsized impact that mega donors have on philanthropic pursuits, policy, etc. Hoffman’s response is that individuals who have amassed large fortunes are, for the most part, highly skilled at leveraging capital. And that before putting their dollars to work in the nonprofit arena they are carefully evaluating the most effective way to maximize the return on those dollars, which is increasing the impact on our communities. Sounds like Effective Altruism to me!

For example, one of his projects is focused on using tech to simplify access to benefits. This sounds like something the government should do! But it also sounds like something that the government is not GOING to do, or do efficiently (basing my assessment on previous experience, here). Furthermore, any nonprofit that decided to take on this task outside of their core philanthropic mission would have to use overhead dollars to do so… a fact that may reduce their ability to raise additional funds in the future due to the misperception that overhead dollars make nonprofits less effective.

Is this a place where private philanthropy can have meaningful impact? Absolutely. Is it a space that is likely to be filled if someone like Hoffman (with money and technical expertise) does not step in? Unlikely. Is Hoffman pursuing a personal agenda here that will have an outsized impact on policy and politics? I highly doubt it, although I suppose it is possible.

But is it a space that will have a concentrated, major impact on the individuals who are trying to understand their benefits? You bet. The dollars spent in this arena will have a significant return on investment in terms of increasing access and reducing confusion associated with benefits, and the scale of the potential audience is massive. Very cool.

Hoffman also believes that so called Capitalist Philanthropy is neither good nor bad… it is gray. Hear hear! There are always examples of both positive and negative infusions of cash into specific philanthropic projects. One individual pouring billions of dollars into a highly political nonprofit that aligns with their worldview can naturally be seen as a negative… by persons who support opposing causes. It will be seen as positive by those who identify with the cause. Luckily, there is plenty of money on both sides of the aisle, with the pendulum shifting over time as a reflection of our culture. Does it matter that this private philanthropic money is not distributed according to popular vote? I don’t think so. I believe that it is up to each individual to decide how to spend their hoard according to their values. Because we do not all have the same priorities and values, we will not all spend the same. And that is amazingly awesome!

Which is all to say that I was highly impressed with Hoffman’s approach. It resonated strongly with me and the purpose of this blog. Using your business savvy and technical (or other) skills to increase the impact that your dollars have on our communities is the whole point! Hoffman is both growing and giving his hoard. Well done, sir.

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