A colleague forwarded an excellent article by Peter Buffett (son of the “Oracle of Omaha” but also someone with his own list of impressive achievements) in the New York Times. Peter Buffett critiques what he calls the “Charitable-Industrial Complex”: a global feel-good industry in the business of alleviating guilt.

New York Times: The Charitable-Industrial Complex

Ironic illustration from the op-ed

©2013 The New York Times Company

The failures of present day large, organised philanthropy, Buffett argues, extend beyond just naively transplanting unsuitable ideas (“philanthropic colonialism”) to new places. Particularly the business-infused variant of philanthropy feeds a desire for cheap “conscience laundering”, making the rich and powerful complacent about their own part in creating social problems. Analogously to medieval indulgences, the Charitable-Industrial Complex promises easy absolution from wrongs committed in the pursuit of profits:

As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering” — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.

The Buffetts aren’t exactly known for mincing their words. Warren (the investor and father) is known for his television statement “there’s been class warfare going on for the last 20 years, and my class has won.” (See also: the Daily Show’s take.) “Derivatives are financial weapons of mass destruction” – also Warren B.

In the Middle Ages, divine punishment could be averted by charitable donations.

Image: public domain

Continuing the family tradition of laying the finger in the wound, Peter B.’s criticism touches something fundamental: business has taken over the world of charity. The present wave of philanthropy follows an unabashedly capitalist ethos, and Buffett specifically singles out microfinance as a negative example.

I now hear people ask, “what’s the R.O.I.?” when it comes to alleviating human suffering, as if return on investment were the only measure of success. Microlending and financial literacy (now I’m going to upset people who are wonderful folks and a few dear friends) — what is this really about? People will certainly learn how to integrate into our system of debt and repayment with interest. People will rise above making $2 a day to enter our world of goods and services so they can buy more. But doesn’t all this just feed the beast?

Indeed, microfinance as the global development intervention du jour stands as an emblem for making a profit to work with the poor – or working the poor to make a profit. It has fueled an even more encompassing ideology of resolving social problems through “full financial inclusion“. Someone of Buffett’s stature and experience in the philanthropy world openly asking the obvious question cui bono? is an important challenge to the industry’s self-image. But it seems likely that if Westerners do grow tired of microfinance at some stage, they may move onto one or another of the countless even more diffuse conscience-cleaners currently on offer. Slogans promising innovative solutions for world improvement at the donor-investor’s fingertip have mushroomed in recent decades: venture philanthropy, social business, philanthrocapitalism, triple-bottom-line entrepreneurship, etc.

All this talk of private philanthropic abundance undermining development and poverty reduction, thankfully, reminds me of my (almost-forgotten) commitment to review a great book by Nik Barry-Shaw and Dru Oja Jay. I hereby vow to review Paved with Good Intentions: Canada’s Development NGOs from Idealism to Imperialism for the benefit of our readers, very soon.