Philanthrocapitalism and new clothes

One of the frustrations of recent events I’ve attended has been the common assumption that what comes from business into the social sector must be "better": venture philanthropy will revolutionise philanthropy, coherent investment-style metrics will revolutionise social impact, risk investment, social stock exchanges and loan funds will provide liquidity for the sector, and social enterprises will scale up in order to meet the challenges they face. Etc.

As regular readers of this blog will know, SSE‘s view of social entrepreneurship is an inclusive, broad-based one, not one that insists that social entrepreneurs must "have large-scale impact" to warrant the label, nor one that insists that social entrepreneurs must "earn income and trade", nor one that thinks impact is only delivered by an organisation’s services, and not also through its operations in the round. For us, at its simplest level, social entrepreneurship is about entrepreneurial individuals applying themselves for social / public benefit rather than solely personal gain.

Further to this, the sector an organisation comes from, its legal structure, or its financing is not a guarantee of efficiency, quality, greater impact, excellence or even, in some cases, competence. Measurement in this sector is more difficult, intangible, and (at times) nebulous than the financial bottom line. Venture philanthropists have a more sensitive, complex role than venture capitalists….and so on. In reality, there should be knowledge transfer and learning between sectors (and always has been); indeed, the action learning process that underpins the SSE programme was originally pioneered in large companies for senior management. And, when ‘business-like’ is equated with more professional or making best use of its money (and people), then no-one has an issue with that either…

But, currently, it has felt rather one way (though I wouldn’t wish to generalise: there are those who have a much more nuanced understanding all along the spectrum): and focusing more on business practice in the social sector, rather than achieving greater social equity and transformation. Hence my welcome for Paul Farmer’s remarks at the Skoll event recently. And hence also my interest in this new book by Michael Edwards: Just Another Emperor? The myths and realities of philanthropcapitalism. It looks at the application of business practices to the social sector / philanthropy in great detail and, as far as I’ve read, speaks much sense, as well as provoking debate. I won’t go on too much more, but would recommend starting with the transcript from the launch downloadable here, and I’ll end this rather long post with a short quote from that which gives you a flavour of the argument:

"[Another] area where philanthrocapitalism claims to make an impact is in
improving the financial and the management capacities of civil society organisations.
However, I’ve always been confused by the way venture philanthropists and social
entrepreneurs differentiate themselves from the rest of civil society on the grounds
that they are “results based” or “high performance”, implying that everyone else is
uninterested in outcomes. Now sure, there are mediocre citizens groups, that’s true,
just as there are mediocre businesses, mediocre venture philanthropists, mediocre
social entrepreneurs and mediocre government departments. So why import the
practices of mediocrity into the social sectors, is Jim Collin’s conclusion, of Good to
Great fame.

What separates good and bad performance has very little to do with
business thinking or involvement in the market. What separates them is whether
they have a clear focus to their work, strong learning and accountability mechanisms
that keep them heading in the right direction and the ability to motivate their staff, or
volunteers, to reach the highest collective levels of performance. There’s no evidence
I know of which proves that business thinking, or business experience, can generate
those advances more effectively than experience in other sectors."


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4 thoughts on “Philanthrocapitalism and new clothes

  1. I think this looks like a really interesting book and I will post more when I have actually read it, but in the meantime …. IT’S COMPLETELY FREE!!!! A great book with really interesting ideas and it is completely free! Someone is finally getting the new economy and is providing their book completely free for download ( What is really interesting is that authors like Paula Coelho are demonstrating that you can generate income by freely distributing their books and massively increasing their readership. Yay Michael 🙂 and I hope this becomes very succesful and encourages more authors to do the same.

  2. Yes – and for those wanting it in hard copy, they can buy it from the Young Foundation here: (they are our landlords, after all…).
    I’m interested in the free-conomy as well. Have downloaded this article by Chris Anderson ( but yet to get round to reading….
    I have to say, though, I’d need Paulo Coelho to pay me to read his books….. ;0)

  3. I agree with your opinion on this matter, but need to correct you on one small matter. Action learning was developed by Reg Revans when he was working for the newly created National Coal Board in the late 1940s. The coal industry, like the rail industry, was in complete collapse, partly due to the Second World War, but largely as a result of mismanagement over the preceding decades in the hands of private owners. Nationalisation was the only realistic option for both these industries. Action learning emerged as a result of managers from different collieries coming together under nationalisation to collaborate in identifying solutions to their problems. In fact the National Coal Board was a cauldron of social innovation – the work of Eric Trist and Ken Bamforth (a Yorkshire coalminer who was my tutor when I was studying at Leeds Universtiy) which led to the concept of “autonomous work groups” and was later made famous by Volvo – and of course there was EF Schumacher, a National Coal Board economist, who went on to write ‘Small is Beautiful’. Infact both Revans and Schumacher did much of their development work in India wokring on social projects. So, action learning could more correctly be seen as the public sector and third sector gift to the private sector.

  4. Spot on Jim….I didn’t express that clearly enough above. The basis for SSE’s action learning programme came out of a mix of Michael Young’s experience and Charlotte Young (our chair’s) knowledge of action learning sets / programmes from within the corporate sector (Thorn EMI, as was). But you’re spot on to say that it was originally developed by Revans in the UK mining industry, which I mentioned here ( many moons ago (!), along with some useful Action Learning links.
    Thanks Jim.