Steve Siebold thinks that only the rich should engage in charitable giving. Here is why he is completely wrong.

Credit to Nonprofit Quarterly for the article that they published entitled “Is Charity among the Less Moneyed Just Plain Foolish?” I have no doubt that by repurposing the misguided musings of Steve Siebold on the morality of philanthropy published in Business Insider, they were intentionally baiting a response from people like me. Evidently, that strategy has proved to be fruitful.

The crux of Siebold’s argument is as follows; Only the rich should concern themselves with philanthropy as they are in a position to give without it being any great personal sacrifice. The idea that people should go without anything that brings them comfort in order to help others is merely “socialistic philosophy…rooted in the belief that everyone is his brother’s keeper.” He argues that energy spent on charitable activity is energy wasted that could be better utilised in the pursuit of wealth. In this view, the generosity of ordinary people is pointless as, “while noble, [it] won’t touch anywhere near the number of people … [as] creating a new product or service”. The best approach according to Siebold, is “to get rich first, get what you want, and then help others in any way you wish.”

The idea that it is possible to bring about social good through profit generating business activities – and even that this might generate greater gains than philanthropy – is not controversial. Job creation is clearly positive and economic growth has lifted millions, if not billions out of poverty. But dogmatic belief that the pursuit of wealth at all costs is necessarily universally beneficial is wilfully self-serving and does an enormous disservice to those who manage to make their fortune though business and investment activities which were designed to have a positive impact from the beginning.

Siebold’s vision of the ideal philanthropic journey as being one that starts after wealth has been generated was characterised by Peter Buffet in an Op-Ed in the New York Times as a form of “conscience laundering” in which the wealthy give money to charitable causes to redress the damage they cause in their business activities. This, according to Buffet amounts to “searching for answers with their right hand to problems … created with their left”.

But even if we accept that there are some areas where business can have a greater impact than philanthropy, it is clear that there are limits to that model. No ethical investment strategy or tech start-up is going to challenge the practice of female genital mutilation in Africa and the Middle East or challenge corruption in local government in Nigeria as affectively as well resourced community led activism and education that is connected to transnational advocacy networks. Fundamentally, philanthropy is not about money, it is about the right of the individual to use their resources to back a cause in which they believe strongly. There is tremendous power in such actions.

Philanthropy, or plain old charitable giving, is unavoidably political. What can be more political than giving your money to bring about change and asking for nothing in return? In recent years the term “political” has been conflated with partisan political campaigning. In almost all countries it is illegal for most forms of not-for-profit organisation – particularly those for which donors can claim tax incentives – to engage in the later. Not-for-profits allow citizens to engage in a more communitarian and individualistic kind of politics which exists outside of, and pre-dates political parties. The idea that such engagement should be discouraged for the majority of people on the grounds that it is “socialistic” is offensive to the basic freedoms on which democracy is built – not to mention socialists. In fact, as a force for checking the power of the state, one might assume that mass engagement in charitable giving would be appealing to proponents of small government such as Mr. Siebold.

In a world where there is growing concern about unchecked income inequality – a concern being highlighted by renowned “socialistic” institutions like the World Economic Forum and the International Monetary Fund – this hardly seems like the time for a member of the 1 percent to be trying to persuade the 99 percent to renounce the power that they yield to reshape the world through their generosity.

A healthy culture of philanthropy should be counterbalancing. A large donor base of ordinary people may never be able to provide the amount of resources as the super-rich, but they add legitimacy to not-for-profit organisations which allows them to carry the civic clout necessary to drive change. Furthermore, whilst ordinary people feel compelled to give, they create a palpable sense of responsibility for those with much more money to give generously. On the other hand, those with extreme wealth are able to provide resources on a scale that can enable strategic,

impact focused approaches and in doing so, they can create a sense that giving is an aspirational activity that the middle classes will want to emulate. A virtuous circle.

But even the above argument for encouraging ordinary people to give undervalues their potential contribution. The world is seeing one of the most important socio-economic transformations in history. The OECD estimated back in 2010 that the number of middle classed people in the world was set to grow by 165% and their spending was set to increase by 161% by 2030. If in 2030, this enormous population of financially comfortable people were to dedicate just 1% of their spending to charitable endeavours – less than half of what US citizens give – that would generate more than half a trillion US dollars in today’s money per year. The Future World Giving project is dedicated to trying to persuade governments in transitional and developing economies to focus on that potential. A mission not helped by the comments of people like Steve Siebold.

Adam Pickering