“Charitable-Industrial Complex” Huh?

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I grew up poor. Let me be clear. We were not welfare poor, but we were food-stamp poor.

Because of my upbringing, one of the things I now enjoy in life is reading articles that beautifully demonstrate rich, liberal guilt. One such article recently appeared in The New York Times: “The Charitable-Industrial Complex” by Peter Buffett, son of multi-billionaire Warren Buffett.

In his op-ed article, Peter describes what he sees as the problems of “Philanthropic Colonialism” and the “Charitable-Industrial Complex.” It could have been amusing if it was not so irresponsible and potentially dangerous. It could have even been a worthwhile piece if it had demonstrated any serious intellectual thought. I encourage you to read it.

George E. Wolf, a consultant, called my attention to the Buffett op-ed piece when he started a discussion in the Philanthropy Network Group on LinkedIn. I thank him for starting the conversation and inspiring this blog post.

Guilt Washing Station-NY TimesIn case you don’t believe me about the article containing a big dose of rich, liberal guilt, consider the graphic that accompanied the piece, which I’m presenting here (left).

Peter Buffett has a very comfortable life thanks to his capitalist father. Now, after reaping the enormous benefits of his father’s hard work and, I suspect, his father’s good name and connections, Peter complains about the ugly side of capitalism. While he states he’s not opposed to the capitalist system, he spends a great deal of time in his article complaining about the very system that has given him his comfortable life. 

Sadly, he does little to propose an alternative. The only exception is a rather vague suggestion that we pursue “humanism,” though he fails to define the term or provide any examples of humanism in action.

Peter is entitled to his opinions. He’s also entitled to be philanthropic, or not, in whatever way he chooses.

However, as an intellectual exercise, his article is sorely lacking.

For example, he asserts that there is a growing “charitable-industrial complex.” To support his claim, he looks at the $316 billion in philanthropic support contributed in the USA in 2012 and the growth rate of 25 percent in the number of American nonprofit organizations between 2001 and 2011. So what?

Overall, philanthropy in the USA has remained at approximately two percent of GDP ever since data was first collected. Therefore, it would seem that the economic impact of the nonprofit sector has not really seen the wild growth that Peter asserts. That’s probably because a massive portion of the registered nonprofit organizations in the USA are either dormant or tiny, often community-based groups.

Peter also fails to consider the enormous good that the nonprofit sector does. He also fails to consider how a robust nonprofit sector helps create a civil society and stabilizes a democracy. (See my article about how the charity sector has helped bolster Brazil’s democracy.)

While Peter’s op-ed piece was intellectually weak, it nevertheless did contain some good points. For example, his comments were valid when he wrote about do-good charities that offer arrogant solutions with little regard to the law of unintended consequences. For a more meaningful exploration of that point, I suggest you read a guest post on my blog from Isabelle Clérié (@iclerie): “Haiti: A Young Professional’s Compelling Lessons for All Nonprofits.”  Or, read Mighty Be Our Powers by Nobel Peace Prize winner Leymah Gbowee.

The nonprofit sector is not perfect. Capitalism is not perfect. However, Peter Buffett failed to provide any evidence that we need to scrap either the nonprofit sector or capitalism as they exist today, though it does not stop him from suggesting we should.

Sadly, he also failed to offer any suggestions for how we might instead simply improve the current system. He offered only the mildly informed musings of a privileged, rich, white guy. By the way, would The New York Times have published his unsupported comments if he wasn’t Warren’s son?

By contrast, my friend Isabelle, a young Haitian woman without any of Peter Buffett’s extraordinary advantages, has done far more to get a sensible conversation started. By the way, she’s also rolled up her sleeves and is actually working to do something about the problems Peter only whines about.

Enough rich, liberal guilt. Let’s have a serious conversation about how we can make the nonprofit community more effective and the world a better place.

If after reading Peter Buffett’s op-ed article, you find yourself agreeing with him, I hope you’ll take the time to reconsider your view.

On the other hand, if you agree with me, I hope you’ll share this post with others. Since my dad was not Warren Buffett (by the way, not a complaint), I do not have the media access that Peter Buffett has. So, I’m relying on you to help spread the word that the nonprofit sector does a massive amount of good, without the significant harm that Peter Buffett suggests. Will you help spread that message?

That’s what Michael Rosen says… What do you say?


UPDATE (August 3, 2013): There has been a great deal of discussion on social media and the Internet about Peter Buffett’s op-ed piece. So, I thought I’d share some interesting links with you:

You can Follow Peter Buffett on Twitter. Buffett has been paying attention to the reaction to his op-ed piece and, to his credit, has been engaging both those who agree and disagree with him.

You can engage in a Google+ conversation started by Wayon Vota. Buffett has been following the conversation and has contributed to it as well.

Because not everyone reads the blog comments, I want to highlight a link provided by Lisa Slater. It will take you to an article by Simone Joyaux. While I don’t agree with everything Joyaux says, I don’t completely disagree with her either. Interestingly, she makes the case that Buffett attempted, but she did so more effectively, constructively, respectfully, and engagingly.

Benjamin Riley has written an excellent blog post critiquing Buffett’s op-ed article. I encourage you to read “Refuting Peter Buffett’s ‘New Code'”.

I encourage you to share your thoughts below and any links on the subject you feel might be worthwhile.


10 Responses to ““Charitable-Industrial Complex” Huh?”

  1. Bottom line: I have no problem with philanthropy that generates as a conscience salve — or any other reason. Philanthropy must be viewed from the perspective of the recipient. What matters is that they are helped. Their lot is improved. The world is repaired, if only a bit at a time. What the philanthropist thinks and feels is of little import. We don’t want to throw the baby out with the bath water. Just because change is not happening on a massive scale does not mean we should stop trying. Of course, there are many inefficiencies in the current system. We need to reduce these, collaborate more and avoid duplicating infrastructures. The more we can focus resources — and philanthropy — to address root causes of problems, the better. But there will always be a need for band-aids too. It’s just part of the human condition.

    • Claire, thank you very much for your comment. After just responding to someone who felt I missed Peter Buffett’s point, it was wonderful to hear from you. Again, thank you!

      Your comment reminded me of Loren Eiseley’s story about starfish:

      “While wandering a deserted beach at dawn, stagnant in my work, I saw a man in the distance bending and throwing as he walked the endless stretch toward me. As he came near, I could see that he was throwing starfish, abandoned on the sand by the tide, back into the sea. When he was close enough I asked him why he was working so hard at this strange task. He said that the sun would dry the starfish and they would die. I said to him that I thought he was foolish. there were thousands of starfish on miles and miles of beach. One man alone could never make a difference. He smiled as he picked up the next starfish. Hurling it far into the sea he said, ‘It makes a difference for this one.’ I abandoned my writing and spent the morning throwing starfish.”

  2. Here’s where I agree with what he said, Michael: he’s pointing to a cultural system in which we – the collective we – have less and less responsibility for those in need. And in which philanthropy is expected to close all the gaps.

    I’m not going to complain about anyone who is generous to charity. We obviously want to expand that circle. But I do think that every single citizen is responsible – beyond those who contribute to nonprofits. And we can’t allow our sector to become a convenient excuse for the 1% to continue on a path that puts more people than ever in poverty. I think that’s a good part of where he was going.

    In other words, philanthropy is not a substitute for our collective responsibility to see that every citizen has enough to eat, education and a safe home. It’s a critical part of our system. But it’s not the whole system. It can’t be.

    See Sr. Simone’s testimony before Congress. She lays it out well, I think.


    • Mary, thank you for sharing your thoughts and for also sharing the link to Sr. Simone’s testimony before Congress. I’ll refer you to another Simone, Simone Joyaux. Lisa Slater, in her comment here, provided a link to Joyaux’s article which I encourage you and others to read. She made many of the points that Peter Buffett tried to make, only she did so in a more compelling and engaging way. While I disagree with much of what Buffett stated, I did not disagree with it all. I found even more that was worthy of consideration when I read Joyaux’s article though I also found some with which to disagree.

      My biggest problem with Buffett is his stated belief that the “charitable-industrial complex” practices “philanthropic colonialism” to maintain the status quo. I think that assertion is flat-out wrong in many ways. I also believe that such an inflammatory, insulting assertion regarding an entire sector shuts down any hope of meaningful dialogue rather than stimulating such a conversation.

      • I agree it’s not at all true across the sector. I think it’s one of those things that’s very true in some areas. But I’d bet they’re a small part of the whole.

        I share your concern about the impact, too. Between ratings systems that use myopic data to articles about for-profit solicitation firms to this, there’s a real risk that many people who desperately need what our sector has to offer will suffer. That’s bad.

        You hit the nail on the head, though: dialogue. That’s the key!

  3. Hi Michael – Thanks for offering your perspective on this. I agree with much of what you say here (for instance, I think we should focus on how to improve the current system and give successful people opportunities to make the world a better place through philanthropy) and think it’s an important and necessary counterpoint to Peter Buffett’s article.

    However, some of what he said was reminiscent for me of Simone Joyaux’s article “Philanthropy’s Moral Dilemma.” (Which folks can find here: http://www.simonejoyaux.com/downloads/PhilanthropysMoralDilemma.pdf) I think that it’s possible for nonprofits and philanthropy to replicate systems of inequality, without impacting the systems that create and perpetuate that inequality. If someone makes their money running a business that doesn’t pay its workers a living wage, does making a $1 million gift to a food bank or low-income child care program even the score? What if someone makes their money by running a tobacco company, and then makes a gift to support lung cancer research?

    I think it’s important to keep asking these questions about how to best move towards the kind of world we want to see, and I do think philanthropy has a role to play. But I think we also need to be thoughtful about how we position philanthropy within the larger landscape of social justice and social change.

    • Lisa, thank you for taking the time to comment and for sharing the link to the article by Simone Joyaux. I think that Simone has very nicely made the points that Peter Buffett sought to make. Unlike Buffett’s piece, Joyaux’s was provocative without being inflammatory or insulting. Unlike Buffett’s piece, Joyaux’s was intellectually mature and supported. Unlike Buffett, Joyaux has a great deal of experience in the nonprofit sector and that experience helped to make her article much more compelling.

      Based on her article, I know that I could have a fascinating, intelligent, respectful, and thought provoking conversation with Simone about this subject. However, Buffett’s assertion that the “charitable-industrial complex” practices “philanthropic colonialism” to maintain the status quo shuts down any hope of meaningful dialogue.

      Don’t get me wrong. There is still much in Joyaux’s piece with which I disagree. However, she engaged me in a way Buffett did not. She made me think. She made me rethink my own positions. Buffett did not.

      As I’ve stated before, we need meaningful discussion about how the nonprofit sector can more effectively improve the human condition. I’ll give Joyaux a thumbs up on her article. However, I’ll continue to give a thumbs down to the Buffett op-ed piece. Buffett can learn a thing or two from Joyaux about engagement and dialogue. I hope he reads her article.

  4. Michael, thank you for your world-class post. You have some real, shall we say “fortitude,” my friend. Not easy territory you’ve staked out here. Sure to ruffle some feathers.

    The concepts of “guilt” and “inequality” seem to be hot buttons in philanthropy these days. In reading some comments to your post, it’s the first I’ve been informed that an important objective of philanthropy is to eliminate “inequality.” I thought the purpose of many charities was to alleviate suffering and lift people up so they can stand on their own feet, not to achieve a collective social result. But then, I’ve been “out of it” for quite a while.

    Thanks for the link to Simone’s article. A real eye opener for me. Loved the Zinn quote, one I can embrace (not in the way you might expect). One kindness deserves another. Here’s a link for you folks: http://ricochet.com/main-feed/American-Catholicism-s-Pact-With-the-Devil . I know, historically, the lure of socialism has been very seductive for many charities and religious institutions, particularly the Catholic Church (as witnessed by the good Sister in the prior comment).

    In the 1930s, many priests and nuns throughout the world embraced the compelling case for socialist redistribution. If “greedy” individuals would not give voluntarily to alleviate the suffering of the destitute, would not Christ have wanted us “collectively” to mandate redistribution to relieve pain, suffering and achieve social justice and equality? That is why you see “liberation theology” to be a common and perverted strain of religious thinking particularly in Latin American countries — a kind of Christianized Marxism.

    Many “believers” in this country, Christians, Jews, and Muslims, similarly believe it is the central role of government to fairly and equitably distribute national resources. Here is where “guilt,” either secular or religious, liberal, socialist, what have you, meets the hard edges of unlimited governmental power. Ultimately, I do not see how philanthropy in a free market can coexist with socialism, even incrementally imposed as we are seeing here in the U.S.

    In philanthropy, gifts should be given voluntarily, not out of a sense of guilt or imposed responsibilty, for a specific purpose to a charity the giver believes will actually produce results. The recipient of a given charity accepts the charity, hopefully with gratitude and not a sense of entitlement, and with the ambition (if they are physically capable) to one day be self sufficient. Indeed, the giver, in a stewardship role, holds the charity responsible for achieving results, one of which (one would hope) would not be a condition of perpetual dependency. If the giver does not like the results, he or she can either stop giving or redirect their generosity to a charity that can achieve demonstrable results.

    Putting government in the role of Grandaddy of Charities may sound like an efficient means to a well intentioned end. But, there are some obvious conflicts and consequences. First, the well meaning stewardship of the individual is replaced by the process of a central bureaucracy. The “giver” (taxpayer) is completely separated from the recipient of the charity so there is no real accountability. Funding is not voluntary, but mandated by force of law. Growth of government programs through the accounting fraud of “baseline budgeting” can be mandated. Moreover, results are seldom defined in terms of the “number of program recipients who no longer need assistance and are now self-sufficient,” rather success is defined by the additional numbers of people enrolled in a program. Indeed, the most pernicious dimension of these great social safety net programs is they create dependency. Sadly, I have concluded much of this is by design.

    Dependency insures the loyalty of a voting block. Is it a surprise to anyone that the government actually advertises programs that redistribute income: SNAP, SSI — even free cellular telephones? Indeed SNAP has been advertised by the FDA in Mexico (en Espanol, of course) as a way of welcoming new “immigrants” to this country. In this environment, is it a surprise to the charity community that the ruling parties are considering the elimination of the charitable deduction? Two reasons: They need the money themselves to redistribute, and secondly they believe your missions should be subsumed into their bureaucracies and control. Some of them may actually despise private philanthropy.

    A true reality check would show that free enterprise — free people pursuing their individual dreams and aspirations, with the right to freely associate and profit from their initiative and ingenuity — has been the greatest engine in this history of the world to lift people from poverty — by their own hands.

    • Steve, thank you very much for your in-depth response. Yes, I did have to think more than twice about whether or not to write this piece. Taking on someone of Peter Buffett’s extraordinary privilege is certainly risky. However, he invited a conversation, so I’ve decided to engage in one. Fortunately, while one person (not here) took a bit of a figurative jab at me, the conversation has been overwhelmingly respectful.

      You made several interesting points. In particular, your thoughts about the tension between the government and private sectors was right on target. Since Buffett offered zero ideas about how to affect the change he vaguely described, I have no idea what he thinks the role of government should be v. the private sector. However, I suspect he trusts government a bit more than what he calls the “charitable-industrial complex” that practices “philanthropic colonialism” in order to maintain the status quo.

      To underscore that particular point of yours, I want to briefly share a few thoughts:

      1. For a very long time, Communist China did not permit nonprofit organizations (non-governmental organizations) to exist. The government felt allowing such organizations would a) be an admission that the government was failing to provide a particular service, b) decentralize power, and c) lead to a loss of power and control for the government. During the period when nonprofits were prohibited, the Chinese government was not exactly known for cherishing individual liberty. As the Chinese government has reformed (and become more capitalist), it has cautiously allowed the creation of nonprofits. While there are still human rights abuses in China (just ask the people of Tibet), those abuses are nothing compared to the days of Mao. As in Brazil, nonprofit organizations in China are playing an important role in developing a civil society and bringing about change.

      2. Brazil’s first attempt at democracy ended in a military coup. It was easy for the military to take over and deprive civil liberties because, even under a democratic government, power remained centralized with the government restricting nonprofit activity. When democracy returned to Brazil, the government encouraged the creation of a robust nonprofit sector to help meet the needs of the nation. In the process, power was decentralized. The result has been that Brazil has been one of the world’s strongest economies and has seen a drop in economic inequality. And its democracy continues.

      3. Marvin Olasky, in his superb book The Tragedy of American Compassion (http://astore.amazon.com/mlinn-20/detail/1433501104), observes that whenever government takes a more active role in trying to solve social problems, the private sector withdraws. He adds, this is particularly unfortunate since the private sector (charities) often deliver social services more efficiently and effectively than government. His analysis is based on an examination of US history from the colonial to modern periods.

      Government certainly has a role to play. Growing up, my family received much needed meaningful help from the food stamp program. However, as the founder’s of the nation wisely planned, government should be limited. In China, in Brazil, and even in the US, we have seen that a more active government means fewer liberties, not more.

      With limited government comes greater responsibility for every citizen. And we need to carefully consider what our role will be. For its part, the nonprofit sector needs to engage in a respectful, meaningful dialogue about what it can do to more effectively improve the world.

      Sadly, Peter Buffett’s op-ed piece is not a good catalyst for that conversation for reasons I’ve already expressed. While I know you disagree with much of Simone Joyaux’s article, I think you’ll agree that it better expresses the ideas that Buffett attempted to express and did so without the inflammatory insult to the entire nonprofit sector.

      Interestingly, the readers who have commented here have varying views of the Buffett piece as well as the broader issues. I’m honored that folks have felt comfortable enough to share their varying views here, and I’m further pleased that the conversation has been respectful and constructive.


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