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Philanthropy can reduce inequality

- William Gumede

The act of giving by business, and wealthy and skilled individuals can make important contributions to solving our pressing problems.

This is in light of the failure of the state, continuing deep levels of poverty, unemployment and inequality.

Philanthropy could be divided into three basic forms: giving by companies, wealthy individuals and ordinary citizens. In many emerging democracies and markets such as South Africa, corporates and rich individuals, may sometimes have acquired their riches on the back of exploitation of the poor, through state capture and even corruption.

Philanthropy can lead to greater social solidarity between the well-off and the poor, trigger positive social change, and overall make citizens more resilient in the face of state collapse. The act of giving can be described as a form of active citizenship.

Funding from philanthropists improves public service delivery where the state fails. It can improve policy-making, provide new ideas to tackle complex problems and give the issues of the poor, marginalised and minorities greater prominence.

It can help reduce economic, social and political inequalities - across race, class and gender. But it can also reduce civic inequalities of voice, access and participation between the poor and the better-off.

It can potentially strengthen civil society - a strong civil society strengthens democracy, public service delivery and accountability of public and elected representatives.

Off course, philanthropy, especially big philanthropy - giving by large companies and very wealthy individuals - also potentially has its drawbacks. The unequal power, influence and money between the wealthy and the ordinary citizen could lead to the marginalisation of the ordinary citizen in civic life.

In fact, the disparities in wealth between the rich and the poor, especially in new democracies such as South Africa, could cause “civic inequality”, the inequality between the ability of the rich and the poor to get their voices heard, to participate in public life and access resources.

Such “civic” inequality comes on top of the already economic, social and race inequality between the wealthy and the poor. The wealthy can disproportionally influence society’s priorities. Wealthy donors can often side uncritically with corporate interests, which may be inimical to those of the poor.

As a case in point, big global philanthropists - who have more money in many cases than individual developing countries, now often determine the policies and priorities of African and other developing countries.

Such big global philanthropists in some cases support groups, forms of democracy and market economies which are palatable to Western governments and interest groups, but which are not necessarily useful to recipient countries.

Unlike governments, wealthy donors are often beholden to public, democratic institutions’ and civil society scrutiny.

This means that wealthy donors are often not adequately held accountable. It is often difficult for the public to surmise the funding motives of wealthy donors.

Many wealthy donors are often not responsive to the needs of the communities they purport to fund. Ironically, Peter and Jennifer Buffett, the son and daughter-in-law of the US entrepreneur Warren Buffett, and wealthy philanthropists in their own right - have warned that philanthropists like themselves may engage in “philanthropic colonialism”. This is the tendency of wealthy donors to think they know the needs - and solutions - of the communities they fund better than the recipients.

Nevertheless, while the focus is often on big philanthropy, giving by ordinary citizens, or citizen philanthropy, is as important. Citizen giving involves ordinary citizens giving amounts they can afford to good causes.

But citizen philanthropy does not only mean giving money, but offering one’s time and skills to help the destitute.

South Africa needs to reinvigorate a culture of citizen philanthropy - which was there in the 1970s and 1980s during the apartheid era.

Then, in many poor communities, conscientious local community members selflessly helped others, sharing the little they had with others more destitute, and providing a shoulder to lean on to those in despair.

In the democratic era, many citizens have withdrawn from philanthropy, arguing that the “legitimate” state should now step in to help the vulnerable. Yet, as state failure increases, leaders that promised much are now becoming increasingly self-serving and many democratic institutions that are supposed to protect the vulnerable are blunted, big corporate and wealthy individual, and citizen philanthropy is now more needed than ever.

Many citizens feel they do not matter, have little impact, and cannot contribute to change. This is not true. Every little bit helps.

The black middle class questions whether black professionals should become more engaged in philanthropy.

The black middle class entered the market economy in 1994, after having been prohibited from owning property, deprived of quality education and high-end jobs because of Bantu education and the apartheid jobs colour bar.

They build their post-apartheid assets - mortgages, vehicles and furniture using debt. However, state failure has meant that they are paying an additional premium for private schooling, health and security, as well as paying higher interest rates on everything from insurance to car loans, because most had no credible financial history, collateral and income in the pre-1994 era.

In addition, many black middle-class individuals have to pay a black tax - paying for the upkeep of poorer cousins. Not surprisingly, many will baulk at providing more “philanthropy” to those unrelated to them. Nevertheless, South Africa needs a new generation of black middle-class philanthropists.

Young black professionals should also get more involved in civic engagement - donating to and volunteering in charities and civil society organisations, and helping the vulnerable outside one’s immediate family circle.

Older, but lapsed activists who were involved during the Struggle, and who may now have become disillusioned should re-engage - sharing their skills to help others.

Currently, solidarity across race, class and ideology is often absent in South Africa. Some white middle-class citizens either argue there is now a black government that should be looking after its “own”, that black capitalists should help, or feel its “patronising” to help poor blacks. Some black capitalists also say now that there is a black government, individual black people must pull themselves up by their own bootstraps.

The lack of social solidarity between the rich and poor undermines social cohesion.

Black political capitalists, many who ironically made their money through political connections in the ANC and the state, through BEE and state tenders, are rarely giving. Furthermore, black political capitalists and traditional white capitalists are increasingly moving money to “safe havens” abroad.

But big corporate and wealthy individual philanthropists who give must do so in more effective ways. At present, many of them have not often focused on social justice issues, causes and organisations.

They often also shy away from supporting programmes strengthening democracy, for fear of being seen to anger the government. They often also do not focus on reducing inequalities - of opportunity, race, gender, class and opportunity.

Yet, boosting social justice initiatives, democracy institutions and reducing inequality are at the heart of strengthening citizen and society resilience.

But big corporate and wealthy individual philanthropists sometimes side uncritically with “big” interests - such as organised business, on policies which may undermine the poor.

They are often also not responsive to the communities they purport to serve. Yet philanthropists must help people who have identified their own needs to come up with their own solutions.

They are also not transparent about why they choose certain priorities, whom they fund and the reasons for not supporting others.

In a democracy, big corporate and wealthy individual philanthropists must also be publicly scrutinised. This will improve the impact of their philanthropy.

William Gumede is Associate Professor in the Wits School of Governance. This article was originally published in the Sunday Independent. Read the original article.