Rising child poverty – what role does philanthropy play?

As child poverty in the UK rises, it's time to ask about a century of charitable giving: does philanthropy just exist to protect a system which makes some people very rich?

Edge Fund
13 September 2013
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Oxfam released a report yesterday predicting that Government cuts will result in 800,000 more children living in poverty by 2020. This supports another recent report on inequality and disadvantage, which shows that the situation for children has not improved in nearly 50 years. Today 3.6 million children are growing up in relative poverty, compared to 2 million in 1969. This figure is expected to keep rising.

On the other side of the coin, currently we have over 600,000 millionaires in Britain, 10,000 of whom have wealth exceeding £19 million. The number of millionaires is expected to grow by a third by 2020, reaching 826,000. That’s right, we have rising numbers of both millionaires and children living in poverty. And what’s more, while poor families struggle to get by, most millionaires don’t even consider themselves to be wealthy.

Our economic system is failing us. Crisis, the charity for homeless people, recently said we live under an "anti-human system" that "treats people as commodities, to be exploited and abused and thrown away and trashed if no profit can be made out of it". Even the wealthy are beginning to see that our economic system needs a serious shake up. In a survey of wealthy individuals, over 35% of those aged 18-44 agreed with the statement that ‘capitalism seems to be flawed’. But it seems people are still scared of talking about capitalism or daring to believe we could create something better.

It might be a surprise to some that after 50 years and many millions of pounds of donations to charity, there’s been no improvement in child poverty. Surely charity is one solution to poverty? There is, of course, a strong link between capitalism and philanthropy, not least the fact that much of the latter is only made possible by the former. This leads to the question; can we ever expect philanthropy to eradicate poverty? What are philanthropists aiming to achieve?

In the book Philanthro-capitalism, which refers to the growing trend of applying business strategies to philanthropy and charitable work, the authors make an interesting point:

Each past boom in giving was associated with massive wealth creation linked to innovation in business, and also to social upheaval that left big problems to solve. Often this was accompanied by political unrest that seemed to threaten capitalism, adding urgency to the need for a philanthropic response.

In other words, when capitalism is thriving but comes under threat due to people seeing the links between capitalism, poverty and inequality, capitalists give away some of their wealth in an attempt to convince people that capitalism serves the poor. It does not. And neither does philanthropy in many cases as often it’s controlled by those with no interest in changing our economic system, as it's what allows them to build their empires. A high profile example concerns one of the first and largest private foundations, the Rockefeller Foundation, which was subject to investigations in 1915 where critics pointed out that its objectives included justifying the status quo, appeasing badly treated workers and promoting anti-union views. Following investigations the United States Commission on Industrial Relations identified the new philanthropic foundations as “thinly disguised capitalist manipulation of the social order”. Has anything changed?

There are certainly plenty of corporations today that use charitable giving to distract people from their unethical practices and create a positive public image for themselves. Often they choose causes popular with the public, such as health. The focus of individual philanthropists is very different. The most popular causes of the rich British philanthropist are higher education, arts and culture, and international development. This is very much in line with findings in the US, prompting Ken Stern to comment that the US charity system is “fundamentally regressive, and works in favor of the institutions of the elite”. He reveals that “not one of the top 50 individual charitable gifts in the US went to a social-service organisation or to a charity that principally serves the poor and the dispossessed”.

Two of the most popular beneficiaries for rich philanthropists in the UK are Oxford and Cambridge universities. This is hardly surprising when you consider that together they have produced 762 alumni worth £20 million or more. Could it be that rich philanthropists support universities because they produce the next generation of capitalists and keep the whole system going?

Philanthropy tends to be undemocratic, elitist and unaccountable, a tool with which the rich can mould the world to their pleasing. In the most part rich philanthropists aim to further the interests of the elite, and to appease the critics of their extreme wealth by offering short-term solutions to the symptoms of poverty, without touching the underlying causes. The big charities – often run by professionals speaking on behalf of others – dependent on the funds of corporations, government and the rich know they’ll loose their funding if they demand real change, causing some to criticise them for playing a part in maintaining the status quo.

We need a different plan. There’s a growing movement of donors and foundations who are addressing some of these issues by putting decisions into the hands of communities and funding work that aims to challenge and replace the systemic causes of inequality. Let’s strive for a world where poverty and inequality cannot exist, which means building a just economic and political system, from the bottom up. It also means philanthropy will not exist in future, because it can only exist in an unequal world.


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