We at HeroHomes.com define “philanthrocapitalism” as “Mother Theresa and Genghis Khan have a business model baby,” and we think that our introduction of this concept at SOCAPGLOBAL, and using our efforts to leveraging military VETrification versus GENTrification to bring about the Great American Renewal and solve such things as the Chicago Neighborhoods equivalent of War Zones on the way to dare say bring about world peace as an example, would at the least spark a valuable discussion and at the most dare say actually fundamentally change things in this so problem filled world for the much better.
Part and parcel we think that philanthrocapitalism can overcome (1) philanthropy’s fundamental problem of endless need forever chasing limited resources and (2) capitalism’s fundamental and ironic problem of it both (a) causing many of the problems that philanthropy aims to fix while (b) hopefully making the capitalist more money at less risk while in the/ir witting or unwitting course getting them to “do the right things.” Also, and particularly in the context of today’s equity discussions/attempts, capitalism leading to large accumulations of excess wealth where a relatively small part of that goes into philanthropy seems to us fundamentally illogical.
Perhaps today’s challenges are actually so great that today’s paradigms in philanthropy and capitalism and their present interfaces are the best that can be done, but we think it’s hard to find an example of either where community-, economic-, citizen-, employment-, environmental-, infrastructure-, tourism-, and housing-development (CECEEITHD) are accomplished in a material, repeatable, risk lowering to free, scalable, unbeatably politically correct, capital efficient, cheap, expeditiously accomplished, self-sustainable, self-financing, and simultaneously accomplished in all these attributes fashion (MRR SUCCESSS).
Note that philanthrocapitalism does not directly involve getting foundations and non-profits to “think more like a business,” because many of the higher goals just do not have market based solutions, although we think any organization can benefit from utilizing the tools and techniques and at the least efficiencies of resource use and allocation that not only come from but are required to succeed in the market, as free as it is or can be. Also note that this discussion will mostly focus on the philanthropy side because we believe that if you can simply offer a capitalist a way not only to “do the right thing” but make more money at less risk they will simply do it.
As for our problems with philanthropy, and we admit upfront that we’ve probably got more than a bit of a dog in the fight and even sour grapes while we say this, we think that without foundations and non-profits having to adhere to the discipline of the market (e.g. every failure can be spun as a “learning experience,” and you actually have to fail a lot over a long period of time to get fired, and unlike “in the real world” rarely do non-profits or foundations get disbanded while businesses trying to achieve the biggest things at highest risks have a near 100% mortality rate) ironically it can lead to more rather than less conservatism and the pursuit and support of so-called “proven” solutions that so far as we can tell have dare say have NEVER led to MRR SUCCESSS at CECEEITHD.
As a preview, if given the courtesy of a session, we intend to propose that some form of market rate discipline, or shall we say statistical significance demonstrated through variability controlled trials, will be brought to philanthropy by not just making optional but requiring by law that up to 50% of foundations’ required yearly 5% or more of the value of their assets distribution will be assigned to applicable program goals based efforts with specific success metrics articulated upfront, and where 1/3 of such 50% go to non-profits chosen by the foundation, the other 1/3 go to for-profits via allowed Program Related Investments by the foundation, and the final 1/3 is randomly distributed to related both non- or for-profit efforts that meet some form of reasonable but as much as possible a minimal screen, and the apples-to-apples judged relative success at achieving said metrics by each of these thirds are independently verified.
While also admitting to the possibility of dog in the fight to even sour grapes, we believe that VC firms and their limited partners should be subject to today’s proposed increase in the capital gains tax if they don’t distribute 33% of their investment funds 1/2 into for-profit entities that they choose in a specific technology and/or market niche and the other 1/2 is randomly distributed into for-profits that also meet some form of reasonable but as much as possible minimal screen, and with there also success or failure being apples-to-apples independently verified.
Yes it is our working hypothesis that the world is so complicated that even with the best intentions and the “best laid plans” and the most strenuous efforts being made, most successes in both the for- and non-profit world when it comes to new paradigm efforts are due to number of shots on goals and randomness. Yet today’s still here massive problems require new paradigms and new individuals and organizations attempting to tackle them. And the above will both give incentives for new and by definition riskier paradigms being pursued. And also through variability controlled trials this approach identify the individuals and organizations that should be trusted with the world’s so scarce financial resources and through a healthy mortality rate of those that can’t beat randomness will free up these resources for newcomers.
Or said another way, does the world really need another hair splitting version of what we call “the High Church of Microfinance” or another food delivery company?