For those wondering what the fuss in Britain is about, a quick recap. Prime Minister David Cameron thinks that government is too big and that the nation would be a happier place if more people gave time and money to sort out social problems through voluntary organisations rather than leaving it all up to the state. As part of this effort, his government has talked a lot about promoting more philanthropy. Yet his finance minister, George Osborne, recently announced a new measure to restrict the tax relief that any single charitable donor can claim to £50,000 ($75,000) or 25% of their income. Cue shrieks of horror from charities and philanthropists, since this would hit the richest donors (who currently pay a top whack tax rate of 50%) who want to give away more than a quarter of their income. According to the #giveitbackgeorge campaign organised by British charities, it is a decision that could cost the voluntary sector up to £1 billion a year. We note, in passing, that British charities have never been so vocal about their love for the rich. The voluntary sector is giving the 1% the best PR they have had in ages!

(Incidentally, the debate may be loudest there, but Britain is not alone in raising the tax subsidy question. Barack Obama’s administration has made several attempts to reduce the tax relief on charitable donations by the rich, though none has yet made it through a deeply divided Congress.)

Much of the debate in Britain is horribly confused, but it has touched on three main issues, each of which deserves to be taken seriously:

1) Does philanthropy deserve a subsidy? Obviously, says the philanthropy lobby. But is it that obvious? Taxes forsaken by the government mean less money to spend on politically agreed priorities, and charitable donations may go to causes that aren’t a big priority for society.  ”[I]t might be preferable for the rich to pay their taxes to contribute to the NHS [National Health Service], schools or tax credits [welfare] rather than to make tax free donations to opera, theatre or, even, other charitable causes”, mused the BBC’s political editor, Nick Robinson.

This makes a good debating point, conjuring up images of wealthy (presumably fur-coated and top-hatted) plutocrats stuffing the mouths of the arts establishment with gold to win prestige points, plush seats and general sucking up. But, on substance, this misrepresents what is really being subsidised by the taxman: most giving goes to health and social causes, not the elite arts. Moreover, back in 2006 Britain went through a whole review of charity law which resulted in it describing a ‘public benefit’ that any organisation must meet to qualify for charitable status. True, such public benefit does not necessarily align with current public spending priorities .But actually that may be a strength of philanthropy, to pick up on causes that are outside political priorities (and most critiques of the current rules defining public benefit boil down to the different personal preferences of the particular critiquer). Nor would it be practical to keep redrawing the definition of how charity delivers public benefit every time political priorities change.

But there is an important lesson for other countries: the effort that Britain has invested in agreeing a public benefit test and funding the Charity Commission to (up to a point) police this test ought to provide some reassurance that the taxpayers’ subsidy is being well used. In other countries, including the United States, that have looser rules on qualification for tax-deductible status, it is harder to justify the status quo. Nor should philanthropists in Britain or elsewhere be complacent. The fact that philanthropy is associated in the public mind more with opera than saving lives says something about the failure of philanthropists to communicate how they are spending their money. This is why one of the pillars of our Good Billionaire Guide is that philanthropists should be effective in their giving as well as generous, including being transparent about what they are doing and why.

2) What’s the tradeoff between paying tax and giving to charity? The whole brouhaha in Britain revolves around a deal struck by the governing coalition whereby the minority Lib Dems agreed to a cut in the top rate of tax from 50% to 45% in return for a crackdown on tax loopholes. The restriction on the tax deductibility of charity is one way that the reduction in the top rate of income tax for the richest can be clawed back.

To understand what this all means, let’s look at a (highly) simplified example. A rich person earning £4 million a year would currently owe £2 million in tax (less, in fact, but let’s assume the 50% rate applies to the entire income). If she gives away £2 million she can reduce her taxable income to £2 million and therefore cut her tax bill to £1 million. Under the new rules (and let’s assume that there’s still a 50% tax rate, for ease of illustration), the first £1 million given away (one quarter of her income) is still taken off her taxable income but the second is not, so she pays 50% of £3m, hence she pays £1.5 million tax. The government’s argument is that under the current rules, by giving away half her income our high earner can cut her effective tax rate to 25%, lower than many people poorer than her (people start paying 40% income tax at around £45k a year in Britain). Under the new rules, she’d be paying 37% tax (£1.5m tax on £4 million income), which is more like her fair share, says the government. In making this argument, David Cameron’s government is echoing what has become known as the “Buffett Rule”, based on financier and philanthropist Warren Buffett’s argument that there is something wrong with a tax system where a billionaire such as he pays a lower rate of tax than his secretary.

The principle expressed in the Buffett Rule is surely right and should shape policy around tax loopholes, as we argue in our Good Billionaire Guide. Philanthropy, however, is different from other loopholes because, at least in theory, the donor gets no personal financial reward for her generosity and, subject to the caveats above about public benefit and effectiveness, society gains. Our donor, for example, gives away £2 million in order to cut her tax bill by £1 million. That, to us, looks like a pretty good deal for society and not something that should be discouraged.

[Two technical caveats: a) The public benefit of tax-subsidised philanthropy is diminished if that £2 million goes into a charitable foundation and just sits there, or is dribbled out very slowly. To  mitigate this risk, Britain should adopt a minimum payout rule for foundations, similar to the one that currently exists in the United States; b) There is a suggestion that the government may offer 'lifetime legacies' (by which a donor can gift, say, a painting and claim the tax relief up front but continue to use that asset for the rest of her life) as a sop to the philanthropy sector. This would defer the social benefit while front-loading the tax subsidy, which strikes us as bonkers.]

3) Do the rich deserve their wealth? It is notable that support for the government has come from a surprising direction. Polly Toynbee, a veteran big government liberal Guardian columnist, has waded in to the debate to defend George Osborne’s move, arguing that philanthropy is no substitute for the rich paying their taxes. So too, curiouser and curiouser, has Financial Times columnist Philip Stephens. The interesting commonality in their arguments is their framing of the rich as undeserving. Stephens’ hypothetical philanthropist spent “a lifetime fleecing the clients of a US investment bank” (boo, hiss); Toynbee goes for a real-life ‘villain’ in Stanley Fink, who she snottily points out is a “godfather of the British hedge fund industry” and, to heap coals on his head as far as Guardian readers are concerned, is also the Conservative Party treasurer (double boo, hiss).

These are cheap shots but the argument does speak to the final pillar of our Good Billionaire Guide: that philanthropists should earn their money honestly. We argue in the book that this is a crucial question for the super-rich of emerging markets, particularly those earning spectacular wealth from extractive industries or government granted monopolies (especially those acquired through dodgy privatisations) – arguments that have been reinforced by the latest global economics blockbuster, “Why Nations Fail“. In markets with proper competition laws and property rights we are less concerned. Nor do we take Toynbee’s jaundiced view of hedge funds. Yet, even if you disagree with us, if there is a problem of ill-gotten gains then tackling it through curtailing tax exemptions on giving is like using a nutcracker to break a boulder. It is a distraction from the issue under debate.

The #giveitbackgeorge campaign has merit because the British policy is poorly thought out, unlikely to raise much money for the Treasury, and likely to damage charities at a time when they are particularly vulnerable. Yet, as we have argued from the outset, that does not mean that all is well with the status quo on the tax treatment of giving, which is ripe for wider reform. This scare for Britain’s charity sector should prompt it to do a better job of explaining why it needs its tax privileges, and ideally how the tax treatment of its activities could be improved (even in the absence of any increase in the tax subsidy).

Donors in other countries, not least America, should take heed. In these difficult economic times, the 1% are going to be under growing pressure to show that they really are making a positive contribution to society through their giving. The debate about what, if anything, makes a good billionaire is coming their way soon. Better get ready.

The contrasting moods actually reflect a paradox rather than a contradiction. Take Prof Rosling’s cheerful presentation. Hidden behind the good news is a new global problem – ageing. Japan and Europe are already struggling with the consequences of a declining number of workers to support each retiree and the burgeoning cost of healthcare as medical technology improves. Within 50 years, China and most of the rest of the world, bar Africa, will be in the same boat. Ageing is shaping up to be the next global crisis (or opportunity, if some social entrepreneur can discover the secret of eternal youth). In a similar vein, Dr Goldin’s risks are largely the product of positive changes in the world, such as rising incomes and global communications.

The lesson here is that the world is constantly in flux (which was the theme of this year’s forum) and changing faster than at any time in history. Managing the world’s problems demands constant horizon-scannning and actors who are able to be fleet of foot. Such long-term perspective and short-term responsiveness are not characteristics of government. It seems clear that the solutions to the problems the world faces in the 21st century are not going to come through the laborious, lowest-common-denominator processes of governmental conferences convened by the UN.

This why we we believe that philanthrocapitalists have a crucial role to play in the new model for global problem-solving, the posse. Philanthropists and social entrepreneurs can take risks to tackle problems long before they have reached the top of the policy or political agenda. Private companies, which are under ever greater scrutiny from consumers, will have to be leaders rather than followers, setting the agenda rather than being pushed into action unwillingly by government regulation. National governments and multilateral agencies will still have a crucial role to play, but as partners with innovative private actors.

In this context, old assumptions are perhaps our greatest risk. We were delighted that Guardian journalist Zoe Williams pronounced philanthrocapitalism as ‘the future’ after her visit to the Skoll Forum, albeit reluctantly because “it conjures up an image of hedgefunders and CEOs who could never have got that rich in the first place other than by fostering iniquity then having the brass neck to recast themselves as the healers of that iniquity by sprinkling down the surfeit of their superflux.”

Figuring out how capitalism can best serve people and planet is the great challenge of our age. For those that think capitalism is the problem, this is a contradiction in terms. And yet – in a powerful Easter message in the Financial Times, Archbishop Desmond Tutu writes: “Everyone can help to make the world a better and fairer place. Indeed, every human is made for goodness – yes, even bankers.” Take note, Ms Williams. Such is the paradox of philanthrocapitalism in this age of flux.

Leaving aside the usual complaints that Big Society is a ‘smokescreen’ for cuts in public spending, even those who might be sympathetic to the idea have sounded notes of caution. Dan Corry, the CEO of New Philanthropy Capital, stresses that for BSC even to have been born is a ‘triumph of perseverance’ and warns that most charities are not (yet) sophisticated enough to be able to benefit from this type of risk-based financing. Toby Blume, a charity CEO, raises the concern that, as a wholesale rather than retail provider, BSC is not going to be getting funds to organisations on the ground any time soon.

The likelihood is that Mr Cameron will have to put this one down as an investment that is more likely to benefit his legacy than win any votes. But we believe that it is an initiative that history will look at in a positive light. As Michael argued earlier this week, the success in Britain of housing associations that have raised tens of billions of pounds of private investment for social housing indicate the scale of the potential prize. And, as BSC’s CEO Nick O’Donohoe observed, what the UK is doing is part of a wider global trend to explore ways of harnessing private capital for public good.

For BSC to succeed it will, first of all, need to stay free from political interference. A nightmare scenario would be politicians trying to steer it towards pet causes or shy from making financial returns. BSC also needs continuing political support to create a supportive environment for social investment. Social enterprises need assets and cashflow to secure their borrowing, much of which will come from transfers of government assets and from the welfare system. The government’s reforms to public service delivery and the welfare system could make or break the social enterprise sector, the BSC’s ultimate clients. BSC’s long-term growth will also depend on whether mainstream finance can be lured into social investment. As we argue in ‘The Road From Ruin’, that is going to require root and branch reform of the incentives on investors to put long-term value ahead of the quick, unsustainable buck.

So, there is much still to do but a warm welcome to BSC and congratulations particularly to its chairman, Sir Ronald Cohen, who has been championing this idea (along with much else that is good in social investment) for a decade or more. BSC may not win votes for Mr Cameron, but as a pioneer of philanthrocapitalism transforming how government and the private sector can work together, we think it is going to have a big impact in Britain and, by example, beyond.

You can see why the charity sector is up in arms about this and has launched a #giveitbackgeorge Twitter campaign. It is not just that Mr Osborne has offended a sectoral interest. He also stands accused of muddle-headedness, since one of the big announcements in his previous budget was a new tax break for donors giving away more than 10% of their legacy in their will. Worse, a man who was once revered as a political tactician is now looking like a bit of a chump, given that his Prime Minister’s big idea, the Big Society, is all about promoting more giving. Certainly this promises to make the government’s much heralded Giving Summit next month less a celebration than a wake.

Yet perhaps a few words for the defence are appropriate. First, Mr Osborne does have grounds to worry about gift-giving as a tax-avoidance strategy. As Civil Society Finance has reported, the Treasury has been spooked by a 2009 legal ruling that donations to any European charity can now enjoy a tax deduction. Laxer regulation of charities in other countries could, it seems, allow less scrupulous wealthy citizens to cheat the taxman through “pseudo-philanthropy”. The charity sector responds that Mr Osborne is using a sledgehammer to crack a nut and that such avoidance could be tackled on a case by case basis.

A different case for the defence, and one that has not been made by the government, is that the whole system of tax subsidies for giving is a mess. The Charities Aid Foundation (CAF), one of the leaders of #giveitbackgeorge, has come up with a poll of 200 major donors which found that more than half of them would cut their giving by at least 40% as a result of the tax change. Well they would say that, wouldn’t they? That is not to say that the tax change would not have any effect, it’s just that there’s precious little evidence that the steadily improving tax subsidy for giving has had that much impact on philanthropy overall. Indeed, an excellent blog post by CAF’s Rhodri Davies rehearses some of the arguments about why giving should not be subsidised at all.

We think that there is a good case to subsidise philanthropy, since private capital can contribute to social good in ways that it is impossible for government to do. Hacking away a major tax incentive for giving without any serious analysis of its likely impact is reckless, at least, and should be reversed at once.

Yet the government should also seize the opportunity in this self-inflicted crisis, by making the reversal of this decision part of a deal with the charity sector that there will be a ‘zero-based’ reform of tax subsidy for giving. To reassure charities, the government should guarantee at the outset that the size of the subsidy will not change. The review’s remit should be to explore how the subsidy can best incentivise giving. For example, if smaller givers are more likely to be motivated by a tax subsidy, then maybe the priority should be to simplify Gift Aid to increase uptake of this tax break by the public at large, even if it means smaller tax breaks for wealthy donors. Or, if mass donation is found to be fairly unresponsive to tax subsidy, maybe focus the subsidy instead at the top end where it could have more effect on the total amount of cash reaching the charity sector. The review could also iron out the current lopsidedness of the tax subsidy towards giving rather than other ways of doing good, such as social investment. (And it goes without saying that, as in America, there should be a minimum payout rate for grant-making foundations to stop the warehousing of cash at taxpayers’ expense.)

The philanthropy sector’s answer to any question about the tax incentives for giving always seems to be “more”. As a result, in Britain – and indeed the rest of the world, including America, where the Obama administration has also proposed cutting the charitable tax deduction – we have a mosaic of unproven subsidies for philanthropy. By starting from scratch to design a system that is focused on encouraging more and better philanthropy Britain would also be advancing its ambition to become the world leader in social innovation.

From March 22nd-24th, Dublin played host to ChangeNation, an ambitious attempt to add the best that the world’s social entrepreneurs have to offer to the cause of rebuilding an Irish society battered, in some ways more than most, by the economic slump. Organised by Ashoka, a network of high impact social entrepreneurs (which we highlighted in our book as a philanthrocapitalism intermediary), it flew in around 50 social entrepreneurs who have achieved significant impact with their work in their home country (and in some cases, other countries), who spent three days sharing their stories and ideas, in two days of behind closed door meetings with leaders from business, politics, non-profits and the media, and a public festival of ideas (at which Matthew chaired panel discussions on collaboration, leadership skills and measuring progress).

The social entrepreneurs were drawn from six different fields, each of which the Irish hosts felt would be fertile ground for innovation in their country. These were economic development; civic participation; education; environment; health; and inclusion.

“Systematically importing and accelerating these proven solutions will increase our speed, efficiency and success rate in addressing these challenges,” argues Ashoka’s head in Ireland, Paul O’Hara, whose brainchild this was. Certainly, this “big bang” approach of bringing all these social entrepreneurs together at once created an inspiring sense of the possibility of large scale impact which is all too rare. It also ensured a lot of media attention, including a pull out supplement in the Irish Times. There were billboard ads across the city, telling the public that there are proven solutions available to tackle society’s problems. And it was a big enough event that Ireland’s richest businessman, Dermot Desmond, and the head of its government, the Taoiseach, Enda Kenny, felt motivated to turn up and support it.

In buzz and inspiration alone, it would have been hard for ChangeNation to fare any better. The sun even shone warmly in Dublin in March. But ultimately it can only be judged a success if it leads to significant impactful action in Ireland. Here, only time will tell.

Ashoka seems to have had three main strategies in mind, for turning the talking into action, each of them untested. One hope was that, having been brought to Ireland, the visiting social entrepreneurs would decide to launch an outlet of their organisation in the Emerald Isle. This was a bit of a longshot, with most of the social entrepreneurs saying they had more than enough to do back home without the risk of overseas expansion. By the end of the event, several of them said they were now considering it, however, so impressed had they been.

One of the big differences between social entrepreneurs and traditional entrepreneurs is that the social kind tend to care more about spreading their innovation than about owning the means by which it spreads. So, without exception, the visiting social entrepreneurs said they would happily share their intellectual property with anyone wanting to launch their idea in Ireland, mentor them, and so on.

So, the second and third prongs of the ChangeNation strategy was to find people ready to take on the task. They could come from the broader community exposed to the ideas by the ChangeNation events. Or, as Ashoka is particularly hopeful about, they could come from the “change executives” it has recruited, mostly 20-somethings who were each given one social entrepreneur to work with for three months before ChangeNation and, crucially, three months afterwards to focus on turning talk into action.

So, fingers crossed. Certainly, the three days ended with hopes high. There is talk of some combination of government and philanthropists establishing a social innovation fund to back initiatives coming out of ChangeNation. And there was much talk among the social entrepreneurs of taking the ChangeNation model elsewhere, to other nations or, in big countries such as America, launching a ChangeCity campaign in a city desperate for new thinking that works, such as Detroit.

Indeed, Girl Effect was so effective that the British Government, through its aid ministry DFID, hopped on board in 2010, launching a joint initiative with Nike called the Girl Hub. This was a bold move. Handing £11.6 million ($18 million) of British taxpayers money over to a multinational corporation comes with significant reputational risks. But this seemed to be exactly the kind of risk-taking that governments need to learn to do, scaling up successful private sector initiatives, if philanthrocapitalism is to fulfil its potential. The purpose of this extra cash was twofold: to extend the influence of the Girl Effect on developing country governments, donors and other decision-makers; and to bring girls into the decision-making process in four countries, starting with Rwanda.

So it was a bit of a bombshell when, earlier this week, Britain’s independent aid watchdog, the Independent Commission for Aid Impact (ICAI), delivered a withering report on the DFID/Nike partnership, saying that it is “not performing well” and is in need of “significant” improvement. So what has gone wrong? The problem it seems is that DFID approached its coupling with Nike to help adolescent girls with the gaucheness and fumbling fingers of an adolescent boy on his first date. The IACI reports over-ambitious objectives. There was poor preparation (“The concept was developed during 2009, although there is limited documentation of this or of how each donor’s contributions were agreed.”; “Insufficient pre-grant due diligence was conducted on Nike Foundation and Girl Hub policies, procedures and plans”). And there were unclear boundaries and allocations of responsibility. Basically, DFID didn’t brush it’s teeth before it went out and was expecting to get to third base on a first date.

The good news is that, despite some of these partnership implementation failings, the ICAI is more positive about the actual impact of Girl Hub, which it scored as “performing well”. Rather than a reason to reject the partnership approach, the problems highlighted by the ICAI are probably best regarded as teething troubles of the sort that often happen when pursuing teenage dreams.

As we write in our book, Indian businesses have a long philanthropic tradition, with donors such as JRD Tata championing the cause of education, for example. His descendants have continuedthat tradition, and been joined in giving by some of the country’s new rich, such as the outsourcing entrepreneurs of Infosys and Wipro (the Azim Premji Foundation is profiled in the book). As Matthew explained in a speech to the Indian Philanthropy Forum, hosted this week by Dasra, India has the potential to become a leader in the global philanthrocapitalism movement: “I would not be surprised if in 10 years, India will be seen as the great innovation centre, not just for the low-cost consumer products, but also in terms of inventive solutions to social problems.”

Dasra itself is an encouraging sign that philanthrocapitalism is taking root in India. Founded by the husband and wife team of Deval Sanghavi and Neera Nundy, it is committed to catalysing social change by promoting strategic philanthropy. Dasra runs giving circles for newcomers to philanthropy, an impressive seven month training course for social entrepreneurs, and the increasingly well-attended annual philanthropy forum, now in its third year.

This year’s forum included the launch of the third annual survey of Indian philanthropy by Bain, which makes mostly encouraging reading. Among the headlines, more than a third of the wealthy Indians who turned to philanthropy last year were aged under 30, whilst 69% of the philanthropic families surveyed said they had a youngster spearheading or shaping the family’s charity decisions. That certainly bodes well for the future.

If Lucifer were organising his affairs by profession rather than nationality, a likely candidate for a lidless pot would be the world’s international development experts, judging by much of the reaction to last week’s #StopKony campaign by US nonprofit Invisible Children. If you use any kind of social media you will have been nudged in the past few days to pay attention to this campaign to put an end to the atrocities of this African Warlord, head of the Lord’s Resistance Army. 74 million people, when we last checked, had watched the #StopKony video on Youtube, which is unprecedented reach for a viral campaign about a conflict in Africa.

Yet for the development community this is not, apparently, something to cheer. Their arguments, well summarised here, are that the ‘slacktivism’ of Invisible Children over-simplifies the problem, exaggerates the importance of Kony relative to other development challenges facing Africa and promotes a paternalistic attitude in the West. This all seems terribly familiar. We have heard similar complaints about, for example, the work of Bill Gates and others to take on malaria (it’s not that simple, there are other bigger problems, etc.). Or, indeed, reactions to Live Aid in the 1980s.

As is often the case with such criticism, some fair points appear to have been exaggerated out of all proportion by the experts of the conventional wisdom. But let’s take #StopKony for what it is – an innovative campaign to engage millions of people in the fight against poverty. It is innovative not just in its use of social media. It is also picking a ‘hard’ issue (lobbying governments to take action to apprehend a warlord), rather than just making the ‘soft’ ask of a donation for some telegenic humanitarian crisis. In picking a clear, definable problem and mobilising public opinion it has the characteristics of what we think is the new way of tackling global problems – the posse.

The reaction to the #StopKony campaign shows off some of the worst traits of the development community (where Michael has worked for 20 years, including 12 at the UK’s Department for International Development): snobbery and miserabalism. If every problem is treated as so complex that only PhD’s in anthropology with years of field experience can talk about it, then how can the development community expect the support of voters for aid budgets and policies that support developing countries? If any action by the public to engage with a real development problem is treated with this kind of disdain, then why should we be surprised that there is so much pessimism?

So, our congratulations to Invisible Children for bringing so many people into this important conversation. Well done.

The answer, Mr Brown argues, is a new Global Fund for Education to mobilise resources from private as well as public donors to plug the funding gap. (This idea has already won the backing of the British parliamentary select committee on international development, in their report on private foundations, to which we submitted evidence.) But is more money the answer? Mr Brown was a habitual spender when in government and is still locked into the idea that the more money thrown at a problem the better. If you only have a hammer, as the old saying goes, you see every problem as a nail. We fully agree with the argument that education really matters. The question is whether education is a nail that needs hammering with more money from Mr Brown’s proposed fund.

Mr Brown’s report is a remarkable testament to the way that philanthrocapitalism is changing how the world tackles problems. Ten years ago, inspired and influenced by Bill Gates, the world launched the Global Fund to fight AIDS, TB and Malaria as a unique partnership between public and private donors. Over the last decade, the Global Fund has disbursed $22 billion in 150 countries and innovated in the way that these diseases are fought. As a result, we are seeing real progress, against malaria in particular. Compare this to the Fast Track Initiative, which was launched by governmental aid agencies alone in the same year, with equally ambitious goals on education. Mr Brown’s report is an admission that Fast Track, which he says has been dogged by “systemic problems”,  has not been as successful as the Global Fund.

Mr Brown’s analysis of the comparative performance of the Fast Track and the Global Fund makes fascinating reading. The Fast Track, which is managed by the World Bank, has been bureaucratic, has struggled to innovate and has failed to mobilise much public or political support. The Global Fund, on the other hand, was based on partnership with private actors from the outset and has its own governance structure that gives developing countries a much bigger say. Though denounced by some global health experts when it was created, as a classic piece of philanthrocapitalist partnering with government, the Global Fund has proven its worth.

So why not a Global Fund for Education? First of all, the Global Fund for Aids, Tuberculosis and Malaria is but part of a wider mobilisation around these diseases. The Malaria No More campaign, in particular, has built up a grand coalition (what we call a posse) around ending this disease that has leveraged resources both to support the Global Fund and to work alongside it. Perhaps more importantly, the Global Fund is focused on ambitious but specific and doable goals. Indeed, one of the commonest criticisms of it is that it is a ‘vertical’ intervention to tackle specific diseases rather than develop the health systems of developing countries. What Mr Brown’s report shows is that, rather than a weakness, this may be its strength.

Ending malaria is a finite task that can be achieved even where governments are weak. It is also a problem that only needs to be solved once. Educating the children of the world will need sustained investment indefinitely, which relies on the will of developing country governments to invest in education over the long term. This is a point that Mr Brown’s review brushes over. One of the biggest laggards in providing education is Pakistan, where the literacy rate is a miserable 55.5%. This is not because Pakistan is poor per se, as other poorer countries such as Malawi do much better, but the result of a lack of political will. By framing the problem of global education as one of aid resources alone, Mr Brown is only telling half (if that) of the story.

Mr Brown also misses the point on the role that private sector could play. Yes, he wants businesses to be part of his Global Fund for Education, but only in a limited way: as providers of e-textbooks, as financiers and as advocates. None of these suggestions are bad ideas. But more radical thinking is needed. If developing country governments cannot or will not invest in education, then maybe the real potential of the private sector is to develop innovative alternative ways to deliver schooling. That suggestion is anathema to many development experts, who want to replicate the public service education models of the rich world and shudder at thought of the ‘privatisation’ of basic services like education. We understand why they worry in principle, but achieving real innovation may mean sacrificing such development holy cows.

The crisis in financing for development is, at last, getting the aid community to take philanthrocapitalism seriously. Yet Mr Brown and his peers still tend to see private donors and businesses simply as deep pockets that can be picked to make up for the increasing shortfall in government spending on aid. The much greater implication of philanthrocapitalism is that unleashing the creativity of the private sector, both for profit and philanthropic, will be crucial if humanity is to develop the full range of tools needed to tackle big global problems such as how to educate properly all the world’s children.

Here are our ten predictions for the coming year:

1. Greater scrutiny of the 1%. The role of the rich in setting the political agenda is going to be one of the big stories in the run-up to the US presidential election in November. Philanthrocapitalists hungry for impact are increasingly looking to get leverage by influencing government policy and this election will set the policy agenda for the next four years at a time when America (and along with it the world) faces some tough choices. We have, of course, been here before with George Soros’s support for the ‘Move On’ campaign in 2004, which was ultimately unsuccessful in unseating the incumbent president, George W. Bush. The influence of the Koch brothers on the right is already on the media’s radar, but there are plenty more to be discovered. Expect donors of the left and the right to pitch in to this contest using political donations and philanthropic giving to support policy thinking on issues like budget priorities and healthcare and school reform. Is this philanthropy or plutocracy? We will all be talking about that this year.

2. Nation building is back. Politics will also be a big theme of philanthropy around the world, which may bring with it genuine danger for those involved. From the nations involved in the Arab Spring to Vladimir Putin’s (for now) Russia, and maybe even North Korea, philanthropists are going to be getting involved far more than in recent years in supporting civic movements and even political movements in countries where there is a real opportunity to change the political balance, hopefully in a more democratic and just direction. As the year-end crackdown on various American backed non-profits by Egypt’s military government should remind everyone involved, those threatened by this philanthropy are unilkely to take foreign interference in their countries lying down.

3. Crunch time for Muslim philanthropy. On a related point, 2012 is going to be a year of decision for Muslim philanthropists. There is a huge opportunity for them to strengthen civil society in the Arab Spring countries and work with the emerging entrepreneurs and social entrepreneurs there. Pakistan and Afghanistan are both in need of high-impact philanthropy. Yet, with the honourable exception of the Aga Khan Foundation, too much of the giving from Muslim donors, including by some of the multi-billion dollar foundations set up by the rulers of Gulf countries and their leading businesses, is still focused on traditional welfare and charity rather than social change. Yet change seems likely to happen with or without them, and if they do not help it along, it may well be at the expense of the Muslim wealthy. Perhaps this is an area where Turkey’s emerging philanthrocapitalists will show a lead to the rest of the Muslim world.

4. Occupy Philanthropy. One of the big questions of the year will be whether the global Occupy movement will evolve from a necessary voice of protest into an effective force for change. There is an opportunity, and we believe an obligation, for philanthrocapitalists to help reform capitalism, so that it genuinely works in the interest of the population as a whole, not just a small subset of it. Andrew Carnegie understood the vulnerability of capitalism to the perception of it being inherently unfair; it is time today’s successful capitalists did so too. The gradually increasing pack of CEOs who get it, such as Indra Nooyi of PepsiCo, Paul Polman of Unilever and Sir Richard Branson of Virgin, have a huge opportunity to set the agenda for their peers, as long as they back up their words with serious action.

5. Steve Jobs, Philanthropist. After spending his life being fairly dismissive of philanthropy, the late co-founder of Apple is likely to be one of the most prominent additions to the mega-giving scene in 2012. His widow, Laurene Powell Jobs, has long been involved in giving, having founded an organisation to get students from poor backgrounds into college, participating in the Clinton Global Initiative and Global Philanthropy Forum, and visiting Africa on a trip for philanthropists led by Ben Affleck. Now she controls her late husband’s fortune, expect her to start putting it to good use.

We can also look forward to some weird and wacky philanthropy from new donors from the social media generation. The Facebook IPO is going to make a lot of people very rich and, since its founder Mark Zuckerberg has already signed up to the Giving Pledge, we are hopeful that the new cohort of wealthy will turn to philanthropy as a priority. The most entertaining philanthropist of 2011 was Silicon Valley venture capitalist Peter Thiel, who famously/notoriously offered $100,000 grants to get people to drop out of college and start a business, as well as supporting efforts to create new floating countries in international waters (“sea steading”) and launching a science fund closed to university academics, a large proportion of the people we normally think of as scientists. Plenty of people think Thiel is nuts, which is great. Too much philanthropy today talks about risk-taking without being willing to court controversy. Expect the donors of the social network generation to have no such fears.

6. Celanthropy’s new stars. Ben Affleck will become more prominent on the Hollywood philanthropy scene, though probably still lagging behind the likes of Brangelina, George Clooney and Matt Damon. The celanthropist to watch, though, will be Lady Gaga, who we expect to take a big step forward in her giving, probably with a cause dear to the hearts of her “Little Monsters” (as she calls her young fans). Another celanthropist worth watching will be Ashton Kutcher, to see if he can recover as a force for good following a messy divorce and some unfortunate tweeting in 2011. Despite his and other bad celebrity experiences, the use of Twitter and other social media in philanthropy will continue to increase – which should mean even more celebrity mishaps this year.

Some giving dynasties will also move more clearly into the limelight. Will Chelsea Clinton, as well as championing social causes in her new tv job, take a bigger role at the Clinton Global Initiative? Expect greater interest to be taken in Barbara Bush, daughter of George W, and her health care non-profit, Global Health Corps. And, now he is focusing on philanthropy, expect some bold initiatives from Howard Bufffett, grandson of Warren Buffett. Also watch out for the House of Windsor, as Britain’s Brangelina, “Wills’n'Kate”, make a serious effort to build a celanthropic brand, hopefully learning from the ability of Princess Diana to draw attention to an issue and the under-rated skills of Prince Charles as a social entrepreneur.

7. Deep Impact. This will be a big year for “impact investing”, which explicitly seeks both financial and social/environmental returns. So far, there has been much more talk than action, but the time has come for the money to back the ideas. The Omidyar Network has already taken a lead, but some other big philanthrocapitalists will join it this year. Enter the Gates Foundation?

8. The Great Extinction. Alas, it is going to be a tough year for many non-profits. We are braced for more scandals about inspiring narratives unsupported by facts, along the lines of the 2011 Greg Mortenson expose. The pain of government spending cuts will be felt widely, both directly, as many non-profits rely on money from government, and indirectly, as cuts to government services will lead to greater demand pressure on non-government alternatives. We think that many non-profits will be faced with serious shrinkage, and in many cases extinction. Our hope is that smart donors will grasp the nettle and try to manage this culling process, encouraging mergers wherever possible, so that the best of the non-profit sector is preserved or, better still, made stronger.

9. Philanthrocapitalism the Chinese way. There was some schadenfreude when the Gates-Buffett visit to China in 2010 failed to drum up new signatories to their Giving Pledge, although that was not the immediate goal of their mission. We expect philanthrocapitalism to become an increasingly important force in China in 2012, though it will have a distinctive local flavour. Instead of traditional American-style foundation-oriented philanthropy, we expect a wave of stories about corporates playing a key role in solving social and environmental problems through a version of “social investment”. China is now hitting a difficult stage of economic development when it needs to manage its use of natural resources, stop competing on low labour costs alone, start tackling potential drags on its competitiveness such as its rapidly ageing population, and deal with rising expectations among the populations. All of this requires a wave of innovation, which China’s philanthrocapitalists are well placed to lead.

10. Some good news. We are hopeful of some big breakthroughs that will prove that philanthrocapitalism works. Will some of the few remaining countries still hit by polio announce they are free of the disease? Will the death toll from malaria plunge even further and faster? We think so, and that as it does it will validate the “posse” approach to solving the world’s problems at the heart of philanthrocapitalism. Expect more new posse partnerships to be announced, similar to the Malaria No More campaign led by Ray Chambers, which has galvanised a powerful coalition of the willing. This is a time of growing scepticism about the effectiveness of government, international aid, and even of giving. Yet clear evidence of results may start to change the mood and persuade a growing number of people that philanthrocapitalism is worth the risk.