Certainly the Kochs are using at least of some of their giving to influence public debate – David started the free-market Americans for Prosperity Foundation and Charles founded the libertarian Cato Institute think tank – and are convinced opponents of President Obama on issues like health care and financial reform. However, David, at least, is harder to pigeonhole as a hardcore Tea Party fanatic since, as New York Magazine reported, he “supports stem-cell research and gay marriage.”

This is not the first time that right-wing billionaires have been outed as the puppeteers of the political process. Before the Kochs it was the John M. Olin Foundation that was seen to have sowed the seeds of the conservative revival in the 1980s. Indeed, such was the success of the right in using philanthropy to influence the political debate that in 2005 the Stanford Social Innovation Review published a seminal article by Andrew Rich about how conservative foundations were using better tactics than their leftier rivals in the battle of ideas.

Yet for many on the right, the great philanthro-conspiracy is being run by liberal billionaires – particularly George Soros, who has been branded ‘Dr Evil’ and ‘Public Enemy Number One’ by critics such as Bill O’Reilly for his support of groups including moveon.org. Indeed, the right has been suspicious of the liberal-leanings of the foundation sector for a long time. For instance, in the 1960s, the Ford Foundation’s support for voter registration provoked conservative ire.

That in turn was part of a far older debate about the influence of philanthropy in politics. Nearly a century ago, in the progressive era of ‘trust-busting’, the 1912 Walsh Commission recommended limits on the size of foundations for fear that they would “manipulate the economy and …influence public opinion.” At the same time, there was fierce resistance to John D. Rockefeller’s (ultimately successful) attempts to institutionalise his philanthropy by creating a foundation, for fear that this would lead to political influence. Later, in the 1950s, the Cox and Reece Commissions, reflecting the mood of the times, investigated charges that foundations were supporting ‘un-American’ causes. (For more on these debates see the bonus chapter we have written on the history of American philanthropy.)

The alternative, of course, is to clamp down on philanthropy’s role in public policy. This has an obvious appeal to those who believe that the democratic process should be left to civic groups, untainted by the donations of rich people. Yet it is worth remembering that some of the great civic movements have been successful because of the influence of the rich – as Stephen Tomkins’ new book about the campaign to end the slave trade reminds us.

The case for philanthrocapitalists meddling in politics has also been made in a recent blog post by a leading aid thinker, Duncan Green, the Head of Research at Oxfam. Reflecting on a speech he made to London hedge fund donors Absolute Return for Kids, Duncan (no relation of Michael’s) suggests that a potential sweetspot for rich donors could be influencing elites in developing countries to support fair taxation, labour rights and so on.

Many philanthrocapitalists understand this already. The Bill Gates backed ‘Malaria No More’ campaign has consciously lobbied political and economic leaders in Africa to be part of the solution to this solveable problem. Even back at home, George Soros and other billionaires have joined the campaign to keep estate duties (known to their critics as ‘death taxes’). These causes are, of course, close to the hearts of most liberals and, on death taxes at least, will make many conservatives bristle. The reverse is also true. Gates is annoying the teaching unions and many of their supporters with his campaign to reform the American schools system almost as much as the Kochs’ donations to free-market causes.

America is right to be live to the threat of plutocracy – the influence of the rich on politics. When wealthy people give to any cause, political or not, they should be transparent about it. Debate and scrutiny by the public is crucial. Philanthropists who are interested in real change will always be drawn to politics. At times this will irritate the right, at other times the left. Maybe this is the best reassurance we have that by joining the battle of ideas philanthropists can enrich rather than diminish democracy: billionaire donors actually seem to be pretty well spread across the political spectrum.

However, what Steve Goldberg calls a “kerfuffle” has taken place over the alleged lack of transparency in grantmaking by SIF, alleged conflicts of interest and alleged favouritism shown to one grantee, New Profit Inc, a venture philanthropy that we feature in the book.

We decided to make this the subject of our second debate on Twitter, where Matthew goes by the alias @mattbish and Michael is @shepleygreen. (Our first debate was on profits and the poor.) This took place from 3-4pm Eastern time on August 25th. It was a lively debate, with 58 different contributors, including our friend Stephanie Strom, whose article in the New York Times introduced the kerfuffle to a global audience. You can read a transcript of the debate here – best done by skimming down the page, rather than concentrating too hard

These were the rules of engagement: Keep your comments to under 140 characters each. Always include the hashtag #SIFDEB (for social innovation fund debate). The hashtag allows people to follow the flow of debate without everyone having to retweet comments they refer to. If you respond to a particular person’s comment, start your tweet with re and the person’s twitter name: for instance, if you respond to a comment by @mattbish, start your tweet: Re @mattbish and end it with #SIFDEB. Other than that, please avoid personal abuse.

Do let us know if there are other topics you would like to debate on Twitter.

Many critics of the Nobel peace prize will regard this award as further damaging the reputation of a philanthropic prize that has lost much of its credibility over the years by honouring such peacemakers as Henry Kissinger and Yasser Arafat. Even Al Gore’s win, following his climate change movie, “An Inconvenient truth”, has been cruelly lampooned as a prize for mastering the art of Powerpoint presentation.

That it was endowed by a 19th century munitions tycoon, Alfred Nobel, is also widely noted by critics of the peace prize. As we report in the book, and on this blog, prizes are increasingly back in fashion among today’s philanthropists – yet what their prizes increasingly aim to do is incentivize future behaviour that the philanthropist wants rather than honour past achievements like the Nobel.

The X Prize Foundation is perhaps the best example of this new trend, with its prizes for achievements such as commercial manned space flight, rapid cheap mapping of a human gene, and building a super-fuel-efficient car. A recent study by McKinsey found that there has been a sharp increase in what the consultancy calls “inducement prizes”. Of the philanthropic prizes introduced before 1990, with a total purse of $55m, only 3% were incentivizing behaviour, whilst the rest were “recognition” prizes celebrating past achievements. Since 1990, of the new prizes announced with a combined purse of $302m, 78% have been inducement prizes.

A more positive way of looking at Obama’s award is that the Nobel judges are trying to turn the Peace prize into an inducement prize. By honouring the President’s fine words at the start of his time as the most powerful man on earth, perhaps the judges are hoping that this will encourage him to put them into practice.

If so, here is a modest proposal, Mr President. By all means travel to Oslo to give your acceptance speech on December 10th, but when you give it, tell the audience that, though you are humbled and honoured by the award, you are not willing to accept it yet. Then pledge to return to accept it properly after you leave office, but then only if the judges take another vote and decide it is still merited. That way, the prize will really mean something – which, if it is accepted unconditionally now, it really won’t.

Sonal Shah, formerly a senior executive at Google’s philanthropic arm, Google.org, gave her first public speech as head of the new White House Office of Social Innovation. She said the doors of her office are “wide open” and warmly invited philanthropists and social entrepreneurs to come forward with innovative ideas about how to work together.

In a speech, Obama’s Secretary of State, Hillary Clinton, announced that she would use the department’s Global Partnership Initiative to work with philanthropists, as a key part of her “smart power” strategy. She cited several examples of “cutting-edge philanthropic tactics that can be replicated on an even larger scale.” She continued by explaining that scaling up is “where government can come in. We have unique strengths to offer at the State Department and USAID, with our global reach, with relationships that connect us with governments and people around the world.”

In particular, Clinton – who has clearly learned a lot from watching her husband’s philanthropic career – thinks that the state department can fill three key roles as a partner to philanthropists. “First, we can be a convener, bringing together people from across regions and sectors to work together on issues of common interest. Second, we can be a catalyst – launching new projects, actively seeking new solutions, providing vital training and technical assistance to facilitate additional projects. And third, we can be a collaborator, working closely with you and other partners to plan and implement projects – avoiding duplication, learning from each other, maximizing our impact by looking for best practices.”

These three seem right, though perhaps in the division of labour within a partnership the philanthropists should do more of the initiating and catalysing, and the government more of the collaborating, especially that bit about avoiding duplication and identifying best practices.

Matthew chaired a plenary discussion on public-private partnerships, involving three participants in the first partnership included by Hillary Clinton in the Global Partnership Initiative – the US Palestinian Partnership, which is aiming to promote peace by encouraging business investment in the West Bank (and hopefully, one day, Gaza). Walter Isaacson chairs the partnership, Jean Case (who runs the Case Foundation with her husband, Steve) has been an energetic philanthropic partner in it, and Shelly Esque has overseen Intel’s involvement, which includes investments in education.

Isaacson, who is also president of the influential Aspen Institute, told an interesting story of how good can come out of bad. In 2005, several Jewish philanthropists, including Jim Wolfensohn, a former head of the World Bank, had paid for the ownership of some fruit and vegetable growing green houses in Gaza that had been occupied by Jewish settlers to be transfered to the Palestinian authority. However, within a couple of days, these viable going concerns had been wrecked with the apparent approval of the new owners. This might have been a source of discouragement, and certainly excited lots of attacks on the philanthropists in the Israeli press, yet according to Isaacson it in fact provided the impetus for the creation of the US-Palestinian Partnership, which he says has already generated considerable sums of money from American businesses to help develop the West Bank – though, such are the problems being addressed there, progress will surely be on a wing and a prayer.

Describing the panel in her blog, Jane Wales, the founder of the Global Philanthropy Forum, writes that Case “stressed that neither the public nor private sectors are homogenous groups, so you have to carefully analyze the tools that each entity brings to the table so that you are sure you are not asking a potential partner to take on a role that they are not built to take on: “what fails”, she explained, “is when you ask a partner to do something they’re not good at.” She noted that business is most effective in promoting change when it is intrinsic to their value chain or business interests. Shelly added that it’s crucial that philanthropists be explicit about their expectations in collaborating: spend the time up front asking all the tough questions, be clear about what your strength is.” Wise words, indeed.

Wolk, chief executive of Root Cause, a non-profit that supports social innovators, notes that this initiative has the potential to significantly accelerate social impact. This is because of our old friend leverage. As he points out, at the federal, state, and city levels, “government provides three levers that ultimately drive the progress we make on critical social issues: (1) government makes the laws, (2) government has access to major systems like schools and healthcare, and (3) government provides the majority of funding.

Hopefully, Obama will find someone to head the Office who is imbued with the spirit of philanthrocapitalism, and has good relationships with leading philanthropists and social entrepreneurs. (As well, of course, as paying taxes, hiring legal nannies, and agreeing with the direction of the administration’s policies.)

Hopefully, too, the Office will find inspiration in the efforts of New York City’s philanthrocapitalistic mayor, Michael Bloomberg, who has embraced philanthropically-funded social entrepreneurship as a solution to the frustrating inability of government to be innovative. One way that the new Office might “market test” its initiatives, and ensure that they are not being guided by short-termist politics rather than long-term social innovation, would be to require that private-sector co-investors be found before the green light is given to providing public funds to social innovators.

As Wolk concludes, “this is an exciting time – let’s make sure that the rigor we all hope to bring does not get lost in the fanfare of this incredible moment in history. Stay tuned…”

Many people worry that the existence of the Clinton Foundation and the Clinton Global Initiative, both of which we write about in the book, create a serious conflict of interest for the new Secretary of State. “The foundation exists as a temptation to any foreign entity or government that believes it can curry favor though a donation,” complained Republican senator Dick Lugar.

In an extensive article yesterday (subscription may be required), the Wall Street Journal went even further, claiming that the deal hammered out between the Clintons and the Obama transition team, which required greater transparency about charitable donations, was not tough enough on the former president. Indeed, transparency seems to have only added to the Journal‘s fury, the release of a list of donors in December under the deal prompting it to write: “Here is the spectacle of a former President circling the globe to raise at least $492 million over 10 years for his foundation – much of it from assorted rogues, dictators and favor-seekers. We are supposed to believe that none of this – and none of his future fund-raising – will have any influence on Mrs. Clinton’s conduct as Secretary of State.” It concludes that “it’d be nice to think Mr. Clinton would forswear this money-hustle while his wife is Secretary of State, but that self-sacrifice would belie his entire career.” Ouch!

Oddly, the Journal seems to regard money donated via the Clinton philanthropies as essentially the same as money going into the former president’s personal bank account. It likens his donors to “clients” of Henry Kissinger’s consultancy, in an earlier controversy. Even the most cynical observer of the Clintons – or of philanthropy – would surely concede that there is some difference between the two cash flows.

Even if the Journal is right that some of the donors to the Clinton philanthropic efforts are not the sort of people you would trust with your children’s sweets, it is not clear how getting these Friends of Bill to give back is a bad thing. On the contrary, perhaps it will help them on the path to personal redemption.

But the more important points are these: First, transparency (even the somewhat imperfect version now being implemented) should deal with the conflict of interest problem. If anything, it should ensure that any gift makes it harder for Mrs Clinton to favour the donor, not easier, given the inevitable scrutiny it will get.

Second, the useful debate to have is not who is giving, or even how much, but whether it is making a difference. Whilst it is early days, and many of the projects trumpeted at their outset at the Clinton Global Initiative need thorough impact analysis, there is already plenty of evidence that Mr Clinton’s efforts are making a difference, especially in parts of the world where need is great and America’s image could do with a polish. Indeed, as we have argued before, working in partnership with effective philanthropy, including (providing it is transparent) her husband’s, could play a crucial role in ensuring that what Mrs Clinton calls her “smart power” strategy really is smart.