The influential Wikinomics blog carries a positive review of Philanthrocapitalism by Don Tapscott, a management guru who coined the phrase “wikinomics” (see our recent post on Wikipedia) and has just written another best-seller, “Grown Up Digital”. Tapscott says that “Philanthrocapitalism is a great book, and I can’t think of any category of educated person who should not read it.”

He started reading the book with a healthy scepticism about our subtitle: “When I look at the many problems confronting the world today it seems to me that the rich, more than any other group, have messed it up. And what a mess it is.” Yet by the end, he says, “My hope is that wealthy people will read this book and follow the lead of their most progressive peers. How ironic, should the rich actually end up being key to making this smaller world a better and more sustainable one?”

One of the constant themes in Tapscott’s writing is that the world is becoming increasingly transparent, not least due to the internet. Here he sees an overlap between his work and ours - because transparency may be changing the business landscape in ways that favour the sort of strategies designed to do well by doing good that we highlight in our chapter, The Good Company. “For some time there has been the expression among the Corporate Social Responsibility community ‘You do well by doing good.’ I don’t think this has been true,” he writes. “Many companies have done well by being awful – by having terrible labor practices, bad products bolstered by good advertising, externalizing costs (such as industrial emissions) on society and the like. However increasingly in the age of transparency everyone is being held to higher standards. And a new generation of people with wealth are beginning to understand that you can’t succeed in a world that is failing.” Amen to that.

Paul Brest, who heads the Hewlett Foundation and has just published a book about smart philanthropy, discusses the challenge to philanthrocapitalism from civil society in an article in the Huffington Post.

Some of the loudest critics of philanthrocapitalism, such as Michael Edwards, come from the nonprofit sector and argue that there is a conflict or contradiction between philanthrocapitalism and civil society. Paul summarises Michael’s argument: “Since civil society’s focus on rights, equality, and collective action and opposes the individualism and competition of business, he suggests that business and civil society organizations “working together but independently may be a better way forward than dissolving our differences in some soggy middle ground.”"

Our view is that it is the critics of philanthrocapitalism who are trapped in a swamp. The great strength of business and civil society is that they are both diverse spheres where different ideas compete and collaborate all the time. Critics such as Edwards like to caricature philanthrocapitalism as philanthropy with a narrow focus on performance metrics, whereas we show in the book that it is a diverse movement with many different approaches. Moreover, rather than challenging or weakening civil society, we think that philanthrocapitalism is a vibrant new force that can help civil society to grow and become more effective and help the private sector to think about the social and environmental consequences of making money. This is a new paradigm for civil society and the market and one that we think has enormous potential for good.  It is disappointing, therefore, that some in the nonprofit sector see philanthrocapitalism merely as a threat.

Paul is going to be discussing these issues in future articles but concludes that the ‘civil society’ critique of philanthrocapitalism is “premised on a notion of “civil society’ that makes it seem much more homogeneous than I think it actually is.”   We agree.  Yes, philanthrocapitalists need to be held to account. But claiming that civil society speaks with one voice about philanthrocapitalism does us all a disservice.

If you are in New York this Sunday evening, come to a discussion of philanthropy during the downturn at the 92nd Street Y. Matthew will be in conversation with two of the most thoughtful philanthropy leaders in America, Paul Brest, who runs the Hewlett Foundation, and Vartan Gregorian, who has long presided at the Carnegie Corporation. This is the second in a series of conversations with philanthrocapitalists that Matthew will be leading at the 92nd Street Y; the first was with former President Bill Clinton, and can be viewed here. Next up, Eli Broad. This Sunday, the talking starts at 7.30pm.

If that is not too much Matthew for you, why not listen to a recent interview (click here, and again on the icon just after January 3rd) he gave to The Economist, or read his recent article in the new Evelyn Waugh-inspired web newspaper, The Daily Beast? As these both focus on the need for philanthrocapitalism to be even more effective during tough economic times, they are ideal preparation for Sunday’s conversation. See you there!

Congratulations to Wikipedia. The free online encylopedia has just exceeded the $6m target it set for its recent fundraising effort. A thank you letter from its inspirational founder, Jimmy Wales, noted that “This campaign has proven that Wikipedia matters to its users, and that our users strongly support our mission: to bring free knowledge to the planet, free of charge and free of advertising. We deeply appreciate the generosity of our supporters.”

Wikipedia is the leading example of what has been called “open source philanthropy” - a form of philanthrocapitalism that is booming thanks to “wikinomics“: potentially huge benefits from connecting and collaborating via the internet at a very low cost. Indeed, the entire open source movement is inherently philanthropic, as it creates a huge benefit to society by waiving or holding in common the intellectual property rights that might otherwise have been captured for primarily private gain. There is also a growing number of web-based philanthropic organisations, including two we write about in the book, kiva.org, a microfinance site, and globalgiving.com, a giving marketplace. We predict that this will be an area of spectacular philanthrocapitalistic growth in the next few years.

We can only bellow two cheers for Wikipedia, however. Although it is generally a wonderful example of philanthrocapitalism, and deserves to be generously supported, both financially and through the time and expertise of those who collectively write its definitions, Wikipedia is wrong when it describes philanthrocapitalism. According to its definition, philanthrocapitalism is merely another word for “venture philanthropy”. As readers of our book - and, for that matter, critiques such as that of Michael Edwards - will know, philanthrocapitalism is far broader and more significant than that. For instance, the Gates Foundation is in many ways the poster child for philanthrocapitalism, yet nobody (including Wikipedia) would describe the bulk of its activities as venture philanthropy, a phrase generally used to refer to the early stage development of philanthropic organisations.

As authors of the term philanthrocapitalism, the organisation’s etiquette means that we are not supposed to correct Wikipedia’s definition. But we hope that someone who can will restore Wikepedia’s reputation for accuracy, and allow us to give it a third cheer.

The collapse of the $50 billion Ponzi scheme run by Bernie Madoff has hurt many philanthropists and the organisations they support. There will be plenty of time to reflect on how to avoid similar disasters in future, especially by improving the financial due diligence of donors and some of their beneficiaries. But the immediate priority is to limit the damage done to the affected non-profits, whose work is of huge importance. Happily, some philanthrocapitalists are coming to the rescue.

Yesterday, a coalition of two philanthropic organisations who we write about in the book, Atlantic Philanthropies and George Soros’s Open Society Institute, and the left-of-centre political activism network, MoveOn.org, announced an imaginative scheme to provide emergency funds to four non-profits hit by the Madoff affair. These are the Brennan Center for Justice, Advancement Project, the Center for Constitutional Rights, and one of our favourite non-profits, Human Rights Watch - an organisation that first drew the attention of the world to the genocide in Darfur and is now highlighting the alarming problems in Congo and Zimbabwe.

The philanthrocapitalists have devised an approach to leveraging mass-market philanthropy that deserves to succeed. Here’s the deal. Atlantic Philanthropies and OSI will each match dollar for dollar any gift (up to $300,000) made to any of these four non-profits between now and the end of the year. So every dollar you give is worth three dollars to the non-profit. You have until midnight.

The need for philanthropy to be accountable to society, as part of a new social contract between the wealthy and the rest of society, is one of the main themes of our book. As we observe in the introduction, “if philanthrocapitalists are to be a legitimate part of the solution to the world’s problems, a new ’social contract’ is needed to spell out what it means to be a good billionaire… The onus in the social contract should be on the rich to be transparent and accountable.”

So it is with some surprise that we read, in an entry on the Gates Keepers blog, that we are “trying to silence the legitimate voices” of civil society by using the word “attack” in the title of our recent blog entry, “Attacking Gates“. Since when has joining a debate been trying to silence anybody? Unless, of course, silence indicates that there is nothing to say in response to our arguments.

Our blog entry, when we so crushingly use the A-word, concerned a chapter of a new book that, well, attacks the Bill & Melinda Gates Foundation in various ways. Although we list our response to nine criticisms in the chapter, Gates Keepers addresses only one of these, where we say that it may be no bad thing that the foundation is not accountable to governments of developing countries or the World Health Organisation. As the rest of our comment makes clear, this is because we believe this enables the Gates Foundation to bring much needed innovation and a different perspective to solving global health and development problems, not because we oppose it being accountable in the broader “social contract” sense.

More broadly, in other entries, Gates Keepers suggests we are too cosy with the Gates Foundation (though it confuses us with The Economist: Matthew, who works for the magazine, and Michael, who does not, both wrote the book in a personal capacity; the same goes for this blog). As readers of the book will know, although overall we admire what Bill Gates is trying to do through his foundation, and by encouraging others to become philanthrocapitalists - in many ways, he is the book’s hero - we are not uncritical.

We point out that he faces significant challenges. These include choosing the right partners in the foundation’s work; figuring out how to achieve large scale change; that the foundation may be distorting jobs markets in developing countries; that progress in improving America’s schools has been slow; that so far there is not much to show for its efforts in terms of new drugs; that delivering new drugs to those who need them will not be easy; that it will be hard to find sensible ways to use the increasing sums of money it is planning to give away; that getting bigger may make the foundation more bureaucratic; that its opposition to “mission-related investing” may be “one respect in which the Gates Foundation reflects philanthropy’s past, not its future”; that its recruitment choices have sometimes been questionable; and that managing well the foundation’s relationships with other foundations and organisations, including governments and multilateral bodies, will be crucial.

As we write, in a discussion of a memo circulated within the World Health Organisation expressing concern that Gates might be creating a “cartel” in health research, “if the power of the Gates Foundation is enough to worry a UN agency, its effect on other philanthropists may be even greater.” We conclude that “Gates will help himself, and other philanthrocapitalists, by ensuring that his foundation is as transparent as possible and subjecting its activities to rigorous public performance analysis.”

Of course, we welcome the creation of the Gates Keepers website, which seems to be dedicated to criticising the Gates Foundation (although the lack of any information on the website about its mission or who is writing or funding it is somewhat troubling, especially given its frequent calls for the Gates Foundation to be more transparent). We will certainly be regular readers.

“If Matthew Bishop were interviewing for the role of Butler in a family I served as Morals Tutor, I would tell him to stand up straighter, lower his nose to be level with the floor, and not to smirk,” says Phil Cubeta on his Gift Hub blog. Phil is the self-appointed “Morals Tutor to America’s Wealthiest Families” and describes the opinions expressed in his blog as “mine, or at least those of a character like Diogenes that I might be impersonating from time to time.”

Phil’s beef is that Matthew has dared to speak positively about the super-rich. Instead, he prefers to pour scorn on philanthrocapitalists. Unfortunately he doesn’t seem to have read the book, since none of the individuals whose recent failures he celebrates (Conrad Black, Bernie Madoff and Richard Fuld) were noted philanthrocapitalists in the sense that we mean it (though Fuld did give away a lot of money, especially to New York’s Musuem of Modern Art). Ho-hum.

At its root, Phil’s criticism of philanthrocapitalism is that he doesn’t like rich people. Tellingly, in a footnote to his blog, Phil admits that “I would be disengenuous if I said that I am really trying to improve your morals. My motivation is more like revenge.” In this way, he is following in the tradition of his alter ego, Diogenes, a founder of the Cynic school of philosophy in Ancient Greece (who was also known for urinating and masturbating in public).

Bashing the rich is like shooting fish in a barrel at the moment. We think that a more urgent debate is about what kind of capitalism we want to see emerge from the current crisis, including what it means to be a good billionaire, as Matthew recently discussed in an interview with Forbes magazine. We think at least some of today’s leading philanthropists deserve praise, and if saying so makes us unpopular with our colleagues below stairs, so be it.

A list of Britain’s top 30 donors has just been published in the Independent newspaper, headed by familiar names like Sir Tom Hunter, Chris and Jamie Cooper-Hohn and Lord David Sainsbury. They each are, or plan to be, billion pound philanthropists. But the journey that British philanthropy still needs to travel compared to American philathropy is evident from the fact that there isn’t the depth of giving - a gift of ‘only’ £600,000 wins 30th place on the list.

There was cause of optimism on Christmas day, when Channel 4 broadcast a follow up to its Secret Millionaire programme, where wealthy individuals go undercover in poor communities looking for people to help. You’d have to be pretty hard-hearted not to be moved by this programme, so it’s easy to dismiss as sentimental when the tears flow as the millionaires hand over cheques to the people and organisations they want to help. Great TV but is it philanthrocapitalism?

Certainly the business mentality comes through in their gifts. 30-year-old personal finance tycoon James Benamor tackles poor school performance in a deprived part of Manchester by funding an ‘incentive scheme’ of treats to get kids to focus on their schoolwork and compete their education.  Haulage millionaire Hilary Devey provides core funding for the Back Door youth music scheme in Rochdale that gets young people off the streets. She is also taking the idea to scale by supporting its expansion across the country, starting in Leicester. This idea of leveraging impact by helping charities to grow is also taken up by IT entrepreneur Kavita Oberoi, who backs Sisters with Voices, a Birmingham-based mentoring scheme for young women, to go nationwide.

Cynics can point out that not all the gifts are so strategic, some are old-fashioned almsgiving. The secret millionaires also get a lot out of the programme - from adulation in the communities they support through to marriage proposals and getting a guidedog named after them. And the organisations they are helping only exist because of the work of community activists and social entrepreneurs who have stuggled for years with no recogniton and little funding.

Perhaps the most important feature of the programme is that the millionaires enjoy the experience and learn from it. The biggest gift in the series, £225,000 to a centre for the disabled in Glasgow, comes from property tycoon Nick Leslau. If he and the other secret millionaires stick with the giving habit and inspire others, maybe the 2009 list of big givers will feature some new names and larger sums.

A holiday message for philanthrocapitalists: read some Charles Dickens. The great Victorian’s novels were full of philanthropists, some inspiring, some useless, quite a few downright offensive. They repay careful study, especially for modern givers who wish to avoid repeating the mistakes of a past golden age of philanthropy.

Dickens understood the potential, and the pitfalls, of philanthropy, not least because he was himself a professional philanthropy advisor, when not writing novels, helping one of the wealthiest women of the day, Angela Burdett-Coutts, give more effectively. (If you want to know more, read “Victorian giving”, one of six bonus chapters on the history of philanthropy available on our website.)

Some of his characters play a positive role, such as Mr Brownlow in Oliver Twist, the Cheeryble brothers in Nicholas Nickleby, and Mr and Mrs Garland in The Old Curiosity Shop. But philanthropists also come in for some caustic ridicule in his later works. In a novel mainly attacking the legal system, Mrs Jellyby and Mrs Pardiggle in Bleak House are, respectively, guilty of ‘telescopic philanthropy’ and ‘rapacious benevolence’, neither of them helping to save the life of the child Jo, who dies of pneumonia. In his final, unfinished, novel The Mystery of Edwin Drood Dickens ridiculed a selfish, paternalist attitude to philanthropy that, even today, colours our perception of the Victorians.

Yet our favourite Dickens novel, of course, is “A Christmas Carol”, which for all its sentimental gushing never fails to inspire. If, after this miserable year of credit crunch and Ponzi schemes, you are tempted to unleash your inner Scrooge, take a deep breath, dust down a copy and ponder the Ghost of Christmas Future. On which note: we wish you a merry, and generous, Christmas.

The story of Mr Scrooge in Dickens’ Christmas Carol reminds us that the festive season is a time to think about more than the giving of presents to friends and family. This was a theme that Nick Kristof picked up in an article in the New York Times on Saturday, where he called on liberals to start matching conservatives in their giving.

Nick picked out some figures from the book (which he thinks is “terrific”) that show Americans are more than twice as generous as Britons and about ten times as generous as the French. He also looked at Arthur C. Brooks analysis Who really cares that shows that conservatives are more generous than liberals, the religious more generous than the secular, and those from large families are more generous than the rest (which we discuss in some detail in the book).

Nick’s call for liberals to step up to (put some money into) the plate provoked a flurry of discussion on the Daily Kos website.

Conservatives are triumphant.

Liberals protest that conservatives seem more generous because they give to religious causes that are more of a club good than a public good. This complaint is only half correct - much religious giving goes to addressing social problems not the pursuit of religion per se (it is also worth noting that many Europeans give through voluntary ‘church taxes’, which are excluded from most international comparisons of charitable giving, so Europeans aren’t as mean as they seem).

Liberals also say that they want to give through their taxes rather than private charity. They are right that different social models have an impact on the scale and purpose of charitable giving - higher taxes and extensive welfare systems in Europe limit the supply of philanthropic funds and the demand for their services. But it’s a mistake if liberals think that government provision means that they don’t have to put their hands into their own pockets.

As we argue in the conclusion to the book, there is a growing recognition that the state does not have all answers to society’s problems. Private donors can do things that governments simply cannot. The philanthrocapitalists like Bill Gates are leading the way with their relatively large sums of money, tackling diseases like malaria and HIV/AIDS where governments have made little progress. But those sums of money are still tiny compared to government and the philanthrocapitalists are increasingly using their money to leverage changes in public policy.

This is controversial - polemicists on left and right see the donors on the other side as perfidious manipulators of public opinion. Which is why more and more philanthropists, on both sides, are looking for this type of ‘leverage’. That’s probably the best reason for liberals to start giving more - because it works.