Blog post

Don’t Call Us a Charitable-Industrial Complex

4 min read
1 Aug 2013


A key question we at Giving What We Can ask ourselves is "how can we make the world a better place?" Currently, we think the best opportunity to do good is to donate to one of our recommended charities.

Peter Buffett, a son of noted billionaire philanthropist Warren Buffett, weighed in on his ideas in his new New York Times op-ed, "The Charitable-Industrial Complex". Peter Buffett writes about what he calls "philanthropic colonialism", where people would spend a lot of their money making donations essentially to feel better about themselves, without much regard to whether or not their donations were making a difference or avoiding unintended consequences.

This message is a good one. It's echoed here by Giving What We Can, and other organizations like "Good Intentions Are Not Enough", and is a core message of what we call the effective altruism movement.

However, this is not the message that Peter Buffett ends up running with.

It turns out Peter Buffett himself doesn't like thinking in terms of "return on investment" - he says:

With more business-minded folks getting into the act, business principles are trumpeted as an important element to add to the philanthropic sector. I now hear people ask, 'what's the R.O.I.?' when it comes to alleviating human suffering, as if return on investment were the only measure of success.

Here, he mischaracterizes philanthropists, at least the ones that I know. "Return on investment" or, rather, looking at how much impact one has per dollar of their donation, is not a fancy business term about cash flows. Instead, it's looking at actual outcomes precisely in amount of suffering alleviated, and figuring out how to alleviate the most suffering given our resources. The use of this kind of language was a response to Buffett's concern that charities weren't measuring their impact.

But that isn't even what Peter Buffett really is concerned about. His main worry is that the very act of donating itself is keeping people entrenched in a system of inequality that is perpetuated by those who can afford to donate. He says:

Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left. […] But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over.

It's hard to imagine this is the entire picture. Certainly there is harm done by economic inequality and some of it probably is perpetuated by large corporations. But there's also disease, famine, and natural disasters - none of which even the most sinister corporation could be causing.

And the donations the rich - or even the significantly less wealthy - give to our recommended charities are working. Things are actually getting better, not worse.

Peter Buffett appears to be suggesting that it is bad to make things better, because that reduces the chance of a dramatic change in society. However, as Jeff Kaufman wrote in response to Slavoj Zizek, even if a better system is coming, does our charity really delay it? If people don't get malaria, have more money, or grow up with fewer parasites are they any less empowered or motivated to change their situation for the better? If they are, is this effect very large? Is this effect large enough that your donation does more through indirect effects to delay the implementation of a better system than it does by direct effects to make people's lives better?

Peter Buffett also quotes some statistics about rising inequality, a somewhat misleading claim, but beside the point. The statistics he doesn't quote include the massive decline in extreme poverty, the decline in malaria rates, the eradication of polio, the decline in malnutrition, etc. Buffett calls this "kicking the can down the road", but we call it success.

Peter Buffett wants "a new operating system" for the world, something that is "[n]ot a 2.0 or a 3.0, but something built from the ground up". He says that the reason we can't do this is because we're short on imagination. However, what we're really missing is the specifics. We're short on actual alternatives for how the world could be and plans for coordinating everyone and getting them to agree to a new economic system.

Even if you think capitalism is the biggest thing keeping the extremely poor people down, Peter Buffett's plan to change the world is still missing something. His hand-waving is fine for those who are thinking big and imagining a better world. And thinking big is important. But for those of us trying to put his call for better aid into practice, we need specifics.

Political and economic change are potentially valuable. But we do need to know where to move our donations to make this happen. We need good arguments and evidence for why the specific changes proposed will be effective.

Peter Buffett's proposal is very short on that.

Image credit: CC-BY-NC 2.0 by Gerald Stolk