Acton Institute Powerblog

The philanthropist’s dilemma — good intentions, harmful effects

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Tim Sullivan, editorial director of Harvard Business Review Press, took a look at how difficult it actually is for philanthropists to give their money away and focused on the case of Paul English, founder of kayak.com. In a Harvard Business Review article titled “The Philanthropist’s Burden” in the December issue, Sullivan talks about how, despite many causes to support, the real trick is to find the most effective organizations. He uses the Acton Institute Poverty, Inc. documentary to show how nonprofits, governments, and socially conscience businesses in the global foreign aid industry have often done more harm than good.  He says this:

English did have other options. He could have decided to donate a significant sum to some well-established charity organization, one that appears to be doing God’s work in eradicating global poverty. But even in that direction lie hidden dangers, exposed by a 2014 documentary, Poverty, Inc., that explores the equilibrium that the international aid community and social entrepreneurship have created in the developing world. Director Michael Matheson Miller reviews the situation in Haiti in particular and in some sub-Saharan African countries, and finds that the perfectly legitimate desire to help, which often manifests itself in the form of cash and in-kind donations, keeps the developing world in its developing state. Gifts from individual philanthropists, nonprofits, governments, and socially conscious businesses have created a state of dependence. When a country is awash in free money, free clothes, and free food from the developed world, it’s nearly impossible for local farmers and entrepreneurs, even formerly successful ones, to compete. Industry dries up, but the residents can’t always rely on specific kinds of aid, since it’s inconsistently delivered.

That’s not to condemn any person or organization with good intentions—the filmmakers are very careful on this point. No one is ungracious about the aid offered. But the single most important message to come out of Poverty, Inc. is from aid recipients themselves: Stop. Stop giving us free stuff and help us figure out how to build sustainable businesses that will have positive and long-lasting impact on our communities. The free shoes sure were nice for a while, but we’d really like to build our own shoe factories instead.

The message behind Sullivan’s article is that just throwing money at an issue doesn’t fix it and often times it can make the situation worse and Acton Institute Poverty, Inc. documentary displays this.  Before a philanthropist decides how to donate their money, its effects should be taken into consideration.

You can read Sullivan’s article ‘The Philanthropist’s Burden’ at the Harvard Business Review here.

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Kyle Hanby