Posted on November 14, 2006

New Breed of Philanthropists Combines Entrepreneurial, Charitable Goals

The line between philanthropy and business continues to blur as a new generation of philanthropists, mostly young billionaires, apply capitalist tactics in the service of charity, the New York Times reports.

"Philanthropreneurs" such as eBay founder Pierre Omidyar, who is using investment capital and contributions from others to expand the microloan industry, and AOL co-founder Stephen Case, who is investing $250 million in companies that help consumers gain control of their health care, are driven to do good while earning a profit. It's an approach that reflects both the culture of the information technology field in which they made their fortunes — and their skepticism of the current foundation model, which they see as insufficiently effective and too slow in responding to urgent problems.

One of the more thoughtful practitioners of this "hybrid philanthropy," former eBay president Jeffrey S. Skoll, has committed $90 million through the Skoll Foundation to social entrepreneurs and their nonprofits, including the Institute for OneWorld Health, a nonprofit drug company, and KickStart, a nonprofit business that develops low-tech agricultural machines. Meanwhile, the Case Foundation recently awarded $5 million to PlayPumps International, a nonprofit group that is working to improve access to clean water in African villages. "The hard truth is Philanthropy 1.0 hasn't worked well enough," Case told a group of foundation executives in January, referring to philanthropic models that were spawned by the industrial capitalism of the late 19th and early 20th centuries. "If you'll forgive the computer metaphors, our system needs an upgrade."

Despite such bold assessments, proponents of the new philanthropy have attracted little criticism from experts in the field. At the same time, however, they have yet to wow their critics. "I come at this [wondering] what are the advantages the melded or hybrid models bring," said Mark Rosenman, a professor at Union Institute and University in Cincinnati. "While I have no problem with philanthropy and socially responsible business being joined, I do have one with a for-profit enterprise being called philanthropy."