It’s the season of giving, and for the next two weeks we’ll be focusing on philanthropy and volunteering. Here, Stephen Pavelin and Lynda Porter of the Centre for Business, Organisations and Society at the University of Bath, discuss some of the many important questions and challenges that philanthropy poses - for us as individuals, and for business.
After the stampede to discounted consumption that we witness on the last Friday of November - Black Friday- the following Tuesday has been designated Giving Tuesday. In the UK, Giving Tuesday is an initiative driven by the Charities Aid Foundation (CAF), which describes it as “the day to do good stuff for charity”, or “one day to make a world of difference”.
Focus on philanthropy
Giving Tuesday seeks to direct the public’s attention to the possibility of charitable giving; but not only this – Giving Tuesday applies to corporations too. CAF proclaims that by taking part, you and I will “be joining some of Britain’s biggest brands.” Whether it’s eBay or Sainsbury’s, BT or Argos, these companies and many more have committed to charitable endeavours on the big day.
Spurred on by Giving Tuesday, the Bath Business and Society Blog will, for the next few posts, focus upon philanthropy and some of the many important questions and challenges it poses for all of us, and for business. So, watch this space for thoughtful contributions on the motivations and effects of volunteering, the potential for businesses to incentivise charitable efforts, and philanthropy as a transformative regional phenomenon (through an update from the GeNErosity Festival).
Do we give enough?
Ahead of that, and to get the ball rolling, let us consider a key question: Do we give enough to charity? Giving Tuesday seeks to promote greater generosity, which appears to imply that we need to give more. Why, though, would we – and the corporations that thrive in our society – not give enough? This is a big, and perhaps deceptively complex, question.
Popular debate on the topic covers many arguments about the rise of consumerism, economic inequality and the breakdown of social cohesion (and more). Instead, let’s turn to some simple ideas from economics.
Milton Friedman wrote:
It can be argued that private charity is insufficient because the benefits from it accrue to people other than those who make the gifts… We might all of us be willing to contribute to the relief of poverty, provided everyone else did. We might not be willing to contribute the same amount without such assurance.
Capitalism and Freedom (1962, pp.190-1)
That is: social issues tend to affect many people; also, many people – who may be directly affected or not – care about social issues and might, accordingly, wish to donate to charity. If we, as potential donors, could somehow know that others would donate enough to fix the problem, we would feel happy that the affected people had got the help they needed – better still, the donations of others would save us the expense. Conversely, if we could know that others would not donate, we may be deterred from donating by the feeling that our lone, likely futile efforts would carry more than a fair share of the burden. Thus, there is a so-called free-rider problem that undermines each potential donor’s incentive to donate.
This, perhaps, is the reason why there has long been broad political consensus behind the idea we should fund the alleviation of poverty and other social issues through general taxation, so everyone pays their fair share. However, Friedman’s simple logic doesn’t fully capture the complexity of philanthropic giving, perhaps because his logic is built upon three core, but (as pointed out by Robert Sugden and others) questionable, assumptions:
Solutions to social issues are a public good. At first, this seems quite reasonable. However, it disregards the warm-glow factor - the pleasure one derives from behaving in a kind and generous way rather than a wholly selfish manner. Such private rewards to generosity should promote greater giving.
People maximise their own well-being. A classic assumption from economics but one which offers a greatly simplified view of human psychology. What about altruism that applies across families, across communities, and across the global village (and even across species)? What about our preoccupations with our individual identity (as a good, fair, responsible person) as perceived by ourselves and others? Once we acknowledge more complex motivations for human behaviour, we find a host of additional drivers that can promote giving.
When deciding how much (if anything) to give, each individual takes everyone else's donations as given. This assumption works quite well for big social issues and big charities – what difference does my £5 really make to a major charity like Save the Children? However, for smaller campaigns, particularly at a local level, single donors can lead the way and make a tangible difference. An individual, yet visible and influential, donation can not only deliver significant improvements in social welfare, but also engender a culture of giving.
So, do we give enough? From the pressing concerns that face our natural environment and the most vulnerable members of our society, it certainly appears that we are not suffering from an excess of charitable work. Perhaps, Friedman’s simple logic explains some tendencies that dampen the philanthropic urge. However, we must not overlook the considerable contributions to fundraising and charitable work of many who commit their time, money and efforts to the welfare of others. Their contributions appear to exceed Friedman’s imagination.
Header image by Howard Lake, under licence CC BY-SA 2.0