Banking on Philanthropy?

There has been a lot of talk recently about philanthropy and banking, and the nature of the relationship between them. The two have often been linked ,which is probably unsurprising: On the one hand there is the fact that philanthropy (or at least the sort that involves money in some way) is at a fundamental level a type of financial transaction, albeit one motivated by ethics, religious beliefs, altruism or whatever. Banking is about financial transactions, so bankers should have some sort of affinity with the idea of using money to achieve social aims (at least that’s the theory). On the other hand there is the point that philanthropy is, in broad terms, about taking money from those that have lots and putting it to use for the benefit of those that have very little. And if you want to find people who have lots of money, the banking sector is a good place to look. As Willie Sutton famously replied when asked why he robbed banks: “Because that’s where the money is.”

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The talk about banks and philanthropy has come from a number of different angles: some people have linked it with the Occupy movement and the general calls for banking reform (for instance Timothy Garton Ash in the Guardian). The Church of England’s St Paul’s Institute issued a coincidentally timed report dealing with similar issues, highlighting the absence of Christian and moral values in the modern banking sector. Ian Hislop has chosen to turn to the past to compare today’s bankers unfavourably with their Victorian counterparts, in a programme to be broadcast tonight. And a report published today by a philosopher at Oxford University claims that ethically-minded young people should consider going into banking and being philanthropic if they want to have an impact, rather than going to work in the charity or development sectors.

All of these are interesting, and raise a range of different issues. The link to the Occupy movement is obvious on the face of it, as that is about people’s anger at the part modern banking has played in creating a huge wealth gap in society, and since philanthropy is concerned with trying to bridge this gap, it should have something to say. The question is whether you believe that philanthropy is the whole solution, a part of the solution, or merely a stop-gap until we address the real problems. It is clear that one of the preconditions for philanthropy is inequality, as you need to have people who have enough and are willing to give to those with less (See, for instance this paper by Rob Reich of Stanford University). But can you be an advocate of philanthropy at the same time as believing that we need to address the basic inequality in our society? I would argue yes, at least on pragmatic grounds. Even if the Utopian vision is of a society where all are equal, history tells us that the reality is never like that, and that there will always be haves and have-nots. For those who care about the health of society, it is perfectly consistent to encourage charitable giving to address the problems we face right now, while still aspiring to solve the underlying problems in the long term.

This issue of inequality being inextricably linked to philanthropy is also relevant to the historical comparison that Ian Hislop is trying to draw. The idolisation of Victorian philanthropy always makes me a bit uneasy, as the background is obviously that there was widespread and absolutely crushing poverty, as well as serious health and social issues, and no State provision (apart from the poor houses), so there was probably a fairly hefty element of “enlightened self-interest” on the part of Victorian philanthropists in cleaning up the areas where they lived and worked. Of course, one can argue that the whole point is that (for whatever reason) they did give vast sums and do great works, and with a few notable exceptions today’s financiers do not in the same way. I think there is a grain of truth in this, in that there is certainly room for far more giving from the City, and people’s attitudes to wealth and social responsibility are skewed, but it is much more complicated than: “Victorian bankers good, modern bankers bad”. It will be interesting to see what spin Ian Hislop puts on the argument.

The Oxford University report is interesting, and quite provocative. The author argues that for many ethically-minded young people, a career in banking  allied to a strong philanthropic approach would be the best way of helping society, rather than going to work in the voluntary sector. The rationale for this is that there are plenty of people who want to work in the voluntary sector, whereas there are not many philanthropically-minded people in the City, so those who are able would be better-off going into banking and expanding the pool of socially-conscious bankers. There is definitely a practical logic to this, but I have two main problems with the idea. The first goes back to the issue of philanthropy and inequality: basically what is being said is that you should buy into the system, at the possible risk of perpetuating the problem of inequality, in order to make money and then distribute it to the needy. This seems to require simply to accept inequality as an inescapable fact, unless the idea is to use philanthropy to address inequality and thereby “paint oneself out of the picture”? The second issue is the more practical one about whether this is a remotely appealing ask: can you really turn round to someone who cares deeply about social issues and tell them that rather than working directly to address those issues they should get on the money-making treadmill and do their do-gooding in their spare time? This also seems to go against the grain of a lot of other discussions of socially-responsible careers, which are at pains to point out how you can combine a businesslike approach with a social conscience by working in a social enterprise or in social investment. By comparison the “make money however you like, then give it away” paradigm seems quite old-fashioned.

One things is for sure: debate about banks, bankers, bonuses, philanthropy, responsibilty and reform will keep rumbling on for a while. There are some big issues at stake about our financial systems and our society, but in the meantime there is plenty of work to be done encouraging those in the banking sector to get involved in philanthropy and to give as generously and effectively as possible.

Rhodri Davies