Philanthropy plays a vital role in addressing pressing social issues, funding essential services, and supporting innovation where the public sector falls short. At Viewpoint Foundation, we believe it has the potential to spark transformative change. However, philanthropy also raises ethical questions, particularly regarding the power dynamics between donors and recipients. The question we are attempting to tackle in this article is, “How can philanthropists balance their power and responsibility in ways that create sustainable and equitable solutions?”
The Power Imbalance
At its core, philanthropy involves the transfer of resources from those who have them to those who need them, inherently creating a power imbalance. Donors often wield significant control over which causes are funded, how funds are allocated, and what outcomes are prioritized. Meanwhile, recipients—whether individuals, organizations, or communities—may feel compelled to conform to donors' expectations, even when these expectations do not align with their actual needs or long-term goals. (White, 2018)
This dynamic can undermine the very goal of philanthropy: to empower and uplift communities. When donors dictate terms too stringently, recipients may have little agency in shaping the interventions that directly affect them. The result can be a philanthropic ecosystem that reinforces existing power structures rather than disrupting them. (Callahan, 2017)
With Great Power Comes Great Responsibility
This power imbalance can be exacerbated by a lack of accountability and oversight. Because donors do much more than provide financial support—they influence the shaping of social outcomes—the fact that they are not democratically elected means that this influence can become problematic if their personal agendas overshadow the needs of the communities they aim to serve. (Callahan, 2017)
Philanthropists hold this transformative power over social, political, and economic landscapes. Their efforts can drive significant positive change, yet their ability to influence public policy outside the democratic process raises critical questions. Whose voices are being prioritized? Who sets the agenda? And ultimately, to whom should these philanthropists be held accountable? (Callahan, 2017)
Accountability must go beyond financial checks and reporting metrics. Donors have a moral obligation to ensure their efforts foster true progress by elevating the voices of those they seek to assist. This means moving away from a top-down approach and embracing a mindset of partnership. Open dialogue with communities is crucial to understanding root causes and co-creating sustainable solutions. (Beckstead, 2012)
Philanthropy has the potential to drive meaningful impact, particularly in areas where government support may be lacking or be slow to come to fruition. To fully harness this potential, we must ensure that philanthropy remains a collaborative, inclusive force for good—one that genuinely listens to and serves the communities it touches. (Callahan, 2017)
The Dangers of Philanthropic Paternalism
One of the ethical dilemmas in philanthropy is the potential for donors to act paternalistically, deciding what is best for communities without fully understanding their needs. This often stems from the fact that many philanthropists come from privileged backgrounds and may lack lived experience of the challenges they aim to address. (Kramer, 2018)
This can lead to interventions that may look good on paper but fail in practice, because they are not grounded in the realities of the communities they serve. This was witnessed by my mum when she was living in Malawi in the 1960s and 1970s. British philanthropists and charitable organizations would donate large modern farm equipment, only for it to sit abandoned in the fields once the gas ran out and the farmer couldn’t afford more, or it broke down and parts were too expensive or the farmer lacked the knowledge to fix it.
Trust & Transparency
I wrote an entire article in Invested earlier this year about trust-based philanthropy, a high-level description is that it is an emerging model that emphasizes the importance of relinquishing control and trusting recipients to use funds in ways they believe are most effective. This approach reduces the administrative burden on non-profits and allows them to focus on achieving their missions rather than meeting donor-imposed requirements.
Trust between donors and recipients is built on mutual respect and shared goals. Philanthropists should not only offer financial support but also listen to the people and organizations they fund. By creating open channels of communication and being receptive to feedback, philanthropists can foster more meaningful and effective partnerships. While philanthropy can indeed be a powerful force for good, Callahan (2017) warns, "when it operates without accountability or transparency, it risks undermining the democratic values it seeks to uphold." This invites reflection on the growing impact of philanthropy and the delicate balance between private influence and public governance.
Alongside trust, transparency is a key principle in addressing ethical concerns in philanthropy. Donors must be clear about their motivations, objectives, and the outcomes they expect from their contributions. (Callahan)
Ethical Wealth Creation & Redistribution
The ethics of philanthropy can also extend to how wealth is accumulated. Critics argue that some philanthropists seek to offset the negative impact of their questionable business practices by giving away a portion of their wealth, raising concerns about whether philanthropy can be truly ethical when the source of that wealth is problematic. (Harvey, et al., 2021) For an example, look no further than Mark Zuckerberg’s charitable giving with money generated by a platform that knowingly harms youth.
This dilemma underscores the need for philanthropists to not only give back but also examine the systems that allow for extreme wealth accumulation in the first place. Ethical philanthropy involves acknowledging the broader societal and economic context in which wealth is generated and considering how philanthropic actions can contribute to systemic change rather than merely treating symptoms. (Harvey et al., 2021)
The answer to the question at the beginning of this piece—of balancing power and responsibility in philanthropy—is an ongoing ethical challenge. Donors have the potential to drive significant social change, but they must do so in ways that respect the autonomy and expertise of the communities they seek to help. By embracing trust, transparency, accountability, and participatory models, philanthropists can mitigate the power imbalances that can occur through charitable giving and ensure their efforts lead to sustainable and equitable outcomes. Ultimately, ethical philanthropy is about using power not to control, but to empower—creating partnerships that pave the way for lasting progress.
Bibliography
Beckstead, N. (2012). Giving Well: The Ethics of Philanthropy.
Callahan, D. (2017). The givers: Wealth, power, and philanthropy in a new gilded age. Knopf.
Harvey, C., Gordon, J., & Maclean, M. (2021). The ethics of entrepreneurial philanthropy. Journal of Business Ethics, 171(1), 33-49.
Kramer, M. (2018). Are the elite hijacking social change? Stanford Social Innovation Review, 16(4), 68-70. https://doi.org/10.48558/FJGF-7148
White, G. (2018). The ethics of philanthropy. The European Legacy, 23(1-2), 111-126.