Three Facts about the “Charitable Industrial Complex”

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Have you ever heard of the “Charitable Industrial Complex”?  It’s a term coined last summer by well known songwriter Peter Buffet, son of Warren Buffet, about the infrastructure that surrounds charitable giving and the ways that our money truly gets spent when we give to charity for a good cause.  Here are some things you may not know, and be sure to check out Peter’s Op-Ed in the New York Times.

1. Sometimes our giving money to specific projects that outsiders think will help a community actually hinders it.  Peter gives the example in an interview on Canada’s “The Q” on CBC of projects where a well is built in a community.  Sometimes it is highly beneficial, giving an easy water source to locals.  But other times it is harming to the societal and cultural fabric that has built up around the trek to get clean water.  In our modernized world, we don’t consider that the walk to the well might be an important source of exercise, or a time to commune with nature, or catch up on the news around town.  Without easily accessible sources of information like the internet or newspapers, people in developing communities rely on each other to stay up to date on issues of concern.  Peter calls interference in this way “Philanthropic Colonialism”.

2. The problems that are being “solved” with charitable giving are sometimes being perpetuated by either a corporation in cahoots with the government, or are being exacerbated by the system of capitalism.  As in: Company A is employing lots of people to do Job X, but this is creating Environmental Harm Y, which we can “solve” with a charity effort.  But, Company A is still in business.  And Job X still exists.  So Environmental Harm Y isn’t going anywhere.

3. Infrastructure of charity work is employing a lot of people.  There are tons of jobs working for charities, and this is where a lot of the money is going – to keep people on the ends of the phone lines to take donations, or to create media like websites and commercials to promote giving.  Most of the money goes into keeping people employed, and the leftover goes to the actual cause.

Peter Buffet argues that we need a total system reset.  He calls for humanism in charity, and humanism in our world.  The gap between rich and poor is ever widening, without the middle to balance it.

What do you think?  Is Peter Buffet way off, or do you often question where the money goes when you donate a some of your hard earned cash to what you consider a worthy cause?