Why Philanthropy Matters

Why Philanthropy Matters by Zoltan J. Acs

Cover of “Why Philanthropy Matters”

Posted by Eileen Ellsworth

This is the second post reviewing the book “Why Philanthropy Matters:  How the Wealthy Give, and What It Means for Our Economic Well-Being” by Zoltan J. Acs (Princeton University Press 2013)

A core idea from “Why Philanthropy Matters” is that the classic arc of American capitalism starts with opportunity. Only then does it move to entrepreneurship and innovation, wealth creation, and ultimately philanthropy. This cycle of American-style capitalism has endured for centuries. Acs is fascinated with the question of why does capitalism flourish here? He believes it is because American policies, laws, and societal structures have not only made it possible but encouraged it.  Indeed, our institutions are fundamentally different from the rest of the world in this regard.

For example, an idle aristocracy never existed here as it did in Britain. In the 1700’s and 1800’s, the Puritans and Quakers innovated, worked hard, and accumulated wealth, a phenomenon which broke down the old world class structures. Wealth could now accrue to the “upwardly mobile” class through industry, not just inheritance. This “Bloodless Revolution” destroyed the existing monopoly on wealth and threw open the doors to opportunity for the many. And the emerging societal perceptions of wealth and opportunity shape our thinking to this day.

Above all, American philanthropy creates opportunity. Acs believes that without philanthropy, wealth stays concentrated in the few and innovation dies on the vine. One of the best lines in the book is this:  “American philanthropists don’t want to leave money to the next generation…They want to leave opportunity.”  Indeed, he calls philanthropists the innovators of opportunity.

Education has been a primary focus of opportunity creation in America. Acs takes considerable pains to explain how the evolving needs of American capitalism reinvented our higher education system. American universities began to move away from the old world “classic” education and move towards more practical courses of study. In 1862, the federal government provided funds to every state in the union to establish universities devoted to agricultural research and education, otherwise known as the “land grant” universities. These institutions focused on engineering, manufacturing, and industry, creating a virtual reinvention of higher education.

Acs argues that American capitalism had a huge impact on the evolution of higher education in America because there was a strong link between the two, namely, private philanthropy. Wealthy capitalists understood that academic research could promote innovation in the economy, and so they drove innovation in the education system. Over time, American universities became breeding grounds for innovative ideas around which entire new industries, systems and economies have been built.

In my next post on this thought provoking book, I will share Acs’ fascinating history lesson on the evolution of capitalism during the 20th century and its impact on modern philanthropy.

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