A new article in the Fall 2020 edition of The Stanford Social Innovation Review (SSIR), the premier global journal on social purpose innovations, focuses on the “Philanthropication thru Privatization,” or PtP, concept that has identified a major new source of social purpose finance involving the capture of proceeds from transactions involving government-owned or –controlled assets to foster private charitable endowments.
With enormous problems of broadband access, inadequate health care, and other societal inequities vividly exposed by the coronavirus pandemic, the need for such additional resources for social purposes has become more urgent than ever.
This SSIR article, “A Vast New Source for Social Purpose Finance,” offers a powerful introduction to this concept and the opportunity it opens up to the mobilization of social purpose finance from enormous transactions already under way in countries throughout the world. It also calls attention to the more than 600 foundations that have already resulted from such capture, including some of the largest and most respected foundations in the world.
Please consider sharing this article with your networks. You can read the full article at Stanford Social Innovation Review or you can download the article as a PDF from the PtP website at any time. Below is a brief excerpt from the article to get you started.
Excerpted from The Stanford Social Innovation Review:
By Lester M. Salamon, Johns Hopkins University
The conversion of government-owned or -controlled assets into charitable endowments, or “philanthropication through privatization,” has succeeded around the world in creating effective foundations for social good.
On February 21, The New York Times reported that Wells Fargo agreed to pay a $3 billion fine to settle criminal and civil charges stemming from its “widespread mistreatment of customers” over a 14-year period. Although the article noted that $500 million of the $3 billion fine would go to the company’s investors, it failed to explain where the rest of the $3 billion would go.
If past practice is any guide, most of such funds will go straight into the US Treasury. Some of the money may even go back to Wells Fargo to pay it for doing post hoc what it should have been doing pre hoc—i.e., protecting its customers from its own employees.
The Wells Fargo fines mystery is but one example of a much broader global phenomenon: massive flows of money from government transactions into black boxes. Trillions of dollars of assets around the world are produced from the sale, transfer, or regulation of common-use property or resources that governments own or control but that are being transferred wholly or partly into private, for-profit ownership and control. These transactions include sales of state-owned enterprises; debt swaps; royalties generated from state-regulated industries, such as lotteries or mining; transformations of cooperative or nonprofit institutions into for-profit enterprises; stolen assets; auctions of broadband spectrum; and penalties for corporate misdeeds of the sort illustrated by the Wells Fargo fine.