There is a very real problem with the way we do the whole “philanthropy” thing. From who we call philanthropists to what we look for in a “good” non-profit, we have it mostly wrong.

Why? To quote James May, “Because you’re obsessed with things that don’t matter!”

Doing good is a messy affair. Though I can’t prove why, I think it is no coincidence that many human phenomena fit a Pareto distribution or at least follow the Pareto principle. Something about us as a species generates inequity in all that we do (which isn’t bad) but does so in really lopsided ways (which is bad). The key observation here is that doing good combats what comes to us naturally, and that’s why it’s a messy affair.

Charitable work goes against humankind’s path of least resistance and that makes it necessarily inefficient.

To focus on the efficiency of a non-profit, like how much of their money goes to “program” costs, is a useless measure. It says nothing about the quality of management, the treatment of employees, or the effectiveness of the organization.

What it does is encourages poor wages (a form of inequality), poor morale (a form of abuse), and an emphasis on cost control over effective management (which is waste).

It’s ironic that those we call philanthropists are the ones who have created inequality around them for their own benefit, and then further reinforce that inequality in the demands they make of charitable organizations.

I’ve attempted to capture the mechanism of economic inequality in my handy dandy chart above. I’ve also pointed out where I believe philanthropy sits and why it is ineffective as a means to combat inequality. I’ve also templated in where I think those with power can actually break the cycle.

It’s worth saying that this subject is one a facet of socio-economic inequality, and in its own won’t “fix” the problem. Instead, the intent is to highlight the faults in the way look at charitable organizations so that you can actually make a difference by supporting effective ones.