The End of Power (38 page)

The SEIU is still very much a union rather than some mutant new breed, and it has faced the burdens of size and unwieldiness in its own right. Among Stern's innovations was the combination of union locals into “mega-locals” of a million workers or more, in hopes of securing stronger
bargaining power—but at the cost, his critics argued, of flexibility, internal democracy, and actual results. And its rival Change to Win, which was born in 2005 and thus far has not been able to scale up SEIU's successes, represents an endorsement of the federation model, not a repudiation. But the nitty-gritty involvement of SEIU with community and immigrant groups, churches and nontraditional allies suggests that in order to maintain their own relevance, the large industrial unions of the past need to embrace new methods and languages and share power with smaller, outside parties.

There is no country where more workers have more at stake than China, the world's largest industrial economy by population. China has fueled its intense economic growth by encouraging the development of a massive infrastructure of factories, many owned by foreign firms or their local subsidiaries, where thousands of workers, mostly young migrants from the countryside, work long hours and live in company dorms and eat and socialize with one another. These factory campuses can serve a population of up to several hundred thousand. The high demand for workers has meant that firms have gradually had to improve conditions, but worker organizing has been taboo. Like many authoritarian countries, China has a system of official labor unions that are part of the overall Communist Party architecture, less vehicles for worker demands and benefits than agencies that contribute to social control. Therefore, rather than attempt collective bargaining, individual workers have responded to poor conditions by job-hopping. And the young labor force typically works in the factories for a number of years only in order to prepare for marriage or send money home.

But Chinese plant workers have taken increasingly bold—and effective—collective actions to demand better treatment from their employers while bypassing the irrelevant official union structure. Strikes, which experts say have quietly gathered momentum in the factory towns of southern China, burst into world view in early 2010 with conflicts at Honda car parts and other factories. The workers demanded the right to form independent unions to hold real management-labor talks, while at the same time creating them de facto, surprising even Chinese labor advocates with the sophistication of their organization and election of shop stewards. The young workers also impressed observers by their adept use of technology to organize strikes and avoid, say, having to gather all of the leaders to meet in person where they might get arrested. They knew to avoid the main Chinese messaging service
QQ.com
because of its high population of government spies.
Honda, Toyota, the Taiwanese firm Foxconn (which manufactures iPhones), and other industrial employers agreed to wage and food and housing allowance increases, albeit not as large as the workers demanded. This success might not have happened without the labor shortage then developing in the overheated economy. Still, what happened in China demonstrates how much easier it has become for workers to self-unionize at the local, plant level when official unions are unresponsive or uninterested in serving them.
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Some emerging models in labor activism have come through organizations that are not unions at all—in fact, ones that have taken root in industries and areas where unions have found organizing to be too complicated and costly. One example comes from Los Angeles, where the Garment Worker Center—a small, compact team of activists drawn from progressive lawyers, immigrant rights groups, and representatives of ethnic communities—managed to score major victories against companies that relied on sweatshop labor. With a large number of small factories mostly staffed by undocumented workers with poor English, working up to twelve-hour days in conditions that often violated health and safety rules, the sector was urgently in need of intervention but extremely difficult for a traditional union to take on. But the Garment Worker Center led successful boycotts that spurred settlements with several of the clothing labels that used these workers' production. Small in size, and drawing on resources from multiple organizations in different specialties, worker centers are complementary to unions but operate on a nearly opposite model. They are also on the rise: from just 5 worker centers in the United States in 1992, to 160 in 2007.
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The last two decades have seen a revolution in global giving. Even with the impact of the global recession, the available data suggest that more donors are giving more money to more people than ever before. To take just one rough number, from 2003 to 2010, the combined amount of official and private development aid from around the world rose from $136 billion to $509 billion.
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Americans in 2010 contributed $291 billion to various causes,
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and the number of US grant-making foundations continues to grow, from 21,877 in 1975 to 61,810 in 2001 and then 76,545 in 2009.
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Together, private individuals and institutions are beginning to catch up with and in some cases displace official government efforts overseas. During
the 1990s, for example, international giving by American individuals and institutions quadrupled. It doubled again from 1998 to 2007, reaching $39.6 billion, a sum more than 50 percent larger than the World Bank's total annual commitment. And charity is also getting a new face, whether the eighty-one American billionaires who as of 2012 had signed the Giving Pledge to give away most of their fortunes, the hundreds of thousands of cellphone users who texted millions of dollars in earthquake relief donations to Haiti, or the legions of “venture philanthropists” who gather in workshops, make field visits to inner-city schools or rural projects overseas to inspect firsthand the projects they fund, and exchange ideas and best practices in forums online.

Big foundations (Rockefeller, Carnegie, MacArthur, Ford), big relief agencies (the Red Cross, Oxfam, Doctors Without Borders), and big government agencies (USAID, Britain's DFID, multilaterals like the World Bank) still play a major role in channeling funds and technical support to the world's afflicted and poor. In fact, by many measures including total outlays, they still dominate the field. But the momentum is with new players: mega-foundations that have vaulted to preeminence such as the Bill and Melinda Gates Foundation, which became the world's largest in barely a decade; individual and small-scale foundations, which have mushroomed in the last fifteen years; and a constellation of private-aid platforms, marketplaces, aggregators, and advisers that are building new models from micro-loans for one Indian mother's sewing machine to public-private financing initiatives for new city buses.

Today's revolution in philanthropy shares two major traits of the previous one a century ago, when the titans of industry set up the Carnegie Corporation (1911), the Rockefeller Foundation (1913), and, a bit later, the Ford Foundation (1936)—massive and influential institutions that for decades were global models. Now as then, the transformation of philanthropy under way is following a period of spectacular wealth creation, this one stemming from information technology, communications, and life sciences instead of from railroads, steel, and petroleum. And once again the hub of innovation in philanthropy is the United States, the country where private giving is most tightly woven into the fabric of business culture.

A proponent of “scientific philanthropy,” Andrew Carnegie believed in delivering charity according to the principles that worked in modern industry, the same principles that built the new corporate giants of the early twentieth century. He urged that the wealthy of his era “apply to their philanthropy
the same entrepreneurial skills and zeal for efficiency that they employed in its accumulation.” Logically enough, the result was the creation of huge institutions with a wide range of activities. The boards and program officers of the big foundations became key players: their funding patterns were bellwethers for other donors, and their choices of projects were models for would-be recipients.

Small individual donors, meanwhile, had few options for direct involvement in the projects their money supported. Channels for charity were not lacking: organizations such as the United Way, March of Dimes, Red Cross, the Salvation Army, and numerous religious groups collected donations in churches, shops, and workplaces and applied them toward the causes they deemed most needy and best fitting their philosophy. In other wealthy and emerging economies, a top tier of relief organizations developed over time. By the 1970s and 1980s, residents of wealthy countries could expect to get in the mail year-end and emergency appeals on behalf of disaster victims (MSF, Oxfam), endangered species (WWF), political prisoners (Amnesty International), and so on. All were worthy, but only a few gave small donors the chance to make a lasting commitment to a specific project or recipient, let alone communicate with recipients or send insights and share experiences along with their money. For that, you had to be rich.

Today's new breed of philanthropists offers a different vision, one informed by their backgrounds, their needs, and their own experiences in the marketplace. Start with their origins. The Bill and Melinda Gates Foundation, with its creation in Seattle in 1994, may be the 800-pound gorilla of modern philanthropy, but it is far from the only foundation born out of the wealth generated by the new economy. In California, for example, the number of foundations jumped by 71 percent from 1999 to 2009, and giving more than doubled from $2.8 billion to $6 billion.
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Such growth helps to explain the shift in philanthropic gravity in the United States over the last decade: in 2003 the West surpassed the Midwest in overall giving for the first time, and in 2006 it overtook the Northeast, the bastion of American philanthropy.
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While many of these new individual givers—the number of family foundations shot up by 40 percent from 2000 to 2005—are tech moguls of one stripe or another, some are also celebrities practicing what one wag at
The Economist
dubbed “celanthropy” (celebrity plus philanthropy): Bono with his One Foundation, Matt Damon promoting access to clean water, and Brad Pitt developing greenhouses to rebuild New Orleans. Mega-star athletes, such as Tiger Woods or
Andre Agassi, have foundations that control tens or hundreds of millions of dollars in assets. But many more are the small personal foundations of middling, journeymen NFL, NBA, or European soccer professionals whose names are little known beyond ardent fan circles.

For many of these new givers, the attitudes and methods of traditional philanthropy are anathema. Rather than give to big institutions, for example, they want to create their own. For the donor, a potential benefit of an individual foundation is the ability to select who gets what funds, and on what terms, without delegating those functions to some other agency. It helps set up a “short route” for philanthropy, cutting out intermediaries whose presence risks absorbing administrative costs as well as diluting or diverting the donor's intent.

Instead of funding the opera, libraries, or museums, they are much more likely to tackle concrete problems, applying their own business experience and methods. While such “outcome-oriented” philanthropy has been around for more than a century and bore fruit in the campaigns that led to the Green Revolution, its evidence-based, goal-focused approach has been championed in the last two decades by veterans of the tech community, who have applied their entrepreneurial mindset and engineering skills to some of the world's most intransigent problems.

Indeed, for many of these new players, philanthropy is no different than a business investment. A deliberate echo of venture capital, “venture philanthropy” reflects the application to charitable giving of that type of investment—selective and hands-on, aimed for the medium- to the long-term, and combining debt and equity stakes. Like venture capitalists, venture philanthropists have particular tastes and favored investment profiles. An organization called Venture Philanthropy Partners, for instance, aids groups that serve children in the Washington, DC, area. It doesn't just give money but also provides technical support and day-to-day involvement in the life of the groups it funds, and stringently monitors their progress. A group called Acumen Fund supports entrepreneurs in developing countries who meet very particular criteria: their venture must be a product or service that directly serves the poor, and it must be scalable to reach a population of at least 1 million. One recipient, for instance, was a start-up to provide rural retail and information kiosks in India. Acumen delivers support partly in grants, but mostly in loans and equity investments, largely blurring the line between business and philanthropy. The amounts involved are still small: in 2007, Acumen's loan portfolio was $27 million. Still, when one considers it was founded with only $400,000 in 2001, and
that it is just one of a flotilla of new venture philanthropies, the speed of its success underscores a broader trend.
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But the most radical transformation in philanthropy today is the rise of tools that allow small individual donors or lenders, operating at a scale of just hundreds or even tens of dollars, to make the kind of specific, directed, involved contribution to a particular recipient or project that was impossible outside one's immediate neighborhood or circle of acquaintances.

This transformation has taken place mostly on the Internet. Kiva, founded in 2005, bundles small contributions as micro-loans to recipients around the world who are identified by name and can send updates to their individual funders. GlobalGiving, set up by two former World Bank employees in 2002, follows a related model in which donors support specific projects that they select. Using the global Web-based payments network PayPal, ventures like these are able to carve a short route between donors and recipients while keeping their own costs low and their organizations lean. Of course, the route can get only so short: Kiva and GlobalGiving rely on local micro-finance institutions and NGO sponsors to winnow their potential applicants and channel funds on the ground. The availability, competence, and institutional support for those remaining intermediaries are essential to the method's success. Still, the model allows anyone with an Internet connection and a few spare dollars to support, say, the conversion of taxis in Bolivia to natural gas, student loans in Paraguay, or a garment business in Cambodia (to cite some recent examples from Kiva).