Philanthropy as Key Ingredient to American Capitalist Economy - NPQ - Nonprofit Quarterly

December 5, 2014; San Francisco Chronicle


<Forwarded from Planned Giving Design Center, 19 December 2014>



Ronnie J. Phillips is an economics professor at Colorado State
University and an expert in entrepreneurial economics. His take on
economics shows in a recent opinion piece that categorizes philanthropy
as “the backbone of American capitalism.”


In 2002, Phillips co-authored a piece
with Zoltan Acs of George Mason University contending that the
combination of entrepreneurship (“the creation of wealth”) and
philanthropy (“the reconstitution of wealth”) distinguished American
capitalism from other forms of capitalism. The usual theory is that
capitalist wealth generates and stimulates philanthropy, but they wrote
that philanthropy contributed substantially to American prosperity
through knowledge creation and entrepreneurship. It’s a theory that
makes sense for Phillips, who has spent time as a research fellow with
the Ewing Marion Kauffman Foundation, American philanthropy’s preeminent
supporter of entrepreneurialism.


In his new op-ed, Phillips suggests that “Spending and giving stem
from very different motives, yet both are crucial to maintaining the
vitality of a capitalist economy.” He writes that in addition to
entrepreneurial activity, “the other essential component of American
economic, political and social stability is philanthropy—that is,
distribution of wealth.” In other words, philanthropic altruism isn’t
standing in contrast to capitalist self-interest, but altruism, like
self-interest, contributes to the creation of opportunity and progress.
The excess returns of self-interest that create immense wealth flow into
philanthropy, which creates opportunities for future generations.


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Philanthropy as Key Ingredient to American Capitalist Economy - NPQ - Nonprofit Quarterly