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A woman in Mozambique uses an ethanol cookstove supplied by the Novozymes corporation to replace harmful, charcoal-based indoor stoves – and, not coincidentally, to expand its future markets for the ethanol it produces. (Jeffrey Barbee/Jeffrey Barbee)
A woman in Mozambique uses an ethanol cookstove supplied by the Novozymes corporation to replace harmful, charcoal-based indoor stoves – and, not coincidentally, to expand its future markets for the ethanol it produces. (Jeffrey Barbee/Jeffrey Barbee)

Welcome to the next generation of philanthropy Add to ...

The non-profit sector, meanwhile, is far from up to the challenge. Only 14 per cent of its funding worldwide actually comes from donations, according to the Bellagio Initiative – almost 40 per cent comes from governments. In truth, the vaunted “third sector” of charity and volunteerism can barely be called an independent sector, so tightly linked is it to government and big business.

As much as Philanthropy 2.0 is a victim of circumstance, though, there is also a sense that it has failed in its original mission to alleviate global poverty and disease.

There were some initial triumphs: UN agencies and major international charities began their efforts to eradicate smallpox worldwide in 1950 and succeeded by 1980; others spearheaded the Green Revolution, which ended large-scale famine in countries such as India in the 1970s. Today, many disasters and crises would be far more deadly if not for the highly evolved, fast-responding infrastructure of big agencies such as the Red Cross.

But in many areas, the world's troubles have seemed immune to charity's salve. A billion people still live on mud floors with no toilets and hardly enough food. Diseases such as typhus and cholera are not being eradicated as fast as they should. Over all, inequality and deprivation have yielded little to the trillions of charitable dollars thrown at them in the postwar decades.

And the main advances that have come cannot be credited to old-school charities. That includes the huge decrease in absolute poverty during the 1990s and 2000s (the rate worldwide plunged from 34 per cent to 25).

Researchers who polled thousands of individuals who managed to escape absolute poverty asked them what institutions and sources of income touched their lives. Not charities. Not Western foreign-aid programs. What brought people out of poverty was export-led economic growth and political stability.

The nagging question is whether Philanthropy 3.0 can do better. Its record, as we'll see, includes historic gains against AIDS in Africa. But on the other side there is the tragic mess in Haiti. This country's post-earthquake donation drive was the largest in history, with an astonishing $1.4-billion in private donations in four months. But despite the huge sums and the sprawling overgrowth of charities, there are few signs of improvement.

Some critics would even say that no matter what model they used, charities – by pouring free money into an economy that needed to start generating its own wealth – made things worse.

NEW YORK CITY: Rise of the philanthro-capitalists

In September, more than 50 prime ministers and presidents, dozens of billionaires, scores of Hollywood celebrities and scads of NGO heads and social entrepreneurs gathered in midtown Manhattan for the three-day annual meeting of the Clinton Global Initiative.

Mr. Clinton strode the stage like a faith healer, extracting promises of aid from businessmen and philanthropists (close to $10-billion at this meeting, adding to the $69.2-billion pledged to date) and nudging those with money and those with causes into impromptu hallway meetings.

“We've learned that if you have government and the private sector and the NGOs working together, they can do things faster, cheaper and better, so that even if there's less money, they can make the money they have go further,” Mr. Clinton said this week at his Manhattan office, where many of his group's 1,400 employees work. “You want to get everyone pulling in the same direction.”

At any moment at the summit, he might have been huddling with billionaire Carlos Slim, the Foreign Minister of China and an NBC news anchor to talk urban reform, or hosting an informal discussion on climate change with the leaders of Bangladesh, Mexico, Mali, Norway, Grenada and South Africa, with Forest Whitaker and Geena Davis in the audience.

In the midst of it all were Ashok and Amrita Mahbubani, an elegant couple who became wealthy running an electronics company out of Toronto.

For many years, their main manufacturing plant was in Haiti, operated by Ms. Mahbubani's Indian father, and his death in 2007 inspired them to start giving back. They set up their foundation, EKTA, with $1-million from his legacy. But instead of taking the traditional path – setting up an office and cutting cheques to the big charities and organizations – they decided to plunge into Philanthropy 3.0.

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