Philanthropists and transactional approaches to funding and resource exchange

Philanthropy has been viewed as an ethical behavior stemming from moral virtue or moral duty. When philanthropic actions are conducted in exchange for what could be construed as personal gain, then what would be a moral act becomes a transactional or even selfish one. Donating money in exchange for some other gift, service, or benefit is not the same as selflessly bequeathing the same. “Pure philanthropy...is a transfer rather than a transaction in the sense that nothing is received in return,” (Keating, Pitts & Appel, 1981, p. 816). However, it may be unrealistic to expect that all philanthropic behavior stem from a sense of moral duty. The concept of a “pure” philanthropy in which efforts are transferred would also preclude any donation that was not anonymous, because of the way public recognition can be leveraged for personal or organizational gain.
In fact, the motivation for transfer and transactional philanthropy is different (Chapman, 2016). Whereas the transactional donor does respond to benefits like recognition or seats to a gala dinner, the transfer philanthropist has a transformational attitude: their gift is designed to bring about the desired social justice change (Chapman, 2016). It is possible to achieve transformational philanthropic goals while marketing social causes as transactions, but ultimately the marketing techniques will be different. The appeals to a transactional donor will be for some service or goods in exchange for the donation, whereas the appeal to the transformational donor will be directly related to the cause itself.
The trend towards corporate social responsibility reflects some of the differences between transactional and transformational philanthropy. When corporate social responsibility is framed as an economic necessity for a firm to remain competitive, gain market share, promote a brand, or attract or retain customers, then whatever social justice or environmental causes are purported become secondary to the benefits to that organization’s success. Many philanthropic transfers are done to save money on taxes, or to cover up for gross injustices perpetrated by the organization. On the other hand, when an organization more genuinely sacrifices something in the form of transference of resources or a fundamental change in its operations, it demonstrates the principles of transformational philanthropy.
The transactional view of philanthropy has become popular, leading to a generation of so-called “new philanthropists” (“The New Philanthropists: More Sophisticated, More Demanding — and Younger,” 2013, p. 1). Represented by the likes of Eric Trump, new philanthropy cannot be dismissed, discounted, or disparaged just because it is not “pure,” (“The New Philanthropists: More Sophisticated, More Demanding — and Younger,” 2013, p. 1). The transaction still achieves the shared goal of desired social change. Transactional philanthropy can cause changes to social norms and inspire other potential donors to take notice. Moreover, there are still a lot of new philanthropists who are both transactional and transformational in that they demand results and accountability instead of simple brand or name recognition (“The New Philanthropists: More Sophisticated, More Demanding — and Younger,” 2013, p. 1).
Philanthropic acts do not always stem from virtuous intentions. Only when an organization or individual uses philanthropy as a means to divert public attention away from nefarious or destructive behavior can transactional philanthropy be criticized. Even then, any donation or philanthropic activity is preferable to taking no action at all. Many of the benefits of philanthropy—such as name recognition—also serve a dual purpose in that they help raise awareness for the cause. The trend towards transactional philanthropy reflects basic behaviorism: people do respond to rewards. Instead of expecting all philanthropy to be morally motivated, it is more helpful to recognize the ultimate need to solicit contributions for important social justice, environmental, or public health causes.




References

Chapman, C. (2016). Philanthropy trends. https://www.linkedin.com/pulse/philanthropy-trends-transactional-vs-transformative-chapman-cfre/
Keating, B., Pitts, R. & Appel, D. (1981). United Way contributions. Southern Economic Journal 47(3): 816-823.
“The New Philanthropists: More Sophisticated, More Demanding — and Younger,” (2013). Wharton. http://knowledge.wharton.upenn.edu/article/the-new-philanthropists-more-sophisticated-more-demanding-and-younger/