September 20th, 2021

Can philanthropy reduce inequality in a post-Covid world – and, if so, how?

By Dr. Johannes Lundershausen




The response of philanthropy to the pandemic has been unprecedented. It has committed more than US$ 20 billion to flattening the curve of infections and to helping the hardest-hit communities. But, while these communities have been grappling with the economic effects of the worst global recession since the Second World War, the world has gained more than 5 million new millionaires.  

Inequality is, paradoxically, both the basis of philanthropy’s power and the biggest problem that philanthropists seek to tackle. Most funders fight the root causes and the consequences of inequality in particular areas, be these education, gender or health. Climate philanthropy is another area where inequality needs to be fought – those who suffer the most from the effects of the climate crisis have done the least to create it. 

The relationship between philanthropy and inequality is complicated. Inequality is rising even as philanthropists dedicate unprecedented amounts of money to fighting it. Last year, for example, Jeff Bezos, the founder and executive chairman of Amazon, generously committed US$ 10 billion to tackle climate injustice. At the same time his personal wealth skyrocketed: since the start of the pandemic his fortune has grown by two-thirds and now stands at US$ 75 billion.  

Probing existing funding routines 

To address this paradox, more and more philanthropists are embracing the challenge of reconciling their privilege with the fight against inequality. Their approach has also driven philanthropy’s response to Covid-19 (see our recent blog post), which has been about more than just committing additional resources: many funders have seized this critical time to experiment with new forms of grant-making. For example, they have partnered with other donors to move faster or they have developed joint grant applications to reduce the burden on grantees.  

The challenge for the sector now is to anchor these new forms of grant-making in other funding areas, including that of climate change.  

How can this be achieved? There is clearly no one way to reduce inequality, but there are some measures that can be taken to support funding approaches that are geared towards changing systems that produce inequality. I propose three questions that will help to challenge funding routines and open ways for philanthropy to address inequality.

Three questions that philanthropists seeking an equitable world need to ask   

1. Am I treating root causes?

Inevitably, not all funding focuses, first and foremost, on inequality. But the individual challenges that philanthropy aims to address are all ingrained in larger economic systems. For funding to have the biggest impact possible on seemingly unrelated issues, philanthropists will have to think about what features hold those systems together (e. g. economic growth and financial value as measures of sucess), what stories drive them (e. g. that economic growth equals prosperity for all), and how these can be changed (e. g. by promoting ecological, social and economic sustainability as measures of success). 

2. Am I embracing risks?

Tackling root causes necessarily means dealing with the uncertainty of what new systems will look like. Philanthropists have the unique freedom to decide how their resources are best used and they can support approaches that are not yet tried and tested. Social justice experiments and prototypes – e. g. trials for a universal basic income – are essential ways of disrupting inequalities. Collaborating with other funders and consulting experts are key to diversifying and mitigating related risks.  

3. Who benefits?

Those who are hit the hardest by the consequences of inequality must be the ones to benefit most from any form of philanthropic engagement. For example, coastal communities in the Global South are at the frontline of climate change which has been caused by countries in the Global North. A good way to ensure the benefit to frontline communities would be to involve them in decision-making throughout the funding process – in jointly defining the problems to be tackled and selecting grantees. This does not just serve to restore those communities’ agency; it also gives funders the insights needed for creating substantial change.

Philanthropy’s role in unsettling injustices 

The greatest task and responsibility of funders is to define their role in disrupting injustices. Funders alone will never achieve the large-scale transformations required. But they are uniquely placed to support the emergence of new patterns and to sustain meaningful movements in the lead-up to the eradication of injustice. It takes courage to do this, but it will be a stand worth making.