Corporation
of New York
Vol. 4/No. 3
Fall 2007
Afghanistan at the Tipping Point
Easing the Transition from Immigrant to Citizen
International Philanthropy: Strategies for Change
Learning from Program Evaluation: Interview with Johann Mouton
Also in this issue:
A Long Island, New York, Perspective
Past Issues:
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by Judith H. Dobrzynski
Andrew Carnegie championed the idea of strategic philanthropy: he thought it was better to give people a fishing rod than a fish. Today, a new generation of international philanthropists is following his lead.
All over the world, headlines are telling a tale: Inspired by the highly public actions of the $30-billion-plus Bill and Melinda Gates Foundation and other big American givers, philanthropy is exploding—both spreading and growing as never before. Interest in it surely is, and there is strong anecdotal evidence that giving is flourishing in dozens of countries. By one count—the 11th annual World Wealth Report published in June 2007 by Merrill Lynch and the global consulting firm Capgemini—about 11 percent of the 9.5 million people around the world worth more than $1 million donated to philanthropic causes in 2006. All told, they gave away $285 billion, or about 7 percent of their net worth.
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Founder of hedge fund gave £230mSome experts believe that figure, which was drawn up this year by Merrill and Capgemini for the first time and was based on an economic model, understates the reality. The Center on Philanthropy at Indiana University estimates that U.S. donations alone, by large and small givers, reached a record $295 billion in 2006, up from $260.3 billion in 2005. In Europe, foundations are growing at what Susan Berresford, the outgoing president of the Ford Foundation, recently called a “remarkable” rate, with an average of 400 new foundations started each year over the past decade, for a current total of about 200,000.
In truth, it’s impossible to get a complete picture of global giving. “There’s almost no data on philanthropy in most countries,” says Paula Johnson, a senior fellow and expert on global philanthropy at The Philanthropic Initiative, a Boston-based nonprofit advisory group. “And definitions are different everywhere.” Plus, she adds, “a lot is still done quietly, anonymously, privately, without concern for tax reasons, so it’s not reported as philanthropy.” Making things very complicated, corporate “social responsibility” contributions are often lumped in with personal giving; in some countries, corporate giving can’t be separated from individual philanthropy because the books of family-controlled companies and personal assets are entwined.
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Diana Leat, director of creative philanthropy at the Carnegie
UK Trust—one of more than twenty organizations and institutions
founded in the U.S. and abroad by Andrew Carnegie—deems much of
the talk about big gains “hype” and “ill-informed.”
“There’s been a growth of intermediary organizations to support
high-net-worth individuals in giving,” she says, “but there’s
no proof there’s been an increase in donations.” The hike
in one common indicator, foundation assets, may stem more from stock market
gains than new gifts,
she notes.
Fair enough. But even if doubters like Leat are correct—that the value of donations has not boomed so far—the abundance of anecdotes suggests that, barring an economic crash or something else unforeseen, it will soon, as the acts of giving catch up with the announcements. What’s more, “competitive philanthropy,” wherein the super-rich strive to match or better donations of their rivals, seems to be taking hold in many countries—especially among youngish and still-active entrepreneurs. And there are undeniable signs of a different, more subtle, change—one that owes much to American philanthropy—that could be as important as the sheer amount of giving.
Contrary to much conventional wisdom in the United States, philanthropy was not invented here (although, according to Susan Raymond of Changing Our World, a philanthropic consulting firm, Americans have given away about 2 percent of total GDP every year since at least 1963, a rate she says is higher than anywhere else). As Vartan Gregorian, president of Carnegie Corporation of New York has pointed out in Some Reflections on the Historic Roots, Evolution and Future of American Philanthropy, an essay published by the Corporation in 2000, the modern concept of philanthropy—rooted in the Greek word philanthropos, meaning love of mankind—“evolved slowly, starting in Europe at the turn of the 17th century. At that time, there was a burst of philanthropic activity, mostly associated with forming mutual-aid societies and promoting humanitarian reform.”
Philanthropy, in fact, has a long history in virtually every country, every culture. In the past, it was most often based in religious practice, whether Christian, Buddhist, Jewish or Islamic. Today, it still tends to be charitable in nature, attempting to meet immediate needs of the poor, or elitist, favoring causes that satisfy personal interests of or lend status to the donor.
What distinguishes American philanthropy is its nature: Since the beginning of the 20th century, it has been institutionalized and it has been strategic. The great foundations started by the likes of Carnegie, John D. Rockefeller, and their successors, went beyond those that preceded them, beyond charity. They strived to assess needs, analyze the roots of problems, experiment with solutions, and aim for lasting impact.
“Since then, America has held the lead in philanthropy,” says Scotsman William Thomson, a great-grandson of Andrew Carnegie and an investor who lives in Perthshire. “A lot of people are looking back at his philosophy on philanthropy and thinking that this strategy has got lessons for today—you give people the means, the fishing rod, not the fish.”
“Now,” continues Thomson, who was once chairman of the Carnegie UK Trust and remains its honorary president, “the philanthropic model of the U.S. is being recognized much more globally, and people are saying ‘we want to do the same thing.’” In some parts of the world, Carnegie’s dictum that “the man who dies rich dies disgraced” is also taking root.
One doesn’t have to look far for evidence. Last July, Sir Tom Hunter, Scotland’s first billionaire, said he would give £1 billion to charities over the next ten years. His current fortune is estimated to be £1.05 billion. Hunter says he not only read Carnegie’s Gospel of Wealth, the 1889 essay in which Carnegie set out his philosophy of how private wealth should be devoted to public service, but also literally knocked on the door of Carnegie Corporation of New York for advice before starting his foundation, into which he has so far put £100 million (with more to come as that’s spent). In May 2007, Lord Sainsbury, whose London-based foundation has given away about £500 million since its formation in 1967, said he would donate his entire fortune before his death, amounting to about £1 billion over his lifetime.
Next page: Tom Hunter, 46, is
both emblematic of and outspoken about philanthropic trends.