Carnegie Reporter, Vol. 4, No. 3 | International Philanthropy: Strategies for Change, page 4

The Gates Foundation’s attempts to reduce poverty in Africa, Barro continued, should learn from China and India, where together 390 million people escaped poverty between 1970 and 2000. “An important clue is that the triumphs in China and India derive mainly from improvements in governance, notably in the opening up to markets and capitalism. Similarly, the African tragedy derives primarily from government failure.”

At the far other end of the spectrum sit those who believe a bit less in the individual and a lot more in government than Americans do. Among other things, they worry that governments will use the rise of philanthropy to abdicate their responsibilities. Even in the U.K., long after Thatcher, Diane Leat says, “We still believe in government, that we have a right to education, to health care, and so on. Those things should not depend on charity.”

Leat speaks more to attitude than actuality. Even in the U.S., total giving in 2006 would have covered not much more than 1 percent of the federal government’s outlays. Adding in what states and localities spend makes philanthropy seem even more minuscule. Fully aware that officials may be tempted to off-load some duties, big foundations like Gates have been careful to leverage their spending in partnerships with governments.

Class envy also clouds the picture: some people in many countries remain uncomfortable with the very idea of others making a ton of money. Tom Hunter’s recent announcement that he would give £1 billion to charity, for example, was greeted with both plaudits and some of the cynicism and resentment that met Carnegie and Rockefeller. “The real philanthropists are those who work for Mr. Hunter or in the economy more widely for less than they need to lead reasonable lives,” read one posting on the Glasgow Herald’s website. “Hunter knows this, hence his guilt buyout reaction.” Another echoed: “Let’s look at exactly how he made his money. People literally working as slaves so that he could afford his lifestyle. He should be apologizing to them and paying them wages they should have got. I’m not impressed with ‘venture philanthropy.’ He’ll still be a billionaire in 10 years with some nice tax write offs from his charity.”

Hunter, who’s focusing his gifts on both Scotland and, in conjunction with Clinton, on Africa, says his critics are “a small minority that feel philanthropists are trying to buy influence. Hopefully, we can present this as a good thing. We want to make things better, and we never force people to do anything.”

A few governments, fearful of losing control, are also wary of the growth of philanthropy. Notably, Russia’s. As the country shed its Communist ways in the ’90s, some groups there notoriously misused their tax-favored and nonprofit status. Others drew support from Western foundations and individuals, which seems to have set off warning bells with Russian officials. Any group connected with promoting democracy, as many did, became problematic. Today, says Rob Buchanan of the Council on Foundations, the Russian legal system is “not supportive. The government views philanthropy as a threat to its authority.” Still, Alliance magazine, which covers global philanthropy from London, recently reported that at the end of 2006 more than 20 wealthy Russians had their own private foundations. “The largest of them, the Volnoe Delo Foundation, made grants of over $36 million in 2006,” the magazine reported.

Count all those factors influencing the willingness of givers—and the history and culture, economic strength and distribution, corruption and trust, ethnic and religious makeup of each country—and it’s easy to see why the development of philanthropy varies all over the globe. “Things are moving at a different pace in each country,” Buchanan says.

Mexico and South Africa: Snapshots of Philanthropy
A look at Mexico and South Africa, both wealthy in many respects, both laden with new billionaires, but both plagued by very unequal income distribution, shows that the will to create a philanthropic culture doesn’t mean it will be easy.

In Mexico, no one has worked harder at it than Manuel Arango, a former retail magnate, educated in the U.S., who sold out to Wal-Mart and then became a real estate developer. By giving both money (an average of $4 million a year for the last decade, primarily to environmental causes) and time (80 percent of his working days, most to CEMEFI), Arango has set an example. Dulany calls him “a stellar figure,” adding “he is a mentor, he is a prodder.” Arango spearheaded the creation of CEMEFI’s awards to companies that meet social responsibility criteria, opening many corporate wallets. He has also pioneered cause marketing.

Yet, aside from Arango himself, and Carlos Slim, there are few noted Mexican philanthropists—perhaps a handful. Daniel Yoffe, the consultant, cites Lorenzo Servitje, the founder of Grupo Bimbo, who received the Woodrow Wilson Award for Corporate Citizenship, as one. Arango mentions José Ignacio Avalos Hernández, a cosmetics executive who has organized a large micro-credit program. And when chocolate-manufacturer and real estate developer Gonzalo Río Arronte died several years ago, he bequeathed $600 million to his eponymous foundation, which has helped clean up water supplies, among other things.

These examples, Yoffe says, “tend to be the exception rather than the rule, mainly because they belong to a generation for which philanthropy wasn’t a main concern.” The state or the church provided, and the wealthy focused what charitable contributions they made on very local issues (a nearby school, say) or “elitist” institutions. And so, he continues, “for the moment” no one looks likely to develop into a Carnegie or a Gates.

Arango explains the biggest hurdle this way: “In the U.S., you have the detonator of foundations—you have the inheritance tax. We don’t, and so in Mexico there is no incentive.” He insists that “we have made a lot of progress” in the past 20 years; CEMEFI has hundreds of donor-members—family foundations, community foundations, and operating foundations. But, Arango concedes, “We have very few foundations with large endowments and the purpose of donating money.”

Next page: Arango worries that Mexico’s younger generation isn’t thinking about philanthropy either, unlike their colleagues in other countries.

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