by Judith H. Dobrzynski
Strategies for Global Change
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.
Founder of hedge fund gave £230m to charity“The founder of a highly successful City hedge fund has emerged as Britain’s most generous philanthropist. Chris Hohn, who established the Children’s Investment Fund more than five years ago, donated £230 million to the hedge fund’s charitable arm last year....”
—Daily Telegraph, July 3, 2007
Donation State: Taxpayers Fuel Charity Boom“A national charity boom is being led by [New South Wales] taxpayers, who are giving away a bigger share of their incomes as tax-deductible donations than people in any other state....”
—Brisbane Times, Australia, May 7, 2007
Practice of Philanthropy Stressed“Speakers at two separate meetings in Rajshahi and Barisal stressed on the need for revival of the traditional practice of philanthropy for well-being of mankind....”
—Daily Star, Bangladesh, April 27, 2007
International Youth Conference on Philanthropy Starts in Yambol“Around 100 young people will take part in the International Youth Conference on Philanthropy, which is held in the Bulgarian town of Yambol today and tomorrow, informs Darik radio....”
—News Bulgaria, June 30, 2007
Views Sought on Government Efforts to Promote Philanthropy“Views of the public are being sought on the government’s plans to promote philanthropy as announced by the Second Finance Minister Tharman Shanmugaratnam in this year’s Budget speech....”
—Singapore News, News Channel Asia, July 17, 2007
You Too Can Be a Philanthropist“Most South Africans would hardly see themselves as philanthropists... like Warren Buffett or Bill Gates... but now you can be, thanks to an organisation that is trying to change our perceptions about giving....”
—The World at Six, South Africa, June 5, 2007
Some 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.
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,
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.
Tom Hunter, 46, is both emblematic of and outspoken about philanthropic trends. As a self-made man who parlayed an athletic shoe company he started with £10,000 into a huge business, sold it, and made much more money in private equity, he is keen to use his business sense as he disburses his fortune. Call it venture philanthropy, social entrepreneurship, catalytic funding, philanthrocapitalism, or whatever, this brand of giving among the super-rich is even more focused on a strategy, innovation, and measurable results than in years past. These philanthropists treat gifts like investments, searching for the highest impact. “The thinking that makes entrepreneurs successful is crucial to philanthropy,” Hunter says. “It’s how you find solutions.”
He freely acknowledges that “competitive philanthropy” fever has spread to the United Kingom. “It is absolutely alive in the U.K.,” says Hunter. “It’s the nature of the beast, and entrepreneurs won’t change their spots when it comes to philanthropy.”
It appears to be alive in a lot of other places, too, as those who’ve made it big in business make donations long before they retire. According to news reports, in China, real estate mogul Huang Rulun (known as “China’s Carnegie”) has donated at least $35 million to education, health and poverty alleviation. In India, Anil Agarwal, the London-based chairman of Vedanta Resources, is pouring $1 billion into a university modeled on Harvard. In Canada, Frank Giustra, a mining, movie, and investment executive, has pledged $100 million plus half his future earnings from his natural resources businesses for the rest of his life to former President Bill Clinton’s Sustainable Growth Initiative to fight poverty in Latin America. In Iceland, Ólafur Ólafsson, chairman of a transportation company called Samskip, has started the first large private foundation with a gift of about $15.2 million, and plans to fund social programs not only domestically but also, in an apparent first for Iceland, in developing countries.
The trend extends even to royalty: In the United Arab Emirates, Sheikh Mohammed Bin Rashid al Maktoum, the ruler of Dubai, recently created a $10 billion eponymous foundation to focus on human development in the Middle East. And at the World Economic Forum at the Dead Sea in May 2007, Jordan’s Queen Rania paid tribute to traditional alms-giving, but pleaded with participants for “more active giving” driven by civic engagement, social responsibility, and joint action.
“There is growing peer pressure among high-net-wealth individuals,” says Diane Leat of the Carnegie UK Trust, especially in the financial sector, where some firms are insisting on a minimum level of donations by their employees. She might as easily have mentioned the technology world, where giving is also becoming the norm.
Even skeptics like Mexican telecom king Carlos Slim Helu, who has characterized mega-donors like Gates and Buffett as giving away money like “Santa Clauses,” are nevertheless joining the ranks of major philanthropists. With a net worth (estimated variously at $58 to $68 billion) that may exceed that of Gates (about $55 billion), Slim announced in the spring of 2007 that he would boost the endowments of his two foundations to $10 billion from $4 billion over the next four years as well as contribute $100 million to the Clinton/Giustra initiative in Latin America. Some—particularly those in the media—have criticized both the pace of Slim’s philanthropy and the fact that he has become wealthy in a nation where many live in intractable poverty, but he seems unconcerned by this criticism. “Poverty,” he has reportedly stated, “isn’t solved with donations.” Had this been another era, the 68-year-old Mr. Slim could have passed all of his billions to his six children, because Mexico has no inheritance tax.
It’s not just the peer pressure, or the example and notoriety of Gates, Buffett, and Bill Clinton—whose Global Initiative is a call to action on poverty alleviation, health care, climate change and a fourth issue that changes annually—that is spurring on the growth in philanthropy. A trend this mighty has to have numerous roots, and it does, some older than others, all intertwined.
The one that makes it all possible is economic. “It starts with the growth in worldwide wealth and more wealthy people, the number of millionaires and the number of billionaires,” says Paula Johnson of the Philanthropic Initiative. “And it’s not concentrated in the U.S.—there are more billionaires in Europe than in the U.S.” In 1996, Forbes reported that there were 423 billionaires in the world; by 2006, the number was 946. As for millionaires, the Merrill-Capgemini wealth survey reports that their numbers are growing fastest in Singapore, India, Indonesia, and Russia, with China not far behind. More broadly, according to the World Bank, per-capita global wealth amounted to nearly $96,000 in 2000 vs. $77,000 in 1990 (in 2000 constant dollars).
While the supply side of philanthropy—greater wealth—has been expanding, so, too, has the demand side. For one thing, the disparity between rich and poor remains vast: per-capita income in wealthy countries is $439,000 vs. $7,500 in the lowest-income ones. Such statistics are hard to ignore; they contribute to the renewed interest in fighting disease and poverty in Africa and well as to the rise of “diaspora philanthropy,” the label applied to gifts by immigrants-who-make-good to projects in their home countries.
The Impact of Global Economic Growth
Perhaps even more, the increase in demand for philanthropy stems from political trends. The global economic growth that generated this new wealth was spurred by the spread of market economies. Back in the ’70s, the U.S. deregulated many sectors and cut taxes. In a wave of privatizations, Margaret Thatcher got the government’s hand out of the business sector and put Britain on a long-term growth path. Like the old domino theory in reverse, Communism fell in country after East European country and in Russia, ending statism across a vast territory. Elsewhere, to stay—or become—competitive in an increasingly global economy, governments deregulated, allowed freer trade, and, sometimes, lowered taxes.
All this, in turn, prompted states to limit spending on social services and led to a profound narrowing of the state’s role in everyday matters. Governments were no longer taking care of everything for their citizens. To answer the demands for services, a mass of nonprofit organizations collectively known as “civil society” sprang up or expanded. These NGOs (nongovernmental organizations) or CSOs (civil society organizations), which carry out activities benefiting society provided by neither governments nor businesses, are not new. But they gathered speed after 1989, when Communism began to crumble. “The fall of the Berlin Wall is seen as a defining moment in the development of civil society,” says Rob Buchanan, director of international programs at the Washington, D.C.-based Council on Foundations. Civil society—which is largely dependent on philanthropy—has since moved from buzzword to broad acceptance.
It’s interesting to recall that Carnegie and Rockefeller started their foundations at a time when the U.S. government was stretched in resources, unable to provide a basic safety net for its growing population—exactly the conditions many countries have experienced in recent years.
Who better then to show the way? In keeping with the maxim of 19th century scientist Louis Pasteur—“chance favors the prepared mind”—American foundations and philanthropists had sown the seeds of philanthropy overseas. For decades, the Ford, Rockefeller, Charles Stewart Mott, W.K. Kellogg Foundations, Soros Foundations Network, Carnegie Corporation1 and others have provided major funding for a variety of programs in many countries. In some cases, they led by example; in others, they were more direct.
Soon after the fall of Communism, for instance, a group of independent but related foundations in Central and Eastern Europe called Environmental Partnership was started with money from the Mott and Rockefeller Brothers foundations, among others, and a mandate to solicit matching donations locally. In 1999, Germany’s Bertelsmann Foundation, one of Europe’s oldest, joined with the Mott Foundation to fund the Transatlantic Community Foundation Network, which fosters the global movement toward community foundations in Europe, Mexico, and the rest of North America, particularly “where the concept is still new.” In 2005, the Kresge Foundation partnered with the South African Institute for Advancement, which cultivates the culture of philanthropy there, beginning with a five-year, $10 million challenge grant program to benefit three universities and a hospital. Announcing these initial grants, John E. Marshall III, Kresge’s then-president, noted: “Our core challenge grant program remains open to non-profits all over the world, as it has for many years.”
Since 2001, the more than twenty Carnegie organizations around the world have partnered in an innovative philanthropic effort, attempting to collectively encourage philanthropy by biennially awarding the Carnegie Medal of Philanthropy, a kind Nobel Prize for the field. Americans have so far dominated, but medals have also gone to individuals from Japan, India, the United Kingdom and to the Aga Khan, the spiritual leader of the Shia Imami Ismaili Muslims.2 In 2003, when Dr. Kazuo Inamori of Japan was given the medal at a ceremony in Washington, D.C., for promoting “academic and cultural development and international understanding” through his Inamori Foundation, “just about every newspaper in Japan carried on page one that he received the medal,” William Thomson says. He wishes American newspapers paid as much attention because “it would be picked up overseas.” The medal’s goal is to stimulate giving in Andrew Carnegie’s tradition: using private wealth for the public good
Then there is Peggy Dulany, a great granddaughter of John D. Rockefeller and the founder of the Synergos Institute, a 21-year-old nonprofit that has catalyzed the growth of homegrown philanthropy around the world in an effort to reduce poverty. It has helped establish private grantmaking foundations in Ecuador, Mexico, Brazil, Mozambique, and Zimbabwe. Of Synergos’s grass-roots work and sharing of talent, one big fan, Manuel Arango, who founded the Mexican Center for Philanthropy (CEMEFI) in 1988, says: “Sometimes that’s more important than the money itself.”
More recently, in 2001, Dulany started the Global Philanthropists Circle (GPC), which brings together rich families in an attempt to deepen their commitment to social giving and to share ideas. Aside from regular meetings, members travel to countries in need to get an on-the-ground look at conditions and to meet locals (who may become partners).
“When we started, we expected this would be of interest to Americans,” Dulany says. “It was more surprising to us how interested philanthropists in other parts of the world were, including some who’ve been at it for quite a while. The less experienced among them find the more strategic aspects of philanthropy to be appealing—they want to go there. They are becoming more strategic and are thinking about impact.” Many members, she added, also want to ensure that their values pass on to their children; GPC thus now has a “Next Generation” group for those in their teens, 20s, and 30s.
Of the 63 families who are GPC members—each encompassing anywhere from three to 20 individuals—about half are American and the rest come from more than 20 countries around the world, Dulany says. American members commit to giving away at least $1 million a year; for others, it depends. Membership, which costs $25,000 per year, is confidential and Dulany says she has no idea what any member’s net worth is. Nor is their donation record of concern. “We’ll meet people wherever they are, and move forward,” she says.
Some of the members have impressive records, according to Synergos case studies. In Morocco, for example, the Benjelloun family of bankers has built about 100 schools in isolated rural Berber villages and sent dozens of students to colleges, spending an undisclosed amount. In Colombia, María Eugenia Garcés and her siblings, working through their AlvarAlice Foundation and with several partners, are tackling poverty and violence with a “restorative justice” program that includes running homes for young criminal offenders and offering alternatives that lead to work, like training in agriculture. In the Philippines, members of the Lopez family have programs in child abuse intervention, environmental protection, and educational television programming, among others.
Along with the rise of such individual efforts has come the blossoming of an infrastructure that encourages and supports philanthropy. When some international members of the Council on Foundations spoke of trying to spur philanthropy in their countries, Buchanan says, the COF helped create “WINGS,” which stands for Worldwide Initiatives for Grantmaker Support. From 50 or so members in 2002, WINGS has expanded to 135 members.
Similarly, there are like-minded groups at the continental level—the European Foundation Centre, for example—and country level, like Brazil’s Group of Institutes, Foundations and Enterprises (GIFE). From 25 members in 1997, it can now boast of 71 members in a field “which essentially did not exist in Brazil” 15 years ago, according to a Synergos white paper. These groups help train people to work in foundations, share expertise, and advocate policy changes, like tax law revisions and other legal considerations, that enable philanthropy. (Studies show that income tax and inheritance tax policy has a dramatic effect on donations, as does the certification of institutions as tax-exempt.)
Giving in a Globalizing World
There’s no question, too, that recent disasters have inspired giving—and not just the 2004 tsunami, the famines in Africa, and Hurricane Katrina, all of which led to jumps in donations. Some that did not provide such indelible images had an impact. For example, Daniel Yoffe, a philanthropy consultant in Mexico, says that the 2000 economic meltdown in Argentina “created a groundswell of solidarity— and donations—as most people became aware of the plight of the most fragile sectors of society.”
Putting top spin on of all these factors is globalization: “People, ideas, money—everything is flowing more quickly,” says Johnson, of the Philanthropic Initiative.
Not surprisingly, like globalization itself, these developments are welcomed by many but there are those who seem to be of mixed mind. Carlos Slim, for example, has said that philanthropists could do more good by investing the money and employing people. “I think that charity and social programs don’t resolve poverty,” he explains. “Poverty is resolved with education and jobs.”
Robert Barro, an esteemed Harvard economist, endorsed that sentiment last June in The Wall Street Journal, when he criticized Bill Gates for dwelling on philanthropy in his commencement speech at Harvard: “His implicit theme was that so far what he has accomplished may have been good for him and Microsoft shareholders, but it has been no great contribution to society.... [yet] By any reasonable calculation Microsoft has been a boon for society and the value of its software greatly exceeds the likely value of Mr. Gates’ philanthropic efforts.”
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.”
Arango worries that Mexico’s younger generation isn’t thinking about philanthropy either, unlike their colleagues in other countries. “Right now, the young here are busy trying to make money,” he says. “We have to change that culture and say that this is part of your life at any age. A street kid can be a philanthropist if he shares the corner of his street. Philanthropy is money and talent and time.”
Yet Arango is convinced “it will happen eventually.” Perhaps that’s why he and others threw down the gauntlet recently, when more than 600 participants from Latin America, plus Spain and Portugal, met in Mexico City—under the auspices of CEMEFI—to discuss civil society and philanthropy. Noting that the big international foundations had turned their attention to Africa and Asia, they challenged their wealthy individuals and corporations to pick up the slack. “Clearly, it is up to the inhabitants of the region to take on an equal share of responsibility,” their statement said.
South African Hylton Appelbaum might have said the same thing. There is a lot of talk about philanthropy in his country, he says. And there is serious spending on development. But much of it is really social spending of corporations made in response to “policy imperatives.”
As the son-in-law of Donald Gordon, who founded what is today South Africa’s largest private foundation in 1971, Appelbaum oversees the David Gordon Foundation as well as The Liberty Foundation and The Liberty Educational Foundation, which are arms of Gordon’s financial empire, Liberty International. (They are pass-through foundations, lacking endowments, and generally donate about 1 percent of after-tax profits; Appelbaum says most South African companies allot 0.5 percent to 1.5 percent of their profits to social spending.)
With its legacy of apartheid, exchange controls, embargoes, and ethnic enclaves, South Africa is a very complicated place. Its Jews, Afrikaners, Chinese, Greeks, and other groups have all traditionally supported schools and socials service organizations within their own communities, but not beyond. Some 15 years after reformers began to dismantle apartheid, social stratification remains rigid. As for competitive philanthropy, it doesn’t exist. “More likely here,” Appelbaum says, “if we have given X million rand, other people here would say ‘good, we don’t have to give now.’” The government allows tax deductions for contributions, but only up to a small portion of personal income— in part so that it can control spending on social goals.
Appelbaum won’t disclose the Gordon Foundation’s assets, but says it has given away about $14 million a year for the last six years. Its most far-reaching initiatives are both attempts to stem the country’s brain drain and improve the training of its professional class. With $15 million in funding, it founded the Gordon Medical Centre, in partnership with the University of the Witwatersrand. And with a gift of about $8 million, it opened the Gordon Institute of Business Science in Johannesburg, part of the University of Pretoria, in 2000.
Appelbaum says that a few other white South African families—the Ackermans, the Oppenheimers, the Ruperts—have traditionally been philanthropic, though much of their giving has been private. He cites Allan Gray, who also founded a financial empire, as a more recent addition to the list.
But as elsewhere when a lid has suddenly been lifted on a country, some efforts to finance scholarships, businesses, and community-based organizations were beset with accountability problems. As a result, some givers pulled back from cash gifts, switched to giving goods or services, and stepped up auditing. Others probably retrenched, though it’s hard to tell since giving is so private.
Now, there’s a new generation of rich, and they are different. Thanks to Black Economic Empowerment (BEE) policies, which involve the transfer of assets from whites to blacks, and privatization of government-controlled businesses, there’s a growing cadre of rich blacks. The money may be too new for them to be comfortable giving it away already. But at least two rand billionaires, Tokyo Sexwale and Patrice Motsepe, have joined Peggy Dulany’s Global Philanthropists Circle, starting down the road.
Shelagh Gastrow, chief executive of the South African Institute for Advancement (SAIA), is far more positive about prospects than Appelbaum. “We want to actually create a movement of philanthropy in the country and make people aware of the necessity to invest in our own society,” she said in a recent television interview. She plans to help show the way. Steeped in the history of philanthropy abroad, the annual report of SAIA (also known as Inyathelo) not only cites Carnegie, Ford, and Rockefeller as inspiration for strategic philanthropy, but also the Leverhulme, Nuffield, Van Leer, and Robert Bosch foundations in Europe. Gastrow, not satisfied with simply developing the culture in South Africa, has taken her gospel and shared her expertise in raising money with non-profits with institutions in Nigeria and Mozambique.
“It is having an impact,” Appelbaum says. “I haven’t seen any new foundations, but it is helping to create an environment conducive to giving.”
That is the key everywhere. As various reports from around the world demonstrate, philanthropy is growing, but only a small fraction of available wealth is being given away—and by only a fraction of the wealthy. Much more could develop—and it’s likely to. “The big thing that will change as wealth grows is that philanthropy will become more prevalent,” Tom Hunter says, “You get fulfilled, and when they realize that, more people will try it.” He’s in a great position to know.
Judith H. Dobrzynski, a former a senior editor at The New York Times, Business Week, and CNBC, is a writer based in New York.