Extract from The Economist's :
To Have, Not to Hold

SURVEY: WEALTH AND PHILANTHROPY

To have, not to hold
Feb 23rd 2006


The rise of the new philanthropist

BILL GATES is much the most generous philanthropist since records began. The $31 billion he has donated so far is already many times the $6 billion (in 2005 dollars) given away by a previous giant of American philanthropy, John D. Rockefeller. And Microsoft's founder is only just getting started. By the end of his life, he intends to have handed over most of the rest of his fortune—put at $46.5 billion in Forbes magazine's latest “rich list”—to the Bill and Melinda Gates Foundation.

Mr Gates is given much of the credit for the rise in giving among today's super-rich. He seems to have discovered his generous streak relatively recently: in 1998, The Economist was still criticising him for sitting on his fortune. But since then “Bill Gates has made philanthropy the norm” among the super-rich of the world, says Vartan Gregorian, who runs the charitable foundation set up by Carnegie.120K :: news “Giving is now what you are expected to do.”

The power of Mr Gates's example is one reason why Mr Gregorian—who is a mentor to many of the new philanthropists around the world—is no fan of the secretive approach to giving. “I like people to be public about their philanthropy; it makes it more competitive if we can see who is doing what.”

In order to give money away, you first have to have it. The past two decades have seen vast global wealth-creation, but the “winner-takes-all” aspect of many of today's fastest-growing markets, and the sharp reductions in top marginal income-tax rates and profit and capital taxes almost everywhere, have caused a rapid increase in inequality between the very rich and the rest. The number of billionaires is growing fast, and not just in America: of the 691 billionaires listed by Forbes, 350 live outside America, with Lakshmi Mittal, an Anglo-Indian steel tycoon, coming third overall. According to the latest annual survey by Cap Gemini and Merrill Lynch, the number of families with over $30m in investable assets has also risen rapidly, to 77,500, as has that of millionaires (defined as people with investable assets of at least $1m, not including their main home), now 8.3m worldwide against 7m in 1997.

In the technology industry, there are now several generations of newly wealthy people who are actively giving—the Hewlett and Packard families, Intel's Mr Moore, Mr Gates, eBay's Messrs Omidyar and Skoll and the newest billionaires on the block, Google's Messrs Page and Brin. Likewise, in the financial industry newly super-rich hedge-fund stars are following in the philanthropic footsteps of Mr Soros. Performance-based donations to charity are now sometimes built into a hedge fund's structure. For example, one-third of all the fees earned by the Children's Investment Fund, one of Europe's leading hedge funds, goes to a foundation that helps children in the developing world.

In Europe, following in America's footsteps, the gradual emergence of an equity culture has generated serious wealth for owners selling their business in an initial public offering. A fair amount of this money is going into charitable foundations. In Germany, for instance, their number has increased from 4,000 in 1997 to over 13,000 now. Germany's best-known charitable foundation, Bertelsmann, which is now mentoring some of these newcomers, says that half the founders are actively involved in their foundations, which for many have become a second career. In America, the number of private charitable foundations has soared from about 22,000 in the early 1980s to over 65,000 today, according to the Centre on Philanthropy at Indiana University.

In India, where traditional charitable giving within communities has dwindled because of urbanisation, those newly enriched by the country's technology boom are starting to fill the void. The wealthy bosses of Infosys, Wipro and Dr Reddy are becoming big philanthropists, joining more established Indian business philanthropists such as the Tata, Birla and Bajas families.

In Latin America and Asia, “whoever has got wealthy...has now got an agenda to give,” says Martin Liechti of UBS, a Swiss bank. He points out that a generational shift is under way from the old wealthy, who tended to practise traditional charity, to the new wealthy, who are open to more entrepreneurial approaches.

Although in many countries the poor give away a higher proportion of their total income than do the rich, it is the wealthy who dominate charitable giving. In America, for instance, families with a net worth of $1m or more accounted for 4.9% of the total number of all donations to charitable organisations in 1997, but as much as 42% of the value, according to a study by Paul Schervish of Boston College. The concentration in bequests is also striking: estates worth $20m or more made up 0.4% of their total number but 58% of their value.

In most countries, total giving has been rising slowly, although the outpouring of public sympathy after a series of natural disasters made 2005 a bumper year for donations. Surveys show that in many countries the public's trust in charitable organisations is falling, and there are growing worries that donations will not be put to good use.

According to an annual survey, Giving USA, total charitable giving in America in 2004 rose by 5% to a record $249 billion, over 2% of GDP. That was more than in any other big country, both in absolute terms and as a proportion of GDP. And even if you ignore donations to religious congregations and add in the value of volunteering, America is still a global leader in giving. A study led by Lester Salamon of Johns Hopkins University of charitable giving in 36 countries, excluding donations to religious congregations, showed that in the seven years to 2002 such giving in developed countries ranged from around 1.85% of GDP in America to 0.11% in Italy.

Mr Salamon also notes that measured against state spending on welfare, charitable spending is tiny everywhere. In America, such welfare spending equals 18% of GDP; in Britain, 28%. This shows just how hard it will be for the new philanthropists to ensure that their money makes a real impact, especially in rich countries.

According to an adviser to a leading Swiss private bank, around one-quarter of its super-rich clients are already committed to philanthropy. A further 40% are actively thinking about it, and another 15% are just starting to put it on their agenda. What motivates them?

Religion has always played a big part in giving (Christians, Jews, Muslims and Sikhs all traditionally aim to give away a set proportion of their income). In America, religious giving accounts for a staggering 62% of total donations, according to Indiana University's Centre on Philanthropy Panel Study, and donations to religious causes outweigh those to non-religious ones in every income group. In Europe, religious giving is generally lower. In Britain, a recent study by the Charities Aid Foundation, a non-profit body, found that faith-based organisations accounted for 10% of the 500 largest charities' income. Among the super-rich of the Muslim world, the Islamic prohibition of things such as alcohol, pork, gambling and conventional financial services has opened up a role for philanthropy: those whose portfolios include such activities can “purify” them by giving the resulting profits away.

“The rich are trying to figure out a moral biography of wealth, and philanthropy can provide part of the purpose side of living the good life,” even if you are not religious, reckons Mr Schervish. Becoming very rich can rob you of your old ambitions and give you a need for new ones. Why did Sir Tom Hunter, a Scottish retail entrepreneur, become a philanthropist? “Aged 37, I got a massive cheque. I had achieved all my goals at that time. So I started to think, what shall I do now?”

“There is a search for a narrative, about making a difference with your life, which is vaguely religious and gives you a buzz,” says Charles Handy, a management guru who is putting the finishing touches to a book about philanthropy in Britain, “Beyond Success: The New Philanthropists”. Mr Handy points to Abraham Maslow's hierarchy of needs, and suggests that nowadays more people are getting to the stage Maslow described as “the highest need, for a purpose beyond ourselves. They want to make a difference—it used to happen in their 60s and 70s, now it is in their 30s and 40s.”

Faced with the world's many and urgent problems, a lot of wealthy people are asking themselves: if I can help, why not? Mr Gates read a World Bank World Development Report and realised he could do something to improve public health in the world's poorest countries. That made it seem absurd to leave his philanthropy until old age, as he had previously intended.

A lot of giving is stimulated by personal experience. Wealthy people often want to show gratitude for something that helped them succeed, such as a school or a supportive community. Similarly, they may want to support a life-saving hospital or play a part in finding a cure for a disease that has afflicted someone close to them, or help a poor country they have visited. Indeed, newly wealthy Americans often give to causes abroad, says Mary Duke of HSBC, a bank. Promoting education and fighting disease and poverty in Africa are now high priorities. The Middle East too is rising up the agenda, in hopes of improving America's battered image in much of the region. So-called “diaspora philanthropy”—where people from, say, Mexico or India who have prospered abroad, send gifts home—is also increasingly popular.

Many rich people feel that they have been fortunate and want to “give something back”. But eBay's founder, Mr Omidyar, dislikes the phrase. “The classic business executive reaches his late 40s and says I want to give back. But what does that mean he has been doing? Taking away? What a sorry way to think about your career,” he says. It is hard to tell whether some of the new wealthy feel guilty, but certainly many of them think, like Carnegie, that philanthropy is part of a social contract: both a duty and an insurance policy against populist redistribution.

Social norms and peer pressure clearly play a part. The fund-raising events in London laid on by Mr Busson for his charitable foundation, Absolute Return for Kids (ARK), seem to be prising open the wallets of many people in hedge funds who would not have contributed otherwise. And not everybody's motives are lofty: Ms Fulton, the co-author of a new report on philanthropy, argues that “a lot of philanthropy is motivated by pleasure—ego gratification and reputation enhancement.”

Good examples can help to stimulate largesse. In Britain, the Beacon Prize, launched in 2003 to celebrate philanthropists, was an attempt to reverse a long stagnation in giving. There are signs that, slowly, British culture may be changing. “There is a mood now in Britain that there are niches that the government doesn't fill, and that if you have talent, money and time you should get into these gaps. Thirty years ago, a businessman would have said, ‘I pay my taxes, the government should do it’,” says Mr Handy, the management guru. “It is getting like America—if you are wealthy, you want to be on the giving list as well as the rich list.”

In continental Europe, a tradition of giving anonymously (not least to avoid the taxman's attention) has meant there is less peer pressure to give, and few role models for would-be new philanthropists. To help change that, Ise Bosch, a member of the family behind the eponymous electronics company, is now writing a “how-to” book on philanthropy. She has also formed a network called Pecunia for wealthy German women interested in giving.

Best stocking filler of the year for anyone who wants sustainability must be the Bill Drayton video where he quiety explians how partnering with social entrpreneurs is the new marketing advantage any sustainable corporation needs to mix with - those who miss this marketing ball may well go the way of the dodo

WC.TV
The joyous reason is that social entrepreneurs are networked through world citizen movements that multiply each other's power and make human rights like transparency circle the world much faster than old globalisation leaders could ever imagine.

Perhaps the time when new globalisation leaders emerged to leave old ones coughing with carbon in their wake was sept clinton global initiative where this blog was seminal - extract on partnerships copied:
A New Era Of Doing Good?

So have I been overly impressed? Am I a starry-eyed Clintonista, blind to the dark realities? I don’t live in the middle of philanthropy issues in my daily life, but I am not aware of a get-things-done conference like this, and especially of this magnitude, occurring before.

The attitude here is: Of course you have to blend governments, business leaders and non-profits together like this. Tom Watson at News onPhilanthropy writes,
”Not surprisingly, business people stressed economic sunstainability and cost control; NGOs talked about partenrships and cooperation with government; government ministers generally provided "realism" about the political situations in various corners of the globe.”
It seems today - after listening to the arguments of so many leaders - like the most natural partnerships. And it seems that it is just accepted here that this is the way society’s challenges obviously should be approached. Now from my admittedly limited, outsider perspective, last I knew the various innovative ideas of venture/entrepreneurial philanthropy and public/private were supposedly still in formative, developing stages – yet here it’s almost as if these had been an operational strategy for decades, all the kinks worked out, “of course this is how it’s done”

In many ways this conference feels like a dam bursting, releasing an explosion of pent-up, problem-solving energy. I often describe blogging as information naturally finding channels in which to flow around the gatekeepers and I see something similar here. I think - at least I hope - there will be a ripple effect, spreading out and touching others. Of course, there are so many heads of companies and organizations ehre that if they do take any of this energy back with them, there has to be a ripple effect.

At Salon today, Joe Conason writes http://www.salon.com/opinion/conason/2006/09/22/clinton_initiative/ of Bill Clinton,
“the impresario and visionary whose foundation's goals merely include alleviating poverty, disease, and religious and ethnic conflict while cooling off global warming.”
And he says that the conference is,
“…raising the prospect of a world where America can lead again, with regained prestige and government competence. Whether intentionally or not, he is demonstrating what world leadership really means.
It is possible, although he would probably resist the idea, that the symbolic value of his conference is even greater than those huge dollar totals. At a time when American government seems oblivious or worse toward human need and environmental peril, the former president is raising the standard of practical compassion and challenging the priorities of conservatism. The message of CGI is that things can change and that ordinary people can act -- and that they should expect governments, corporations and institutions of every kind to act, too.” [emphasis added]
The level of public/private partnering happening here seems quite remarkable. Also, the spirit of “responsible business” is strong. It’s like our society has developed a thirst to finally see some positive role models, especially form the business community, stepping forward. I see that desire just as strongly within business as outside. I mean, even Wal-Mart is here, talking about sustainable and responsible business practices. (Could Exxon or Big Tobacco be next? Leave a comment.) Sure, there is a self-interest in building positive feelings about their brand, and profit to be made from energy efficiency, but I sense this could be part of a beginning of a new era.

posted by Dave Johnson @ 9:53 AM

Jeff Skoll looks at philanthropy through the lens of filmmaking.

What do you do for an encore when you’re worth a billion dollars before turning 40? Canadian-born Jeff Skoll, the first president of eBay and the developer of the Internet giant’s hugely successful business plan, set out to realize his boyhood dreams of being a writer and changing the world.

In 1999, he created the Skoll Foundation, a philanthropic organization that tries to shift the imbalance between the “haves” and “have-nots” of the world and to encourage social entrepreneurs worldwide. BusinessWeek recognized Skoll as one of today’s most innovative philanthropists.

Always fascinated with the power of a story to effect change, Skoll set up Participant Productions in January 2004 as an independent production company whose goal is to deliver compelling entertainment that inspires people to get involved in social issues. Three of Participant’s projects—Syriana, North Country, and Good Night, and Good Luck.—won multiple Oscar and Golden Globe nominations this year; Syriana earned an Oscar for George Clooney as best supporting actor.


The studio’s most recent project was An Inconvenient Truth, a documentary released in May about global warming that features former Vice President Al Gore, a longtime advocate of environmental issues.

Hemispheres recently sat down with Skoll to talk about Participant Productions and the social-action initiatives integral to each of his movies.

Q: How did you get started in this business?

A: Being involved with the eBay Foundation, I began to meet people from different charitable foundations. I was so intrigued that I started the Skoll Foundation to back social entrepreneurs. They’re a lot like business entrepreneurs—they are strategic, passionate, creative, hardworking, and they see an opportunity to make change that can be valuable. A social entrepreneur sees a problem in society—AIDS orphans who have nowhere to go or refugees who are stranded—and has a better way to deal with these issues.

Q: What’s the foundation’s goal?

A: To find the social entrepreneurs who’ve done something which demonstrates that a new model can be effective. Then, we help them scale it and build it in much bigger ways so it can affect the whole system. We bring money, strategic help, connections. We created a Web site [socialedge.org] that is now the prime destination site for social entrepreneurs.

Q: What made you form Participant Productions?

A: My vision was to create a company that could make a difference in major world issues by using compelling entertainment as the means.

Q: Why do you think issue movies are being so well-received?

A: After September 11, there was a demand for material that was entertaining, could make sense of the world, and could provide some inspiration about what to do.

Q: Were you a fan of the political movies of the ’70s and ’80s?

A: I was influenced by All the President’s Men, The China Syndrome, Gandhi, and films like that. There’s enough of a history in Hollywood of doing movies that have a message—Erin Brockovich, Schindler’s List, Hotel Rwanda, movies like that. But I was shocked that nobody had created a company that was specifically focused on entertainment that could make a difference in the world, done in a systemic way.

Q: What’s been the social impact of your movies?

A: With each film, we create a social-action campaign where we partner with social-sector organizations. In Syriana, the issue is oil dependence and the dangers that implies, so we partnered with the Sierra Club and Natural Resources Defense Council. Even President Bush in his State of the Union address spoke about America’s addiction to oil, and it’s a line that’s repeated throughout the film.

Q: And North Country’s issue was violence against women? What did you do for that film?

A: We timed its release to October 2005, when the Violence Against Women Act was up for renewal in the House, and partnered with NOW and other groups to mobilize people to contact their representatives and remind them that the legislation was important. We also had a screening of North Country on Capitol Hill. Fortunately, the House passed the renewal of the act.

Q: And for An Inconvenient Truth?

A: Part of the campaign for the film was to work with Conservation International, the Sierra Club, the National Audubon Society, and the World Wildlife Fund and with groups like the United Auto Workers. And once people have seen the film, there’s a site, climatecrisis.net, where this tremendous coalition has come together to help people get involved. We think it’s going to blow people away just how urgent the issue is.

Q: What are your criteria for getting involved in a film project?

A: First, is the issue relevant to a large segment of society and is it actionable? Second, is it a good story, well told with the right people involved? Third, is it financially sustainable; will it make money? It’s a complicated equation because we’re willing to take risks on material that may be financially dicey, so long as the social good that comes from it is worth the effort. In the case of North Country, where we felt the film contributed to getting the Violence Against Women Act renewed, the social good that came from doing that film was well worth the effort.

Q: How can you gauge a film’s social success?

A: Measuring social return on investment is difficult. We measure what we can. For example, we track how many people have downloaded tips to encourage “oil change,” a campaign associated with Syriana’s release that’s intended to influence oil policy, and how many car owners have bought a TerraPass, which lets drivers offset the effect of their auto emissions by helping pay for clean-energy projects. The good news is that tens of thousands of people have downloaded these tips and bought these TerraPasses. But the bigger question—Has this project made a difference in the way people see oil policy?—that’s a little harder to measure.

Q: How tough is it to make these movies that aspire to effect change?

A: What occurred to me when I was going around town, trying to assess whether this idea for Participant Productions would fly, was why there weren’t more movies of this kind. It really came down to economics. The studio executives are kind of risk-averse, because if they make a superhero movie or an action film or a romantic comedy with big stars and it doesn’t do well, nobody’s going to take their job away. That’s what studios do. But if they make a movie about social action, like the Angelina Jolie film Beyond Borders [2003] and it doesn’t do well, then they could lose their jobs.

It struck me that everybody I talked to—writers, agents, lawyers, directors— wanted to make films that they could feel more proud of, but the system just wasn’t set up that way. The one major thing I could do was to bring financial resources to these risky projects so that it took away the financial risk from the studios.

Q: Where did you get your sense of giving back to the community?

A: As a kid, I read a lot of books like The Fountainhead, Brave New World, 1984—books that painted different pictures of what the world could be like if folks didn’t pay attention. When I was 14, my dad, who’d been a hard-working guy, announced that he had cancer. He survived it, but I remember him saying he didn’t feel so bad that he might die but that he hadn’t done the things he’d wanted to do. That inspired me to ask, “How can I make a difference in the world?”

Q: What projects are you particularly proud of?

A: There was a TV series we did last year called The New Heroes, which was hosted by Robert Redford and ran on PBS. It focused on social entrepreneurs, and it educated viewers about the fact that there were people doing great works, that there was hope, and also that there’s a noble calling in doing this kind of work yourself. And the series raised quite a few dollars for organizations.

Q: Where would you like your efforts to have impact?

A: First is the environment, then health, human rights, institutional responsibility, peace and tolerance, and social and economic equity. Under each of those, there are subheadings. For example, with the environment, there’s global warming, diversity of species, oceans, pollutants, and toxins. There are multiple other issues.

As far as I know The Economist coined Billanthropy late June 2006. This may well have been the first time its Scottish founder James Wilson cheered for a decade or two.

WC.TV June 06
Track megatrends from a google of Billanthropy and google news; ... track trends & news of Africa Progress Panel (APP), one of the first experimental "babes" funded by Billanthropy

WC.TV Sept 06
I am beginning to believe that the greatest contributions the Gates' make are behind the scenes which is perhaps the only way that billanthropy can work

For example, Bill Gates was in New York last week at the ClintonGI but he might have been travelling incognito when you rate how little publicity he got this time compared with the trip to New York to celebrate the marriage with Buffett

Equally news is quietly webbing around the world service (London Guardian Sept25, google.org minute 40 sec 25 a few months ago) that one of the greatest innovations funded by the Gates' is revolutionising the pharma industry from the inside with that greatest of systemic innovations the not for profit pharma company

case of what I don't understand about the gates historical approach to bringing health to all
chaired by mary Robinson this meeting of 60 womens leaders was actually sponsored by Gates Foundation in May (hope this is very promising)
http://www.realizingrights.org/pdf/Wye_River_Report.pdf

The statistics are well known and staggering. And yet, in many countries the figures continue to worsen. Each year 500,000–600,000 women die in pregnancy and childbirth. In some parts of Sub–Saharan Africa, 1 in 6 women die in child birth, while in United States the lifetime risk is as low as 1 in 84001. HIV/AIDS statistics tell an equally disturbing story of disparity. In parts of Africa, over 35% of the adult population — 1 in 3 adults — is infected with HIV 2. The number of women contracting the disease is also on the rise. For example, in Botswana, twice as many women as men, ages 25 to 29, are living with AIDS3. We know the interventions that can save most women’s lives. If every woman had access to essential maternal care, 74% of maternal deaths could be prevented4. If all women had access to self–controlled means of HIV/ AIDS protection and were in a position within society to use these methods, millions of HIV/AIDS deaths could be prevented. Thus, we do not so much need new technology, as we need to ensure universal access, utilization and equity. But ensuring universal access, utilization and equity means that our health services cannot continue to function as “business as usual.” Fundamental change is necessary. We must rethink the link between poverty and health and understand the essential role that health systems play in society, in poverty–reduction and in overall development. Poverty is not just a state of want. Poverty is also fundamentally about the relationships that people have with structures of power. Health systems are core social institutions that function as one of the most important and pervasive structures of power in any society ...

Conventional approaches to health in poor countries focus on disease–specific interventions and their cost effectiveness, implemented via the path of least resistance with a strong emphasis on short term results. The upshot is that systemic problems which underlie poor health, failing health systems, and health inequity are circumvented. Long–term, sustainable strategies are rarely developed or deployed.

Steady as She Goes, and Where is the Map of the Future based on learning from the mistakes nations made the last 200 years

Investing in long-term sustainability exponentials is the exact opposite in certain ways from seeing how much an organisation can extract from the world each quarter. Accountants and their spreadsheets often fast burn everyone's attention so that simple questions get buried, forgotten, or globally answered in hunders of disconnecting ways instead of one atlas which we all step onto and linkin with confidence that 7 billion beings are travelling round the globe's map in a way that compounds human progress rather than the fatal opposite: extinction.

How do we classify thematic project areas of humanitarian endeavour? Am I correct in assuming there is no standard of the same sort that industry statistics are broken down into several hundred sectors and perhaps 30 mega-groupings? If so, can the development of the project30000 catalogue offer an independent bonus?: permitting any worldwide concern network to crosscheck how its project applications areas mix and match with another network's development foci.?

Where would we look to see which project application areas subnetworks are convening around. Ashoka now has about 15 identified group interests which its 2000 social entrepreneurs identify with one or more of. You can start to see what that list is at www.changemakers.net . Its not complete but if it interested enough people here, I am confident I could get Ashoka to tell us what they have so far identified. As well as effectively cataloguing theory 2000 entrepreneurs by application interest, knowledge of how grassroots up sustainability in any particular context application area involves different intelligences than those who have only mapped how do you do eg health from top-down's standard ways of classifying is being developed and at www.changemakers.net this is shared wherever you come across the keyword mosaic.

http://www.changemakers.net/journal/03july/water.cfm
The smart commons mosaic for water is a particular favourite of mine but perhaps because a few years ago some of us came up with the pair of questions: is there an atlas of the world with red spots wherever there are water problems and how many different legend codes would be needed to catalogue every type of redspot problem. Although water could be taught as the mother of all geographic systems, we find no evidence that such a map exists in a simple way to navigate round, and we find too many top down experts have different vocabularies which to the layman overlap but which the experts seem unable to transparently translate into profiling what project is first needed where.

WE might ask who's classifications could be useful and whether anyone is doing it as an open atlas representing that humanitarian approach to change the world

-are microfinanciers working towards an agreed project classification listings
-are the largest philanthropies from GatesF down 1
-do open space and conflict resolution facilitators have a checklist of what project areas recur as most prominent t in the practice of peace
-how do mosaic applications areas get listed by any change the world method you may find most convincing to advocate that civil society knows of http://www.omidyar.net/group/community-general/news/1368/
-how does this match with the way the world social forum classifies its members activity foci http://www.omidyar.net/group/community-general/news/1376/
-globalisation's exponential risk profiles http://exponentials.blogspot.com : if we listed the 25 biggest global market sectors and each one's most risky externality or potential loss of sustainability, how would we map the solution project themes people will need to unite round if we are not to go past extinction’s tipping point on one inconvenient truth or another?

think of the 2 biggest networks or virtual communities you feel a part of; can you top 10 their members' actual project activity areas; if you or we could , would that be one way forward in getting humanitarian networks to better understand mutually advantageous collaboration areas

does our classification list match with what future historians and entreprenurial revolutionaries monitor as being the greatest innovation opportunities and risks of being in that first generation to try to trasform to the higher order (cross-cultural) system, as we boldly go from local to global in every choice of relationship connection we trust to maing?