Philanthropy is a set of private initiatives seeking to improve the well-being of humankind by preventing and solving social problems.
Its etymological root is derived from the Greek ‘philanthrōpia’, meaning the love of humanity.
The Forbes 2023 Philanthropy Score finds that, unsurprisingly, the wealthiest are the biggest philanthropists.
Yet, while the quantum of philanthropic giving in the US, for example, amounts to $250 billion for the year, this constitutes less than six percent of the worth of the top 400 super rich. Only eleven of the US’s 400 super rich have given away 20% or more of their wealth to philanthropic causes. While 70 billionaires have signed Bill and Melinda Gates’ Giving Pledge, committing 50% or more of their wealth to philanthropy, George Soros (who did not sign the pledge) is the only name on the 400 super rich list to have done so. Notably, McKenzie Scott has already donated $15 billion of her divorce settlement with Jeff Bizos to philanthropy. Berkshire Hathaway President, Warren Buffet, holds the title of most generous billionaire, giving away $55 billion of his personal fortune to date.
Yet, it is the Indian Tata family of industrialists that heads the list of greatest philanthropists in history, donating the equivalent of $102 billion over the 20th century.
While the quantum of philanthropic giving is important, its effectiveness and impact are more so. For it to be effective and have impact philanthropy requires more than a cheque book.
The first requirement is focus. Throwing private money at any social problem has a limited prospect of success. Key to successful philanthropy is the self-identification of issues that have resonance with the donor. This allows for a sense of ownership, but also helps ensure long-term commitment to the achievement of a desired social outcome.
The second requirement for effective philanthropy is good governance. It may seem counterintuitive, but effective philanthropy at scale requires highly qualified programme managers, lawyers, accountants, trustees or a board of directors armed with the appropriate qualifications and imbued with high standards of integrity. Philanthropy is often a family initiative, but to achieve long-term sustainable impact requires corporate standards of professionalism and governance.
The third and related requirement is transparency at two levels. First, it is important to know who the philanthropic donor is to avoid reputational risk, prevent undue influence or worse still, money laundering. Conversely, treating philanthropy as a public relations exercise to advance the interests and reputation of the donor is simply another form of influence peddling. While being recognised for philanthropic giving to a social cause is perfectly legitimate, doing so merely to advance a corporate interest is not.
The second level of transparency is that of the recipient. Far too many good causes are denuded of funding by philanthropic entities weighed down by a bloated overhead. Effective and well governed philanthropic entities carry their own overhead and ensure the maximum throughflow of donations to the underlying beneficiaries. Relatedly, effective philanthropy requires not only transparency of all financial matters, but also regular feedback and reporting on programmatic impact. Failure to deliver a return on investment means depriving other worthy projects of funding and is an abrogation of the social compact that underpins all philanthropy.
Philanthropy is not without its critics, however. This often relates to how the money disbursed through philanthropy was accumulated. Some of the world’s most generous philanthropists including Carnegie, Rockefeller and Rhodes have been the source of trenchant criticism for their personal and business practices. Contemporaneously, the personal and corporate behaviour of Bill Gates, particularly during his leadership Microsoft, leaves a question mark hanging over the Bill and Melinda Gates Foundation.
But here’s the rub. Is the world a better place due to the philanthropic giving of the Rockefeller Foundation to 47 Nobel Laureates before they won their awards? Are universities and libraries enriched as repositories of knowledge and learning through Carnegie Foundation funding? Has talented leadership been rewarded and nurtured through the Rhodes Scholarships? Are we closer to eradicating Africa’s biggest killer, malaria and saving the lives of eight million children through the work of the Gates Foundation? Demonstrably yes, but isn’t philanthropy really just a vanity project of the wealthy designed to achieve what governments and states should be doing and are not?
I would contend that philanthropy should not be viewed as a substitute for the state, its duties and social obligations, but it can play a vital role in strengthening civil society, buttressing democracy and the forging of private sector networks that benefit millions who otherwise may simply be left behind as the wretched of the earth.
Ian Kilbride is chairman of Spirit Invest and an Honorary Professor, at Stellenbosch Business School.
BUSINESS REPORT