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Global Philanthropy

The World's Conscience

By Rüdiger Falksohn

Part 2: Continue reading about the "Bono Effect" on Page 2.

There is already talk of a "Bono effect," although one would be hard-pressed to measure it. In the cradle of modern philanthropy, the United States, almost a quarter billion dollars were donated in 2004, the lion's share coming from ordinary citizens. Two-thirds of all Americans have taken to copying the world's generous elites, who are deliberately burnishing their own images or those of their companies with their charitable donations and activities.

The current mantra might as well be: do good deeds and talk about it. Despite its persistent cutbacks on funding for social programs, the US government did without $40 billion in tax revenues as a result of deductions for charitable giving in 2004, and yet the loss somehow paid off. That's because the government cutbacks triggered a quadrupling in private charitable donations, even amounting to as much as $2,252 per capita on the especially generous west coast.

Gates' model is oil magnate John D. Rockefeller, who died in 1937 at the age of 97. Rockefeller, widely seen as an industrial age robber baron, invested $450 million in his Rockefeller Foundation -- partly out of vanity. He wanted to trump Andrew Carnegie, the Scottish-born steel mogul, who himself had invested $350 million in his own foundation. Carnegie believed that "he who dies rich dies in shame." But even when adjusted for inflation, Bill Gates has long since outpaced both Rockefeller and Carnegie.
The Henry Ford Foundation, launched in 1936 with a paltry $25,000, now manages an endowment of $11 billion. The foundation established by insurance tycoon John D. MacArthur operates on an endowment of $5 billion. New York mayor and media mogul Michael Bloomberg, who gave away $138 million in 2004, currently holds the number ten spot on the global list of do-gooders.

Recently many younger business leaders in the IT industry have also turned their attention to charity. With its $1 billion endowment, the foundation of 41-year-old PC maker Michael Dell is already one of the US's leading charitable organizations. Intel co-founder Gordon Moore and his wife, Betty Moore, have set up a $5 billion foundation -- a surprise to market speculators, since business magazine Forbes estimates the Moores' fortune at only $3.7 billion.

The Buffets, another ultra-rich couple, are the closest to the Gates when it comes to charitable giving. In fact, Warren Buffet, the world's second-richest person, even plans to spend his entire fortune, currently estimated at $42 billion, for humanitarian purposes -- but only after his death. Ever since the end of the last stock market crisis, the volume of charitable giving has reached previously unheard-of levels, partly as a result of the Indian Ocean tsunami and Hurricane Katrina. And although tax benefits may play the biggest role in charitable giving, hardly anyone can dispute the benefits and need for charity.

Dependent on private aid

In fact, Third World countries, in particular, are practically dependent upon non-governmental organizations (NGOs) and their outside financing. The World Bank even believes that government-funded development aid could come to an end by 2030. Agencies could bundle private funds and earmark them for specific projects. And because the business world is largely considered better at managing money than governments, some even hope that the worst hotbeds of corruption would eventually disappear. Each recipient country would have to present the donors with a precise strategy for using the donated funds, which the donors would then accept or reject. This would force the recipients to take more responsibility for their actions.

Most foundations today already have their own auditing systems that constantly check to make sure that funds are allocated as directly as possible. And, in a typical display of capitalism, even the auditing has proven to be a profitable undertaking. The Swiss firm Société Générale des Surveillance, for a fee, performs audits of all the possible weak points in nonprofit organization activities. The company has developed about 80 criteria, keeps a close watch on greedy customs officials and makes sure that local NGO personnel manage the funds effectively.

In many cases, the obvious self-interest of wealthy philanthropists is seen as a drawback, especially when promises of aid remain nebulous or never materialize. "Unfortunately, there is far too much zeitgeist and hypocrisy," says Nestlé Honorary Chairman Helmut Maucher, 78, who prefers to preach old-fashioned entrepreneurial ethics. "The best way for a manager to help society is by investing in his employees, in training and education, in R&D and in the markets."

Other skeptics call it indulgence capitalism -- a transparent attempt to gain competitive advantage by espousing politically correct attitudes. Philanthropists must live with such accusations -- including Jeffrey Skoll. The 41-year-old is one of the two founders of Internet auction Web site Ebay. Skoll retired in 1998 and has since devoted his full attention to charitable corporate initiatives the world over.

After all, what's wrong with giving without being self-sacrificing at the same time? Why shouldn't donors also benefit for their charitable activities? And why should glamour automatically hurt credibility?

The images of photogenic Oscar-winning actress Angelina Jolie appearing with earthquake victims in Kashmir may present a disconcerting contrast to the tabloid gossip over her roller coaster relationship with actor Brad Pitt. But her appearance is effective nonetheless. After Jolie gave a speech about Sierra Leone at Manhattan's Supper Club, the well-heeled guests sat down to a cheerful meal -- but they also gave generously for causes in strife-torn West Africa.

In Davos, UN Secretary General Kofi Annan presented his concept of ten commandments for environmentally and socially-oriented businesses. These principles, known as the Global Compact, fit on a single folding sheet of paper. More than 2,000 companies have already agreed to abide by Annan's compact, and in return are able to reap the marketing benefits of sporting a UN logo.

The informal system of private giving is often faulted because it lacks fundamental controls. But no one seriously questions the urgent need for private donors -- even if it's also clear that such philanthropy is no cure-all since it fails to correct the complex causes of poverty. And the fact that rich benefactors are often all too eager to use the Third World as a source of cheap labor? It's just another one of those contradictions to which no foundation can offer any answers.

Translated from German by Christopher Sultan