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We Still Haven’t Found What We’re Looking For

By Tom Watson on February 3, 2006No Comment
SearchWe Still Haven’t Found What We’re Looking For

It’s almost become routine to read about philanthropy in the context of bold-faced names, whether it’s Angelina Jolie at Davos or the recent cover of Time celebrating Bill and Melinda Gates and rock star Bono for their worldwide efforts as “The Good Samaritans.”

The cover, a Mount Rushmore of Philanthropy framed in traditional Time magazine red, proclaimed the power of international philanthropy for all to see. So why wasn’t I cheering?

Over the last five years, Bill Gates has dedicated billions of dollars to philanthropic endeavors.  His commitments to global health and infectious disease control, and to his home region of the Pacific Northwest, are well known.  Many other wealthy individuals have committed fortunes to philanthropy.

But, for all the counting of dollars, Mr. Gates and his peers are missing the biggest opportunity of their lifetimes, not to mention the biggest opportunity in the history of philanthropy – and it’s an opportunity you won’t read about in the Time magazine hagiography.

As an economist with a particular interest in both American-style philanthropy and international development, I see two historical currents converging in rapid fashion: the growth of increasingly open economies, and the spread of political freedom.

The world economy is expected to be 80-percent larger in 2020 than it was in 2000, and average per capital incomes will be about 50-percent higher.  And the pistons driving growth are not just Western.  Last year, East Asia grew by 7.6 percent, compared to 4.4 percent in the U.S. and just 1.7 percent in Germany.  According to United Nations population data, the poorest countries now represent just 4.4 percent of the world’s population.  By 2020, economies such as those of Brazil and Indonesia will surpass all but the largest European countries.

Economic progress has come not just with the benefits of cross-border trade and investment born of globalization, but from the rise of private local investment in middle income countries.  In the world’s least developed countries, private investment accounts for 12% or less of Gross Domestic Product.  In middle income countries like China, India, Mexico, Malaysia and the Philippines, private investment accounts for between 20% and 30% of GDP.  And where there is investment, there is wealth.  Sixteen of Forbes’ top 100 wealthiest people in the world are from outside of North America and West Europe.  But the top of the proverbial economic heap does not measure the true pace of wealth creation.  Between 2000 and 2004, per capita Gross National Income in middle income countries increased by a whopping 29%. 

At the same time, the spread of freedom is inexorable.  Today, 73% of nations are free and open according to the Freedom Index of the nonpartisan Freedom House compared to just over 50% three decades ago. By this index of political rights and civil liberties, 44% of the world’s population live in free countries governed by the rule of law, free political competition, and the protection of human rights. 

This is an historic opportunity.  As wealth builds within free societies, the economic leaders of developing nations have the opportunity to create a whole new pool of philanthropic resources in these nations.  Rather than fleeing political and economic oppression and flowing to unmarked bank accounts in Switzerland, local economic leaders will increasingly be able to invest in their own nations and their own communities. Only the emergence of this local philanthropic leadership will make philanthropy sustainable in growing economies.

That opportunity will not necessarily become reality, however.  Philanthropy is not hotwired into economic systems; it grows from social norms and leadership examples. As my fundraising colleagues remind me time and time again, people give to people.

Where Bill Gates and Bono put their money is of less importance than where they put their leadership.  In a world of growing economies and open societies, the future vibrancy of philanthropy rests not on money but on leadership.  If Mr. Gates and his colleagues would worry as much about encouraging their emerging peers in middle income countries to commit themselves to philanthropy — and less about transferring money across borders — the prospects for sustained private commitment to community in middle income countries would be vastly improved.

So here’s my modest suggestion to the Gates and Bono: Establish a Global Philanthropy Roundtable. Focus less on spending your money than on encouraging emerging economic leaders to invest on their own societal commons.  Create a Roundtable that is prestigious, where economic leaders from all economies join to share best philanthropic practices.  Create a Roundtable that itself generates social expectations for philanthropy in growing economies.

And, just as the economy is increasingly global, so too can be the Roundtable’s charter leadership.  This need not be an American initiative.  Mr. and Mrs. Gates, pick up the telephone and call your peers in Malaysia, Mexico, India, China, Indonesia, Brazil.  Ask them to join you as partners in leading the world’s growing wealth to philanthropy.  You will be pleasantly surprised.  Many of these men and women are themselves beginning to give in their own countries.  Together, you all will provide the example and create the expectations that will multiply your numbers many fold.
The opportunity to lead, and not just transfer, is your true legacy and that of  a potential global generation of philanthropists. 

Sources

Freedom in the World 2004: The Annual Survey of Political Rights and Liberties.  New York: Freedom House.

H Kuroda, “Dynamic East Asia: Progress and Prospects for Economic Growth and Regional Integration,” Address by the President of the Asian Development Bank to the Columbia University School of Business, September 15, 2005.

D Altman. “With Interest – Giving: Asia’s new class act.” International Herald Tribune, October 22-23, 2005, 12.

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