The world’s conscience
The world’s ultra-rich are giving to worthy causes more than ever before. Charitable foundations now jump in where governments cut official aid. It can make a huge difference to the needy — even if the donors’ motives are often self-serving.
When Paul Hewson drops in on the planet’s richest couple, Bill and Melinda Gates, horizons quickly expand as the conversation jumps from one topic to the next. “We don’t leave anything out from stand-up comedy to quantum physics,” Hewson says.
The Gates often play host to people with a wide range of interests in their high-tech villa in Seattle. But this man visiting the Microsoft mogul and his wife is someone whose stage name carries weight in two respects: Bono the pop idol and the voice of Irish rock band U2, and Bono the ultimate Good Samaritan.
The trio has a lot in common: their middle-class backgrounds and their dizzying ascents to the sunny realm of the carefree. They have money to spare and the will to become involved in good causes. Having hit midlife, they’ve realized that success and fame can also be tied to obligations.
Bono, with his trademark pink designer glasses and cowboy hat, prefers to take his concerns right to the top. He now has so much clout that he has no trouble gaining access to some of the world’s most powerful leaders — including US President George W. Bush and German Chancellor Angela Merkel — to campaign on behalf of more justice and more charitable giving. He stumps for Africa and other regions where poverty, famine and disease ensure the local populations have a life that couldn’t be further from his charmed pop star existence. During his first visit to Washington, he asked, unabashedly: “Who’s the Elvis here? With whom do I have to speak to change the world?”
Since then, Bono has put together a network of bonhomie that includes many artists of his generation. His own agency, Data, coordinates the activities and works with lobbyists, and even manages to get US senators involved. With everyone attempting to influence decision-makers, political and business leaders are at least not inclined to spurn the promise of a celebrity photo-op. To improve his line of argumentation among these people, the extrovert singer has taken a few pointers from Jeffrey Sachs, a professor of economics at Columbia University and author of the bestseller “The End of Poverty.”
Advocates of the meek
As the advocate of the world’s meek and poor, Bono jets to G-8 summits in places like Gleneagles, where he knows Oscar winner George Clooney will be standing by his side, or the World Economic Forum in Davos, Switzerland — and not to the alternative World Social Forum in Caracas, since Bono is only drawn by the true powerbrokers. At an appearance in the Swiss resort in January, Bono campaigned for a concept dubbed “Red,” under which companies pay a portion of their profits to a humanitarian fund. In late February, the Grammy winner showed up in Chile to receive the Pablo Neruda Award for Human Rights from outgoing President Ricardo Lagos. While he was there he also rocked Santiago’s national stadium at a concert for 75,000 fans.
The Gates were also in Davos. They had just visited South Asia, traveling in their Bombardier private jet, to see firsthand where their charitable funds could be invested most effectively — and, of course, to intensify business contacts in the region.
“Very impressive,” mumbled the reedy software entrepreneur, somewhat awkwardly, when he was introduced to the four members of a New Delhi family only to discover they pay $13 a month in rent for their windowless room. In Bangladesh, the Gates visited hospitals, posed for photos while feeding bedridden children and listened to housewives tell them about a successful micro-loan program for women launching small businesses.
The growing presence of private philanthropy, especially in the United States, is shining a spotlight on the global suffering many governments are either unable or unwilling to address. At least a third of the world’s six billion people live on $2 or less a day and cannot even dream of Western standards of living — let alone those of Bill Gates. The charitable activities of the ultra-rich, programs beyond the scope of official development aid, are often devoted to the poorest of the poor. But the donors are also well aware of the fact that their involvement does wonders for their public images and that such magnanimity is beneficial to both those giving and receiving.
For the past six years, Bill and Melinda Gates have funded the biggest foundation of all time. Before the foundation was established and endowed with just under $32 billion — more than half of the Gates’ estimated $50 billion fortune — Microsoft was suffering major image problems as a result of an antitrust suit. Today, the 263 employees of the Gates Foundation work on behalf of education and healthcare programs, with an emphasis on fighting malaria, tuberculosis and AIDS, as well as supporting charitable organizations, libraries and researchers. The Carter Center, run by former US President Jimmy Carter, which is currently involved in efforts to eradicate the parasitic Guinea worm, has received $25 million. The Global Alliance for Vaccines and Immunization, a UN project, has been promised $750 million for the next 10 years. The Gates Foundation also plans to spend $900 million on battling tuberculosis over the next decade.
So far the Gates Foundation has spent a total of $6 billion on healthcare projects alone. The organization’s total budget for 2004, $3.35 billion, was substantially larger than the national budgets of many governments, including underdeveloped countries like Mali and Haiti. Given these numbers, it comes as no surprise that Time magazine declared the Gates and Bono as its “Persons of the Year” for 2005. The ultra-rich and the superstars who use their fortunes and fame to assume positions of social leadership, serving as untiring heralds and fundraisers, have become the public conscience of this world.
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.
GOOD MONEY: AMERICA’S BIGGEST DONORS IN 2004
Bill and Melinda Gates $3.35 billion -Microsoft
Susan T. Buffett $2.55 billion – Berkshire Hathaway
John M. Templeton $550 million – Financial Investor
Caroline Wiess Law $450 million – Oil Heiress
George D. Cornell $196 million – Former Banker
Leo A. and Kay K. Drey $180 million – Businessman
Pierre and Pam Omidyar $173 million – Ebay Founder
Bernard Marcus $161 million – Home Depot Founder
Sidney E. Frank $142 million – Grey Goose Vodka Founder
Michael Bloomberg $138 million – Media Magnate
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. Autor: Rüdiger Falksohn