Lessons from billionaires on the right way to give away money
By macleans.ca - Monday, March 4, 2013 - 0 Comments
“The problem of our age is the proper administration of wealth.” So wrote Andrew Carnegie, the richest man in the world, in 1889. Carnegie’s solution to the problem of his age—what many today would call income inequality—was to give away his millions as wisely as he could.
Carnegie’s spirit of philanthropy is alive and well these days in the Giving Pledge, a commitment among the very wealthy to give away at least half their fortunes before they die. The pledge began as a private agreement between Microsoft founder Bill Gates and legendary investor Warren Buffett; since 2010, they’ve encouraged other U.S. billionaires to act likewise. And in good news for rich and poor alike, their commitment is now spreading around the world.
Last week, it was announced the Giving Pledge was “going global” with the inclusion of new philanthropists, including Richard Branson, founder of Britain’s Virgin Group, Patrice Motsepe of South Africa, India’s Azim Premji and Vladimir Potanin of Russia. There are now 105 pledgers ranging in age from 28 to 97.
Of course, the Giving Pledge has always had a strong Canadian flavour, despite claims it only breached America’s borders last week. Montreal-born Internet entrepreneur Jeff Skoll was one of the first signatories in 2010. Canadian business titans Charles and Edgar Bronfman both joined Buffett and Gates last year. Elon Musk, the South African PayPal founder who attended Queen’s University in Kingston, Ont., also signed in 2012.
Regardless of how one defines global, however, the recent expansion of the Giving Pledge is clearly a great benefit to all. Beyond the obvious advantage of making more money available to worthy causes, it also presents the opportunity to raise the quality of charitable work everywhere.
The average non-billionaire donor typically bases his or her charitable decisions on familiarity with certain causes and/or the emotional sway of pitches over the phone or at the doorstep. But is this really the best way to give?
One of the key motivators behind the Giving Pledge is a desire to harness the rigour and drive that has allowed pledgers to achieve great success in the private sector and apply this to the charitable sector. Such an approach shares much in common with the provocative new book, With Charity for All: Why Charities Are Failing and a Better Way to Give, by former National Public Radio CEO Ken Stern, who claims most emotion-driven charity is either wasted or used in inefficient ways.
Stern argues charities ought to act more like the private sector, putting greater emphasis on head-office oversight and a scrupulous focus on outcomes. Donors should act similarly, demanding provable, long-term results for their dollars. It’s a whole new way of looking at good works. The author suggests, for example, that the popular preoccupation with extremely low administration costs is entirely misplaced. The mark of a truly effective charity is the ability to self-scrutinize and innovate.
Stern offers up an example from the early years of the Bill and Melinda Gates Foundation when it decided, largely based on guesswork, that smaller-sized high schools would improve student outcomes. Grants of $1 billion were handed out to build small schools or restructure existing schools into smaller units. But five years and 1,500 schools later, a comprehensive review revealed that all this money had done very little for student results. Math scores actually suffered.
“From the ashes [of the small-schools scheme], the foundation developed new requirements that all Gates projects and grantees be subject to rigorous and verifiable measurement,” Stern writes. “The Gates Foundation now maintains a department whose sole function is to measure and analyze results.” In other words, the Gates Foundation substantially increased the size of its administrative overhead to ensure its efforts were cost-effective and productive.
What sets billionaires of Giving Pledge apart from the rest of us, besides their money, is the ability to ensure the charitable works they support yield high-quality, efficient outcomes. So now, when the Gates Foundation advocates low-cost bed netting to fight malaria in Africa, or new ways to fund health care, there’s plenty of evidence supporting these decisions. This sort of thoroughness is the reason Buffett is giving the bulk of his fortune directly to the Gates Foundation. And as the Giving Pledge gains traction around the world, it seems reasonable to assume a more results-based focus will filter out across the charitable world. We can hope.
Just as investors have long paid close attention to how Buffett invests his money, donors today ought to mimic how he gives it away as well.
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‘Social finance’
By Aaron Wherry - Friday, November 9, 2012 at 9:33 AM - 0 Comments
Diane Finley is moving forward with the Harper government’s plans for “social finance.”
Ottawa is making a bold push to have business play a bigger role in funding government social programs – asking Canada’s corporate and charities sector to submit ideas that could ultimately form part of the 2013 budget.
In an interview with The Globe and Mail on Thursday, Human Resources Minister Diane Finley said interest in the emerging field of social finance is “very high,” pointing to multimillion-dollar investments from the Royal Bank. “We need to make sure that we’re not only not getting in the way, but we’re helping them advance their efforts to improve the outcomes in things like homelessness and literacy and other community challenges,” Ms. Finley said.
The prepared text of Ms. Finley’s speech is here. The plan is reminiscent of David Cameron’s Big Society, which has been met with mixed reviews. The Star looks at some of the criticisms of Ms. Finley’s plan. The NDP was unimpressed during QP yesterday.
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The cuts and the changes
By Aaron Wherry - Friday, March 30, 2012 at 9:30 AM - 0 Comments
The Chronicle-Herald looks at the proposed rules for foreign charities.
The Conservative government is threatening to decertify foreign charities that do not act “in the national interest of Canada.” Under rules announced Thursday in the 2012 budget, foreign groups can apply for registered charity status if they meet one of two criteria. The first is providing disaster relief or urgent humanitarian aid. The second is if they work in the national interest of Canada. The national revenue minister, working with the finance minister, will have the power to decide who meets the criteria.
Embassy reviews the cuts to foreign aid, immigration and defence.
Within the suite of departments and agencies that contribute to foreign aid, CIDA would take the largest hit: $152.7 million by 2012-13. That amounts to about 4.5 per cent of CIDA’s total budget for that year. That number would ramp up to $319.2 million by 2014-15. To put that into context, that ongoing $319.2 million decline is just under the $320 million CIDA currently spends on basic education programs and for water and sanitation, according to figures from the Canadian Council for International Co-operation.
Mike De Souza reviews the impact on environment policy. APTN looks at the closing of the Fist Nations Statistical Institute.
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Making commitments for the year ahead
By macleans.ca - Thursday, January 13, 2011 at 9:20 AM - 6 Comments
A study revealed Canadians over 55 are the most generous with volunteer hours
Steve Russell/Toronto Star
How do you solve a problem like 2011? The coming year promises a great many daunting challenges for Canada and the world. Overcoming these obstacles will require fresh and innovative thinking. And Maclean’s is pleased to be a part of that process.
This issue features many stories that bring important new perspectives to current problems. In our cover story, National Editor Andrew Coyne tackles the great bugbear of modern urban living—traffic. With wit and logic, he parses the solutions on offer and finds his way to the inevitable conclusion that drivers must starting paying tolls if they want access to congestion-free roads. You may not look forward to such an outcome, but it’s impossible to dispute Coyne’s common sense route.
Similarly, Senior Writer Jason Kirby shines a light on what will eventually come to be seen as the most significant economic experiment of our generation: the austerity of British Prime Minister David Cameron versus the pump-priming of U.S. President Barack Obama. And Maclean’s award-winning investigative reporter Michael Friscolanti examines a little-known moral quandary at the heart of Canadian foreign policy—how much should the Canadian military pay for accidental deaths and destruction in Afghanistan?
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Corporate Social Responsibility: recession proof
By Philippe Gohier - Monday, June 14, 2010 at 9:00 AM - 5 Comments
Why companies didn’t scale back on social responsibility efforts during the downturn. PLUS: the 50 most responsible corporations
With the recession battering the pocketbooks of Canadians across the country, charitable donations took a nosedive. In fact, many charities are running out of cash just when they need it most. According to a survey by Imagine Canada, an umbrella organization representing charities and non-profit groups, 45 per cent of the 1,500 charity leaders polled between November 2009 and January 2010 said the economic downturn had led to an increase in demand for their services, but 48 per cent say they’re having difficulty fulfilling their mission and 22 per cent claim they could have to shut down operations altogether if their financial situation doesn’t improve. And the future doesn’t look any brighter: 51 per cent expect to have a hard time covering their expenses between now and next year.
When the going got tough, Canadians looked out for No. 1. But what of their employers—many of which spent the better part of the past decade touting their new economy bona fides and aligning themselves with causes like climate change and AIDS awareness? While some suspected corporate social responsibility (CSR) initiatives would be the first items to disappear from corporate budgets amid all the slashing, for the most part, companies stuck to their principles. “We didn’t see any let-up in sustainability programs at companies that already had them,” says Heather Lang, director of research products for Jantzi-Sustainalytics, which compiles the list of Canada’s Top 50 Socially Responsible Corporations. “If anything, there was likely an increase in programs.”
