On the Beneficence of Billionaires: the Gates of Generosity

May 12, 2011

The annual shindig that puts Omaha on the map as something other than a D-Day landing beach in France has attracted even more interest than usual in the vast conglomerate interests of Warren Buffet’s Berkshire Hathaway as a result of the late unpleasantness involving his key lieutenant and putative successor. It’s not for me to lay out the rights and wrongs of that messy business, though transparency and accountability are everything in public companies, even with someone as respected as the cultivatedly folksy and I am sure all-round good guy Warren B. A journalist friend of mine was there, and had dinner with a leader in the Gates Foundation. Which set me thinking.

As we know. Buffet decided to throw most of his spare billions not into the Warren Buffet Forever Foundation, but to out-Gates Gates by passing his wads of spare cash to his buddy and fellow gold-tier member of the billionaires club to bulk up his effort instead. A lot has changed since robber barons became the more bizarre of benefactors, typically after death; we now have persons respected as businesspeople (let’s not talk about the software) deciding while they are still alive and very much kicking that it’s time to weigh in and make a difference. Ted Turner’s somewhat bizarre United Nations benefaction may be more modest, but was another striking case. Great wealth attained through business has often ended in public benefit, usually with at least half an eye on perpetuating the name of the benefactor, from colleges at Cambridge and Oxford in early modern times down to today. Not to mention the rather more obviously self-centered endowing of monastic orders to fund the saying of masses after death.

I’m sure motives have been many, from contrition (in respect of how the moolah was amassed) to lifelong concern for the wellbeing of the poor and sick to a vast tax-deductible marketing expense to ensure that, as the book of Ecclesiasticus has it, their name liveth for evermore. (Here’s an idea: what about an extra tax kick-back for gifts that will not bear the donors’ names? That’s novel: benefits for humility.)

The relation of these post-corporate benefits (which are distinct from ongoing corporate foundations and the like) to corporate social responsibility (CSR) proper is interesting. It has become common to argue (and in principle I agree, though with caveats) that in the long term, sustainable value will need to be aligned with CSR. To a degree it has been hard for hard-nosed businesspersons to push significant resources into non-profit centers for reasons of shareholder value and, indeed, fiduciary responsibility.

There’s no doubt that a much better (business) argument can be made for this now than, say, 10 or 20 years ago; brands are plainly benefited by “responsible” associations; they can be radically threatened by irresponsible; brands are in general getting weaker; and so on. The growth of CSR as a core business effort (which is helpfully benchmarked by the Committee for Encouraging Corporate Philanthropy) is strong and widely recognized. So in some degree the generosity of billionaires is a response to an earlier situation in which coining the dosh and then handing it out fit better an older business model. But there is plainly more to it than that.

And the Gates (and thereby Buffet) focus on neglected tropical diseases, like Ted Turner’s on the United Nations – continuing the tradition of unsaintly Andrew Carnegie’s endowment of libraries and peace and science – shows a mixture of elite disdain for the capacities of government to handle deep social challenges, hubristic self-confidence that helped leverage these guys into vast corporate success, and an awareness that non-profits can pretty much do what they like, and do it fast.

It’s likely that trends in technology and innovation are going to throw up more gazillionaires, and faster (Zuck is barely past his mid-20s and he has started to give away vast sums). The pattern that emerges will be fascinating. Every day we all get a little less confident in government (left and right both), and correspondingly a little more aware that investment decisions and personal life choices shape the human future. Expect more Gatesian giveaways and a future in which leveraged personal fortunes keep being directed to dire social ills. But the climate has begun to shift, and integrated CSR – driven by branding, yes, but perhaps reflecting the way things are (not to mention natural law, though some would) when markets run well – is on the up.

I’m looking to a both/and future.