Alliance Online - January 2008

Interview Charles Handy
A new breed of entrepreneurs

Photo Elizabeth Handy

Charles Handy is known throughout the world as a thinker on business organizations and their management. Recently, with his wife Elizabeth, he turned his attention to a different kind of entrepreneur in a book called The New Philanthropists. Caroline Hartnell talked to him about what makes the new philanthropists ‘new’, about whether it requires different characteristics to be a ‘philanthropic entrepreneur’ rather than a business entrepreneur, and about why there are so few women in the book.

In The New Alchemists you looked at a number of modern-day entrepreneurs, mainly business entrepreneurs, who have made something out of nothing. Are the factors behind the success of these business entrepreneurs different from those behind the success of the philanthropic entrepreneurs whom you profile in The New Philanthropists?

Well, I would say not really, because most of these people were entrepreneurial businessmen themselves – they don’t call themselves donors, they call themselves investors, or venture philanthropists. Everybody in the book has really taken the lessons and methods from their business life into their philanthropic life. If you are a banker, for instance, you basically act as a broker, matching resources and needs, and interestingly the bankers in The New Philanthropists do exactly that. They back things rather than start things.

So you’ve found the bankers actually work as philanthropists in a way that reflects their work as bankers?

Yes. But the business people, the entrepreneurs, start things because that’s what they do, and they start things rather courageously and venturously. So they don’t do lots of research, they get a hunch, they see a gap – or what they think is a gap – and they dive in. They don’t always succeed, but usually they do, and of course the people we’ve been interviewing have mostly succeeded. But they behave in their philanthropic career in exactly the same way as they behaved in their business career.

You mention in the introduction to The New Philanthropists that one of the criticisms of new philanthropists is that they jump in without doing a lot of research and they don’t necessarily understand the long-term implications of what they’re doing. Do you feel there’s any justice in these criticisms?

Yes I do, but I don’t think that’s necessarily a bad thing. They do agitate the pool a bit, and for the established inhabitants that’s uncomfortable. When I meet them, I say to them, look, there are people who know about this world that you’re jumping into and it would be sensible to talk to them. They need your energy, your management skills, your business acumen and so on, but you need their knowledge of the field and how it works because the not-for-profit world isn’t the same as the business world.

I suppose if they’re operating in other countries, there’s an even greater danger of jumping in without finding out what local expertise there is?

Well that’s right, but the way these people learn is by jumping in and swimming – and if you ask them if they made any mistakes they say, no, we had some good learning experiences. So they don’t worry too much if they get things wrong. But it does seem a waste of effort if they don’t talk to people enough. And on the whole of course they do, but they are in a hurry, and they are impatient of bureaucracy and the kinds of wordy consultations that tend to go on in the NGO world.

Sometimes, if development projects don’t get local buy-in, they don’t get firmly rooted in their communities. Do you think that’s a danger?

Not with these people because they go directly into the community. It’s the NGOs, local councils and so on that they don’t get tangled up with. Quite often it’s the locals, the people they’re trying to help, who welcome them. It’s the people who have been helping them who get irritated.

So the typical style would be to go straight into the community, maybe ignoring the other NGOs or government organizations that were working with them before?

That’s right. Take, for instance, our Irish property developer who jumped into a South African township and wanted to build houses there. The elders welcomed him in the township, but the established NGOs thought that he was in a bit too much of a hurry. In fact he had to slow down after a bit because he was moving faster than the township could actually handle. You know, if you build a brick house in a township you actually displace three shacks. One of the three shack-dwellers probably has the title to the land and he gets the brick house, but the other two have to go somewhere else and the local infrastructure has to cope with that. So he had to learn to adapt to the actual speed of change in that particular township.

And did he end up connecting with the organizations that were already on the ground there?

Well, he had to get in touch with the local government because there is funding – partial funding – from the government for this kind of thing. How closely he works with the local NGOs I don’t know.

I assume it’s part of the framework of most of these people that they want the things they’re founding to be, in the long run, sustainable without them?

That’s absolutely essential because, again, entrepreneurs like starting things, they don’t like running things very much. So, first, they want the management to be sustainable without endless prodding and, second, yes, the organization has got to be self-sustaining financially because they don’t want to be endlessly funding it, they want to move on to something else. So they tend to build in some kind of sustainable financial system. For instance, the wife of Mo Ibrahim, the Sudanese businessman and philanthropist, is building a breast cancer care hospital in Khartoum, and he told me that the top two floors will be executive suites, which will earn enough money to support the running costs of the hospital.

You call these ‘the new philanthropists’. While I entirely take the point you make that there’s a new generation of people now with enough wealth to start things themselves, I wonder how much of what they are doing is really new. Take Jeff Gambin, who is working in Sydney feeding 400 hungry people every night. It’s a fantastic thing to be doing, but it’s also a very traditional charitable activity. Is there something that’s different about their approach or is it just that they are willing to take their money and go and do it?

Yes, I think their approach is different, the fact that they actually think of themselves as investors and not as donors. I keep telling the fundraising community, please don’t talk to these people as donors; they want to see outcomes from their money as investors – not financial outcomes, obviously, but they want measurable results from their money, and they want to be in some sense in control of that. I think that’s what makes them different, as well as the fact that they’re actually starting something new. Jeff Gambin could have just given money to an existing relief organization, but he thought they weren’t doing the work well enough so he started his own, and he gets an enormous kick out of it actually.

That’s the other thing: if you are involved as these people are, it’s incredibly satisfying. They all say, now I understand why I make money – it’s so that I can use it, not spend it, and that’s very exciting. One of the reasons we wrote the book was to say that if you’ve got surplus money, think about using it rather than spending it.

Tom Hunter, the Scottish philanthropist, said recently that he divides his time, 50 per cent making the money and 50 per cent using it. And he says he’s become much more efficient at making money because he knows it’s terribly important that he makes lots of it so there’s more to use.

Because he’s got more motivation?

Yes, because he’s got more motivation, and I think that’s very interesting. People sometimes think that making money is enough in itself, but it isn’t. Peter Lampl, the educational philanthropist, left his private equity business because he said it was getting very boring making lots more money. Now he’s found something to do with the money he’s much more satisfied with life. So how you’re going to use your money is something that I think people involved in wealth creation should think about.

One person who I can think of who doesn’t fit that model is Warren Buffet, who clearly likes making it and doesn’t want to use it.

But he does apply what he does in his business life in his philanthropic life. In his business he finds the best people to back, and now in his philanthropy he says, well, I can’t spend it, I don’t know anything about philanthropy, but I’ll find someone who can. So he invests in Bill Gates. Whereas Bill Gates is an entrepreneur and he sees where the gap is, where things are missing, and he dives in and uses his money to make it happen. It’s the way you go about life, isn’t it – find out what you’re good at.

Does the need to measure in some ways limit what people will undertake because they want it to be measurable and they are in a hurry?

Well, there are different ways of measuring things. These entrepreneurs are involved, so they can go out and see what’s happening. Yes, you can count the heads or you can count the mouths or you can count the kids or whatever, but to go out and actually see it happening is another way of measuring. What they’re really saying is that they don’t want to give money to rather anonymous bodies who take it and say they use it well, but in fact it all gets swallowed up in the overheads and the general administration. They want to know it’s made a difference.

You could say that it’s a bit self-interested in a way but it’s their money, and usually quite large chunks of their money, and I think they’re entitled to say that they want to see how it’s being used. Since they start their own charities, they do see it, and that’s what they find extraordinarily satisfying. They feel they’ve made a difference, and it’s a visible difference.

I was very struck by your characterization of the new philanthropists as social entrepreneurs who can write themselves a cheque. I can see that not having to go out fundraising is a huge advantage. Do you think there are any disadvantages of being able to fund yourself, for example not being sufficiently self-critical or accountable?

Well, I think they make mistakes, but as I said that’s how they learn. Social entrepreneurs typically have to go and raise money and meet a lot of people who say, well, I don’t think that’s a sensible way for you to use your money – or my money. These guys just dive in, and if they feel it’s not working, they try something else. If you’re a donor you wouldn’t tolerate that, but if it’s your money, it’s just another way of finding out what’s the best way to do things, by experiment rather then by discussion.

Isn’t this method of trial and error potentially rather destructive for the people you’re trying to help?

Not really. If things don't work as well as they should, they don't do harm, they just disappoint. Few things are perfect in this world. It is better, surely, to do one’s best than not to do it at all.

You’ve had a lifetime of thinking about organizations and management. What advice would you give to a would-be philanthropist about how to go about things?

Well, actually I would say do find a partner, because there are people who know about this world that you’re moving into. Without encumbering yourself with endless committees and boards and so on, which they don’t like, do find someone to help you into this world – and I think probably most of them would.

I think there’s an interesting phenomenon taking place. We all know that Americans are terribly generous and like giving back and so on, but basically they support institutions that helped them to get to where they are: their college, their church, their local hospital, and so on. But there’s this new trend to help the poor, so Bill Gates is not setting up the Bill Gates opera house, he’s actually trying to make the world a healthier place. I think that’s an interesting and exciting new trend – and it’s not just confined to Americans, of course – and I applaud it.

Is there anything else you’d like to add?

Well, the only other thing I wanted to mention is why there are so few women – and I’m slightly surprised you didn’t ask me.

We hunted quite hard, and I think there are probably two reasons. One is that independent wealthy women are still rare. There are getting to be more of them, and there are women who are earning large salaries and near the top of organizations, women bankers and so on, but there really aren’t a lot of women who have started their own organizations and sold them and made millions, which is what you need to do this sort of thing. I think we’ve probably got to wait another generation or so for that to happen. I think that women entrepreneurs on the whole like to keep it small and hands-on, employing 10, 20, 30 people. So (a) they don’t have enough money and (b) they don’t want to get too involved in these things. I think it’ll change, but it hasn’t yet.

Gordon Roddick is in the book. Could you have included Anita instead, or was it not her money?

She did say she wanted to give away all her money before she died, which I don’t suppose she succeeded in doing, but it was giving away; she was a donor. Gordon was the entrepreneur, the unseen figure behind Anita in the Body Shop. Anita was the publicist and the person with the vision, but Gordon was the guy who made it into a business.

Do you think women don’t want to get too involved because of wanting to fit in with the rest of their lives?

I think it’s partly that, I don’t think they’re power hungry. They like to run the businesses as a family and there are limits in scale to that. I mean, you can’t run Google as a family. The first two to five years involve total dedication, which is why lots of male entrepreneurs lose their marriages in the process. I think women are much more balanced in their lives. So they start little things, and they don’t want to build them huge, and maybe they’re right.

Are there any other interesting questions I should have asked you?

These guys are very like the new alchemists – on the whole, they weren’t very good at education. They didn’t like it much, because they’re rebels in a way. Many of them don’t have degrees, so they’re not going to get into big corporations, so a lot of them go off and do their own thing. Some of them are very clever so they just breeze through university life without bothering too much about it, but a lot of them are like Bill Gates who opted out of Harvard because he had something better to do.

I think that one of the problems with our education system is that is doesn’t take rebels seriously – it calls them naughty, truanting, and so on. But maybe there are talents that we’re missing out on, if only we could find a way of harnessing their creative rebellious instincts into something productive.

Charles Handy describes himself nowadays as a social philosopher, and Elizabeth Handy is a portrait photographer. They have, in recent years, collaborated on several books, including The New Alchemists and The New Philanthropists. Email CandEHandy@aol.com

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