Will growing wealth in emerging economies lead to meaningful philanthropy?

 

Strategic Philanthropy

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Hilda Vega

Hilda Vega

It was hard to miss the story about Carlos Slim Helú being ranked the richest person in the world by Forbes this year. Either Bill Gates or Warren Buffett had held this ‘title’ for the past nine years (and at least one New York Times piece argued that if Gates and Buffett were less philanthropic, they would still be topping the list). Though Slim had been climbing the Forbes list recently, this change is another indicator of the decentralization of wealth towards non-Western countries including Brazil, India and China.

But when Forbes released its list of the world’s 14 most generous philanthropists in August 2009, Slim was not on it, while Gates remained at the top and Buffett was in the top 10. Nevertheless, some have speculated about what Slim’s new position as the world’s richest person might signal not only for his philanthropy but also for the giving practices of other emerging ultra-high-net-worth individuals from around the world.

Is it realistic to expect that as more entrepreneurs from the Global South break into the Forbes’ rich list, global philanthropy, or even the culture of giving in the home countries of these individuals, will be strengthened? And, if so, should the wealthy of other countries follow the models offered by prominent American or European philanthropists?

Philanthropy has been evolving in other countries over the past few decades, especially where there is sufficient concentration of wealth to encourage the creation of support organizations and networks – as is the case in Mexico. However, Carlos Slim has gone on record saying that philanthropy is not the answer to poverty and the social problems that it creates. His focus, in terms of helping to stimulate change in Mexico, is through job creation (presumably in his own companies), education and health. Addressing job creation, health and education is not very different from the approach of some of the programmes at, for example, the Bill and Melinda Gates Foundation, but the spirit and strategy behind it certainly are. Not only does Slim appear to remain unconvinced by the potential of philanthropy, but his giving is spread across a variety of programmes and giving vehicles, which makes it difficult to really understand his overarching strategy or outcomes.

In at least one way, Slim’s philanthropy has identified with an American approach. In 2007, he made a significant donation to the Clinton Foundation’s Giustra Sustainable Growth Initiative, which focuses on programmes to strengthen child nutrition, expand access to health care and strengthen entrepreneurship in Latin America. Slim also pledged support to the Clinton Global Initiative and has made commitments to increase gifts to his own philanthropic organizations.

Even with these investments, which are no doubt a sincere effort to address pressing issues in Mexico and throughout Latin America, it is not to be expected that Slim will change philanthropy in Mexico. His philanthropic strategy has lagged far behind his money-making ambition; it is closer to a traditional corporate giving approach than to social change philanthropy. This isn’t necessarily a criticism of Slim’s philanthropic strategy, but we do need to acknowledge that having money does not mean that it will be thoughtfully invested in philanthropy (if it gets channelled into philanthropy at all).

Nor should we have unrealistic expectations that philanthropists in other parts of the world will gain inspiration from Slim’s ascent to the top of the Forbes list. As pointed out in a 23 March Reuter’s piece, India now has two individuals in the Forbes top 10, and the number of high-net-worth individuals has grown by 11 per cent in the past decade. Yet, philanthropy in India still largely consists of government funding and donations from organizations outside India. Only 1.6 per cent of giving comes from India’s wealthiest.

Thus, while wealth creation in other regions is matching or exceeding that in the so-called ‘developed’ world, philanthropy continues to struggle. Roadblocks for giving persist, including:

  • Lack of trust in non-profit organizations
  • Weak to non-existent tax incentives for giving
  • Corruption in business, government and the non-profit sector
  • Less formal non-profit operating structures that do not facilitate knowledge of the outcomes or impact of a donation
  • Few role models for giving and a culture in which high-net-worth individuals do not compete for the philanthropic spotlight

This last point may seem irrelevant, but American philanthropy today owes much to the models provided by philanthropists throughout our history. It also benefits from media interest in the lives of high-profile donors, making individuals more aware of social issues and how the wealthy in our communities respond to them.

Perhaps this attention to philanthropy is exactly what is needed. As interest in philanthropy and philanthropists grows, we are more inclined to think about the impact of their giving, the meaning of their strategies, and how giving can be a more integral part of managing wealth and contributing to the well-being of society. With such conversations bubbling up to the surface, changes in the culture of giving and the structures that govern it are likely to become more responsive to the needs of donors and recipients. Hopefully, such changes will also lead to the removal of those barriers to locally inspired and culturally relevant giving.

Hilda Vega is senior advisor at Strategic Philanthropy, Ltd. Email hilda@stratphilanthropy.com

 

Tagged in: Carlos Slim Helu Emerging economies Forbes list


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