Modern philanthropists do it their way
Resource type: News
The Australian | [ View Original Source (opens in new window) ]
By Catherine Armitage.
UNIVERSITIES hoping to reap the benefits of the latest golden age of wealth creation will need to stop complaining about these “wretched billionaires who want to get involved”.
That’s the message, crudely put, from Matthew Bishop and Michael Green who argue in their book, Philanthrocapitalism, How the Rich Can Save the World that we are in the midst of a new age of philanthropy led by the world’s most successful wealth creators including Bill Gates, Warren Buffett, George Soros and Chuck Feeney.
Their fortunes – and generosity – dwarf even the likes of the Carnegies and Rockefellers of a previous golden age. But there are other important differences between past and present ways of giving big: donors are active, not passive. They are focused and strategic, they target resources at where they are likely to make the biggest difference, they seek to measure impact more effectively, they look for partners to work with, and they encourage participants in the causes they invest in to collaborate more.
“In short, they are trying to apply the secrets behind [their] money-making success to their giving. That is why we call them philanthrocapitalists,” says the book.
The good news is that universities are regarded by at least some of these philanthropic entrepreneurs as ideally placed to help advance civilisation. Giving to support research is seen as a direct investment in generating knowledge that increases the likelihood of solving the problems facing humanity, “a sort of default high return activity”, says Bishop, the US business editor and New York bureau chief of The Economist.
So far so good. But things can get tricky when stuffy, old-school collegial university culture meets urgent, thrusting, results-focused entrepreneurship.
Paul Greenfield, vice-chancellor of the University of Queensland, confirms: “The main criticism of some of the philanthropists is universities move too slowly. They are interested in helping us speed up things.”
UQ and the Perpetual Group co-hosted a recent tour in which Bishop and Green conducted invitation-only forums for Australian philanthropists and not-for-profit organisations.
UQ has been a prominent beneficiary of philanthrocapitalism, particularly as practised by Feeney, the Irish-American duty free and private equity magnate, who is exercising his giving while living philosophy with a plan to disperse his billions by 2020.
In Australia he has given away a reported $500 million or so, mainly to biomedical research and most of it in Queensland, through his charitable foundation, The Atlantic Philanthropies.
“Most of our current philanthropists, Chuck Feeney included, have made their own money, not inherited it, through their own entrepreneurship and business acumen, so it is not all that surprising that they want to be actively involved in its distribution, and the projects they are funding,” says Greenfield.
“What that implies for an institution is you are going to be involved with these people for the rest of their career or life. They are not passive investors.” In other words universities need to figure out how to ensure benefactors get value, including enjoyment, from giving their money away.
Greenfield says the level of the benefactor’s involvement needs to be tailored to their individual interests. Graeme Wood, UQ alumnus and co-founder of wotif.com, tipped $15m into UQ’s Global Change Institute, dedicated to tackling problems created by global-scale change. He sits on the advisory board.
“He is really interested in the outcomes. He is not interested in running it,” says Greenfield.
Meanwhile Wotif co-founder Andrew Brice supports a scholarship program to encourage university attendance for disadvantaged Year 11 and 12 students.
He and his wife Jennifer play a role by addressing the students as a group when they arrive at university.
As Bishop and Green point out, increasingly donors seek to use their influence to change the way things are done, for example by impelling competing institutions to work together, or using their gift as leverage to coax funding from governments.
The Atlantic Philanthropies, for example, has partnered with the Queensland government in its Smart State strategy, making government funding a condition of its donations. The Atlantic Philanthropies $50m gift to the $354m Translational Research Institute Queensland, added to $140m from the commonwealth government, $100m from the Queensland government, $25m from Queensland University of Technology and $10m from UQ, among other funding.
Controversy can result when it is perceived that the cause on which the money is spent might not otherwise be a university priority. The University of NSW copped some ugly headlines last year – “Revered then reviled: gift sparks outrage” – when students protested at a $2m gift to its College of Fine Arts from Sydney philanthropists Brian and Gene Sherman. Part of the money was to be spent on a gallery named after murdered art curator Nick Waterlow, their friend, with Gene Sherman to become an honorary professor and the School of Art History and Art Education to take the Sherman name.
Students said they were concerned by what the deal meant for the integrity of the university. A student leader was quoted as saying: “The reputational risk posed to the university far outweighs any financial benefit gained. Students want to see quality education placed before private interests.”
According to Bishop and Green, university governing councils are getting better at managing conflicts over endowments by ensuring that objectives and goals are clear, results are forthcoming and everything is done transparently. “Because these are additional resources, the risks of corrupting public priorities are minimised,” says Green, an independent economist and writer.
Being proactive about seeking money for identified purposes is a way of minimising such conflicts. Before a university approaches a philanthropist it needs a very clear view of what it is seeking. Says Greenfield: “It can’t be too ad hoc and it can’t be too rigid. You have to have a clear sense of what you think is important, and you have to get buy-in within the institution.”
Different schools or faculties might have varying wants and interests – from building works to scholarships to research funding – that need to be catered for. Then the institution needs to be prepared to ask for money and, if successful, to steward the gift – and the giver – through to success.
“These people want to enjoy giving money away, so they like to see success, obviously,” says Greenfield.