The serious business of philanthropy

Adam Smith famously argued that the pursuit of self-interest in a free market would benefit all in society. What is less well remembered is that he also said sympathy, by which he meant a concern for one’s fellows, was essential for the cohesion and stability of that society. Business eagerly embraced the self-interest part of the equation, leaving sympathy for others to deal with. In the long run that has undermined the spirit of capitalism, which many see as an invitation to selfishness on the part of companies and individuals. Altruism and capitalism seemed unlikely bedfellows.

There are signs now that the tide is turning. Bill Gates of Microsoft and Warren Buffett of Berkshire Hathaway hit the headlines but, even in Britain, those who find themselves with more money than they need or want are looking for ways to do something useful with their surplus. Moreover, if they are business people they know about money and how it can be most usefully employed to create and grow enterprises, even where those enterprises are social as well as commercial. They are not content to write cheques to strangers with no strings attached, however worthy the cause, any more than they would give it to one of their managers without requiring proper accountability for its use.

Our forthcoming book, The New Philanthropists (by Charles and Elizabeth Handy), profiles and photographs 23 successful business people, and one sportsman, who have turned social entrepreneurs. They are using their talents, their time and some of their money to start a wide variety of social projects. Niall Mellon, an Irish property developer, is helping African workers to build proper houses in the townships of South Africa, aided by an annual aircraft load of Irish volunteers. Sir Tom Hunter, the sports retailer, has invested time and money to inculcate programmes of self-responsibility and entrepreneurship in Scotland’s schools and is doing more of the same in Africa with former US president Bill Clinton’s Global Initiative.

Not all are that rich. Peter Ryan, an executive at a technology company, devoted his time and modest amounts of his salary to setting up a microloan operation in Malawi. Tony Adams, former captain of Arsenal football club and England, put the proceeds of his book and his testimonial match to work in founding a clinic for addicted sports people. What they all have in common, however, is a passionate concern for their projects combined with a determination to see that they are well managed and are sustainable in the long term without constant pump-priming by themselves.

Their individual stories are interesting, even inspiring. The book has photographs of “still lives”, composed of their symbolic objects, which say a lot about who they are and what matters to them. The exciting possibility, however, is that these are just the tip of a promising iceberg. There have always been generous individuals among the very rich, although most of them have inherited their money, but we are now witnessing the emergence of some serious business people who have made their own wealth, are still in mid-career and have talents and skills to apply to its use. Ten years ago 75 per cent of those on the Sunday Times Rich List had inherited their wealth. That has now been reversed: 75 per cent have made it themselves. For most of them the money is the incidental outcome of doing a job very well but it gives them a resource that aches to be put to good use. They will not all want to be pioneering social entrepreneurs, but they will want to keep their eyes on where their money goes and how it is used. They will be venture philanthropists and may be as demanding of their clients as their capitalist equivalents are of theirs.

They are, however, novices in the charity and social arena. They will need help and advice as to how best and where to apply their resources. Already there are charities such as New Philanthropy Capital which exist to do exactly that, while organisations such Ark are experts in funnelling money from the rich to good causes. Charities will have to get used to these more demanding donors but the donors could usefully learn from charities’ experience in the field and will, anyway, need their continuing partnership if their initiatives are going to be sustainable in the longer term.

Cultures change slowly but, as more examples of the new generosity emerge, we could see the marriage of altruism and capitalism that Adam Smith hoped for all those years ago, a marriage that would provide capitalism with an acceptable human face and do a lot to ensure its future.

• Could the new philanthropists provide capitalism with an acceptable human face and help ensure its future? Charles Handy answers your questions in a live Q&A this Monday at 1pm BST. Post a question now

The writer is author of many books on work, life and organisations, including his recent memoir Myself and Other More Important Matters. The New
Philanthropists will be published by William Heinemann next month