Ask the expert: New philanthropists

Could the new philanthropists provide capitalism with an acceptable human face and help ensure its future? Charles Handy answers your questions

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Did you find that the philanthropists you interviewed for your book were generally motivated by altruism, tax avoidance or the hope of establishing a legacy?
Sunil Singh, Berkshire, UK

Charles Handy: For the most part they spoke of ‘making a difference’ and of their pleasure in doing something transparently useful. They did not go for what one of them called ‘post-mortem philanthropy; and, unlike most of American philanthropy, they were not interested in status philanthropy. They did not give to their old schools, to museums, religions or art galleries but to areas of social need.

Altruism does give pleasure to the giver, but is no less valuable for all that, and none of them put their own name on their ventures, which I found interesting - so no legacy building either.

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Philanthropists today want more control over how their money is spent. Perfectly understandable as it’s their money. But wouldn’t these decisions be better made by the state? Do you think that we could tax the rich more and give governments greater control over how the really large donations are spent? Many traditional causes are out of fashion and over-looked by the new philanthropists.
Lesley O’Neil, London, UK

Charles Handy: The philanthropists pay their taxes too, and, perhaps unlike you, I am not convinced that governments always do things best. Yes, the new philanthropists do tend to look for causes that are overlooked and for niches that the government ignores, but their spend is tiny in proportion to what the big charities get and the government doles out.

So, on balance, I think that their bit extra does not detract from any government’s responsibilities it does add a useful bit extra and does more good than paying a little more tax into government’s bottomless pit.

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There has been too much adulation over these new philanthropists for my liking. Are they really becoming more generous? The amount of money the likes of Gates and Buffet have given away is a drop in the ocean for two of the world’s richest men.
Harold Smith, London, UK

Charles Handy: I think you may be a bit churlish! Bill Gates has so far pledged half his money and Warren Buffett most of his. More important are the signals that the new philanthropy sends out - that wealth entails responsibility, that if you are clever or lucky enough to have made piles of the stuff, much more than you need, it is only right to try to spend it on something of benefit to others.

It can seem unfair that if you are successful in other walks of life, teaching or the arts, for instance, you don’t get rich, but if you are successful in business, by the nature of the game you are in, you pile it up. To offset the apparent unfairness of capitalism we need all the evidence we can get that capitalists themselves are not selfish.

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What is your view of the new entrepreneurial style of philanthropy?
Peter Willis, Perth, Australia

Charles Handy: I think the new style of philanthropy is for the better. Yes, they do sometimes get up the nose of existing charities because they are more entrepreneurial and in more of a hurry, but they add a bit of excitement and energy to the sector and, by demanding visible results, they add a sense of accountability that has sometimes been lacking in the traditional grant-making world.

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As a past trustee of a charity that funds medical research through donations I welcome the fact that increasingly new philanthropists are spending their own money. There is no better incentive than spending ones own money to ensure that charitable donations are used effectively. Presently, we have the great and the good usually without the focus, discipline and business acumen of the new philanthropist spending other peoples money as they see fit and without accountability hardly a recipe for success. Do you see this new and welcome change having a bearing on the present charity industry?
Brian Finney, Merseyside, UK

Charles Handy: Yes, I think that the new breed of philanthropists, whether they start their own projects as the individuals in our book have done, or donate money to existing charities will be much more demanding in their expectations. They will, as they say, want to see the metrics. Personally, I think that this pressure on accountability can only be beneficial although it may not always be welcomed!

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I’ve read that the Bush administration is trying to encourage philanthropy through tax cuts for the very rich. Isn’t the idea of tax savings for the very rich a bit paradoxical? Why would a typical philanthropist worry about saving tax money, which might help poor people in his own country? I’ve always assumed that philanthropists were individuals who are comfortable with their achievements and accumulated fortune, and therefore decide to part with some of their fortune. Hence, for those who’ve already attained most of their life’s goals, a bit of added personal income due to lower taxes doesn’t sound like great encouragement for philanthropic activities. In taking into account the mentality of the very rich, do you think that tax cuts for these people inspire them to further acts of philanthropy?
Zoyd Huemer, Munich, Germany

Charles Handy: You are right. In fact the richest men in America have publicly objected to Bush’s tax plans on exactly the grounds that you state. He does not appear to have listened, alas.

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Capitalism already has an acceptable human face. It provides new services of value to customers, gives employees work opportunities and provides 30 per cent or more of its receipts to the government. Only a decadent people, who forget the source of wealth creation, would say altruism is needed-in the interests of society. Is poverty in China being eliminated by a World Bank officials or economic growth? I’ll take the extra 1 per cent in GNP growth from the private sector any day to help people. The Americans are criticised for their developmental aid spending as a percentage of GNP but when private contributions are included it is very high-like love you have to have it first (earn it) to give it away.
Peter Strupp, Warsaw, Poland

Charles Handy: Absolutely! Capitalism does create wealth of all sorts, and you do have to earn it before you spend it. I am not in any way decrying the value of creating wealth or of building a successful business. I also agree that all the philanthropy in the world will always be a drop in the ocean compared with government spending.

But there are niches overlooked by governments where individual initiatives can help, as in many of the examples in our book, and we do need to demonstrate that the spoils of success don’t all go to the rich, the owners and managers. If capitalism continues to be seen as selfish it will ultimately be brought down by those left outside.

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My suspicion is that the majority of the philanthropists featured in the forthcoming book are from the English-speaking Western countries. It would be fairly safe to assume that the remainder accumulated their surplus wealth thanks to mainly Anglo-Saxon globalisation. If true, is this not symptomatic of the uneven distribution of economic benefits between the developed and developing world?

Rather than recycle their financial largesse back into the largely English-speaking mainstream globalised economy, would it not make sense for the philanthropists to bite the bullet linguistically speaking and accept that there is a justification for economic altruism targeting the poorer, non-English language environments in the developing world?
George Witherington, London, UK

Charles Handy: When you read the book you will discover that while the philanthropists do indeed come from the English-speaking countries their philanthropy is, in most cases, directed to the needs of the developing world. Thus Chris Mathias recycles computers from British businesses to African schools, Niall Mellon is helping to build brick houses in South Africa’s townships, Mo Mohamed is investing in projects in Sub-Saharn Africa and so on. I hope you will approve!

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I have just been appointed as CFO of a private equity firm actively involved in micro-finance and, as such, am very much interested by your forthcoming book. If I understand correctly the book shows how the tide is turning from egotism to altruist capitalism. With the little experience I have gained in my new job, I have found that capitalistic values can work in a micro-finance environment as long as humanist values prevail over straightforward ROI. I have difficulties in reconciling the absence of self-interest, which dominates altruism, and capitalism. I much more prefer a win-win situation based on humanist values where gains are balanced between customer and provider in mutual respect of each other as human beings. Altruism appears to me as more one-sided. I would love to hear your thoughts.
Jean-Louis Allez, Paris, France

Charles Handy: Yes, a mutual respect situation based on humanistic values is surely the best way forward in a business situation, and the philanthropists in our book would surely agree, but when it comes to spending their surplus wealth then altruism comes into play. My concern is that we have to demonstrate that capitalism is not only for the benefit of those who won or run the business. Run the business as fairly as you can but then be generous with the surplus.

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Background

“Those who find themselves with more money than they need or want are looking for ways to do something useful with their surplus”, writes Charles Handy, author of many books on work, life and organisations, in the Financial Times.

Mr Handy’s forthcoming book, The New Philanthropists, profiles and photographs 23 successful business people, and one sportsman, who have turned social entrepreneurs.

“There have always been generous individuals among the very rich, although most of them have inherited their money”, writes Mr Handy, “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.“

Mr Handy argues that “cultures change slowly but, as more examples of the new generosity emerge, we could see the marriage of altruism and capitalism that would provide capitalism with an acceptable human face and do a lot to ensure its future.”

And even though new philanthropy may stay a niche sector, Mr Handy believes its values could change the perception of business from being a largely selfish occupation to being one that benefits society.

Do you agree? Mr Handy will answer your questions on the issues raised in his article and book today from 1pm BST. Send your questions now to ask@ft.com or use the online submissions form below.

Charles Handy - The serious business of philanthropy

The New Philanthropists will be published by William Heinemann next month.