| My
Brother's Keeper
By Daniel
Rose
Fondazione Cariplo Forum
on Philanthropy
Milan, Italy
October 19, 2006
All modern societies should provide effectively for public well-being;
and as our systems converge, we must learn from each other how best
to respond to our common problems.
All societies provide in some way for their destitute and distressed,
provide vehicles for health and education, and support culture and
the arts;
but nations pursue these goals differently depending on their customs,
traditions and beliefs.
Government, the marketplace and private philanthropy each plays
a part; determining the appropriate role for each deserves thought
and examination. The strength of government lies in its ability
to enforce its dictates; the strength of private philanthropy lies
in the diversity and creativity it encourages; the strength of the
marketplace is that it reflects not what the public “should”
want but what it is willing to pay for.
A visitor from Mars or Venus in 2006 might think that Americans
ask too little from their government, that Europeans ask too much,
that each could do better in utilizing the marketplace for the common
good, and that private philanthropy is an under-utilized tool for
filling the gaps left by the other two.
In nations with a history of strong central government, a dominant
church and a hierarchical society with an energetic aristocracy,
government traditionally assumes responsibility for the public good,
its costs underwritten by taxation.
Established custom has permitted Europeans to believe that payment
of taxes absolves them of further responsibility to their fellows,
and that the government is their “brother’s keeper”;
but, as the recent growth of European philanthropic activity demonstrates,
that is now changing.
Reliance on government persists, of course. Today, in France, for
example, it is taken for granted that most of the Louvre’s
expenses are paid for by the government, as are pre-school services
and primary education. In Italy, the staffs of La Scala and La Fenice
are virtually employees of the government.
But a younger “frontier society” like the United States
reflects different traditions and social assumptions. Our virgin
continent, settled by 17th and 18th century Europeans with no strong
central government, with no state religion and no established aristocracy,
called for different responses.
If American pioneers wanted a church or a school, they had to build
it; if they wanted hospitals or roads or courthouses, they had to
construct them.
Since raising the rafters of a barn could not be done by a farmer
alone, he had to call on his neighbors for help; and he, in turn,
helped them. The festive party he gave for his neighbors on the
barn’s completion lives on in the phrase “raising the
roof.”
This pattern of voluntary association of private individuals for
mutual help continued; by 1831, Alexis de Tocqueville wrote, “Whenever
at the head of some new undertaking you see the government in France,
or a man of rank in England, in the United States you will be sure
to find an association [of private individuals”].
America’s tradition of involved individuals and limited government
persists; today, no one is surprised to find that, for example,
private sources provide 87% of the budget of the Art Institute of
Chicago and 96% of the Cleveland Orchestra budget, or that private
individuals like me are still battling to persuade our federal government
to underwrite the cost of universal pre-school education.
The three sources of social support—government, the marketplace
and private philanthropy—bear close examination.
First, Government:
Traditional American wariness of government is reflected in our
widespread popular preference for decentralized power over centralized,
private over government support; and when government support is
indicated, indirect subsidies over direct.
Indirect support for housing, for example, is given through tax
exemption for home mortgage interest payments; indirect support
for religion is given through tax exemption for religious institutions;
and indirect support for the arts is given through tax exemption
for cultural institutions.
Indirect subsidies permit government support without moral or aesthetic
judgments, which Americans do not like their government to make
for them; and these subsidies have stimulated creativity and diversity.
Tax exemption for gifts of art to museums at current market values
with no capital gains tax paid are attacked by some as “windfalls
for the rich”; but most of us prefer to think instead of the
Rembrandts, Giottos or Jackson Pollocks, now in American public
collections.
This American system—of providing public goods through private
philanthropy encouraged by tax exemption—works well for middle
and upper income Americans, but works less well for poor and lower
income groups.
Our research universities and art museums are among the world’s
finest, but health care and child care for poor Americans are below
European standards. That some 15% of Americans are without health
insurance is a national disgrace, and it is not clear when this
will be rectified.
Prospects for eventual federal government support for universal
pre-school education are better, because recent studies demonstrate
clearly that pre-schooling is an excellent public economic investment,
yielding a high financial return as well as important social benefits.
If federal funding of pre-schooling does take place, it will be
an interesting demonstration of the American preference for governmental
aid to benefit society at large, rather than to provide compassionate
help for those in need.
Europe today presents a different picture: here, active governments
take more and give more than their American counterpart, especially
in matters of culture and of help for the poor. In a period of emerging
economic stringency, will this model still be economically feasible?
Berlin’s three separate opera houses, Dutch government warehouses
filled with contemporary paintings that no one seems to want, and
France’s government-imposed 35-hour work week raise questions
about what a nation’s economic priorities should be.
When aging and retiring workers require more government expenditures
paid for by taxes on a smaller and younger labor force, hard choices
will be faced by many governments.
In the years ahead, more government involvement in health and education
seems likely in America; and some governmental pullback in support
for culture seems likely in Europe.
The second area of social support is The Marketplace:
In health, education, social welfare and culture, the roles of government
and philanthropy vary. What is untouched by them is left to the
marketplace, which allocates resources to provide what the public
desires and can pay for. Subsidies may tilt the balance in one direction,
taxation in the other, but the preference of the cash-paying consumer
rules.
For example, European opera lovers note the large amount of Verdi
and Puccini that New York’s audiences demand; French filmgoers
usually vote at the box office for taxed American films over government-subsidized
French movies and for pornographic films in spite of the punitive
VAT taxes they carry. When French films try to please the public
rather than the critics, they, too, do well at the box office.
In matters of health care, housing and education, America’s
middle and upper income groups are well-served by privately-supplied
services they can afford to pay for. Our problem is that the poor
are not well served.
“Private affluence and public squalor” is how John Kenneth
Galbreath described American life in his 1958 book The Affluent
Society, and although conditions are somewhat better today, our
government has far to go to meet European standards for its poor.
The American hope is always that the poor will in time enter the
middle class, but conditions can be painful in the interim.
The third area of social support is Private Philanthropy:
Private philanthropy is perhaps the least understood and least appreciated
leg of the “public support” triad, particularly in Europe.
It meets needs that the marketplace and government leave unfilled.
The accepted American definition of philanthropy is “voluntary
giving, voluntary service and voluntary association for the benefit
of others.” Distinct from “charity,” which is
help for the poor, philanthropy’s goal is improving the “quality
of life” as one sees fit.
Although the U.S. government spends our tax money as politicians
or bureaucrats decide, it is through philanthropy that we give or
do as we wish so long as it is seen as for “the public good.”
Our President may oppose stem cell research, for example, but some
private universities pursue it anyway.
This year Americans will spend approximately $300 billion (equal
to about 10% of our federal budget and over 2% of our GDP) on causes
ranging from saving whales to curing AIDS in Africa, from building
university research laboratories to sponsoring productions at the
Metropolitan Opera, from providing scholarships for disadvantaged
minority students to preserving neglected historic landmarks.
The rich donate buildings or endow named professorships, the poor
give to their churches, but the majority of Americans give, serve
or solicit for some not-for-profit cause; and smaller gifts are
frequently the most creative and effective. On death, it is customary
for rich Americans to leave charitable bequests, and the names of
Ford, Rockefeller, Carnegie, MacArthur and that reclusive American,
Henry Wellcome (benefactor of the Wellcome Trust, England’s
largest foundation), among many others, live on through the foundations
they created.
Our federal government permits the sums thus contributed to be deducted
from taxable income. In recent years many other nations have started
to permit tax deductible gifts to approved organizations (Sweden
being a notable exception). Tax exemption procedures abroad, however,
are often complex and discouraging, unlike American tax laws (and
now British laws) which are designed to encourage giving.
Europeans claim, mistakenly but repeatedly, that “Americans
give because of the tax advantage”; but American income taxes
were first introduced in 1913, long after the American philanthropic
pattern had been established. In Europe, the new Picasso Museum
went to France because of favorable tax arrangements, and similar
arrangements could be explored by others.
We Americans are proud of our philanthropic sector. If all private
philanthropy were abolished and that $300 billion were added to
federal revenues, few think that the quality of life in the U.S.
would be improved.
The majority of Americans believe that governments are best at catching
thieves, putting out fires and fighting wars, but that other activities
are performed more effectively by non-profit or free market entities.
The Jeffersonian notion of limited government—“that
government is best which governs least”—is reinforced
by the American belief that government is inefficient.
NGO’s (non-governmental organizations) are seen as more creative
and innovative than government, less tied to precedent, more responsive
to public needs and wishes and, above all, as more competent and
cost effective. “Saving as many lives as possible at the lowest
per capita cost possible”—Bill Gates’ goal—reflects
philanthropic, not governmental, thinking. Philanthropy has its
weaknesses, but they are widely seen as fewer than those of government.
At all income levels, Americans give voluntarily of their time,
effort and money to a degree unheard of in Europe. For example,
there are few U.S. elementary schools, public or private, without
a Parent Association, through which parents raise funds to provide
supplies or services to schools; but the formation of such groups
is relatively recent in Europe.
One fundamental aspect of American philanthropy is donor recognition;
although most Europeans decry this practice and find it embarrassing,
Americans cannot imagine philanthropy without it.
When the Reverend John Harvard died in Cambridge, Massachusetts
in 1638, leaving to the local divinity school 800 pounds sterling
and his library of 400 volumes, in gratitude the school renamed
itself “Harvard College.
When, eighty years later, Elihu Yale donated goods sold for 560
pounds sterling to the Collegiate School of New Haven, Connecticut,
the school was promptly renamed “Yale College,” even
though Elihu Yale had not been in America since childhood and was
never to return.
(On a personal note, this June, at our 55th college reunion in New
Haven, my Yale Class of 1951 collectively donated to the Yale Alumni
Fund $64,764,127, with contributions coming from 90% of all living
classmates. Yale is a private institution, but over 20% of the alumni
of America’s state-supported universities contribute annually
as well.)
Johns Hopkins of Maryland, when he died in 1873, left one million
dollars to be divided among the members of his extended family,
but he left an unprecedented seven million to found America’s
first research university and teaching hospital. Hopkins would have
understood—and loved—Warren Buffett’s comment,
when asked, after he announced his $37 billion gift to Bill Gates’
foundation, what provision he had made for his family.
Buffett’s answer thrilled the nation: “I have always
wanted to give my children enough to do anything, but not enough
to do nothing.” Americans identify with the “worker
bees” of the hive, not with the drones.
Brown University, Duke, Cornell, Vanderbilt, Stanford and Rockefeller
Universities are among the many other institutions named for their
founders or major benefactors.
American museums list on their walls the names of major donors,
and major tax-exempt organizations publish Annual Reports listing
the names and gift levels of donors, even the most modest.
“Vulgar,” “ostentatious,” and “crude”
are words sometimes applied to American fundraising techniques;
but Americans, the most pragmatic people since the ancient Romans,
reply, “Yes, but they work.” If Europe wishes to replicate
American philanthropic success, it should consider finding ways
to praise and encourage donors while embarrassing the rich whose
names are absent from the lists.
Philanthropic peer pressure from friends, neighbors and business
associates is non-stop; invitations to testimonial luncheons, dinner
dances, theater parties, auctions and rock concerts assault us;
a daily avalanche of charity mail fills our mailboxes. And, yes,
“it works.”
Harvard University’s endowment is over $26 billion, Yale’s
is over $16 billion and Princeton, Stanford and the University of
Texas each boast over $12 billion. Fifty-six American colleges have
endowments of over a billion dollars; this year alone, 22 U.S. universities
have each announced fundraising drives of over one billion dollars—Columbia,
$4 billion; the University of Virginia, $3.3 billion; Yale, $3 billion;
New York University, $2.5 billion; and even the municipally-financed
City University of New York is seeking $1.2 billion from private
donors.
In the 21st century, when intellectual capital is more important
for a nation’s international competitiveness than physical
or financial capital, private philanthropy has an important role
to play in higher education.
Our superb M.I.T.’s or Cal Techs not only educate and perform
research; they also set high standards that public institutions
strive to meet, and everyone benefits.
Cynics question the motives of donors, and those motives are indeed
complex. Professional fundraisers cite many reasons for philanthropic
giving:
A) Common Sense and Enlightened Self-Interest—it helps the
community, of which the donor is a member;
B) Religious Imperative—God wills us to help others;
C) Good Investment—society gets a good return on funds expended;
the donor gets prestige and enhanced social standing.
D) Fun—socialites organize dinner dances, theater parties,
raffles, etc. and enjoy working with friends on such projects;
E) Altruism—generosity, benevolence and selfless giving feel
good and are spiritually rewarding;
F) Repayment—school and college alumni, former hospital patients,
etc. feel that they have benefited from the institutions and that
they “owe” something in return;
G) Family Tradition—inheritors of wealth and members of prominent
families feel loyalty to institutions.
The degree to which individuals define themselves and their values
through their giving is sometimes overlooked by professionals. “I
am what I give” is a more common belief than is generally
realized.
The profound sense of mission of George Soros, a “one man
Marshall Plan,” who has already given over 3 billion Euros
to European philanthropies and has pledged to them his remaining
5 billion Euro fortune; the hardnosed practicality of Bill Gates,
whose fortune is willed to his foundation and who demands a dollar’s
worth of result for each dollar donated; and the imaginative involvement
of Michael Bloomberg, New York City’s billionaire mayor, who
on completion of his term in government will devote his imagination,
his energy, and his $6 billion dollar fortune to full-time philanthropic
activities—such people are, of course, in a special class.
Others abroad are following suit. Indian billionaire Anil Agarwal
recently announced his country’s largest ever donation of
a billion Euros to found a university in his native province; and
Li Ka-shing, Asia’s richest individual, has announced that
he is bequeathing one-third of his 15 billion Euro fortune to his
foundation. Richard Branson of Virgin Air; the founders of Google;
and Ted Turner are among those announcing huge “pro bono”
gifts.
They are the living embodiment of Andrew Carnegie’s dictum
that creators of great fortunes should apply the same thought and
attention to disposing of their riches as they did earning them.
But it must be remembered that it is not only the rich who give;
John D. Rockefeller tithed from his very first pay check; Michael
Bloomberg’s father, who never earned more than $11,000 a year,
discussed his charitable giving with his family at the dinner table;
and most Americans contribute some time to pro bono activities.
Securing philanthropic contributions is an accepted career field
now—involving part art and part science—and American
fundraising professionals focus on the basic motivations I have
described. Such professional fundraising is just beginning to appear
in Europe.
To increase European voluntary giving, not only should tax laws
be simplified, but traditional cultural patterns of public praise
should be re-examined.
England bestows knighthoods on major philanthropists, France, the
Legion of Honor, and America awards them Honorary Doctorates; but
encouraging all citizens to feel proud of their contributions is
an important step in increasing those gifts.
In Italy, for example, a good start would be to identify “la
bella figura” with philanthropy and to convince the public
that its contributions will be spent honestly and productively,
with accountability for income and outgo equal to any other investment.
The introduction of a prestigious “Lorenzo Dei Medici Award,”
to recognize outstanding philanthropy, presented by the President
of the Republic at a major ceremony, could help change attitudes.
Here in Milan, an award for private patronage of the arts could
be named after Ludovico Sforza, the sponsor of Da Vinci’s
Last Supper.
In New York’s “Little Italy,” the Feast of San
Gennaro, a joyous 11-day street fair, annually attracts over a million
attendees and raises large sums for parochial schools, activities
for the elderly, and other projects of the Archdiocese; such fundraising
fairs could be replicated in the mother country
.
For smaller fundraising events, Beppe Severigni suggests that they
celebrate the family and Italian cuisine, and that they be conducted
with great style!
Fundraising professionals know that those who donate to philanthropic
causes, those who work actively with them and those who solicit
funds from others, are “psyching themselves up”; and
every effort is made to involve participants in these mutually-reinforcing
activities.
In New York David Rockefeller, Brooke Astor and Arthur Ross are
well-known examples. Another is Lewis Cullman, who has personally
contributed some $250 million to New York charities, is a tireless
solicitor, an activist Board member and author of an excellent treatise,
How to Succeed in Fundraising by Really Trying, which can be found
on www.LewisCullman.com.
In Europe and America, large fortunes are increasingly in the hands
of what Warren Buffett calls the Self Made Man, as opposed to the
Inheritor; and the Self Made Man is more inclined to donate his
money.
“There must be more to life than having everything”
is their frequent discovery; and the satisfaction, the pride—and,
yes, the prestige—of commendable philanthropic contributions
are high on the list of goals of wise creators of new fortunes,
who increasingly realize the destructive potential of huge sums
left to their families.
Skillful encouragement of major gifts is a slow process that in
the United States is usually conducted by professionals. First,
they establish a relationship with the prospective donor; next,
they educate the donor about the organization and encourage identification
and involvement with it; then, they encourage a modest gift whose
effectiveness is demonstrable and for which appropriate appreciation
is expressed.
Then, they help the donor conclude that his or her next major gift
will achieve something the donor believes is important, and from
which the donor will receive satisfaction and pride. Finally, the
professionals help select the appropriate person to suggest (or
ask for) that major gift.
When the gift has been pledged, the donor is acknowledged and celebrated,
both to reward the donor and to encourage others.
Private philanthropy—(in addition to, not instead of, government
expenditures)—has earned an important place in modern life,
with material benefits to society and psychic benefits to donors.
To Conclude:
While government and marketplace mechanisms can be improved, private
philanthropy, from donors large and small, is the area most open
to expansion, especially in Europe. In some cases the American model
may be useful; in others, new vehicles, such as the great new Italian
banking foundations, may evolve. And we are likely to see in Europe
more private institutions such as Milan’s excellent Bocconi
University or Rome’s respected LUISS University.
The creation of large private fortunes—and the prospect of
huge inter-generational wealth transfers—give Europeans today
the opportunity to reintroduce into public discourse the concepts
of “noblesse oblige” (or perhaps “richesse oblige”)
and “obedience to the unenforceable”. It has already
started and it should be encouraged.
The medieval and Renaissance cathedrals that are the glory of Europe
could well be matched in our day by secular cathedrals of education
and culture financed by today’s private fortunes.
Then Europe’s rich would be able to answer the Biblical question,
“Am I my brother’s keeper?” with the proud reply,
“Yes, I am!”
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