Monthly Archives: August 2012

Andrew Carnegie the greatest philanthropist in history

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Andrew Carnegie, who died 93 years ago, remains a polarizing figure. He has been labeled a great industrialist by some, a robber baron by others. Even his unparalleled philanthropy — which continues to shape the American educational and cultural worlds to a remarkable degree — has sparked its share of criticism.

After immigrating to the U.S. from Scotland at age 12, Carnegie worked a series of low-wage jobs until landing a position as personal assistant and secretary to Thomas A. Scott, superintendent of the Pittsburgh division of the Pennsylvania Railroad. Scott, along with Pennsylvania Railroad President J. Edgar Thomson, taught Carnegie several valuable investing lessons. Among the most significant was how to exploit inside information whenever possible, which was legal at the time.

At 65, Carnegie sold Carnegie Steel and many of his other enterprises to J.P. Morgan for $480 million, netting $225,639,000 (about $6.5 billion today) for himself. Carnegie’s deal with Morgan would eventually make him the world’s richest man — significantly wealthier than anyone alive today. Carnegie “would be richer than the top six richest people in the world at the moment,” Evans says. “And he chose to give that away.”

Before his death in 1919, Carnegie donated $350 million to hundreds of organizations and individuals around the world. He funded universities, libraries and established pensions for professors and the workers in his mills. Still, not everyone agreed with the way he distributed his wealth. Contemporary articles and cartoons called into question his focus on higher education, which at the time was considered a luxury of the rich, as well as the extent of his international giving.

Puck magazine published a satirical cartoon in 1901 criticizing his founding of the Carnegie Trust for the Universities of Scotland. According to Carnegie biographer Peter Krass, the grand scale of Carnegie’s philanthropy also frightened many people, who thought it was anti-democratic.

Despite the divergence of opinion about Carnegie’s methods, the scale of his charity remains unrivaled. According to Anthony Marx, the president of the New York Public Library — which was founded with a gift from Carnegie — his legacy of giving is without equal, even compared with today’s most generous philanthropists. “Andrew Carnegie was, as far as I can tell, the greatest philanthropist in history,” Marx says. “The New York Public Library system was created by a gift of $5.2 million, which in today’s dollars is equivalent to $2.7 billion.”

–From a Bloomberg article by Kristin Aguilera

Revolutionary toilets to provide safe sanitation

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A toilet that uses little or no water is expected to improve sanitation in the developing world. Last year the Bill & Melinda Gates Foundation, named after the Microsoft co-founder and his wife, gave grants to eight universities around the world to help create a hygienic toilet that is safe and affordable and can transform waste into energy.

About 2.6 billion people – or 40 per cent of world’s population mostly in sub-Saharan Africa and south Asia – lack access to safe sanitation and are forced to defecate in the open.

Open defecation leads to sanitation problems that cause 1.5 million children under five to die each year.

The winner of the Reinvent the Toilet fair was a team from the California Institute of Technology. Professor Michael Hoffman’s design toilet is solar powered, generating hydrogen gas and electricity [EPA]

The designs needed to operate at a cost of no more than five cents a day and would ideally capture energy or other resources.

Other designs submitted included a lavatory that used microwave energy to turn human waste into electricity. Another turned excrement into charcoal, while a third used urine for flushing.

A new crowd emerging on the philanthropy beat

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There’s a young, up-and-coming crowd of entrepreneurs, philanthropists, donors and volunteers who aren’t entirely like their parents or their grandparents.

The rising so-called Millennials, or Generation Y, now in their late 20s and younger, may have the same passion, commitment and concern for their communities as their predecessors. But philanthropy experts said many of these young individuals want to take more “ownership” of a cause than Generation Xers, “traditionalist” baby boomers or the “Silent Generation” of givers who have mostly been satisfied with just writing checks to large umbrella organizations for the past several decades.

While the younger generation may not have as much financial capital as previous age groups, experts and studies indicate that many of these young individuals who do or will have money later in life want to have more of a stake in where and how their dollars are spent rather than blankly giving to an over-encompassing charity.

Young philanthropists are also more familiar with technology, armed with instantaneous “crowd funding” through smartphones, social media or websites like Kickstarter.com or Gofundme.com to have a global reach.

The generational differences, however, can sometimes become a “double edged sword” and has created new challenges for managing today’s philanthropic organizations at a time when many nonprofits are in desperate need of discretionary dollars, said Jeffrey Wilcox, a certified fundraising executive and president/CEO of the nonprofit consulting firm The Third Sector Company.

“What’s difficult for nonprofits is that [young] entrepreneurs who have a lot of money don’t like to give to a lot of processes that involve committees and a lot of people in decision-making,” he said. “They want streamlined decision-making and they want a larger voice in how their dollars are going to be used . . . The younger generation, at least in my opinion, sees a lot of things that the older generation has not made possible.”

Wilcox added that young individuals are branching out with their own endeavors, goals and philosophies with the technological know-how to “create a social movement overnight” rather than pandering to bureaucracies, boards and committees. While he said “due process” is still needed in today’s society, the obstacle for many organizations, Wilcox said, is to learn how to keep young people interested in philanthropy.

The Toilet Revolution is coming

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This week, engineers, philanthropists, media and more from around the world will gather at the the Bill & Melinda Gates Foundation in Seattle for the “Reinvent the Toilet Fair,” a $3 million project funded in grants by the Foundation that will showcase revolutionary new toilets that don’t need water, electricity or even a connection to a sewage system.

The goal of the project is to help improve the lives of the 2.6 billion people in the third world who do not have access to a toilet.

Lack of access to proper sewage can expose people to deadly diseases, and as Bill Gates notes on his blog, “we need new ideas to help reduce disease and find new ways to turn crap into valuable stuff, like fuel, fertilizer, and fresh water.”

Leaving Hollywood for Cambodia’s garbage dumps

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Scott Neeson’s final epiphany came one day in June 2004. The high-powered Hollywood executive stood, ankle deep in trash, at the sprawling landfill of Stung Meanchey, a poor shantytown in Cambodia’s capital.

In a haze of toxic fumes and burning waste, swarms of Phnom Penh’s most destitute were rooting through refuse, jostling for scraps of recyclables in newly dumped loads of rubbish. They earned 4,000 riel ($1) a day—if they were lucky. Many of the garbage sorters were young children. Covered in filthy rags, they were scruffy, sickly, and sad.

Clasped to Mr. Neeson’s ear was his cellphone. Calling the movie mogul from a US airport, a Hollywood superstar’s agent was complaining bitterly about inadequate in-flight entertainment on a private jet that Sony Pictures Entertainment, where Neeson was head of overseas theatrical releases, had provided for his client.

Neeson overheard the actor griping in the background. ” ‘My life wasn’t meant to be this difficult.’ Those were his exact words,” Neeson says. “I was standing there in that humid, stinking garbage dump with children sick with typhoid, and this guy was refusing to get on a Gulfstream IV because he couldn’t find a specific item onboard,” he recalls. “If I ever wanted validation I was doing the right thing, this was it.”

Doing the right thing meant turning his back on a successful career in the movie business, with his $1 million salary. Instead, he would dedicate himself full time to a new mission: to save hundreds of the poorest children in one of the world’s poorest countries.

Much to everyone’s surprise, within months the Australian native, who as president of 20th Century Fox International had overseen the global success of block-busters like “Titanic,” “Braveheart,” and “Die Another Day,” quit Hollywood. He sold his mansion in Los Angeles and held a garage sale for “all the useless stuff I owned.” He sold off his Porsche and yacht, too.

His sole focus would now be his charity which he had set up the previous year after coming face to face, while on vacation in Cambodia, with children living at the garbage dump.  [Read full CS Monitor article]

 Further reading     Further reading

 

Find work with purpose

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“Many people today have not been given vocabularies to talk about what virtue is, what character consists of, and in which way excellence lies, so they just talk about community service, figuring that if you are doing the sort of work that Bono celebrates than you must be a good person.” –  David Brooks, The New York Times 

A CSR Blog excerpt:

The new wave of social entrepreneurs believes work needs to be meaningful. What kinds of people are drawn to careers devoted to social change? Where should they work, given the changing roles of governments, philanthropic organizations, and corporations? How can young people who want to make a difference find jobs that matter?

Should you work for a profit, a non-profit or the government? Or for a profitable non-profit? Or for an unprofitable, grant-taking for-profit? Or a for-profit foundation that makes grants to the government?

If you’re a student who is hoping to find meaningful work in the new social economy, here’s some advice I hope will help your search:

1. Don’t be pigeonholed by your academic credentials. Social organizations that are becoming more businesslike need people who know about finance, marketing, operations, and strategic planning. Corporations that put a high priority on social outcomes need people who know about social service and sociology. Governments need people who aren’t tainted with the bureaucracy and can get things done. In the new social economy you’re valuable in ways that you may never have thought about.

2. Talk about your own vision of social change. The most successful organizations in the new economy are those that are working backwards from a future vision of social change. They are inventing as they go and are looking for likeminded people who have the courage to trust in their vision. Share what you believe and discuss issues that you’re passionate about.

3. Understand and stand by your social purpose. There is no shortage of talented, highly educated people, who have had really interesting volunteer and intern experiences. There are far fewer people who have a sense of purpose about why they’ve chosen a particular academic discipline and why a particular work or volunteer experience was so meaningful.

4. Don’t settle. In his 2005 Commencement Speech at Stanford, Steve Jobs said, “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking.”

 

Venture philanthropy and cures for deadly diseases

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Once certain that he would die young, a young man, born with the deadly disease, now dreams of growing old. “I’m going to be a grandfather someday. I’m going to have a really long life,” says Bill Elder, a 25-year-old Stanford University graduate who is now applying for medical school.

That’s because of a blue pill and a new trend in drug development called venture philanthropy.

Elder has cystic fibrosis (CF). It’s known as an “orphan disease” because so few people have it — only about 30,000 in the U.S. and about 70,000 worldwide — so there is little incentive for drug companies to seek a cure.

When Piper Beatty was born 30 years ago and diagnosed with CF at 6 weeks, health workers gave her parents a heartbreaking message: “Take her home and love her as long as you have her.” At that time, the best the family could hope for was that she would live to be a teenager. Beatty, now 30 and a law school graduate, has high hopes for improved therapies for CF patients and others born with rare genetic diseases.

Developing a single new drug can cost a billion dollars, so pharmaceutical companies want to create blockbusters for common diseases like Alzheimer’s or cancer to maximize the return on their investment.

“From a patient perspective, venture philanthropy is a remarkable strategy,” Beatty said. “It’s the best of business and the best of philanthropy coming together. It allows us to be very active in the drug development process. It allows people with a stake in the disease to get involved to partner with the drug companies. You take an active role at the forefront of the fight.”

Other charities including the Michael J. Fox Foundation, which is fighting for a cure for Parkinson’s, are following the CF model.

GuideStar and charitable donors

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The success of a charity often depends on more than the number of gowns and black bow ties parading at a fundraising gala.

The success often depends on the data that gets churned up by the savvy analysts at a nonprofit group such as GuideStar. GuideStar combs through charity filings to produce reports on how groups spend their money, and that information is closely followed by donors who are trying to decide where to give their time, talents and treasures.

Donors don’t just want an analysis of IRS filings any more. They want to give to charities that make a palpable social impact, a quality that’s not always easy to measure. And to stay useful, GuideStar needs to develop new yardsticks.

President and chief executive Bob Ottenhoff recently announced that he is stepping down from GuideStar and making way for Jacob Harold, a 35-year-old foundation leader who has served on GuideStar’s board since 2010. After studying literature and ethics in college, Harold worked for environmental organizations including Greenpeace and Rainforest Action Network.

During that time, Harold became familiar with the aggressive ways that often mark community activism. In a protest stunt against Ford Motor Co., some of his colleagues rappelled off of a building in downtown Detroit to hang a 50-foot banner. Harold bailed them out of jail that night. The next day he found himself in a suit speaking at the car manufacturer’s shareholder meeting about the need to build clean cars.

“To have the sort of impact that I think the world needs, I had to figure out how to wear a suit and multiply my impact,” Harold said. So he decided to go to business school. “A business approach is not fully translatable to the nonprofit sector … but there’s no doubt that both sectors have a lot to learn from each other,” he said.

He spent a summer in India working on climate change and in China studied the science of complex systems. Suddenly the world of philanthropy with all of its moving parts — donors, nonprofits, social impact — seemed a bit more understandable.

Harold couldn’t pass up the opportunity to bridge the world of big data to philanthropy.

— From a Washington Post article by Vanessa Small 

Move from success to significance

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When a Silicon Valley firm goes public, it can result in scores of employees instantly becoming millionaires. But what happens then? Following is an excerpt of a San Francisco Chronicle op ed written by Kerry Olson and Dave Katz, co-founders of the Firelight Foundation:

Wealthy folks will eventually have to ask themselves an important question: What should I do with this money?

As a couple who was fortunate enough to face that question when we benefited from Juniper Networks’ IPO more than a decade ago, we would urge [IPO firm] employees to consider devoting a share of their newfound wealth to philanthropy.

They are well suited to charitable giving, but not just because they have money. They’ve proved that they rapidly can build a successful, innovative organization from scratch – as well as identify needs within a community and then meet them. Skills like these are crucial to solving the difficult social, scientific and political problems plaguing our world today.

Previously unimaginable lifestyles will be within reach – but so will the ability to help people and causes in life-changing ways. And while it may be tempting to take care of all the friends and family who come calling, an ad hoc approach to charity can grow overwhelming – and lead to well-intentioned but counterproductive giving.

The Bill and Melinda Gates Foundation provides an instructive model. The Gates foundation’s investments in vaccinations and antibiotics have saved millions of lives and generated billions in economic activity in Africa. Such willingness to try new approaches to solving social problems – and to evaluate candidly whether they’re working – comes directly out of the culture of entrepreneurship embodied by [many] Silicon Valley firms.

 

The philanthropic force of connected giving

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As governments around the world pull back, the philanthropic sector will be a critical force in meeting global needs. In what is called the “Giving Pledge”, 81 billionaires have committed to give more than half of their wealth to charitable organizations.  This level of philanthropy, over $37 billion by Warren Buffett alone, is historically unprecedented.

Warren Buffett most lasting contribution will not be his money; rather that he has successfully leveraged his social network and the media to inspire other billionaires to give extraordinary wealth for charitable good.  He is reshaping the way the rich think about money and giving.

And in the same way Warren Buffett has used media to get other billionaires to pledge their fortune to charity, people all over the world have used social media to raise money and inspire their network to join them in giving.

Indeed, according to Blackbaud, people are 200 times more likely to donate to a cause if their friends ask them to support a charity, in comparison to receiving an e-mail solicitation from the organization.  This is part of a distinct cultural shift – you no longer have to be a professional to be a fundraiser.

With the rise in connected giving will come the use of social data for fundraising.  Seventy percent of Millennials ages 20-35 report they prefer to give online, making online giving as the #1 preferred method of giving.

The IDC, a technology research firm, estimates that the total amount of data doubles every two years.  Social media data is a major part of this growth.  Marketers are interested in the “social network value” of a customer– how one person’s purchase influences others to buy a product.  Similarly, nonprofits are becoming aware how a donation can have a ripple effect in the donor’s network.

–Matt Bishop, founder and CEO of iGiveMore