Category: Grantmaking

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.

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.

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.

 

Would your organization have given Gandhi a grant?

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Here’s a thought-provoking question: Would your organization have given Gandhi a grant? How about Martin Luther King?

Speaking on the state of philanthropy, Dr. Bob Ross, the CEO of The California Endowment, said: “I shudder to think what would have happened if Martin Luther King, or Gandhi, or Cesar Chavez had submitted a grant application to us.”

He made this observation while discussing the ways his organization tries to push the boundaries on risk-taking while also being conscious of its mission, its appetite for risk, and the political and cultural climate in which it operates.

Generally, he said, foundations are very risk averse.

And of course, what impacted the audience was the thought that we could possibly pass on supporting someone who would go on to change the world in a really big way. Or that we already had.