Category: Philanthropy

Free Market Philanthropy

KochClharles.gif Charles Koch.  Source of image:  online version of WSJ article cited below.

 

Mr. Koch’s latest crusade to spread the ideas of liberty has been his sponsorship of a twice-yearly conference that gathers together many of the most successful American entrepreneurs, from T. Boone Pickens to former Circuit City CEO Rick Sharp.  The objective is to encourage these captains of industry to help fund free-market groups devoted to protecting the fragile infrastructure of liberty.  That task seems especially critical given that so many of the global superrich, like George Soros and Warren Buffett, finance institutions that undermine the very system of capitalism that made their success possible.  Isn’t this just the usual rich liberal guilt, I ask.  "No," he says, "I think they simply haven’t been sufficiently exposed to the ideas of liberty."

 

For the full commentary, see: 

STEPHEN MOORE.  "THE WEEKEND INTERVIEW with Charles Koch; Private Enterprise."  The Wall Street Journal   (Sat.,  May 6, 2006):  A8.

NGOs Throw Money at Poverty, and Then Declare Success

Mark Pendergrast, in his opus on coffee, tells us about Bill Fishbein, a coffee retailer from Rhode Island, who wanted to help small, poor, coffee farmers in Guatemala:

 

(p. 419) . . . , Fishbein wanted to do something to help.  At first, he worked with established nongovernment organizations (NGOs) but soon became disillusioned. Too often, the NGOs simply threw money at communities, then declared projects successful even without long-term improvements.  "It amounts to a network to move money around, to pull the heartstrings of donors," he complains.

 

Source:

Pendergrast, Mark. Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books, 2000.

 

“If you’re giving while you’re living, you’re knowing where it’s going”

The American Council of Trustees and Alumni has published a short book, “The Intelligent Donor’s Guide to College Giving,” that lays out some basic ground rules for donating to higher education. These include placing clear restrictions on gifts, working with a particular professor (and, if possible, bypassing the development office) and avoiding endowments in perpetuity. As Sir John Templeton wisely said: “If you’re giving while you’re living, you’re knowing where it’s going.”
Obviously, this sort of due diligence does require time and effort on the part of the donor, But if even a few more philanthropists were watching where their funds ended up, college officials would surely monitor their programs more carefully. There have been a few celebrated cases in recent years in which donors have asked for their funds to be returned after discovering that they were misused, and these cases have sent a shudder through the academic community.

For the full commentary, see:
JAMES PIERESON. “Only Encouraging Them.” The Wall Street Journal (Fri., November 18, 2005): W13.

“Sachs Aid Model Has Financed Tyranny”: More on Why Aftrica is Poor


Famine in Niger is no surprise — desert wastes, locusts and decades of Marxist rule keep it second-to-last on the world poverty list. Famine in the fertile climes of southern and eastern Africa, however, seems more shocking. But there’s a common thread: centralized state rule — incompetent at best — marked by corruption and sustained by aid. These are the shackles that keep Africans poor: It would be nice if EU and U.S. trade barriers were removed at trade talks in Hong Kong this week, but exports are a distant notion to the 75% of Africans who live off the land.
Niger is little-blessed by nature, but it has also spent its postcolonial era trying various forms of failed government, with Marxism reigning longest. A quarter of the population — 2.5 million people — faces starvation. Yet more temperate southern and eastern African countries are on the edge of famine, too, with 10 million affected in southern Africa alone. Again, we find the same economic profile: Zimbabwe, Malawi, Zambia, Mozambique, Swaziland and Lesotho all lack economic freedom and property rights; all have economies mismanaged by the state; all depend on aid. All these countries have a history of utopian schemes that failed to produce everlasting manna. State farms, marketing boards, land redistribution, price controls and huge regional tariffs left few incentives or opportunities for subsistence farmers to expand. Despite torrents of aid, these cruel social experiments could not turn sands verdant or prevent the granaries of southern and eastern Africa from rotting.
Ethiopia’s Prime Minister Meles Zenawi believes that allowing Ethiopians to own their land would make them sell out to multinationals. He seems to have overlooked a basic market principle: It demands a willing seller and a willing buyer at an agreed price. If that price is worth selling for, the farmer might have some money to reinvest elsewhere; if that price is worth buying for, the purchaser must have plans to make the land profitable. If there is no sale, owners might have an incentive to invest in their own land and future, having, at last, the collateral of the land on which to get a loan. After decades of socialism, Ethiopia’s agricultural sector — the mainstay of the economy — is less productive per capita than 20 years ago when Band Aid tried to defeat famine. Although 60% of the country is arable, only 10% has been cultivated. Ethiopia is entirely dependent on donations; but instead of grasping reality, Mr. Zenawi, a member of Tony Blair’s “Commission for Africa,” is forcing resettlement on 2.2 million people.
In Zimbabwe, the murderous kleptocrats of Robert Mugabe’s regime deny that land seizure has pushed their rich and fertile country into famine: Some three million people face starvation today.
. . .
African leaders must be pushed to reduce economic intervention, free financial markets, remove bureaucratic obstacles to setting up businesses, establish property rights and enforce contract law. These are the forces that release entrepreneurial energy. But the ruling cliques will do none of these unless forced to do so as a condition of aid. The Sachs aid model has financed tyranny and corruption for 40 years, leaving Africans destitute. The world trade meeting in Hong Kong will hear cries for “Trade Justice” for Africa, representing more protectionism and more state-run, aid-fueled schemes. What we really need is economic freedom and the rule of law at home: We are perfectly capable of improving our own lot if only allowed to do so.

For the full commentary, see:
FRANKLIN CUDJOE. “The Terms of Trade: Africa Needs Freer Markets — and Fewer Tyrants.” The Wall Street Journal (Weds., December 14, 2005): A20.
(Note: ellipses added.)
(Note: The WSJ identifies Mr. Cudjoe as “director of Imani, a policy think tank in Ghana.”)

Rockefeller’s Money Conserved Land

The limestone buttes, granite steppes and near-permanent icecap that make up the urban expanse known as Rockefeller Center constitute the best-known landscape connected to the famous family’s name.
But those 12 acres in Midtown Manhattan are far from the only vista that owes its existence to Rockefeller philanthropy.
Over the last century, five generations of Rockefellers have used the family wealth to reshape the American horizon, creating a magnificent panorama of open spaces and more than 20 national parks from the rocky coast of Maine to the icecapped mountains of Wyoming.
These natural oases are not always linked to the Rockefeller name, but tonight they will be. As part of the yearlong celebration of its 100th anniversary, the National Audubon Society, one of the nation’s largest and oldest conservation organizations, is honoring the family for a record of conservation that matches the society’s century-long existence.
”Cumulatively, no other family in America has made the contribution to conservation that the Rockefeller family has made,” said John Flicker, the society’s president.
The towering Palisades that guard the west bank of the Hudson River were preserved with Rockefeller money. So was Colonial Williamsburg. The family created exquisite miniatures like Greenacre Park, tucked between two buildings on East 51st Street in Manhattan, and it donated 35,000 acres to help form Grand Teton National Park in Wyoming. Part of the family’s Pocantico estate in Westchester County has become a beloved forest preserve, and an educational center known as the Stone Barns.
The Cloisters, Acadia National Park, Forest Hill Park, Greenpeace, the Nature Conservancy — the list of the family’s efforts to conserve and protect the environment goes on and on.
. . .
Many of the family’s most spectacular conservation efforts began with a family camping trip. ”As Father traveled, if he saw things that needed to be done, he took steps and did something about them,” David Rockefeller said.
He recalls accompanying his father to California in the 1920’s to see the giant redwood trees. When the elder Rockefeller found out that the trees were in danger of being clear-cut by a timber company, he helped buy 9,400 acres that he then donated to the state. That grove of ancient redwoods, including one that is more than 2,000 years old, is considered the largest old-growth redwood forest in the world.
. . .
More than 30 members of the Rockefeller family — ranging in age from 17 to 90 — will be honored by the Audubon Society at tonight’s ceremony, each one involved with the environment. Most times, though, the support is low key and the family tries to shun the spotlight.
”The important part for us is not having our name on it,” said Gail O’Neill Caulkins, 52, a fifth-generation Rockefeller who is president of the Greenacre Foundation, which assists in the maintenance of city parks and supports dozens of community gardens, ”it’s seeing that something gets done.”

For the full story, see:
ANTHONY DEPALMA. “Praising Rockefellers for Land They Saved.” The New York Times (Tues., November 15, 2005): A25.
(The online version has a somewhat different title.)

Good Eating for Experts: More on Why Africa is Poor

Michael Wines, writing from Malawi in Africa:

It makes one wonder why, with so many experts here to do good, the rest of the country not only isn’t thriving, but is slipping backward.
. . .
There is even a hilarious poem demonizing “the development set”:

We bring in consultants whose circumlocution
Raises difficulties for every solution
Thus guaranteeing continued good eating
By showing the need for another meeting.

MICHAEL WINES. “Letter From Malawi: Amid Squalor, an Aid Army Marches to No Drum at All.” The New York Times (Weds., December 7, 2005): A4.

Industrial Giants Succeeded in Philanthropy in the Same Way They Succeeded in Business

(p. 3) . . . the Gateses were not the first to see that money could sometimes move mountains in public health. They are following in the footsteps of the industrial giants of the late-19th century, said Dr. Howard Markel, director of the University of Michigan’s Center for the History of Medicine.

These men also brought their fortunes to bear on social problems, and believed that they could succeed in philanthropy in much the way they had succeeded in business.
The donors of the robber-baron years started their philanthropy while still alive – a novel idea then. Andrew Carnegie, for example, gave away hundreds of millions of dollars to build libraries long before his death.
The largest bequest in American history prior to Carnegie’s time was from Johns Hopkins, a Baltimore merchant, who left $7 million to found the eponymous university and hospital in 1873 – after he died.
But the closest parallel to the Gates approach to philanthropy is that of John D. Rockefeller, said Dr. Markel and Robert E. Kohler, a medical historian from the University of Pennsylvania.
Rockefeller built Standard Oil. Like Mr. Gates, he was the richest man of his time, and like him he was reviled as a greedy monopolist.
Rockefeller, like Mr. Gates, hired a professional to run his charities. And he, like Mr. Gates, used his money systematically to identify and attack important public health problems.
Rockefeller hired Frederick T. Gates, a former minister (and no relation to the Microsoft co-founder) as his philanthropic executive. Mr. Gates read an 1892 medical textbook that convinced him that diseases had causes, like germs and worms, that could be fought by science – not a universally accepted idea at the time.
The most famous health campaign he started with Rockefeller money was the drive, begun in 1907, to rid the rural American South of hookworm. Called “the germ of laziness” because it caused anemia and made victims lethargic and dull-witted, hookworm afflicted up to a third of Southerners.
The foundation set up clinics that administered purgatives and – because the worm is shed in feces and picked up by bare feet – taught people to dig deep privies and wear shoes. More Rockefeller money underwrote some of the 20th century’s great public health drives, many using research done at Rockefeller University. Clinics were built in 50 other countries to eliminate hookworm worldwide. The effort failed because the worm can survive in soil and reinfect people; but the problem diminished, especially in parts of Asia.
In 1915, the foundation declared war on yellow fever; by 1932, scientists had realized that monkeys were also a reservoir for the virus, making eradication impossible, but by then Rockefeller scientists had invented the vaccine still used today.
Patty Stonesifer, chief executive of the Gates foundation, said she and William H. Gates Sr., the father of the software pioneer and co-chair of the foundation, consider the Rockefeller campaigns especially instructive. “We stood on their shoulders,” she said.
. . .
As Ms. Stonesifer said admiringly of the Rockefeller campaign against hookworm: “A lot of people would say, ‘you’ve got to reduce poverty to get rid of hookworm.’ But the Rockefellers said, ‘You don’t need a 20-year intervention. You can use shoes.’ “

For the full article, see:

DONALD G. McNEIL Jr. “The Rich, Sometimes, Are the Best Medicine.” The New York Times, Section 4 (Sun., December 11, 2005): 3.
(Note: ellipses added.)

The Right Way to Give Away Money

Why is the foundation closing, 52 years after its founding? John M. Olin, who died in 1982, feared that if it were to exist in perpetuity, it would eventually be captured by hostile forces; the example of Henry Ford II, who quit the board of the Ford Foundation in frustration over its liberal agenda, had especially impressed him.
. . .
The Olin model offers many lessons for foundations that would seek to mimic its success, some of them simply mechanical: restrict the number of trustees to avoid the creation of factions (there will be only six at tomorrow’s Olin meeting); hire a staff of smart generalists with diverse backgrounds from outside the foundation world; and make sure that everybody sticks to a set of clearly defined guiding principles.
Other lessons are more strategic in nature. The Olin Foundation’s leaders understood that success is often unplanned, and so they focused on creating the conditions for success rather than thrusting a set of detailed agendas and goals upon grant recipients. Nobody, for example, expected that Allan Bloom’s “Closing of the American Mind” would become a runaway best seller whose meaning is still debated two decades after it was published; the John M. Olin Foundation merely decided in the early 1980’s that Mr. Bloom, a political theorist at the University of Chicago, was a genuine talent who deserved financial backing.
. . .
Finally, the decision to spend itself out of existence may seem bizarre, like an act of philanthropic suicide, yet it magnified the Olin Foundation’s influence. Although it never had much more than $100 million in assets, its refusal to hoard its endowment allowed it to spend at the rate of a much larger foundation.

JOHN J. MILLER. “The Very Foundation of Conservatism.” The New York Times (Mon., November 28, 2005): A23.