Gates, Buffett, and Philanthrocapitalism

In the last couple of weeks, there's been no shortage of coverage about Bill and Melinda Gates, together with Warren Buffett, offering a Giving Pledge. The goal: to convince their fellow billionaires to pledge to give away 50% (or more) of their net worth to charity during their lifetime (or, at the very least, upon their death). If you've missed the coverage, then here is some of it.

• Fortune - The $600 billion challenge, June 16
• Fortune - Billionaire peer pressure: Behind the Buffett-Gates challenge, June 16
• NY Daily News - Bill Gates and Warren Buffett ask Oprah, Bloomberg, other billionaires to give big money to charity, June 16
• Charlie Rose interview, June 16

(This Bill & Melinda Gates video is from January 2010, before the challenge was made public.)

Coincidentally, this announcement came as I was reading the book Philanthrocapitalism: How the Rich Can Save the World by Matthew Bishop & Michael Green. (The newer version of the book, according to Amazon.com, has been rebranded with the subtitle "How Giving Can Save the World" and an introduction by Bill Clinton.) The book begins, understandably enough, with Buffett's 2006 decision to give the majority of his vast fortune to charity - the bulk of it to the Gates Foundation, for their work in world health and development.

In the Charlie Rose interview on this new challenge, Buffet lays out some of his philanthropic thoughts (also detailed in this article):

So the truth is I’ve had everything in life, everything
in life I’ve ever wanted.  I have never given away any
money that’s caused me to give up a movie or dinner or
trip to Disneyworld or anything of the sort.

So it’s cost me nothing.  So I have these little pieces
of paper in safe deposit box which I bought about 40 or
45 years ago and they’ve grown in value enormously.
And what they are is they’re claim checks on something
in the future.  

I don’t have anything I need in the future.  All kinds
of other people have all kinds of needs.  And it’s a
way of cashing those claim checks in a way where
people’s lives are changed for be the better.  Mine’s
already changed for the better.  It couldn’t get better.

If those little pieces of paper translate whether it’s
into children avoiding diseases, becoming better
educated, people having a better life in their own age,
whatever it may be, that’s terrific.  I think a lot of
people feel the same way. 

This is a profound statement, and certainly true ... for billionaires.

For most of us, of course, choosing to give something does mean that there are some sorts of desires that we have to pass up. People with this degree of wealth don't run into this problem (financially, at least), but when you think about things on a global scale, this situation extends to the majority of people in America.

Worldwide: The poorest 75% of the world lives on only 25% of the resources! At least 80% of the human species lives on less than $10 a day.



By extension, living on $3,650 a year means that you are among the wealthiest 20% of the people on the planet Earth! (Note: This is 2005 data, so the number would be a bit higher now ... but not much.)



Depressing, isn't it?



So the arguments that Buffett make are all, by extension, arguments that could apply to the majority of us. We can all afford to give a bit more, even if all we can give is of our time or our sympathy.



Elsewhere in the interview, Bill Gates recounts an early dinner party where these three billionaires gathered with other billionaires in an effort to help convince them to give more. The group of billionaires share their stories of philanthropy - how they got involved, what causes they're committed to, and so on - and there was a tangible energy and enthusiasm among the group, which Buffett and the Gateses wanted to harness. Gates makes the observation:

And one thing more I would like to say is no one said that they felt bad they’ve given the money. Everybody felt more fulfilled, were able to use their creativity in some special ways.

I would certainly agree with this. There have been a handful of people who have come forward to me, saying that they were motivated give in part thanks to my 40 Days of Giving project. Not a single one of these people has said, "You know, I gave this money, and just think it was a waste!"

The amazing thing about this isn't just the money itself (although Carol Loomis makes a strong case that this will profoundly increase the money going into charitable giving). Many billionaires are self-made entrepreneurs and businessmen, like both Gates and Buffett themselves, and if they turn their eye toward philanthropy, it's unlikely that they will do so in a passive way. The sheer amount of innovation, brainpower, and overall resources that this could turn toward philanthropic goals is astounding.


And this is the the whole point of Philanthrocapitalism, which talks about the way that these powerful capitalists can leverage their talents in that area toward philanthropic goals. A similar case was made by David Bornstein about social entrepreneurs in How to Change the World.


And these sorts of thinkers are crucial, because the problems we face today - climate change, oil spills, clean energy, clean water, diseases such as malaria and AIDS, rogue states, terrorism, and so on - literally cannot be solved solely by throwing money at them. These are real problems that require careful thought by innovators, and it's important to get the innovators engaged.


That is the real goal of the Buffett-Gates challenge, because they know that they are in a position to turn serious people onto these issues. The money can be used for good, but it's the human capital that they really want. They want solutions ... and as businessmen and innovators, they know that you can never predict where the real solutions are going to come from. They want to get as many people as possible into the marketplace of solutions.


It's saving the world, free market style. You've gotta love it, America!

Oenophilanthropy

Oenophile (or Enophile): Someone who appreciates wine. (Wordnet)

Philanthropy: Voluntary promotion of human welfare. (Wordnet)

Oenophilanthropy (or Enophilanthropy): Appreciating wine in a way which actively seeks to promote human welfare. (Coined at 6:02 pm Eastern time, June 6, 2010, by AZJ. Feel free to use to your heart's content, but please link back to this posting!)

So let's imagine - just for the sake of argument - that you like wine. And let's assume that you're the support of person who likes to support worthwhile causes. How can these two things be linked together?

Well, I suppose that one option would be to establish some sort of wine-tasting charitable function to raise money for your favorite cause. And certainly that's a clever and worthwhile goal.

But another action that even the laziest of oenophiles could perform is to orient your wine-buying activities so that the money goes to businesses that themselves support philanthropic activities.

And there's certainly no shortage of them, as I learned when my mother handed me a page form Food and Wine magazine with the clever title "Grape Causes." (Although I think that Oenophilanthropy is clever, too.) They discuss some great wine-related giving programs:


Wine to Water: This group of oenophilanthropists have done just what I suggested above: raise money through benefit wine events, such as tastings, and use the proceeds to support water access projects around the world. The lack of clean, fresh water is one of the biggest world-wide problems, affecting over 1 billion people worldwide. The organization also produces their own wine label as a means of generating funds.


Indego Africa: This organization sells fair-trade handicrafts, with proceeds going to the Rwandan artisans who craft the items, as well as providing training in entrepreneurship, literacy, and computer skills. How does this impact the oenophilanthropist? Well, they have wine coasters and wine bags.


Boisset Family Estates' Fight Against Hunger: Each bottle of wine sold by the Boisset Family Estates winery results in the donation of three meals for families in need! This is an astounding donation, but it may be over. Though the Food and Wine report is from April 2010, the website itself indicates that this was in place for June through December 2009, with no indication (that I can find) that the program has been extended. They exceeded their goal of 1.2 million meals!


Fledgling Wine: A joint project of Twitter and Crushpad's custom winemaking, this new wine label is created to provide funds for the wonderful Room to Read project. Room to Read provides local-language books to impoverished areas around the world.


O Wine Company: 100% of the net profits from this wine goes to fund scholarships for at-risk youth. In 2009, the owners signed a contract with Oregon State University's Science and Math Integrated Learning Experience (SMILE) program to fund 5 scholarships over 5 years, resulting in a total of 25 needy students who will achieve financial assistance from O Wines.


Korks 4 Kids: This wine cork recycling program uses proceeds to support programs that help children, focusing initial efforts on the Autism Society of America (ASA). The organization's Rubber 4 Rugrats program also recycles rubber-based goods, such as tires, to raise money.


Help for Haiti: Wine producers were among the many people donating to Haiti relief, of course. The Spirit of the Americas (funded by Diageo) donated more than 45,000 pounds of food to Haiti. Constellation Brands provided medical supplies through an ongoing partnership with InterVol.