Dwight Cass
02/02/2004
When Edwardian social reformer Ellen Key described philanthropy as "a savory fumigation burning at the mouth of a sewer, seeking to make the air more endurable to passers-by," she was expressing a widely held belief. Wealthy benefactors of her time often approached their charities with buckets of reputational whitewash in hand, and left little good behind. Key’s cynicism about the motives and efficacy of the Ladies Bountiful at the turn of the last century made her an effective champion of state-supported child welfare programs.
But Key’s derisive view overlooked the fundamental changes occurring in the world of philanthropy at that time. The efforts of a number of leading families, like the Carnegies, the Rockefellers and the Mellons, set philanthropic precedents and established charitable pursuits as an accepted—and expected—activity of successful industrialists. One hundred years later, this legacy has proven its value both to our society and to the health and cohesion of our families.Charitable donations today are no economic nuance: In 2002 they exceeded the total amount invested in mutual funds. Charitable donations represented nearly 2 percent of our $11 trillion economy. Clearly, this is not solely the result of dilettantism or the leavings of social climbers, as caricaturists often portray it.
Nor is philanthropy a stagnant domain. Its landscape has changed dramatically in the last decade as the newly affluent have quickly outpaced legacy money foundations in both the size of their giving and the business acumen they apply to their charitable projects. Bill and Melinda Gates, Michael and Susan Dell, Philip and Donna Berber and Theodore and Joan Waitt are some of the computer, software and Internet entrepreneurs who find themselves topping the lists of the country’s most active philanthropists.
Few of these super-philanthropists pursue the "fire-and-forget" model of decades past, writing a check to an established institution and moving on. Rather, their strategies hearken back to those of the Carnegies and Rockefellers who gave not just their money but also their expertise, establishing charitable organizations that operated to their era’s highest standards of business efficiency.
The dedication this requires bears some explanation. As entrepreneurs, we have succeeded by keeping our hands on the levers not only of strategic decision-making, but of tactical implementation as well. The difficult lessons learned from business setbacks caused by delegating responsibility unwisely now inform our charitable activities.
Mistrust is another reason. The decline in confidence in corporate governance and accounting has bled over to the world of philanthropy, where calls for greater transparency have been heightened by outrages like the United Way scandal in 2002. Not-for-profit institutions have been scrambling to bring their accounting and corporate governance policies in line with the for-profit sector’s best practices to preserve the trust of their donors, but suspicion lingers. These institutions are the legacy of earlier generations’ entrepreneurship, but have become lumbered with bureaucracy and vested interests over the years. As the reform of many foundation boards now illustrates, those with inherited wealth are also waking to the need for best practices within their charitable pursuits.
In this month’s issue, we examine how our philanthropic pursuits are inspired by, and in turn influence, our families’ mission statements and our pursuit of meaning. Indeed, in the U.S., a meritocracy without peer, where the first question asked after an introduction is usually "So, what do you do?", philanthropy provides those with substantial inheritances a way to make an important contribution to society.
The egalitarian and entrepreneurial character of this country informs the nature of our philanthropy, and always has. Some of the great philanthropists of the 19th and early 20th centuries set their giving in motion partly from a realization that this country would not tolerate the accrual of great wealth unless it was used to some extent for the common good.
The most coldblooded capitalists, slumlords and robber barons of the 19th century looked to philanthropy to rehabilitate their reputations. Like Tiberius hoping that Rome would remember him for rebuilding its public facilities and roads rather than for his ruthless pursuit of power, these men feared that posterity would judge them harshly.
Today, philanthropic enterprises are often the expressions of our family missions, which, if not manifested in this manner, would languish as little more than torpid mottos. They hold our families together through the generations, giving expression to the common goals we develop and nurture through the years. As we discuss in "The Practice of Charity" (page 72), these pursuits, while as demanding as any of our business ventures, are crucial to our well-being, and to the success of our families.
Dwight Cass
Editor-in-Chief
Back to February 2004 Table of Contents