By Rahul K. Bhardwaj
How should you give away your money to charity?
Some people who have the wealth and generosity to give back to their community apply their own experience and values to those they want to support and to what form that support should take. This is only natural and can work well for everyone concerned. But, often, it doesn’t work as well as it should.
Let me explain why. Broadly speaking, cities in the developed world are being built on three pillars: the public sector, the private sector, and the philanthropic sector. Historically, each of these has had a very different bottom line. For business, it’s been profits and money. For governments, it’s security and social cohesion. And for non-profits and charities, it’s the quality of life.
But, in the past 20 years, each of these three sectors has begun to merge and align with the others. Governments are much more focused on the bottom line. Many corporations, meanwhile, have a mission to satisfy more than their shareholders and customers; they need to prove they’re good community citizens.
The world of philanthropy has changed, too. It used to only deal with charities and the people and organizations that supported them. Today, however, philanthropy is not only playing a larger role in society, it’s become the meeting place for government and business and donors.
Just ask Bill Gates and Warren Buffett if the worlds of business, government and philanthropy are aligning. They’re not just giving back extraordinary amounts from their own vast fortunes; they’re changing what it means to give. In doing so, they’re reshaping the very definition of philanthropy. For many people of means, living the good life has changed to living a good life and ensuring that others do, as well.
With the Gates-Buffett “billionaire challenge,” the world’s wealthiest people are moving philanthropy directly from the boardroom to the barrios, doing what governments used to do, or never could do, stretching what it means to be a large corporation, a senior executive, a foundation, and a philanthropist.
But this transformation is not just limited to billionaires: we see it in Toronto, for instance, with families who give as little as $25,000 to set up a family foundation within the Toronto Community Foundation. Every member of that family is involved in determining where their philanthropy should go.
That bottom line is morphing and merging, so more non-profits are run more like businesses than ever before.
But they shouldn’t be run as businesses. What’s more, the overlapping shouldn’t be a one-way trip. If you feel charities should run more like businesses, then surely businesses can work better if they’re run in some ways like charities.
To those people who say the business approach is the only way to run government or philanthropy, let me say, no, business can help explain and inform government and the social sector, but not replace them. When business tries to turn society into a business, things get out of whack. Or put more elegantly, these three sectors become misaligned.
We see the cost of this misalignment particularly in the United States, where the political gridlock has an iron grip on any progress the country hopes to make, especially economically. The reason is that the competitive urge – the basis of much of business – can at times completely overwhelm the co-operative impulse. The result is that healthy debate about the future of cities, for example, is replaced by clenched fists instead of outstretched hands.
The situation is not as dire in Canada or Brazil.
Competition – the ability to compete and win – has built much of Toronto and Sao Paulo. But the way forward is not through competition. Or at least not just competition. It’s through collaboration. Lots of people know how to “do competition.” But knowing how to do “co-operation” is much harder because it’s new and we don’t have the tools and skills to do it well. This just means we need to find a way to reward co-operation.
We need to stop thinking of our sectors as walls, but rather as bridges. If we can find ways to align our interests, to start by finding what we share rather than what we don’t, business will prosper all the more, the social sector will better serve more people, and government will improve the lives of its citizens.
When people give money to charity and use the financial bottom line as their sole determinant of who gets that money, that’s doing good for personal sake. Or for corporate sake. Or even for political sake. But it’s not for goodness’ sake.
We can only do that when we join with others in the journey, and only when knowledge is added to philanthropy to improve society.
Rahul K. Bhardwaj is President and CEO of Toronto Community Foundation. He gave this address during the recent Sao Paulo Foundations’ Association 5th annual conference. This commentary also appeared in the Globe and Mail.