Maxine Rich
“There is one thing one has to have: either a soul that is cheerful by nature, or a soul made cheerful by work, love, art, and knowledge.”
The Culture of Penny Pinching – Philanthropy in Australia
The growing chorus of calls for more and better social investing by Australians is encapsulated in a timely article in this weekend’s Sydney Morning Herald. Citing Australian of the Year, Simon McKeon, and his observations that the “elephant in the room [is that] we really are not overly generous,” it details how our wealthy are remarkable penny pinchers with 33% of people earning over $1 million per year not making any charitable donation. This stands in stark contrast with the United States, where a long-standing culture of philanthropy has spawned programs like the Giving Pledge where Gates and Buffett have announced that the majority of their wealth will be bequested to philanthropic institutions. They are not only working in the US, they are approaching the wealthy globally to galvanize similar action in other parts of the world: http://www.smh.com.au/business/philanthropy-is-big-business—except-in-corporate-australia-20110603-1fktm.html
Why we are so reluctant to give is little understood. Whether it is because of the lack of a “culture” of public giving, or something more fundamental is unclear. What may produce a shift, however, is the growth of “philanthrocapitalism” – or the investing of money into social ventures to which business methods and measures are applied. Whether this investment be by way of social bonds, venture philanthropy or other technique, the prospect of enhanced social outcomes and perhaps limited capital return may make it a more attractive investment alternative.
Additionally, there is a growing acceptance that business models which integrate enhanced social outcomes, not only benefits the community but also the participating corporation. With increased recognition of Corporate Social Responsibility and the need for more effective business integration with their community, more funding will start to flow to the third sector.
However, leading US authority on company strategy and competitiveness, Michael Porter together with Mark Kramer, have recently taken the debate one step further. In January in an article entitled “The Big idea: Creating shared Values: Rethinking Capitalism”, they put forward the idea that the legitimacy of the capitalist model was under threat, and would only be sustainable when the intersection between corporate performance and society is reconceived. The traditional neoclassic approach to economics which characterises social issues as an externality to business, is flawed, and they posit a new paradigm which demands that enhanced social outcomes be integral to the business process itself. As Corporate Social Responsibility is merely a “bolt on” or response to external pressure from regulators or the community, it is considered to be a “dead end.” Instead, where the business and the community have “shared values” ie where corporate value is attributed to both the social and business imperatives of corporate activity. Porter raises the Fair Trade example of business process as a good example of Shared Values creating successful and sustainable outcomes.
While some detractors have called these ideas “old wine in new bottles,” it is certainly generating much discussion. A brief version of their article is at http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1.
I have posted the video blog with Michael Porter and the Harvard Business Review in a separate post.