Philanthropy: are we getting better at it?

In this second of our in-depth series on the Passion and Science of Giving, internet entrepreneur and dedicated philanthropist Daniel Petre delivers a forthright analysis of philanthropy in Australia.

A former Microsoft executive under Bill Gates, serial entrepreneur and, with wife Carolyn, founder of the Petre Foundation, Petre has long been one of the most outspoken philanthropists in Australia - and another who brings a venture capitalist’s rigorous analysis to the field.

"Even though we must celebrate the Andrew Forrests and Paul Ramseys we should also note for the most part our billionaires are missing in action, donating far less pro-rata than any model would suggest is appropriate."
Daniel Petre, Philanthropist

Petre tells BlueNotes managing editor Andrew Cornell philanthropy is not an option, it's a responsibility.

To read the first edition in the series, click here.

Andrew Cornell: Daniel, thanks for speaking with BlueNotes. Is philanthropy in Australia changing and, perhaps more importantly, does it need to change more?

Daniel Petre: Up until very recently the list of the top 20 donors annually in Australia included far more corporate philanthropic efforts and Charitable Foundations created by people long dead than Charitable Foundations created by those still living.

Yet there is some, small, change afoot. In 2014 it would seem that there has been a sea change in philanthropic giving. Twiggy Forrest has signed up to the Bill Gates inspired Giving Pledge (agreeing to donate more than 50 per cent of his wealth to philanthropy between now and his death), Paul Ramsey allocated the bulk of his $3 billion plus wealth to his foundation in his will, Graham Tuckwell has donated more than $50 million to ANU and John Grill over $20 million to the University of Sydney. Gifts or allocations to foundations of these amounts were unheard of only a few years ago.

At the same time there has been growth in Corporate Philanthropy. Westpac allocated $100 million to a scholarships program and Crown Casinos (as part of an overall commitment by the Packer family) has targeted $100 million in donations over the next ten years.

AC: But judging from some of your public comments, though, things must change more?

DP: One view is that any giving is good giving and clearly any charity, desperate for funding, is unlikely to take a stand on the overall state of Philanthropy in Australia. Yet even though we must celebrate the Andrew Forrests and Paul Ramseys we should also note that for the most part our billionaires are missing in action, donating far less pro-rata than any normalised model would suggest is appropriate.

Simplistically if a billionaire was to allocate only 20 per cent of their wealth to philanthropy this would establish a corpus of $200 million with annual giving being at least $10 million…If said billionaire mapped to the Giving pledge then for every billion they had around $25 million in donations PER YEAR would flow. So if you have $4 billion you should be giving $100 million PER YEAR.

It is painfully clear that other than Twiggy and Paul, none of our super wealthy have decided to give at the levels established by more than 125 billionaires globally who are giving at this level. So there is scope for improvement of our most wealthy.

AC: And what about on the corporate front?

DP: Equally while there is no doubt that there will be some who prosper as a function of corporate programs, it is odd to see a commercial institution decide to take some of what might rightly have been provided to shareholders as dividends and instead use the money to enhance their brand. It is Brand Marketing but done in a more nuanced way.

Further it would be interesting to understand the private donation patterns of the CEOs of the major corporations who are establishing grand corporate philanthropy programs. Are they themselves generous donors or do they hide behind their corporate giving…?  “I gave at the office” but on a much larger scale.

Click image to zoom Tap image to zoom

Source: JB Were Philanthropic Services, ATO

AC: Where do you see the role of governments?

DP: Governments of all persuasions are unable to meet the needs of those who can’t help themselves, whether they are local or overseas and with a country whose most wealthy are increasing their wealth at a rapid rate, it is incumbent on all of us to give back to the society within we have created our wealth. Philanthropy should not be a choice but rather a responsibility….and the measure of giving should be that you give until it hurts, not give the minimum to keep the focus on others and not you.

AC: Are there, for want of a better description, structural reforms that could help achieve this?

DP: As Philanthropy becomes a more important part of our social fabric we will need more access to giving data and better data on the performance of charities. Donors moving forward are looking to invest in the most effective charities, understanding the simple premise that you want your dollar to work as hard as it can.

Thus measurement and data become guiding principles for a large part of our society that has been, for the most part, a data free zone. We will want to more accurately measure giving at all levels to celebrate those that meet the moral requirements of a civil society and also expose those that decide not to give as morally corrupt and leeches on society as a whole. Society will demand this of our wealthy.

Equally charities will have to match their passion for the cause they address with deeper analysis that justifies why they should get funding. Donors will demand this of Charities.

AC: That’s a hardline approach Daniel, for society in terms of leeches, but also for charities which it sounds like you expect to corporatise. Is it necessary to be that hardline?

DP: I think so. Societies hang together only if we all play our part and we all look after each other. In Carnegie’s (US Philanthropist) treatise called the Gospel of Wealth he spells out the very clear thread that those who are wealthy have a responsibility to look after those who, through no fault of their own, have fallen behind. Warren Buffet makes an even more compelling case when he talks about the “lucky” gene pool.

For too long we seem to want to believe that our most wealthy are by definition good citizens because they employ people or pay taxes.

They have employed people and paid taxes so they can build great companies and great fortunes not to be nice people, necessarily. You are not a good person or model citizen just because you have built a company or made a fortune.

It is only fair to expect that those who have been able to do well, and who have worked no harder than the 95 per cent of the rest of the workforce, chip in a bit along the way.

Charities can’t expect, in a world where deep measurement of outcomes and efficiency is the norm in the commercial world, to be given money without proving, in clear performance metrics, that they will use the money wisely and will deliver globally most efficient outcomes. Donor and recipients of the help deserve this level of commitment.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks