Over the next few days, the world’s most influential leaders, chief executives, philanthropists and Nobel laureates are gathering in a small skiing village in Switzerland to talk about reshaping the world.
Tony Abbott, David Cameron, Ban Ki-moon, Kofi Annan, and hundreds of other leaders and heads of state are meeting for The Annual Meeting of the World Economic Forum, to address a theme of “The Reshaping of the World: Consequences for Society, Politics and Business.”
The world has come a long way in the five years since the despair of the Global Financial Crisis, but there is a long way still to go in order to reduce unemployment, achieve sustainable wealth creation, and reduce debt.
The gap between rich and poor in developed countries has continuously grown, and for better or worse, the US Occupy Movement enunciated a class warfare rhetoric that has put the notion of “the top one per cent” on a global agenda.
These intergenerational economic challenges are not small, not new, and not impossible to solve. Collaboration between business and government, and the participation and resources of the private philanthropic community will be essential to finding the solutions.
Time to recognise philanthropy’s role
Now is the time to rethink the age-old paradigm of business and government as the binary alternatives for problem solving, and to recognise the integral role that private philanthropy can play in addressing great challenges.
If there is to be a silver lining of the Global Financial Crisis, perhaps it’s that philanthropy – its impact and effectiveness – is now firmly on the table.
Governments are answerable to constituents and businesses are answerable to shareholders, but philanthropy is not bound by the constraints of quarterly reports and election cycles.
Philanthropists have the capacity to articulate a vision and actually implement it over a realistic timeframe by exercising the requisite skills, expertise and efficient deployment of private resources. These are luxuries rarely accessible to a president or chief executive.
The recently retired Mayor of New York City, Michael Bloomberg, is a good example of how modern action-orientated leadership can achieve real outcomes by leveraging the best of business, government and philanthropy.
Bloomberg was able to impressively legislate public policy where there were private market failures, such as in the areas of obesity and tobacco, and was equally able to empower the private philanthropic sector to generously engage where public policy and resources were limited. He demonstrated the effectiveness of city-based action driving the national debate. Perhaps this is the blueprint for other global cities to emulate, particularly in relation to bypassing multilateral inertia in areas like climate change.
Philanthropy as a new asset class
Over the last five years, the community has vociferously developed a perception, rightly or wrongly, that the rich ought to be doing more because they have been disproportionately affected by the GFC and income inequality.
In my view, it’s time to reshape this discussion and to look at philanthropy as a new asset class.
Philanthropy is the love of humanity – not charity. To me, ‘charity’ implies negativity, reaction and history, whereas ‘philanthropy’ is about being positive, proactive and visionary. Old problems will not be solved with old thinking, as history has repeatedly demonstrated. Perhaps if the wealthy start thinking about how they give in the same vein as how they invest, we could make major inroads and solve big problems.
Think about a world where the best for-profit minds apply their business intelligence and objectivity to nonprofit challenges, and then think about a world where the advisors to these industrialists and entrepreneurs apply the same analysis and due diligence to philanthropic proposals. Everybody wins when there is accountability, measurables, quantifiable impact and real results.
In the kind of world I want to live in, philanthropy is not the dividend of profit, but the driver of it.
Let us also debunk the myth that profit and philanthropy are somehow mutually exclusive – because they’re not.
The traditional charity paradigm implies that if a corporation or individual has a profitable year, they allocate a portion of their windfall to philanthropic giving. In the kind of world I want to live in, philanthropy is not the dividend of profit, but the driver of it. The more we have, the more we can give. The more we give, the greater the impact, and the more we want to give.
At the same time, in order to give more, we need more, and the culture of finance must radically shift to celebrate goals far greater than greed or the pursuit of power.
Philanthropy poses such a profound opportunity for our world to grow our way out of the malaise, ensure the most disadvantaged are not left behind, and navigate beyond government gridlock and business constraints.
Let’s start thinking about philanthropy as an asset class and begin positively influencing the allocation of capital. We will go a long way to repairing the world by engaging the best minds and their access to private resources to solve great challenges neither business or government are equipped to effectively deal with.
About Jeremy Balkin
Jeremy Balkin is a financier and philanthropist from Sydney, currently based in New York. He is the founder of Karma Capital and Give While You Live, is a member of the ROI Community of Global Jewish Leaders, and is a World Economic Forum Young Global Leader. Balkin’s TED talk – The Noble Cause – has received over 200,000 views on YouTube. He is currently writing a book on how finance can change the world. Follow him on twitter @jbapex.