Matthew Bishop

Our ‘influential reader’ in this edition is Matthew Bishop, New York Bureau Chief of The Economist and coiner of the term ‘philanthropcapitalism’. His book with Michael Green on the global boom in philanthropy will appear in spring 2008.

Matthew will speak about the ‘new philanthropy’ in the keynote address at the Association of Charitable Foundations annual conference on 20th September.

Matthew says:

The three publications I recommend are Andrew Carnegie’s essay, The Gospel of Wealth; a new biography of the secretive philanthropist Chuck Feeney, The Billionaire Who Wasn’t and Charles Dickens’ A Christmas Carol.

“The problem of our age is the administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship,” wrote Andrew Carnegie in 1889. Plus ça change. Over a century later, in the midst of a period of wealth creation that far surpasses that in which the steel tycoon made his fortune, inequality is again rising from the top. Whether the wealth of the new super-rich will be put to harmonious use is again the question of the age and so Carnegie’s essay remains essential reading.

Used to the British tradition of hoarding wealth in vast country estates, on first reading Carnegie’s essay I found it refreshingly shocking. Enthusiastically Darwinian, Carnegie argued that the growing gap he then saw between rich and poor was “highly beneficial” and “much better” than the universal squalor that he saw as the only alternative. The rich had got rich and were responsible for administering wealth well because “the laws upon which civilization is founded have thrown it into the hands of the few”.

Of the three ways in which wealth can be disposed of, two were ineffective: leaving it to family descendants or leaving it to public purposes after death. Carnegie recommended the third: active philanthropy during the philanthropist’s lifetime. Indeed, he regarded death taxes as the ‘wisest’ of all forms of taxation: “By taxing estates heavily at death, the state marks its condemnation of the selfish millionaire's unworthy life.” Carnegie did not mince words, which is one reason his essay still appeals today - but not the only reason. Indeed, I suspect that if, say, Bill Gates or Warren Buffett were to write an updated Gospel of Wealth its content would not be very different.

Carnegie would have approved wholeheartedly of Chuck Feeney. I have just read a new book about the Irish-American businessman, The Billionaire Who Wasn’t by Conor O’Clery, and I could not put it down. It is much the best biography of a living philanthropist I have read, all the more remarkable because it is the result of a decision by Mr Feeney to abandon a life of obsessive secrecy. A co-founder of the retailer Duty Free Shopping, Mr Feeney became one of the richest men in the world and promptly decided to give most of his money away. He then went to such lengths to hide his philanthropy that the foundation he created, the Atlantic Philanthropies, became known in philanthropic circles simply as ‘The Anonymous Donor’.

The book, which is remarkably candid, not least about the somewhat messy way in which he made his money, describes some of Mr Feeney’s philanthropic achievements. These include a significant role in the development of higher education in Ireland and Australia, boosting health care in Vietnam and advancing the peace process in Northern Ireland. It is particularly enlightening on how Mr Feeney cleverly managed to get the maximum ‘leverage’ - the Holy Grail of today’s leading philanthropists – from his money.

Charles Dickens would have enjoyed Mr Feeney, not least because of his refusal to enjoy the trappings of wealth and his tendency to become embarrassed when thanked in person by one of the beneficiaries of his generosity. The last time philanthropy was as popular as it is now was the Victorian era, and you need only read Dickens to understand its pros and cons. What would his novels have been without philanthropists? One of the themes of the book about philanthropy I am writing with Michael Green is how hard it is to give successfully, which is why today’s philanthropists will need to work at least as hard at giving their money away as they did making it in the first place. So I am tempted to recommend Great Expectations for its treatment of the complexities and unforeseen consequences of philanthropy.

Yet, I am somewhat embarrassed to admit, at an emotional level my view of wealth and philanthropy has long been shaped by A Christmas Carol, with its simple message that money does not bring happiness but giving it away can. To be fair, the philanthropists I have interviewed do not seem to have much difficulty enjoying their money, though many of them worry that inheriting wealth will ruin their children. Many of them say they have felt more fulfilled since they started giving, and have a greater sense of purpose than they ever found in business. Moreover, I suspect that among the world’s growing army of billionaires there is many a Scrooge in need of an encounter with the ghost of Christmas future, and a new career as a philanthropist.