Dani Garavelli: Giving their all

Published on Wednesday 23 June 2010 19:20

IT'S easy to sneer at the 38 US billionaires who last week signed up to Bill Gates and Warren Buffett's The Giving Pledge - a moral commitment to divest themselves of at least 50 per cent of their fortunes by donating it to "good" causes. The image of self-satisfied tycoons dispensing largesse to the grateful masses from the comfort of their city penthouse or country chateau is frightfully patrician.

Even the knowledge they are following in the footsteps of Andrew Carnegie, whose philanthropic legacy affects hundreds of thousands of people today, is not enough to dispel the knee-jerk sense of inequity. They're so offensively rich, their generosity is unlikely to impact on their lifestyles. If they give away half their wealth, there'll still be enough for fleets of fancy cars, holidays in Barbados and sizeable bequests to their loved ones.

Even if your response is less visceral (and motivated by envy), there are still plenty of valid arguments against this rather feudal means of wealth redistribution. The billionaires who have signed the pledge won't pay tax on their charitable giving, so that's millions of pounds the US Treasury won't have to spend on its own good causes. And isn't giving - particularly on such a public platform - just a great big ego trip designed to heighten brand awareness and create yet more wealth for the benefactor?

Yet despite recognising the legitimacy of these criticisms, I can't help feeling there's something inspiring about these entrepreneurs - many of whom have built up their business empires from scratch - wanting to share their wealth with those less lucky than themselves. Perhaps it's all the talk of shameless city bankers with their enormous bonuses, quaffing champagne and tipping lap dancers while the rest of us suffer from the results of their excesses; perhaps it's just having grown up in the Me, Myself and I decade, but it's a relief to hear people finally acknowledging that the accumulation of riches comes with a social obligation.

Of course the idea of is not new to Scotland, the land Carnegie hailed from. Way back in 1998, sportswear tycoon Tom Hunter set up the Hunter Foundation, donating millions to projects to promote education and tackle global poverty and coining the phrase "venture philanthropy" to describe the way he drove the initiatives he backed. Indeed, he pledged to give away a 1bn in his lifetime before the recession wiped out a large chunk of his fortune.

And JK Rowling - once as famous for being a single parent as for writing the Harry Potter books - set up the Volant Charitable Fund to aid women and tackle poverty and social inequality as well as contributing a substantial sum towards the creation of a new Centre for Regenerative Medicine at Edinburgh University.Last year, a Barclays Wealth survey suggested that - although US donors continued to give a greater proportion of time and money to good causes than their British counterparts - a new golden age of philanthropy was being ushered in, with the value of the top 30 donations in the UK increasing nine-fold since 2003.

Those who complain elected governments are better placed to tackle poverty than unelected millionaires, might note the study also showed that while the recession has led to massive cuts in public spending, only a quarter of the wealthy people questioned had cut their giving and one in four had increased it.

There are pitfalls to philanthropy. Charitable giving can come with an agenda attached. Some big givers - like Lord Sainsbury and Lord Ashcroft - also use their wealth to bankroll political parties, securing them undue influence over the future of the country. You need only think of the way Stagecoach co-founder Brian Souter underwrote the Retain Section 28 campaign to see how wealth can be used in a negative way.

But, on the plus side, there have been some great achievements. Bill Gates, for example, has spent billions on tackling malaria, TB, HIV and pneumonia in developing countries. Not only do these entrepreneurs have the resources to ensure they can invest enough to make a real difference, they have the business acumen to ensure the money isn't frittered away on overheads. They may even have the nouse to make their venture self-sustaining. When Souter's sister Anne Gloag founded an orphanage in Kenya, it wasn't long before she saw a way it could be used to make money. She let the grounds for weddings, with the children helping to arrange flowers and wait tables. The income was used to bake bread for other hungry youngsters.

In an ideal world none of this would be necessary. The gap between the richest and the poorest would be much smaller, everyone would earn a decent wage, governments would be able to sort out all social injustice and there would be no billionaires either to wallow in their own benevolence or engage in complicated tax dodges.

In the meantime, however, surely it's better that those who have made a fortune through their own endeavours set up an orphanage in Romania than splash out on a new Rolex, a Lamborghini for their pal's 16th birthday (P Diddy for Justin Bieber) or 3.2m on an embarrassingly lavish wedding for their daughter.