Dec 17, 2007

Where Philanthropy and Government Meet

by Laura Starita

One of the questions that is continually being asked in these pages is what role should private philanthropy take in relation to other types of humanitarian aid, most relevantly that which is provided or brokered by government. Most of humanity would agree that governments have a responsibility to their citizens to provide and/or oversee access to basic life necessities such as clean water, public safety, health care, passable roads, public schooling, etc. Yet history has shown the divide between what groups in power should do and what they can . Even the world’s wealthiest, most socially-minded countries (think Sweden or Germany) still have populations of homeless, unemployed and poor people—albeit a small minority proportion. The circumstances are far worse in countries with impoverished central governments and a lack of social infrastructure.

Enter private philanthropy. In the case of the United States, at a time when very few Americans were prosperous Carnegie and Rockefeller filled gaps where the public sector was failing. Public libraries, public schools and public hospitals can all be credited to their early efforts. As more of the spots on Forbes’ list of wealthiest people are taken up by developing world entrepreneurs, we are seeing their early engagement in philanthropy covering the same territory that Carnegie et. al. traversed a century ago. In short, they are focusing on filling gaps, and going where their governments can’t—or won’t—go.

Consider the example presented by Husnu M. Ozyegin, a Turkish entrepreneur profiled last week in The New York Times as part of the paper’s series on wealth disparities. Ozyegin made his wealth in the financial sector, and to date has donated $50 million of his own money to build 36 schools in poor regions of his country. Educating girls is also at the top of the agenda, a controversial effort given that in the poorest regions in Turkey girls are primed for young marriage, and parents see little value in investing in their educations.

Ozyegin is one of a handful of developing world wealthy who are dedicating portions of their personal fortunes to addressing social gaps in their countries, a trend which is growing commensurate with the explosion of wealth in parts of the developing world, as a Financial Times piece points out. Carlos Slim of Mexico—the world’s third wealthiest man—is doing the same by investing in public health and education; Russia’s Roman Abramovich—also in the world’s top twenty wealthiest people—has invested his money and energy in raising the living standards for people from Chukotka, a Siberian region closer to Alaska than Moscow, where he also serves as governor. Ozyegin works closely with the Turkish government on the schools and Abramovich is the government in Chukotka. This philanthropy-government linkage is evident elsewhere as well, as a recent Financial Times piece on philanthropy in India mentions. The FT names a foundation called Naandi as well as billionaire Azim Premji’s eponymous organization as nonprofits which work with existing government-built schools and programs to improve their performance.

As in most things, the reliance on philanthropy as a governmental gap-fill has potential for problems. There is the possibility that philanthropic cash and resources invested in the social sector could take the onus of responsibility out of government hands, which is where it, at least partly, belongs. There has also been vocal concern expressed, in the case of Russia for instance, that a social services monopoly on philanthropic donations removes resources from other areas of need—such as in free press, or democratic pluralization. These are legitimate concerns. Nonetheless, there seems great potential in philanthropy-government match-ups to leverage financial investment and share accountability to the broader benefit of recipients, as well as of society as a whole.

New York Times: A New Breed of Billionaire

Forbes: The World’s Billionaires

Financial Times: Supporting the cause

Financial Times: Two world’s collide