Chapter 6: Philanthropy in Business: Doing It Right

Chapter 6: Philanthropy in Business: Doing It Right


The essence of philanthropy is compassion. The word itself, in its ancient Greek semantic roots, means “love of humanity.” For societies that are organized around private enterprise (and the United States is the most prominent example), philanthropy provides a bedrock of care for the needy as well as a pillar of support for such nonprofit organizations as educational and cultural institutions. People who dedicate their time and resources to philanthropy have good reason to believe that they are making crucial contributions to the well-being of their society.

The value of philanthropy is widely recognized throughout the business community. As I noted in Chapter 2, almost four-fifths (79 percent) of the men and women whom we interviewed reported engaging in philanthropic giving to a significant degree. Consistent with the theme of this book, they do not see their charitable activities as a sacrifice but rather as another way to achieve their highest career goals. These business leaders believe in compassion as a desirable end in itself; and they also see it as an effective and moral means toward their more worldly career aspirations. They see giving as beneficial for both the giver and the recipient.

Of course this is age-old wisdom, found in many religious and philosophical traditions, including the Bible. But it is by no means a relic of bygone times: today’s successful business leaders are convinced of philanthropy’s importance to their deepest moral and strategic goals.

Why Philanthropy Is Important for People in Business

The business leaders we interviewed gave three major reasons when asked why they engage in philanthropic giving. The reasons are complementary rather than being mutually exclusive of one another. Often these reasons were expressed as a piece, although sometimes one or another was given special emphasis or reflected a particular giving priority.

The first reason for philanthropic giving is a concern for the well-being of people in need. This is a direct expression of altruism, reflecting the compassionate spirit behind philanthropy in its purest sense. Most people dedicated to philanthropic causes over the long haul act, at least in part, out of concern for those in need. For example, McDonald Williams, the chairman of Trammel Crow Real Estate, does philanthropic work for minority students at a Texas university: “I’m on the board at Abilene Christian University, which is where both my wife and I went to undergraduate school, and we’ve been involved in trying to help get more scholarships for minorities, for minority faculty development, and to help the school address the issues of inner-city poverty.”

The second reason for philanthropy is building community relations that will profit both the company and the local community. This is sometimes called public relations, a term that has acquired an unsavory connotation because it includes activities that are superficial and insincere. Yet when a public-relations effort reflects a genuine commitment to the public interest, it becomes a matter of enlightened self-interest that benefits everyone. Many of the business leaders we interviewed understood their own philanthropy in just this way. They saw no contradiction between helping their communities and furthering their business prospects. As one man noted, this is “right” as well as “smart”: “One of our core values is giving back to the communities in which we do business. It started with our founder, who was poor, and he just felt that was the right thing to do and the smart thing to do.”

The third reason for philanthropy is out of a sense of obligation to “give back” to society. For many successful businesspeople, this is seen as a matter of elementary reciprocity: their society has been good to them, endowing them with wealth, status, and opportunities to pursue and find their life dreams; now it is time to return the favor. These men and women are driven by their personal consciences. The obligation to give back is not just a responsibility to one’s fellow citizens or society at large. Rather, it is a responsibility to oneself. As one CEO with whom we spoke put it: “We’ve been given great wealth; therefore we have a responsibility to give it away intelligently. . . . You can pass on a work discipline—it’s important to work. But it’s also important to give.”

Each of these reasons—altruism, enlightened self-interest, and reciprocal obligation—is sufficient in itself to motivate a philanthropic act; yet most people in business are motivated by all three reasons. Among the people we interviewed, a clear majority explained their commitment to philanthropy as a mix of their concerns for society, their good business sense, and the dictates of their personal consciences. As noted throughout this book, mixed motives of this sort are the rule, not the exception, for worthy acts in the world. This combination of other-oriented and self-oriented concerns is realistic for ambitious people who want to be effective in every sphere; it also provides a way of sustaining a dedication to philanthropy without sacrificing their business interests. It is a motivational system with staying power.

The potent mix of altruism, enlightened self-interest, and reciprocal obligation that drives charitable giving has created a lively philanthropic scene in today’s society. Organized private foundations spent about $17 trillion on public interest causes in the United States during 2003. Add to that the even larger amount of donations made by individuals on their own account, and it is clear that philanthropy plays a major role in shaping the public landscape. For the most part, this is a good thing. The cultural world—from art museums to libraries to institutions of learning—would be vastly barer; and the needy populations—from the sick and elderly to the economically disadvantaged—would be far more impoverished if it were not for the robust philanthropic impulse that flows from the business community.