Give and Make: Bill Gates and Warren Buffett May Be Setting New Records for Individual Charitable Donations, but, as Scott Payton Finds out, British Firms Are Leading the World in Engaging the Philanthropic Inclinations of Their Employees
Payton, Scott, Financial Management (UK)
June 2008 will be an important month for Microsoft. Bill Gates is leaving his day-job at the software giant to focus full time on the charity he founded with his wife eight years ago. It's no ordinary charity: with an endowment worth more than 19bn [pounds sterling], the Bill & Melinda Gates Foundation is the largest philanthropic organisation in the world. Its biggest donor to date has been legendary investor Warren Buffett, recently named as the world's richest man. Buffett has pledged more than 15bn [pounds sterling] of shares in his company, Berkshire Hathaway, to the foundation.
Does such colossal generosity reflect a wider global increase in charitable giving? And how does philanthropy vary in scale and scope from country to country and between business and personal donations?
The trend set by Gates and his friend Buffett is certainly being followed by the super-rich elsewhere in the world. "It is leading others who have sizeable wealth to consider charitable donations as part of their overall financial planning," says Andrea Van-Sittart, head of company relations at the UK-based Charities Aid Foundation (CAF).
Last year, for example, Scotland's wealthiest man, private equity guru Sir Tom Hunter, pledged 1bn [pounds sterling] to charity. Meanwhile, the Virgin Group's chairman, Sir Richard Branson, promised to donate 1.6bn [pounds sterling] over ten years to research projects aimed at tackling global warming.
But it's not only rich individuals who are giving away big chunks of wealth. Some of the world's most profitable companies are also increasing the portion of income that they give to good causes. Mobile telecoms company Vodafone is donating 24m [pounds sterling] this year through the Vodafone Group Foundation, established in 2002. The foundation is the hub of an international corporate philanthropy network, donating money to 24 charities around the world. Each is run by a local company in which Vodafone has a significant stake. These firms add their own donations, taking the total raised last year over the 38m [pounds sterling] mark.
"We don't know of any other corporate foundation that has such a global footprint," says Andrew Dunnett, the foundation's director. "There is a huge diversity of need in the communities in which we operate, so the local trustees decide which are the most pressing causes."
These causes range from disaster relief and support for homeless and disabled people to funding for sport and the arts. In all, Vodafone has donated more than 100m [pounds sterling] over the past six years. It is the biggest corporate donor to both Oxfam and the United Nations Foundation.
The benefits to those receiving the cash are clear, but what does the donor get out of it? For one thing, it wins the respect of its staff, according to Dunnett. "We have 67,000 employees worldwide. They expect the company to invest in the communities in which it operates," he says.
Catherine Sermon, community impact director at the UK not-for-profit organisation Business in the Community, says this is a familiar story. "We have evidence showing that when companies engage in this kind of activity, employees think more highly of them," she explains (see panel opposite page).
Corporate philanthropy initiatives can also be a powerful recruitment tool. "Graduates are getting increasingly interested in how companies conduct their charitable giving," Van-Sittart says. "This area can be extremely important in the war for talent."
One employee who is benefiting from his firm's charity programme is Benoit Vauchy, a principal at private equity behemoth Permira. In 2005 the company teamed up with UK charity the Community Action Network to launch Breakthrough, a programme designed to invest money and private equity expertise into developing "social enterprises", a recently coined term for business-like organisations that have a social purpose. …