Celebrating philanthropists – the IEA’s “Inspiring Freedom Award”


Philanthropy is not the same as charity, although the two are related. Charity is the giving of aid to those in need, whether financial or in kind, and it is usually short-term, immediate, and reactive. Philanthropy is more strategic, the focusing of time and resource, often at significant levels, to the solving of long-term social challenges. To give is charitable, to give wisely to effect change is philanthropic, to be the force behind that change is to be a philanthropist. In the creation of the IEA’s Inspiring Freedom Award, we are honouring those philanthropists who support the education of the next generation of free-market thinkers. We are celebrating those women and men who have dedicated some of their own success to this end. Such celebration is too often lacking from contemporary society.

Philanthropy is a mid-18th century term, from the Greek meaning the ‘love of humanity’. It is particularly rooted in the Anglo-American tradition of giving, where people, most often entrepreneurs, gave some or all of their wealth to trusts, foundations and projects that made a substantial difference to improving the human condition. I grew up in the product of one of these endeavours: the Bournville Village Trust. This was the early 20th century social housing venture of George Cadbury, building decent homes and open spaces for factory workers and the wider community from the proceeds of making chocolate. That this small enclave of South Birmingham survives and thrives today, a desirable suburb next to the concrete tower blocks or “slums in the sky” thrown up by Birmingham’s mid-century socialist regimes, is a testament to his vision and enterprise.

Such contrasts are at the heart of the free market celebration of philanthropy versus the centrally planned alternatives of the welfare state. Philanthropy is a product of spontaneous order, not Government planning. Philanthropists choose their endeavours. Andrew Carnegie and Alfred Nobel spent widely on science, education, heritage, culture, and peace. George Peabody, in Britain at least, spent more narrowly on housing for the poor, and in the USA, on education. Bill and Melinda Gates pursue poverty, disease, and inequity, but are most known for their work fighting AIDS and malaria. But these are just the most high-profile examples. There are many thousands more who give tens of thousands to millions, not billions, and end up as the names behind innovation prizes, schools, and hospitals. When the government nationalises giving through the tax system and public spending programmes, it can improve universal access, but it removes personal accountability. As Milton Friedman noted:

“Doing good with other people’s money has two basic flaws. In the first place, you never spend anybody else’s money as carefully as you spend your own. So a large fraction of that money is inevitably wasted. In the second place, and equally important, you cannot do good with other people’s money unless you first get the money away from them. So that force – sending a policeman to take the money from somebody’s pocket – is fundamentally at the basis of the philosophy of the welfare state.”

It is therefore bizarre that some parts of the public associate higher state intervention with ‘doing good’, while treating private giving with a degree of suspicion. This is mostly notable in the recent spate of attempts to cancel figures from history who gave generously – not just those who achieved their wealth through activities considered immoral today, but also those who were merely associated with such activities through others, such as their parents. We see it from time to time, for example, in attacks on endowment funds that have links to historic oil wealth, from people perfectly content to pay for social programmes through fuel duty and fossil fuel windfall taxes. We celebrate policy measures that enable people to keep more of their own money for charitable giving, such as gift aid and inheritance tax allowances, but we do not condemn the very high taxes that prevent people from having more to give in the first place. For the Left, the government, taxation and spending are a laundromat that converts enterprising vice into moral virtue. They ignore the impact this has on all the perfectly virtuous organisations in the process, not to mention on the general climate of enterprise, and competition to provide better social services through philanthropy. That the state itself can engage in vice on an industrial scale, for example putting people into poverty by increasing their energy bills to pay their land-owning friends to host wind farms, is an analysis that eludes them.

It is also the case that individual entrepreneurs tend to be more generous than corporate or general givers. The NPT analysis put individual donations at 70% of the $470bn given by Americans in 2020. A 2008 Heritage Foundation study of US giving found the entrepreneurs’ generosity nearly double that of non-entrepreneurs and higher across all income ranges. A belief in your own ability to do good, underpinned by evidence of success, is a powerful driver to give to others, and, in that study at least, education was the destination for nearly a quarter of the giving. It is the most strategic of all donations, influencing the minds that will build the future, without knowing or directing how they will build it. Contrary then to the left-wing view that high taxes and a welfare state are needed to stave off the worst excesses of our instinct for greed, Heritage concluded:

“Free markets rely on the entrepreneurial spirit, but that urge to create, innovate, and succeed is not grounded in self-centeredness. Entrepreneurs are no greedier than anyone else. On the contrary, the typical entrepreneur gives generously from the wealth he creates.”

 

So let’s hear it for free markets, the entrepreneurs who invent the world through their work, and the entrepreneurs-turned-philanthropists who drive social change through their giving. Our award covers one aspect of that often unnoticed engine of progress. It would be good to see others.

 

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Andy Mayer is Chief Operating Officer at the IEA. Andy worked as Head of Public Affairs, UK & Ireland at BASF plc for seven years. He has over 20 years of experience in strategic communications and the operations that support them in the business and think tank worlds.


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