Giving: The New Imperative

Finally, all those chain email hoaxes about Bill Gates giving his wealth away have come true in a form that may defeat even the most fanciful imagination: Bill & wife Melinda Gates have pledged to give billions of dollars worth of wealth away to philanthropy. They are joined by billionaire investor friend Warren Buffet who has pledged 99% of his wealth away. More dramatically, together this team of three have created an initiative, The Giving Pledge, which invites billionaires to pledge to give a majority of their wealth away either at death or within their lifetime.

Because the task of convincing billionaires to part with their money is complicated – not the least due to legal implications, or the need to know what exactly to give money – the proposition of the pledge has been kept simple: commit to give at least 50% of one’s wealth. The total Buffet and the Gates are aiming at? US$ 600 billion.

So far, over 40 pledges have been gathered and shared at a website curated by Melinda Gates: givingpledge.org. The exact total cannot be
determined, for wealth of such magnitude is likely to shift over time.

How Will This Change The World?

Each pledge is personal, with money being channeled to a cause dear to the giver. The donors have written letters sharing what their view of philanthropy is, what cause they are dedicating to, and why. Director George Lucas for instance is “dedicating the majority of [his] wealth to improving education”. The Gates are giving to health and education especially for the very poor.

An examination of the letters, shared on the website givingpledge.org, reveal that these donations will quench some very thirsty needs of the world.

The point of the Giving Pledge is more in the spirit of unconditional giving. The idea is that the very rich should actively (and necessarily) consider philanthropy; and that not just with a relatively small part of their wealth – but that only a small part is retained for the self and the heirs. By sharing letters from the billionaire who have taken the oath, the Pledge creates a positive ‘peer pressure’ for their proposition.

Criticism

Critics have taken issue with the Pledge, or the very idea of giving. Some have argued that one has every right over her/his wealth, and does not need to ‘feel guilty’ or morally obliged to share (Don Watkins and Yaron Brook of the Ayn Rand Center of Individual Rights).

Cynics wonder if this is about tax play or a publicity stunt.

The writer’s view is that it’s reasonable to assume that one (such as Warren Buffet) does not give away 99% of their hard-earned billions to look good ? especially if they are already considered good. Indeed the truth is that motives would be individual and complex ? ranging from joy, to guilt, to joining the good billionaires’ club, to realizing that this may be the way forward for doing business in a world that is ailing with need.

The Multiplier Effect and The Giving Ratio

Consider this interesting fact: each billion dollar given multiplies into billions of dollars worth of giving.

This is due to the Multiplier Effect, which suggests that each time a unit of money is spent, it creates an onward cycle of spending from one receiver to another. So if you give Rs. 100 to someone, they will keep some (it’s called their ‘propensity to save’) and spend some (‘propensity to consume’). Say they save 30% and spend Rs. 70. If the next person has the same saving/spending ratio, they will spend Rs 49, and save Rs. 21.

If the population’s average propensity to save is 20%, then Rs. 100 translates into a total income of Rs. 500 in the population. At 30%, it’s Rs. 333; at 40% saving or withholding rate, it’s Rs. 250. The higher the savings, the less money is passed on each time, and this also means fewer persons become part of the cycle of ‘income’. On the converse, the higher the giving ratio, the more number of people benefit, each beneficiary receiving a higher amount. In sum, where there is a giving habit, more people flourish, support one another, and are collectively better off.

Note that we have shifted the word from ‘consume’ to ‘giving’. Consuming, which in pure economics may simply have alluded to spending away without describing the quality of that spending. Giving is different: it is for charity, for philanthropy, or for fostering community by building something that is not for one’s immediate use. Giving is not about consumption of material by the giver (though these sometimes overlap in the case of social business ? such as when one would buy crafts from disabled or underprivileged people to help them).

In Pakistan, Pleading For the Pledge

The spirit of the Giving Pledge has traveled far and wide partly through the word getting out, partly because Buffet and the Gates are now reaching out to rich people in other parts of the world to encourage them to replicate the same idea. In China, long-time philanthropist Chen Guangbiao has convinced a 100 other rich Chinese to commit a majority of their wealth to charitable causes.

In Pakistan, construction giant Bahria Town’s CEO Malik Riaz Hussain has come forth with a pledge of US$2 billion for flood relief. In a manner typical of these very large commitments, he is dedicating his wealth to an area where he has passion and, in his case, expertise: constructing places to live.

It is in this sense that this newer form of giving is more than just parting with one’s wealth. It is about giving smartly, ensuring that specific, measurable objectives are achieved. Riaz has also issued an open appeal to the 100 richest Pakistanis. As he perceives, the rich of Pakistan could face a violent uprising against themselves and their assets if they do not choose to voluntarily step up and share with the poor of Pakistan.

To date, there is no public pledge in response. Ironically, it is only giving that can cure the economic ailment and restore mutual trust by building inter-dependency. Other alternatives may lead to closed ends.

I would go further to propose that the Propensity to Give become a separate, independent metric from the propensity to consume, and be recognized as such in positive economic literature. It recognizes that giving is an imperative, not just an occasional act of personal greatness.

Human societies have taken all kinds of shapes and structures. The kind of society that considers itself integrated, cohesive, and communal is more likely to have members that understand that giving is a part of the cycle of life; that the one who earns (money) is not the sole consumer (of money), but must share that earning with others such as family, neighbors, deserving poor, and the sick.

Is World-Wide Cluttering Impoverishing the Human Body?

Leading thinkers, such as the curator of TED conference Chris Anderson, are foretelling the forming of humanity into a super-organism. In short, this means that all humanity will organize like a single body ? an idea familiar to those who have engaged in a philosophical examination of the world.

This has several implications. For once, the accumulation of ‘stuff’ at one point means a depletion of necessities at another point. Interestingly, this does not benefit the accumulator, for the disease that arises in the deficient part affects the accumulating part. This process accelerates in an interconnected world (because the ‘damage’ can transmit more seamlessly in a better connected world).

Hoarding, saving above and beyond need, and cluttering are behavioral issues with real economic costs. They lead to mass depravity, crime, and a morose socioeconomic structure. This behavior occurs within nations, and even between nations ? because geography and the transmission of benefit or harm know no national boundary. Take the recent global viral scares, for instance. Originating in one place, the viruses, such as flu, hopped planes quickly to spread globally.

On the flip side, the opportunity in this inter-connected world is that if giving for doing good becomes a habit, then it can unleash massive positive change, from nation to nation.

Historically, some nations are more inclined to accumulate than others which has, arguably, led to depravity in other parts of the world. This is an imbalance with such deep consequences that not just governments but also businesses and humanitarians have now risen to redress the balance.

It is my understanding that once such massive, unconditional giving crosses national barriers, and it becomes not an occasional incident but a way of doing things, that humanity will be rapidly able to overcome its most abject crises that include super-floods, droughts, mass deaths, disease, and war and terrorism that arise in deprivation and poverty. We may even begin to find a way out of that most damning crisis of all: a human-unfriendly shift in the Earth’s climate.

    Author Information

    Ramla Akhtar is the founder of Pakistan Changemakers Hub, a connector of innovators and community leaders, and co-founder of The Oneness Breakfast, a peace initiative.

    No comments yet.

    Leave a Reply