Philanthropy, politics and the power of giving

Giving away your money is much harder than you think. Just ask Owen Glenn. So what is our problem with philanthropy?

Let’s get this straight: Sir Owen Glenn, former owner of the $500m-plus US-based logistics business OTS, wants to be the biggest donor in New Zealand by the end of 2017. No strings attached.  Already this ex-pat Kiwi has given millions away.

There’s the more than $2 million for a report into child abuse, with $80 million more earmarked for child poverty and abuse.

There's $7.5 million to the Auckland University Business School for the Owen G. Glenn building; $500,000 to the university's Leigh Marine Research Laboratory; $1 million for Christchurch earthquake relief; $2.5 million for a national aquatic centre being built on Auckland’s North Shore (which will also bear his name); and significant sums to New Zealand Hockey. 

Overseas, there are bicycles and spectacles for Asia, money and equipment for wells, leper colonies, schools, mental health institutions, hospitals, kindergartens.

They love him in places like India, Burmaor China, Glenn says. People over there come up to him to say thanks. 

And New Zealand? Mostly he just attracts abuse.

His donations to build the business school building were overshadowed by a public spat with Winston Peters and Helen Clark. Clark snubbed him at the ribbon-cutting in 2008.

In 2011, Glenn wanted to donate $80m-$100m to child abuse and New Zealand youth.

This time, coverage was dominated by debate about whether the money was, or was not, politically motivated. Had (or had he not) stated that the donation was contingent on National and Act winning the general election, people wondered publicly.

Meanwhile, his decision in 2013 to spend $2m on an independent inquiry into New Zealand child abuse – after the Government announced it wasn’t interested in a royal commission – didn’t bring Glenn any thanks either. Instead media unearthed a physical abuse complaint made against him in by 2002 by a young, female hotel employee in Hawaii. (Glenn entered a plea of no contest at the time and the charge was dismissed in 2004 after a probationary period.) 

“With anything I ever did, [the media] tried to find an ulterior motive. They dragged up information even when they knew it was wrong, and then they printed it anyway.”

To the pugnacious Glenn, there’s a simple explanation: jealousy.

Glenn took out the 20th slot on the 2014 NBR Rich List, with an estimated net worth of $450m. How else can you explain it, he asks.

“I haven’t done anything to hurt anyone. How have I hurt New Zealand? They end up saying I only do it to bolster my ego. I don’t need anyone to bolster my ego. It’s way up there already. I’m just trying to help. And if I have my name on it, so be it.”

The politics of envy may well exist, but does it really explain Glenn’s spectacular unpopularity?

If we were scientists we could test the idea with a control group. Alas, Glenn has no twin. However, as it happens, we can get perilously close.

Sir Ray Avery (pictured) is a wealthy philanthropist and knight of the realm who made his fortune in the pharmaceutical business. Avery makes no bones about his womanising past and love of fast cars, though, like Glenn, nowadays he devotes his time to good causes such as the Fred Hollows Foundation and inventing medical devices for the developing world.

So far, so similar. Except that, for his efforts, Avery was named Kiwibank New Zealander of the Year, received a World Class New Zealander award from KEA, and is much in evidence on the speaker circuit.

Avery and Glenn are both ‘rich pricks’ by average Kiwi standards. So why the difference in  their public treatment? 

Avery himself hints at the answer. He memorably described Glenn as a “loveable rogue” who is “flash” about his donations. Whereas others slip a million or two quietly into an anonymous pot, Glenn likes his name on the front of the building. 

And Glenn can be as difficult as a French kiss at a family reunion. He’s frequently gruff and highly opinionated. He’s famous for falling out with people; Winston Peters over political donations in 2008; Eric Watson over the Warriors partnership last year.

Even his exit from the Warriors earlier this year showed a unique ability to turn PR gold into muck: his offer to donate his half share in the NRL club to a charitable trust for the development of rugby league at “grass roots” level received only ambivalent coverage at best.

But perhaps the most criminal for prissy New Zealand, Glenn likes the trappings that go with money– the super yacht with bikini-clad girls, the rich boys’ holidays, the luxury house in Monaco, a tax haven.

It appears that even in extreme wealth we require a Colin Meads-style modesty.

That’s a problem, says Beth Breeze of the UK’s Centre for Philanthropy. She told the Guardian newspaper, it’s great to raise a few dollars for a local charity, “but as soon as you add a few zeroes, people start thinking something’s up.  What’s in it for them?”  

Back in New Zealand, Kate Frykberg, chair of Philanthropy NZ and head of the Todd Foundation, believes modesty, and fear of blowing your own trumpet, or appearing in the spotlight, means many Kiwis don’t give as much money away as they could

“Money is an embarrassing thing to talk about,” Frykberg says. “It’s like a taboo. And people are scared of the tall poppy syndrome.”

Frykberg is a good position to know because going public on her own philanthropy was scary. Frykberg agreed to her first TV appearance only if she was anonymous and had her face blacked out.

“And then one of my friends rang and said ‘Kate, was that you on TV?’ and I thought ‘OK, I might as well just be open about this.’” 

Frykberg believes ‘out and proud’ is critical to encouraging more New Zealanders to give more.

“When people talk about it, that normalizes it. And then you create a culture of giving, of sharing. It becomes something we just do.”

One of her plans when she leaves the Todd Foundation in April is to set up as consultant specialising in “building generosity”.

Not that New Zealanders are mean; actually we stack up quite well in the generosity stakes. The 2013 World Giving Index ranked New Zealanders fourth in the world, while another survey, by economic research company Berl, estimated Kiwi giving equates to 1.35% of GDP – above Australia, Canada and the UK.

Only the US gives more, at 2% of GDP – and some argue the US figures are skewed by the fact that nearly a third is to religious organisations.

In New Zealand, generous individuals (rich and not so) contribute the bulk (almost 70%)of the total amount collected (see graph below, right). Businesses give a miserly 6%. 

Much to shout about

Tech entrepreneur Scott Gilmour knows all too well that talking about his philanthropy may be the best way of ensuring his project moves from pilot study to full-blown capital injection stage.

His successful “I Have a Dream” educational support programme, franchised from a US project, started with 53 Year 4 students at a decile 1 Auckland primary school and was funded from Gilmour’s own fortune.

Now he is looking to raise $20 million from other philanthropists and foundations to expand the project to 1500 kids in the high-needs northern suburbs of Whangarei.

Gilmour made his money from 12 years in increasingly senior positions with chipmaker Intel in the US and NZ – with the stock options that entails.

The “the icing on the cake” came with selling his own software company, ABC Technologies, which he co-founded, built up to 200-odd staff, and sold for $30 million to business analytics giant SAS.

For Gilmour and his wife, the boat-beamer-bach Kiwi dream didn’t appeal; their four children, after a good education, were ready
to forge their own path. 

And like other philanthropists Gilmour didn’t want to be known after his death purely as a Successful Rich Guy. “[US philanthropist] Andrew Carnegie, in his essay. The gospel of wealth said: ‘The man who dies rich, dies disgraced.’ That seems about right.”

I Have a Dream takes kids from disadvantaged backgrounds and gives them the sort of opportunities available to more privileged kids – computers, mentors, extra tuition, help with homework, guidance when times are tough, camping and tramping trips.

A critical difference with some other programmes, Gilmour says, is his foundation supports the children long term – for up to 15 years. 

When Gilmour started in 2003, statistics predicted that only 11% of the programme’s Pasifika, Maori and refugee children would get NCEA level 3, only 30% would do any form of tertiary study, and three would be in jail by the time they were 21.

Twelve years later – and with the project having invested $4000 per child per year, plus hundreds of hours of volunteer mentoring and tutoring time, the results are impressive. 

Of the 38 students still in New Zealand (15 moved to Australia over the period) 44% got NCEA level 3, and 80% progressed to tertiary study. And (can’t win them all) only one is in trouble with the law.

Gilmour is still actively involved in tech companies as an angel investor, and has been on the board of several companies, including Jade, Right Hemisphere and Nextspace.

He’s a big fan of entrepreneurship, but admits many of his happiest moments are when he’s working with I Have a Dream.

“It’s the best thing I could be doing with my time. And really it’s a selfish thing – I get more out of it than I put into it. To take these kids on a school camp, or to see them walk on stage in front of their family when they graduate from year 13 – it’s just fantastic.”

Gilmour, who spent more than a decade in the US, reckons generosity is almost de rigueur for successful people in the US. Giving money is almost a competitive symbol in a country where being rich is applauded, not castigated.

As Breeze says: “In America, every Harvard graduate thinks: ‘Who’s going to be the first in
my year to have a building named after him?’”

Try telling that to Owen Glenn.

Scott Gilmour also experienced first hand the perils of being up front about giving your money away. Just after giving his first press interview about I Have a Dream, he turned up to play his weekly “old farts football game”.

“One guy comes up to me and says: ‘That was a nice bit of self-aggrandisement Scott.’ He just thought I was doing it for my own glory.”

Owen Glenn says negative publicity hasn’t put him off giving money to New Zealand causes.

Press reports that he was so disillusioned with New Zealand following the reaction to the child abuse inquiry that he was concentrating all his giving overseas aren’t correct he says, although the amount of money destined for New Zealand has certainly decreased. 

And he knows of other people who have been put off by his experience.

“They want to keep their head down, not to
be dragged through the dirt. It’s not that they don’t want to help, but they don’t want to be brought into the headlights.” 

Out and proud in Oz

The trouble with being modest about your giving, ANZ Bank chair and long-time arts philanthropist David Gonski told a roomful of high net wealth Kiwis recently, is that it doesn’t set an example to everyone else. 

Gonski, known as one of Australia’s best-connected business people, says his philanthropy moved to a whole new level after seeing in the paper that a merchant banker he’d worked with in the past was giving “a vast sum of money” to a museum of contemporary art.

“I remember the morning I read it. I’d done a lot of talking about philanthropy, but I had never contemplated giving that sort of money.

“That was a seminal moment for me; a very expensive moment; that’s when I started giving much more money to our family’s charitable foundation.”

Since that epiphany Gonski, described by colleagues as a “humble” and “unpretentious” man, has given hundreds of thousands of dollars to support Australian arts.

Gonski believes the climate is changing in Australia.

“There is an excitement and people are starting to talk about philanthropy. Bill Gates paid a visit. It was only 10 hours, but he spoke to many, many people. From that, now almost once a week there is an announcement, with a lot of fanfare of $10m-$15m by some prominent person, and that’s making a difference.” 

Are attitudes changing here? Philanthropy NZ chief executive Liz Gibbs Gibbs isn’t certain.

“Some philanthropists in the younger generation are doing a huge amount, but are still not comfortable in that public space.
I think it’s more important that we are contributing, rather than forcing individuals into the limelight.”

The best-known international example of out and proud philanthropy is the Living Pledge – the group of American billionaires who agree to give at least 50% of their wealth to charity.

Founded by Bill and Melinda Gates and Warren Buffett in 2010, it had signed up 128 individuals and couples earlier this year.

Successful businessman, philanthropist and former Auckland City mayor Dick Hubbard says the possibility of embarrassing or hateful comments, or (another worry for philanthropists) the risk of being inundated with requests for funds from every Tom, Dick and Harry, is no excuse for being reticent.

“If you have a public profile – and most people who have done well in business have a profile – you get a multiplier effect. If you give $10 and you encourage 10 other people to give $10, you get $110... You have to realise you aren’t going public for ego, or because you are seeking publicity. You are going public for helpful reasons.”

The main one being a pressing need for more money. One argument against philanthropy, particularly from the left of the political spectrum, is that it takes over functions that should be the role of government. Private giving is letting government off the hook. 

But inequality rises, environmental degradation worsens and we all live longer, taxpayers can’t do it by themselves. Anyway, says Frykberg, one of the roles of philanthropy is risk-taking – trying out solutions that might not work.

“That’s hard for government to do.”

A growing sector

Philanthropy is definitely on the increase, Frykberg says. The 2011 Giving New Zealand survey showed Kiwi donations rose 81% between 2006 ($1.4bn) and 2011 ($2.67bn).

The biggest categories of increase were personal donations (up a whopping 236% to $1.4bn) and high net worth giving through family or individual trusts (doubled to $271m). 

Frykberg expects the next Giving New Zealand survey, due for release later this year, to show another increase, despite the fact the Global Financial Crisis put the brakes on for a time. (People had less spare cash, and many of the trusts providing income for donations took a hit in the GFC).

“We are a generous nation, but there is room for growth and I am expecting that to happen.”

High net wealth individuals will be a strong part of that, says Chris Liddell. 

Liddell is the CEO of Carter Holt Harvey, who left New Zealand for the top financial job at Microsoft, and there got to know the world’s two most influential philanthropists, Microsoft’s Bill Gates and investment guru Warren Buffett.

One of Liddell’s several positions these days is chair of the Next Foundation, tasked with spending $100m of the fortune Neal and Annette Plowman made selling their successful industrial cleaning and hygiene company to the Americans.

Liddell says New Zealand is at an interesting point. 

“We are the first generation where a significant number of people have made a significant amount of wealth in their lifetime. 

“An emerging theme in New Zealand is people who have made a small or large fortune getting into their 50s, 60s, 70s and thinking about what to do with it.”

Handing big sums to your children isn’t always seen a good idea, Liddell says. 

In that he takes his lead from Buffett, who famously said very rich people “should leave their children enough money that they would feel they could do anything, but not so much that they could do nothing.” 

Meanwhile Breeze quips that Paris Hilton has done more than almost anyone else to encourage the cause of philanthropy. It’s worth giving your money away to ensure your kids don’t end up like her.

US research suggests people who make their own money are three times more likely to give it away than people who inherited it; part of the reason for the surge in giving in New Zealand.

Kate Frykberg isn’t in Bill Gates’ league, by any means. But she and husband Dave Moskovitz were both in IT and were left comfortably off when The Web Ltd, the web development company they founded in 1995, was bought by KPMG Consulting in 2000.

The money left them mortgage-free, with enough for their retirement and then some left over. 

Like Buffett, the couple decided they wouldn’t be doing their three children any favours by leaving them a lot of money (“for their own self-worth they need to make their own way in the world”), and with advice from Warehouse founder Stephen Tindall and others, they set up a charitable trust, which gives out around $50,000 a year to charities helping children
and their families.

Frykberg and Moskovitz decided to adopt the “giving while living” model, spending down their capital over their lifetime. There’s more money each year that way and the pair get to be more hands on.

Bill (pictured below) and Melinda Gates’ foundation is designed to run out of money within 50 years of the death of its last founder.

And here’s the rub. As Charles Dickens’ miserable miser Scrooge discovered, making other people’s lives better is actually fun. 

Sir Noel Robinson, who came to big ticket item philanthropy after he sold his manufacturing company Robinson Industries, says the projects he’s been involved in have brought him more enjoyment than his time in business.

And being “out and proud” has allowed him to bring other people on board to give time and money.

“I get a bigger buzz by doing things that could add value for people that haven’t been so fortunate as me. And hopefully I’ve inspired others.”

As ANZ’s general manager of private banking Nigel Scott says, it’s time to start celebrating wealthy people trying to do something positive.

“It will take some brave people, but by and large, business people aren’t afraid.”