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Column: GPP - Australia
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Frankly, they don't give a damn
 

Global Poverty Project Director and 2011 Australian of the Year, Simon McKeon, was interviewed by The Age Newspaper on the current state of philanthropy amongst the ultra-wealthy of Australia. 

This piece was originally published on June 4, 2011 by Miriam Steffens of The Age Newspaper here.

 

When it comes to philanthropy, many seriously wealthy Australians have deep pockets and short arms.

IN THE midst of an unprecedented mining boom that's creating more millionaires than ever, rising standards of living and wealth, it is our dark little secret. Australian of the Year Simon McKeon calls it the elephant in the room.

The prominent investment banker and corporate philanthropist says it's time to shine a light on the big end of town, and what is one of the uncomfortable truths about rich Australia - the lack of generous giving.

And it begins with the fact that in a country where thousands of people earn seven-figure incomes and the richest 200 have built $200-million-plus fortunes each, the greatest philanthropist isn't Australian, but a reclusive Irish-American who doesn't even live here.

Chuck Feeney, 80, a billionaire who has made his money with airport duty-free shops and gives it away to support health and social projects around the globe, has spent more than $500 million on charitable causes in Australia, mainly in medical research.

And while in the US, tycoons such as Warren Buffett and Bill Gates are donating most of their riches to charity, turning themselves into the Rockefellers and Carnegies of our age, little is heard of comparable commitments by the wealthiest people on our shores. Fostering giving among the rich is a ''national challenge'', says McKeon, executive chairman of Macquarie Group's Melbourne office, who works part-time to pursue philanthropic interests such as the Global Poverty Project.

''I do feel that over the next few weeks it's time for me to elevate that issue,'' he says. ''It starts with declaring that there is an elephant in the room. We really are not overly generous.''

While the nation tops a recent World Giving Index of 153 countries in terms of people's willingness to give money, volunteer and help strangers, and proves generous in tragedies such as the Queensland floods and Victorian bushfires, there's a growing sense the rich are not pulling their weight.

Daniel Petre, a former Microsoft executive who worked alongside Gates and has focused on philanthropy after his return to Australia, says the average worker gives away more cash than the super wealthy, ''and that is just appalling''. ''Our wealthy in Australia are morally bankrupt,'' he says. ''Generally speaking, they don't see a moral obligation to give generously to the society in which they've built their wealth.'' This puts us in contrast with the US, where philanthropy has become a cause celebre among the rich and famous.

Taking guidance from steel industrialist Andrew Carnegie's 1889 The Gospel of Wealth, which called on the affluent to support ''the masses of their fellows … to dignify their own lives'', leading philanthropists there have been inspired by his suggestions of giving away their excess wealth during their lifetime, rather than leaving it to the kids, and using their business acumen to spend money effectively on the common good.

Last year the country's two richest men, Gates and Buffett, started their Giving Pledge, committing most of their wealth to charity and challenging other billionaires to do the same.

About 60 rich Americans have taken up the call, including media mogul Michael Bloomberg, corporate raider Carl Icahn and Facebook's Mark Zuckerberg. The founders have been travelling to India and China to recruit some of their wealthy. And there is - unconfirmed - talk that Gates may come to Australia this year.

He would find much potential. Thanks to the mining boom and a budding recovery in financial markets, the number of millionaires in Australia bounced back by almost a third to 174,000 in 2009, holding a combined wealth of $US519 billion. In fact, there are more millionaires now than before the global financial crisis, according to the World Wealth Report, published by CapGemini and Merrill Lynch.

Leading up to the crisis, ''people were amassing money far faster than what they were giving away'', says Wendy Scaife, a senior researcher at the Australian Centre of Philanthropy and Nonprofit Studies at Queensland University of Technology. The dial hasn't changed. While high-net-worth individuals globally gave away 3-11 per cent of their assets, in Australia it was less than 2 per cent, she says.

McKeon says he was gobsmacked by tax statistics showing that of about 8000 Australians earning more than $1 million a year, ''more than a third made no gift at all'' to charity, claiming not one $2 tax deduction.

Taxpayers claimed $2.1 billion in deductible gifts in 2008-09, down 10.8 per cent from the year before - the first drop in a decade, according to Australian Taxation Office data. While the number of people overall who claimed gifts rose slightly, the value of donations fell. And the most dramatic decline was among the biggest donors claiming deductions of more than $25,000.

''In Australia, some evidence suggests that giving at a higher level is something that may not be considered by wealthier Australians,'' Scaife and fellow researchers conclude in a February report on major giving in Australia. ''It is a practice that is not widely seen or expected of them.''

Some see it more bluntly, such as the multimillionaire electronics retailer turned activist Dick Smith. ''In Australia, it is utter greed and selfishness,'' he says. ''You can be very wealthy and be on the BRW Rich List and give nothing away.''

It's not like there aren't any impressive donors. Former transport magnate Greg Poche is widely seen as the greatest domestic philanthropist, having given $40 million to the Mater Hospital in 2005 to start the Melanoma Institute of Australia. He has also spent more than $20 million on indigenous health.

IT entrepreneur Steve Killelea set up the Charitable Foundation in 2000, which has become one of Australia's biggest private overseas aid providers. John Kinghorn, using funds from his $650 million windfall from RAMS Home Loans, has donated $25 million to build the Sydney-based Garvan Institute's and St Vincent Hospital's new cancer research centre.

And some of the nation's mining magnates have also opened their wallets. Clive Palmer in 2008 pledged $100 million to establish a foundation for medical research in Western Australia and support indigenous communities.

Fortescue Metals' Andrew Forrest has given more than $90 million in shares and options to his trust for underprivileged children (although there was media speculation that tax deductions and falling stock prices might have shaved his net costs to a fraction). He transferred $50 million more of shares to range of charities this week, and said he would step back to devote more time to philanthropy.

Yet talk to people in the sector, and they'll tell you these are notable exceptions, echoing again and again how there's just no ''culture of giving'' akin to the US.

While real estate and race horses may be the talk of Sydney's dinner soirees, in New York and Boston it's the charities one supports, former expats such as Daniel Petre have observed.

If you are wealthy in the US and do not give, you are seen as a social pariah - with peer pressure so high that even ''not very nice people'' give, he says.

And the ticket to the ball does not come cheap, with sizeable sums expected before earning the right to call yourself a philanthropist. In contrast, Australia's millionaires give away peanuts compared with their wealth.

''As a nation we have to understand that when a very wealthy person gives a million dollars away it sounds like a whole lot of money,'' McKeon says. ''But it actually really is a tiny proportion of their wealth.''

So are Australia's elite really just a club of Scrooge McDucks?

People in the sector see various reasons why a US-style ''culture of giving'' has yet to take off. For one, much of the wealth here has been accumulated over the past four decades, compared with the long-held philanthropic traditions of US dynasties such as the Rockefellers.

Australia has no estate duty, or death tax, which could be a powerful trigger for the wealthy to give money to select causes during their lifetime, rather than let the state take it off their heirs. At the same time, there has been a greater reliance on government here to provide welfare.

And some of our richest simply seem too busy expanding their empires. Take James Packer, who has yet to make any notable investments with the Packer Foundation he set up in 2006 after inheriting $6 billion from his late father, Kerry.

Yet a major factor in Australia's laggard status may be what philanthropy researcher Scaife calls the ''quiet code of giving'' - people making donations anonymously in fear of being lambasted for showing off or for seeking publicity.

''The tall-poppy syndrome is very much alive and well here and people tell us that if they were to talk about their giving publicly they in fact would be shunned,'' she says.

The tall-poppy syndrome is cited by many, including Deborah Seifert, head of the sector's peak body, Philanthropy Australia, who says the US has a ''culture of giving then talking about it'', whereas here ''people have been much quieter about their giving especially in the high-net-worth income band''.

But not everyone buys into the argument. ''I believe it's a myth, I believe they don't give,'' says Dick Smith. Petre argues such secret donations would have to be felt in tax statistics and charities' coffers. ''If you talk to any major charity and you say to them, are you getting in cheques in millions of dollars - no, they're not,'' he says. ''Sure there are pockets of people, but if it was happening at a great level you'd see the money flows.''

Valid or not, there's a growing sense that donating needs to become more public to inspire major giving. Some call for philanthropist ranking lists to shame the stingy. Others take a more gentle approach.

Corporate adviser and philanthropist David Gonski, as chancellor of the University of New South Wales, asks the university's benefactors to make their donations public.

''I have a strong, strong view that there are two parts to giving,'' he says. ''One is the money itself and the second thing is the example.

''If you're giving anonymously that's really a matter for the giver, but it lacks the second part which is to set the example.

''When Bill Gates started his foundation, that was very instructive to the world.''

And improvements have been made over the past years. ''There's substantial evidence that the wealthy in Australia are giving more than they ever have,'' said Andrew Thomas, head of Perpetual's Philanthropic Services, which oversees more than 450 charitable funds with $1.1 billion in holdings. Overall, tax-deductible giving in Australia has tripled over the past 10 years, he says.

The introduction of private ancillary funds (PAFs), earlier known as prescribed private funds, in 2001 has been a watershed, making it easier to set up tax-effective foundations. PAFs have to give away 5 per cent of their assets each year. At the peak of the sharemarket in 2007, about 160 new such funds were set up. Today, there are about 860 PAFs with a combined asset base of more than $2 billion.

Yet Peter Winneke, who helps families set up such structures as head of philanthropic services at the Myer Family Company, believes ''we have the wealth to have 8000''. He calls for a widespread giving campaign to promote donations and dispel the myths of our generous country.

''No one knows the stats,'' he says. ''Most don't even know the contributions made by this embarrassingly small sector in Australia.''

Lawyers, financial planners and tax advisers should be better educated about trust structures, and there should be giving targets such as donating 1.5 per cent of personal income, compared with the current national average of 0.4 per cent, Winneke reckons.

Despite the shortfalls, he is optimistic for the sector. With baby boomers reaching the end of their wealth-creating years and looking to build a legacy, coupled with the mining bonanza, there could be a new wave of giving in Australia. The Myer Family Company just opened an office in Perth, hoping to tap WA's new jet set.

Activists are also hopeful the establishment of the Australian Charities and Not-for-Profit Commission next year to better regulate the sector - revealed in last month's federal budget - could play a key role in establishing trust in the sector.

But the biggest change agent yet may come from peer pressure, as brought on by Gates's and Buffett's Giving Pledge.

On our shores, Chuck Feeney has clearly raised the bar. Having donated more than $500 million through his trust, The Atlantic Philanthropies, mainly in Queensland, he is now seeking to build ''giving while living'' networks across the country, calling on philanthropists to pool their funds for large projects.

Earlier this year, he pledged $10 million to the University of NSW's Kirby Institute for infection and immunity in society for new $80 million facilities - but only on condition that the federal and state governments and the university pay $60 million, and other wealthy people cough up the remaining $10 million.

The university has so far raised about two-thirds of that from wealthy donors.

Call it philanthropic public-private partnerships. Feeney hopes to create such networks of high-net-worth individuals in each state and territory by 2015.

''We need examples, people like Feeney,'' Gonski says.

Seeking to inspire a culture of giving on our shores, McKeon is keen to bring American philanthropists to Australia to network and be role models. ''Something is happening in the US that is simply not happening here and it's on a scale that we've never seen before,'' he says.

He plans to use his clout as Australian of the Year pursuing the ''elephant in the room'', meeting fellow philanthropists such as Dick Smith and seeking to elevate the issue in a speech at the National Press Club next week.

Ultimately, McKeon believes the rich need to realise it's not just about parting with their money, but enriching their lives even further.

''I'm saying, do you really want to die as someone who may have established an amazing business … but you had the opportunity to go even further again and without any great expectation to get anything back to give, to give, to give? Because that is a special feeling, which unfortunately not that many seriously wealthy Australians have ever experienced.''

 

Read more: http://www.theage.com.au/business/frankly-they-dont-give-a-damn-20110603-1fl7r.html#ixzz1ONM8Z9uJ
Posted by Global Poverty Project in What Can I Do? for column GPP - Australia on Jun 5th 2011, 15:15
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The Courage of a Kept Promise

 

It's easy to become cynical about politics because our leaders too often say one thing and do another. There is nothing more dispiriting in a democracy than a broken promise.  It feeds apathy and mistrust.

Politicians don't need to be told this.  They understand that every time they break a promise, they hurt themselves and make it harder to win the next election. So why do they do it?  

Well, a promise in politics is hard to keep because it means change to the way things are done.  There is always a powerful lobby against change, and to defend the status quo.  There is never a shortage of reasons against doing something.  

That's why we should take a break from cynicism to congratulate leaders when they actually stand true to their word.  We should recognize, as Ronald Reagan's speechwriter Peggy Noonan once wrote, that "part of courage is simple consistency".

To that extent, the Australian federal government deserves plaudits for simple consistency.  Despite many political and budgetary pressures, Treasurer Wayne Swan has announced an increase to overseas development and aid funding that keeps Australia on course to meet its commitments under the Millennium Development Goals.  By increasing the ODA budget by AUD$500 million in the coming 2011/12 financial year, Australia's ODA funding represents 0.35% of the gross national income, on target to reach 0.5 % by 2015.  

'0.5 by 2015' is a longstanding commitment supported by both major political parties, but the MDGs were set in place before the global financial crisis scrambled the world economy and brought about new fiscal pressures in Australia and elsewhere.  As we see in the US budget fight, there are plenty of politicians who regard aid and development spending as an irresistible target for cutting.  It is easy pickings for the simple reason that the people that directly benefit from ODA spending -- school kids in Indonesia, say, or pregnant women in Papua New Guinea -- don't get to vote, let alone donate to political campaigns.  No form of government spending is as vulnerable to harsh political realities as overseas development and aid.  

GPP has a productive dialogue with political leaders across the spectrum in Australia.  We constantly remind them that  Australia has the sixth highest income per person in the world and our level of government debt is by far the lowest of any major developed country. We point out that -- even after this announced increase -- countries like UK, much harder hit by the Global Financial Crisis, give more aid than Australia does.  We can still do a lot better.

But today, if only for a minute, we should give credit where it's due.  In the fight against extreme poverty, the Australian Government is proving itself to be a reliable partner.  

 
Posted by Hugh Evans - GPP CEO in Aid for column GPP - Australia on May 12th 2011, 01:00
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5 Reasons to keep our promise to the world's poor
 

Last night the Australian Government announced the federal budget, announcing it would direct 0.35% of Gross National Income (GNI) to foreign aid, remaining on track to fulfil the commitment of both major parties to allocate 0.5% of our national income to overseas aid by 2015.

We commend the Government for staying on track to meet this commitment. The decision is important for a number of reasons:

1. It's right that we support the world's poorest and most vulnerable.

We are lucky in Australia that we can afford to support those in need at home as well as provide life-saving aid to those overseas.

2. Australia made a promise - and it's only right that we keep it.

This budget continues to honour a promise that Australia made to the world’s poor when the Howard Government signed on in 2000 to support the achievement of the Millennium Development Goals.

3. Foreign aid makes up a very small amount of our federal budget, and it makes a big difference.

Although Australia’s aid budget will account for just 35 cents in every $100 dollars of Australia’s income in 2011-2012, it will have a big impact. According to the UN, over the past 20 years about 14,000 children’s lives a day have been saved with the help of well-targeted aid money. 

4. It's in our interest to invest in a secure and prosperous region.

We give aid to the poorest and most fragile countries in our region. By helping to lift people out of poverty, we are doing our part to create a world in which it is safer to travel and in which Australia is less likely to be threatened by or drawn into war.

Aid is also a good investment in regional stability and helps foster economic growth. Stable countries offer new markets for trade and business with Australia. For example, Australia earns an estimated $130 billion annually through exports to countries that receive aid.

5. As a wealthy country, Australia spends a small amount on aid.

Australia has the sixth highest income per person in the world and our level of government debt is by far the lowest of any major developed country. And yet, Australia is still a long way down the list of donor countries in terms of how much we give. A number of European countries are already giving 0.5% of GNI and will hit 0.7% by 2015. In the UK, despite being hit hard by the Global Financial Crisis, David Cameron’s Conservative-led Government has pledged to reach 0.7% by 2013.
Posted by Mick Sheldrick & Renee Carr - GPP Australia Campaigns in Aid for column GPP - Australia on May 10th 2011, 23:58
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The 101 on the 2011/2012 (aid) budget
 

Want to know what tonight’s budget announcements will mean for our commitment to the world’s 1.4 billion extreme poor? We take a quick look at the 2011/2012 budget.

In tonight’s budget, the Government has allocated 0.35% of GNI to Official Development Assistance (ODA) in 2011/2012. This is in line with the bipartisan commitment to reach 0.5% of GNI in ODA by 2015.

According to Foreign Minister Kevin Rudd the 2011/2012 foreign aid budget will:

  • Increase development assistance to Africa and the Middle East,
  • Support humanitarian assistance, stabilisation and peace building,
  • Continue to invest in Australia's partnership with Indonesia,
  • Invest in education projects in the Pacific,
  • Expand community engagement in the Australian aid program,
  • Invest in eliminating violence against women,
  • Improve water, sanitation and hygiene, particularly in Asia, and
  • Tackle avoidable blindness.

We commend the Government for staying on track to meet the bipartisan commitment to allocate 0.5% of GNI in foreign aid by 2015.

For more details about how the 2011/12 aid budget will be spent, see this media release from the Foreign Minister's Office: 2011/12 International Development Assistance Budget.
Posted by Mick Sheldrick & Renee Carr - GPP Australia Campaigns in Aid for column GPP - Australia on May 10th 2011, 08:58
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Incredible opportunities in 2011
 

As the Australia Country Director of the Global Poverty Project, I am fortunate to see first-hand the impact that our education and advocacy work is having around the country, and the way that our supporters are helping make inroads in key areas related to poverty alleviation.
 
As hundreds of Australians prepare to spend 5 days living below the line in support of our work from 16-20 May, I want to reflect on the impact we’ve collectively achieved this year, and the exciting opportunity we have to scale up our efforts against extreme poverty in the next 12 months.

1.  Launch of youth presentation and partnership
 
In March, we launched our tailored youth-focused presentation 1.4 Billion Reasons for Youth, developed in conjunction with Plan International Australia.  It was inspiring to see so many young people from across Victoria travelling to the event to find out more about how they can fight the injustice of extreme poverty.  I am excited about the work we are doing with Plan International Australia in schools and with youth around the country, to empower students to become anti-poverty leaders in their communities. 

2.  Launch of workplace presentation and partnership
 
Also in March, we launched our tailored workplace-focused presentation 1.4 Billion Reasons for Workplaces at events in Melbourne and Sydney.  This presentation has been developed in conjunction with our partner Opportunity International Australia to foster discussion of the crucial role business can play in the alleviation of extreme poverty. We are very excited to be working with Opportunity International Australia to engage workplaces in these issues, and it was particularly enjoyable to hear the 2011 Australian of the Year Simon McKeon share his insights into the key role business can play in tackling poverty at the Melbourne event. 
 
3. Looking forward to an exciting year
 
In the next 12 months I’m very excited that the Australian team will be working in three crucial areas to help fight some of the root causes of poverty. This month we’re working with the Oaktree Foundation to run an experiential campaign that is engaging thousands of Australians with the issue of global poverty.  It’s called Live Below the Line – a challenge offering each of us the opportunity to engage with extreme poverty and the fundamental lack of choice that keeps people trapped in the cycle of poverty.
 
Right now, thousands of people are preparing to take this challenge across the world - raising both awareness of global poverty issues, and funds to support crucial anti-poverty initiatives.  This year, funds raised for the Global Poverty Project during Live Below the Line will be directed to running the following crucial campaigns:
 
The End of Polio
 
This year, the world has an unprecedented opportunity to protect future generations from the crippling and debilitating disease of Polio. Thanks to a global push initiated by Australian Rotarians to combat the disease, we have seen a 99% reduction in cases of polio amongst children worldwide since 1979. And in the next three years, we can see this number reduced to zero.
 
This October Commonwealth Leaders will meet in Perth for a Commonwealth Heads of Government meeting- and to make sure Australian finishes what it started, we’ll be leading a 100 day campaign calling for an international commitment to eliminate this preventable disease in the next three years. (Find out more about our campaign to End Polio)
 
Ensuring a fair price for workers
 
As part of our education and community engagement work this year, we will raise awareness of the role purchasing decisions and consumer power can have in fighting extreme poverty. We’ll work with our supporters to increase support for ethical products which ensure workers and producers earn a fair wage, and have income to invest in local health and education projects.  (Find out more about our ethical purchasing campaign)
 
 Exposing and tackling corruption
 
In the next 12 months, we will also work to expose and tackle corruption in developing countries; by ensuring those complicit in corrupt practices are called to account for their actions, and by working to support regulations which can protect the poor against corruption. (Find out more about our campaign to expose and tackle corruption)
 
The efforts of hundreds of GPP supporters this month are helping us maximise our impact in these three important areas – and ensuring our neighbours in developing communities have better access to the opportunities they deserve.
 

On behalf of the GPP team, I thank you for your continued support.  I look forward to working with you over the next twelve months to realise the potential of these campaigns, and together, to continue making great strides toward a world free from extreme poverty.
Posted by Wei Soo - Australia Country Director in Polio for column GPP - Australia on May 6th 2011, 14:34
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