Sally Alspaugh, CAP®

Chartered Advisor in Philanthropy®

building family legacy

Book Review by Sally Alspaugh

book coverThe Greater Good: How Philanthropy Drives the American Economy and Can Save Capitalism

Authored by: Claire Gaudiani

I once heard serial entrepreneur Paul Brooks describe our American culture by referencing a three-legged stool, and ever since have been intrigued by that concept.

The stool’s three legs are the 1) private sector, 2) public sector and the 3) not-for-profit sector. In contrast, European societies are a 2-legged stool propped up by private and public sectors only. Their universities, museums and hospitals are usually government run.

Not since hearing Brooks’ description have I come across someone who could elucidate this concept as well as Claire Gaudiani. She has, in a scholarly way, brought together the interdependence of capitalism and philanthropy from a historical perspective but also with a futuristic message.

America’s liberty and its hope for the future have created the fertile soil for citizen generosity to flourish. Like capitalism, philanthropy has produced prosperity. We wouldn’t be the country we are today with out either of them. Claire sees generosity serving as an economic engine to complement capitalism.

“Our right to happiness is exemplified in our entrepreneurial spirit. We are generous because we are rich; we are rich because we are generous.”

Because Americans are free to be philanthropically entrepreneurial, our human intellectual and physical capital has benefited. Citizen generosity creates and sustains new ideas, new inventions, and new initiatives long before government even catches on. Philanthropy provides a dynamic engine beyond markets and government. From the Rockefellers and Carnegies to everyday citizens, American both volunteers and wealthy patrons work for the greater good. A great example is the March of Dimes.

Claire posits that philanthropy acts as a governor on the potential negative effects of runaway capitalism.

“Citizen generosity works as a mitigator to soften capitalism’s more destructive features; cutthroat competition and wealth concentration. Generosity expands toward those who have not been favored in the game of life and seeing their potential as an asset to them and to the rest of us, it offers them a chance to play and win.”

I emphasize the word potential because it is mainly in America that we value potential. It is in our collective hope for the future that we encourage benefactors to fund someone else’s child’s education, in the name of… the greater good.

Generosity helps to distribute wealth rather than concentrate wealth and opportunities in society. Contrast that with…

“when public goods such as museums and hospitals are the result only of government spending, not of philanthropic investments by fellow citizens, people learn to wait for something good to happen rather than helping to make it happen. If ideas are doomed to falter unless they attract government funding or create a profit, many people will stop trying to innovate.”

Gaudiani spends time on the impact of generosity on investing in people’s physical well being; their health, homes, nutrition, security, as well as their minds; their education, scholarship, training and mentoring. She reminds us that as early as 1643, Harvard was offering its first scholarships. Post civil war, citizen generosity was funding women’s Exchanges for soldiers’ widows. Settlement Houses were founded at the start of the twentieth century to improve the lives of immigrants. Studies of urban conditions, funded by individuals, helped to start the whole social work movement and profession. The WPA was modeled after these aforementioned movements to help relieve the economic hardship of the great depression.

Donations of physical capital have also played a major role in American philanthropy. Carnegie’s libraries, Julius Rosenwald’s (founder of Sears, Roebuck) YMCAs for African Americans throughout the south, and Chicago’s museums are a few examples of donated physical properties. As a matter of fact, Chicago’s five major league teams combined do not bring as much revenue to the city as do the nine philanthropically supported museums.

Written in 2004, before the economic downturn that peaked four years later, Gaudiani’s mission is to teach readers about philanthropy’s historic role in our American culture as well as to warn that “we have stopped nurturing and building our giving habits at just the wrong time.” She explains how citizen generosity can help energize our economy.

“It’s somewhat difficult to argue that life in the United States is really good at the same time that I’m arguing for improving it, but that’s exactly the position in which I find myself. I want to say that the U.S. system works pretty well, but that the system includes a very important mechanism –philanthropy-- that we must acknowledge as crucial and that we must continue to encourage. And we must do it right away. The earliest signs of significant increases in the size of the gap between haves and have-nots appear in the 2000 census data. The new data is alarming. The United States may be on the verge of losing the fragile balance that citizen generosity has maintained with the forces of capitalism. This balance has enabled America to make dramatic economic progress in an atmosphere of relative social order and little class conflict. Taking the past for granted may spell real doom for our future. Citizen generosity matters. Without it, cynicism and class conflict could pervade and change the very parts of America’s spirit that make us successful. Social trends are shifting the ground from under us in ways that could be devastating. The handwriting is already on the wall. Without determination we could find that the spirit of generosity that has made us so great has been forgotten.”Pages 27-28.

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