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When Giving is Not Enough

07 March 2011

I recently listened to Carlos Slim, one of the world's richest men, talking about the inefficiency of charity at the 2010 Forbes Conference -Sydney, Australia.

I have to admit, it's the first time I had heard someone speak out against charity. After all, many of us would intuitively feel that it's better to make some difference, rather than none.

So I was initially shocked that a man who could give so much, would say not to give at all. His position was that trillions of dollars have already been spent on poverty, yet poverty persists.

Furthermore, giving money to charities is easy - its mindless, painless and apparently close to useless.

So instead, Slim was advising people to apply funds to the creation of new, sustainable businesses. Businesses are the entities that can really make a difference. Businesses create jobs, find innovative solutions and ultimately multiply wealth far more effectively than charity .

As an example, he noted that Microsoft has given more to the world than the millions of dollars donated to charity by Bill Gates.

By this point, I had to say I was over my shock and starting to see some logic. It sounded similar to the famous saying;- \"Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime\"

Carlos Slim went on to talk about the idea that charity is \"inefficient\" and creates a sort of \"dependency\" between the giver and the receiver. It is aimed at solving the immediate need, not the cause of the problem.

Philanthropy however, in his eyes was aimed more at facilitating self-sufficiency. It is about identifying the root of the problem, and investing private capital to finding a cure.

He says to do this right \"charities\" and philanthropic doners needs to think more strategically.

Social entrepreneurship is the answer.

A social entrepreneur is someone whose primary motive is to make a social return, in equal or greater measure, to the financial return of the business. Slim's premise is that social entrepreneurship is a far more effective model than charity. It ensures sustainability, innovation and importantly a higher rate of return (socially and financially) from the use of available funds.

This concept goes against the inspirational simplicity of another quote attributed to Nelson Henderson, a pioneer, who apparently said to his son \"The true meaning of life is to plant trees, under whose shade you do not expect to sit.\"

But as self-less and wonderful as Henderson's statement is, it's hard to argue with Slim's logic when you look at how 'commercial' movements like Fairtrade are making a difference.

Fairtrade ensures fair wages are paid to workers in communities which previously lacked sustainable employment. This money creates local wealth, ensures people can afford food, education, healthcare and housing. Yet there is no doubt Fairtrade delivers equal benefits to the businesses involved.

So I can sort of see what he means. I'm still not 100% sure how I can be more strategic in my giving and thus move from addressing the symptom to treating the cause.

But I'm happy to try, because I also liked Slim's parting comment that;- \"It is important to leave a better world to our children, but its even more important to give better children to the world.\"