The Age of Philanthropy: The Wheels of Wealth

By Wayne Visser

The Rockefeller story is a

good one to introduce the Age of Philanthropy, not only because of John D. Rockefeller’s iconic status as a tycoon and philanthropist, but also because his life and views on charity embody much of the philanthropic attitudes that still prevail today in business. At the heart

of the Age – and its chief agent, Charitable CSR – is the notion of giving back to society. Rather interestingly, this presupposes that you have taken something away in the first place. Charitable CSR embodies the principle of sharing the fruits of success, irrespective of the path taken to achieve that success. It is the idea of post-wealth generosity, of making lots of money first and then dedicating oneself to the task of how best to distribute those riches, by way of leaving a legacy.

Of course, the ideals of charity and philanthropy pre-date Rockefeller. Like greed, charity is probably as old as humanity itself. And right from the beginning, there is an element of enlightened self-interest. For example, in the Hindu religious text, the Rig Veda (1,500–900 BC), we are told: ‘If it is expected of every rich man to satisfy the poor implorer, let the rich person have a distant vision (for a rich man of today may not remain rich tomorrow). Remember that riches revolve from one man to another, as revolve the wheels of a chariot.’ Similarly, in the Upanishads, another of the Hindu scriptures, it states: ‘Like in a well, the more you fetch, the more water oozes. The more you give the more you get. This generosity is mandatory to every individual. Hurry to promise or pledge to help.’

Turning to the Far East, Confucius (551–479 BC) said: ‘When wealth is centralized, the people are dispersed. When wealth is distributed, the people are brought together.’ Hence, ‘a man of humanity is one who, in seeking to establish himself, finds a foothold for others and who, desiring attainment for himself, helps others to attain’. When asked, ‘Is there one word which may serve as a rule of practice for all one’s life?’ he replied, ‘Is not reciprocity such a word? What you do not want done to yourself, do not do to others.’

This so-called Golden Rule, which we find in all the world’s major religions, has come to represent the very essence of charity. In fact, the word charity derives from the Latin caritas, which means preciousness, dearness, or high price. In Christian theology, caritas became the standard Latin translation for the Greek word agape, meaning an unlimited loving kindness to all others. Hence, in St Paul’s Letter to the Corinthians, we read, in the King James Version of the Bible, of ‘faith, hope and charity’. Of course, it is not only giving that is important, but also the nature of giving. There is a Jewish proverb that says: ‘What you give for the cause of charity in health is gold; what you give in sickness is silver; what you give after death is lead.’

Islam also has a strong tradition of charity. Zakat, or alms-giving for the purposes of alleviating poverty and helping those less fortunate, is one of the Five Pillars of Islam. The practice is generally in the form of an annual tithe or tax of 2.5% of an individual’s wealth (although the percentage can vary by country and tradition), including money made through business, savings and income. The zak_at must also be above an agreed minimum (called nisab), which is said to be around $2,640 or the equivalent in any other currency. As important as the collection of zakat is in a community, its fair distribution among the needy is even more important. Another form of charitable action by Muslims is sadaqah, which literally means ‘righteousness’ and refers to the voluntary giving of alms or charity. These ancient traditions are considered to be a personal responsibility for all Muslims, practised out of love for humanity, to ease the economic hardship of others and eliminate inequality.

There are numerous other religious and cultural variations on the theme. Philanthropy in Latin America typically revolves around asistencialismo, which is charitable giving for poverty alleviation. In Eastern Europe, Bulgarian communities have, over the years, raised donations to build churches, schools and cultural centres called chitalishta. In India, Gandhi’s trusteeship concept has been adapted and applied to welfare acts. In Mexico, the Raramori, who still live in the mountains of the state of Chihuahua, use the expression korima, which means ‘to share’ resources in times of stress. In Southern Africa, ubuntu is the practice of humanism based on the collectivist notion that ‘I am a person through other people’. And so on, all around the world.

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This is an extract from Chapter 3 of The Age of Responsibility: CSR 2.0 and the New DNA of Business. For more information and ongoing updates, follow the The Age of Responsibility Blog

Copyright 2010 Wayne Visser

Deborah Leipziger on "The Age of Responsibility"

The Age of Responsibility will change the way you think about CSR, allowing you to discard myths and to work towards a systemic view of CSR. Wayne Visser holds up a mirror to the CSR community and to business and society itself, providing a brilliant lens with which to see our past and envision a new future. Visser projects a new type of CSR he terms "CSR 2.0". The Age of Responsibility is a call to arms: inspiring, engaging and visionary.

- Deborah Leipziger, author of The Corporate Responsibility Code Book and SA8000: The Definitive Guide to the New Social Standard

Video: Roberto Salazar on CSR and Stakeholder Dialogue in Ecuador

Roberto Salazar is CEO of Hexagon Consultores. In this interview with Dr Wayne Visser, Director of CSR International, he talks about the state of CSR and the role of stakeholder dialogue in Ecuador. The interview took place in the cloud forest reserve in Mindo at Septimo Paraiso on 2 October 2010.

Brad Googins on "The Age of Responsibility"

High marks for Wayne Visser who brings us a book that both challenges the conventional state of CSR in very fresh and bold fashion, and offers a provocative new vision of CSR 2.0.

What is most energizing about this book is that it provides a well documented historical and analytical framework on the progression of CSR over the past century. But in analyzing the current state of CSR, it recognizes that despite amazing achievements and progress, CSR has to leap frog into a new world, one that recognizes the new DNA of business, and one that calls for a CSR 2.0 that goes far beyond the models that currently exist.

The new Principles of CSR 2.0 that Visser puts at the heart of this book provide the business community and the CSR world a new path for incorporating the complexity of the social and environmental issues that confront today’s corporation, a CSR that can serve as a more transformative force for economic and social sustainability.

What a refreshing and creative read! There are few books that can cut to the chase and provide a thoughtful analysis of the current state of CSR while at the same time opening up a vision for tomorrow. This is a contribution to the CSR world that is long overdue and most welcome.

- Brad Googins, Associate Professor in Organisation Studies at the Carroll School of Management, and former Director of the Boston College Center for Corporate Citizenship

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The Age of Responsibility: CSR 2.0 and the New DNA of Business, by Wayne Visser is available from Amazon.co.uk, Amazon.com and other leading book retailers (ISBN-10: 0470688572, ISBN-13: 978-0470688571).

The False Promise of Ethical Consumerism: Why "Green" Products Obstruct CSR 2.0

Guest Blog by Katheryn Rivas

As Corporate Social Responsibility, with all its divergent meanings and applications, burgeons into a more common practice, companies have traditionally taken up the call of CSR in part from the growing pressure of investors and consumers who are now more "ethically aware". In other words, consumers, who have become more educated about the ways in which unrestrained global capitalism affects the environment, demand that the companies who produce their products do so in a more responsible manner. Of course, this is all well and good, as corporations must be responsive to their investors. Simply put, it's good business. After all, the customer is always right.

In the past decade we've seen an enormous proliferation of products that are touted as "green". While there is no one standard, regulated definition of green or eco-friendly, it's a label that is taken to mean a number of things. The product may be "fair trade certified", meaning it meets agreed-upon standards for ethically responsible labor practices, or it may have not been tested on animals, or maybe it contains no chemical additives, and so on.

Corporate Social Responsibility, as noted in Wayne Visser’s new book, The Age of Responsibility, must occur on a much more systemic level. This is how a real impact is made. Not by churning out "eco-friendly" products and marketing the heck out of them. Of course, CSR requires communication between each business and its respective investors and customers. And rendering transparent a business’s internal processes and how they effect our social and environmental worlds is a central component of CSR. But turning this communication (which has the potential to be substantive, co-creating dialogue between businesses and their customers) into a marketing gimmick essential cheapens and mocks the goals that drive our cause.

If a difference is really to be made, let’s stop treating investors and consumers as passive children. Let’s stop trying to convince them that they are really involving themselves in solutions to the world’s problems by consuming products, no matter how ethically the product is made. A business products should be marketed and purchased because they provide real value to the person who consumes them. No matter how well-intentioned, inserting this too facile message that "if you buy our product, you buy into the workings of a better, more just world" only serves to confuse the aims of CSR.

As Visser has noted, ultimately, the purpose of business is to serve society. Making a positive contribution to society is the essence of CSR 2.0--not just a marginal afterthought." If this is true, if the purpose of business is truly to serve society, then marketing social and environmental initiatives vis a vis products is a hypocrisy of the highest order. The Age of Marketing is over. It’s time for CSR to step up its game and move beyond green washing.

About the author

This guest contribution was submitted by Katheryn Rivas, who specializes in writing about online universities. Questions and comments can be sent to: katherynrivas87@gmail.com.

The Age of Greed

By Wayne Visser

In my view, the Age of Greed began when the first financial derivatives were traded on the Chicago Mercantile Exchange in 1972 and peaked when Lehman’s collapse in 2008. It was a time when ‘greed is good’ and ‘bigger is better’ were the dual-mottos that seemed to underpin the American Dream. The invisible hand of the market went unquestioned. Incentives – like Wall Street profits and traders’ bonuses – were perverse, leading not only to unbelievable wealth in the hands of a few speculators, but ultimately to global financial catastrophe.

The word ‘greed’ – from the old English grædig – has etymological roots that relate to ‘hunger’ and ‘eagerness’. This is similar to the older word, avarice, coming from Old French and Latin (avere), meaning ‘to crave or long for’. Those are characteristics that Larry had in spades. The Greek word for greed – philargyros, literally ‘money-loving’ – also has a familiar ring in the Lehman's story. The trouble is that capitalism in general, and the American Dream in particular, has tended to interpret this as a healthy trait. Traders at Lehman Brothers didn’t believe he was being unethical, or doing anything wrong. They were playing the game – extremely well – and being rewarded handsomely.

Perhaps we would do well to revive the German root of the word for greed (habsüchtig), which means ‘to have a sickness or disease’, for greed acts like a cancer in society, an essentially healthy cell in the body, which becomes selfish and ultimately destroys its host. The enabling environment is as important as the greedy cell itself. After all, as I argued in my book, Beyond Reasonable Greed, a certain measure of selfishness is natural, but it needs to be moderated by norms, rules and cultural taboos that keep its destructive tendencies in check.

It is worth reminding ourselves what the consequences of those destructive tendencies can mean in the lives of millions of ordinary people. The financial cost of cleaning up after the global financial crisis – which ultimately gets translated into a tax burden on the public – was estimated by the IMF in August 2009 at £7.1 trillion, enough to finance a £1,779 handout for every man, woman and child on the planet. The gargantuan sum includes capital injections pumped into banks in order to prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees over debt and liquidity support from central banks.

And then there is the human cost of unemployment. In January 2010, the International Labour Organisation released figures showing that global unemployment rate for 2009 was 6.6%, which translates into 212 million people, an increase of almost 34 million over the number of unemployed in 2007. In the US alone over 100,000 businesses filed for bankruptcy in 2008 and 2009. At the same time, the World Bank estimates that the financial crisis will left an additional 50 million people in extreme poverty in 2009 and some 64 million in 2010 relative to a no-crisis scenario, principally in sub-Saharan Africa and Eastern and South-Eastern Asia.

The Age of Greed was not something ‘out there’. It was not the preserve of a few rogue traders. We were all caught up in its web. It is in fact a multi-level phenomenon, incorporating executive greed, banking greed, financial market greed, corporate greed and ultimately the greed embedded in the capitalist system. These different facets of greed are each explored in turn in the sections to follow ...

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This is an extract from Chapter 2 of The Age of Responsibility: CSR 2.0 and the New DNA of Business

For more information and ongoing updates, follow the The Age of Responsibility Blog

Copyright 2010 Wayne Visser

CSR in South Africa (Guest Blog)

Guest Blog by Mervyn E. King

In the broadest sense, CSR refers to the role of business in society. It entails how business is governed and how it contributes to a just and sustainable society.

In South Africa, the concept and rationale of CSR are strongly informed by the King Code on Corporate Governance. Now in its third edition, the King Report was the first report on corporate governance that embraced the concepts of stakeholder engagement, ethics and environmental management and actively encouraged an inclusive approach to these issues.

Through the King Report, confidence is placed in the entrenchment of African values into corporate governance, of which ubuntu (African humanism) is the most evident. The notion of ubuntu resonates with the reciprocal nature of CSR in South Africa, making it a dominant culture driver of CSR.

Priority issues include:

• HIV and AIDS - South African is currently at the epicenter of the AIDS pandemic and the disease is affecting all aspects of South African society. Prevalence rates have increased from 0.7% among 15 – 49 year olds in 1990 to 18% at the end of 2007.
• Skills development and job creation - South Africa's unemployment rate is around 24% and unemployment remains the country’s greatest economic challenge. Job creation and skills are consequently a major national development objective to address poverty and develop the economy.
• Energy - Energy issues are high on the political agenda ever since the January 2008 energy crisis and subsequent blackouts, during which more than 20% of South Africa’s electricity-generating capacity was out of commission. Plans to address the power supply crisis are summarised in a policy document issued by the Department of Minerals and Energy.

Among the most interesting trends is that the latest version of the King Code (King III) strongly argues in favour of external assurance of sustainability reports becoming a mandatory requirement.

National legislation significantly informs the nature of CSR as the government has legislated several social issues in management and in the workplace since the democratic dispensation in 1994. Nonetheless, implementation and enforcement are challenging, even to the extent that compliance in some instances is treated as “an issue of business voluntarism”.

The following case studies illustrate different approaches to CSR in South Africa:

• Pick ‘n Pay - CSR practices are perceived as informal, unsystematic or even “whimsical”, as they are directed by the paternalistic “whim of the company chief executive or chair”.
• AngloGold Ashanti - CSR is based on systematic decision-making guided by institutional policies. Operationally, CSR is approached as a professional area that requires good management. The mining company, AngloGold Ashanti, epitomises this type of CSR which, although not new, is significantly influenced by mandatory guidelines such as the Mining Charter and other codes aimed at standardisation and accountability.
• BHP Billiton (SA) - This company aims at integrating CSR into all business strategies and processes. BHP Billiton (SA) is emerging as a leader and innovator in institutionalising CSR.

A review of the 17 accredited MBA programmes in SA revealed that CSR is minimally integrated into core course curricula (Hamann et al 2006).

Source

Based on extracts from the chapter on South African by Mervyn E. King (Chairman of the King Committee on Corporate Governance in South Africa and of the Global Reporting Initiative) and Derick de Jongh (Director of the Centre for Responsible Leadership, University of Pretoria), in The World Guide to CSR (Greenleaf, 2010).