Philanthropy, more than just generosity

When done well, highly organised giving transcends being big-spirited because it can shape outcomes.

GENEROSITY is putting a few dollars in a homeless person’s begging bowl. Philanthropy is being part of the solution to that person’s homelessness.

Regrettably, experience shows that philanthropy relies not just on wealth, but long-held fortunes that are often multi-generational.

Western Australia’s volatile economy has yet to create long-term wealth out of the hands of a few fortunate families.

Even in the past decade of boom-time conditions, most of those on the rich list were being seen for the first time. It was new wealth, and much of it was on paper.

Nevertheless, some strong-willed people saw that this state needed a philanthropic culture and sought to kick-start it; seeking to challenge the accepted wisdom that such newcomers to wealth were too preoccupied with earning and spending their riches to give it away.

In part, they also had to break the tall poppy syndrome, which worked against public displays of generosity or philanthropy. Conspicuous giving was, to many, simply rich people big-noting themselves.

Thankfully, some notable people bucked this system. Malcolm and Tonya McCusker, Brett and Annie Fogarty, Andrew and Nicola Forrest have all shown that wealth can be used for good causes in a very public way.

Having overcome that cultural barrier, to an extent, the next challenge will be an economic one.

The rapid slowdown in the resources sector has deflated real and paper wealth, reducing the ability of those who were previously willing to give.

In part it is about confidence as much as it is actual wealth. Philanthropy is a long-term process that requires strategy and management. It is harder to plan to give when there is uncertainty about the funds to provide for that. It is also harder to focus on giving to others when you are fighting for the survival of your own business.

The same can be said for corporate philanthropy, even though it has always been harder edged in terms of having a purpose. The so-called social licence in fields such mining is reflective of this type of giving.

In tougher times, social licence to expand is diminished and the social licence created by continuing to employ people is enhanced.

For those who rely on philanthropy, these changes are significant. It highlights why sustained commitments – provided with medium and long term goals in mind – are the most significant form of philanthropy.

That creates real legacies that result in outcomes well beyond the boom that spawned the initial gift.

Iron ore inquiry

THE state’s big miners should have nothing to fear from a proposed parliamentary inquiry into the iron ore industry.

While Fortescue Metals Group founder Andrew Forrest ought to be congratulated for his political influence in successfully agitating for this action, the result is likely to vindicate his opponents.

In the meantime, Mr Forrest has cleverly caused angst on the demand side of the iron ore business, perhaps helping lift prices enough to save his own operation.

If that is the only major result, we ought to breathe a sigh of relief.

The danger of regulation seems distant but there may well be repercussions among major clients such as China.

Decades ago, short-sighted union action undermined the security of supply for Japanese iron ore buyers, prompting them to invest in developing the Brazilian industry. It is not impossible to consider the possibility of the Chinese developing alternative supplies if Australia sought to control prices.

Market manipulation can lead to all sorts of unexpected outcomes.

No example could be better than Australia’s wool industry. Like iron ore, Australia dominated the market and, collectively, the producers believed they could control prices. When the market suggested lower prices were in order, our industry withheld supply.

In doing so they destroyed their industry, forever.

Textile manufacturers and clothing designers sought alternatives and the cotton and chemical sectors obliged. Once factories were retooled, at great expense, there was no turning back. The value of wool found a new level – much, much lower than it was before.

We have great wealth in the ground that will last for a very long time. Do we really want to encourage the use of alternatives?