Rupert Cornwell: This golden age of philanthropy

However remarkable in scale, Buffett's gesture is merely the American way
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The Independent Online

"The man who dies leaving behind him millions of available wealth," wrote Andrew Carnegie, "will pass away unwept, unhonoured and unsung." Carnegie was a Scottish-born steel tycoon who before he died in 1919 gave away the then colossal sum of $360m, equivalent to almost $8bn (£4.4bn) today.

However even Carnegie's generosity has been eclipsed by the announcement by the man whose knack for spotting a good investment has made him the second richest individual in the world. Like Carnegie, Warren Buffett concluded he shouldn't take it with him when he goes. He therefore decided to make over roughly two-thirds of his fortune to the charitable foundation administered by the one man on earth richer than he.

Until now the assets of the Bill and Melinda Gates Foundation totalled $30bn. That figure will now double. Bill Gates, the Microsoft chairman who last week announced that from 2008 he would move to a part-time role with his company to devote his energies to philanthropy, will preside with his wife over an entity that has the potential to be the world's single most powerful force for improving health and education.

Its assets of $60bn are six times larger than the total annual budget of the United Nations, and will rival the gross national product of Algeria. By way of comparison, the annual budget of Unesco, the educational, cultural and scientific arm of the United Nations, is just $610m. But however remarkable in scale, Buffett's gesture is merely the American way.

For social, historical and economic reasons, charity plays a role in the US unmatched anywhere else. According to an authoritative study, Americans last year made total charitable contributions of $260bn (£143bn). That represents 2.5 per cent of the entire US gross domestic product. And so it has long been.

Secular Europe, with its traditions of social democracy and higher taxation, looks to what Americans disdainfully refer to as Big Government to redistribute wealth and look to the basic needs of the less fortunate. The US, with its religious convictions, its ingrained suspicion of government intervention and its help-thy-neighbour ethos, could hardly be more different.

Live there only a short while, and you realise the importance of community, represented by interest groups devoted to furthering or protecting a specific cause. Schools, churches, organisations of every hue, advertise themselves as "communities". Should you join them, whether as congregation member, class parent or even newly arrived resident on your street, you are expected to contribute.

The tax system is geared to this tradition of grass roots philanthropy. Make a gift and you will receive a receipt enabling you to claim a tax deduction. The Internal Revenue Service takes it for granted that every taxpayer will be making his or her contributions to charities. The whole process is far simpler than it is in Britain and other European countries.

Even so, Warren Buffett's gift suggests we may be entering another golden age of philanthropy. Carnegie lived in an age of rampant, unregulated capitalism. The accumulation of wealth was Darwinian, he believed, a mechanism of natural selection operated by the forces of competition. But great fortunes carried great responsibilities: the rich had both a moral and a practical obligation to use their wealth to improve the general lot.

But self-interest applied as well; better to keep government at bay by giving voluntarily than invite radical reform, even social upheaval that might destroy the very system that made you wealthy in the first place. For Carnegie, it was a matter of providing "ladders upon which the aspiring can rise". In some respects the America of the early 21st century resembles that of the late 19th - with a global dimension added for good measure. At home, the divide between rich and poor is increasing, and social mobility decreasing, not least because of tax cuts mainly benefiting the already wealthy.

Earlier this month Congress only narrowly rejected a proposal to abolish the estate tax (death duties in the UK), and thus conclusively bury Carnegie's views on inherited wealth.

Today however the tensions stretch far beyond America's borders. Implicit in the philanthropy of Gates and Buffett is the awareness that a globally connected world in which opportunity is so unfairly divided between the rich and the poor is a cauldron waiting to explode. It is a world too, they believe, whose ills are much more likely to be tackled if private-sector initiative works alongside well-meaning, but inevitably cumbersome international institutions. And you know instinctively that it is a formula of which Andrew Carnegie would have mightily approved.

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