Being rich brings with it obligations

Media Releases, Opinion article written on the 25 May 2007

‘The rich are only tolerable so long as their gains can be held to bear some relation to roughly what they have contributed to society’, so Robert J. Samuleson of The Washington Post recently paraphrased English economist John Maynard Keynes.
We are witnessing unprecedented corporate profits in many Australian industries. Highly paid chief executives are commanding breathtaking salaries and bonuses. Recent debate about such high corporate salaries in leading Australian companies was sparked in part by their extraordinary value, but also partly by questioning to what extent such wealthy individuals were contributing some of their wealth to the underprivileged, both in Australia and around the world.
In the United States such similar fat corporate pay packets are to some extent balanced by prominent and ever-growing philanthropic giving. Supporting charitable causes and forming philanthropic foundations is far more developed and entrenched in the psyche of US executives. One needs just to look at the Bill & Melinda Gates foundation, through which the Microsoft founder channels billions of dollars to poverty reduction, as well as the recent unprecedented philanthropic ‘investment’ from finance and investment guru Warren Buffett.
There are promising signs in Australia, with several prominent and wealthy Australians leading the way in giving to existing charities or forming their own charitable foundations. And they are not only businessmen, with many wealthy and prominent Australian sports men and women forming their foundations as well. And one could say they are the ones leading the way, perhaps because they better understand the responsibilities that fame and prominence carry.
In addition, big business and charities are also coming together to help tackle poverty, such as through the recent Business for Poverty Alliance, which aims to inspire the Australian business and government to make a greater contribution to poverty relief. However, such trends are still in infancy in Australia and our high wealth philanthropy lags way behind that in the United States.
In contrast, ‘ordinary’ Australians are exceptionally generous. A recent survey conducted by the Queensland University of Technology’s Centre of Philanthropy and Nonprofit Studies analysed statistics on tax-deductible donations made by Australians in their individual income tax returns 2004-2005. It stated that Australians claimed $1.47 billion in charitable deductions, up from $1.16 billion for the previous year – an increase of $307 million, or 26.4%.
The survey also found that the charitable giving rate of average Australians over the past five years has risen exponentially above both the national economic rate and the inflation rate. Yes, that ‘urban myth’ is in fact the truth – Australians are indeed a nation of givers.
Another report, Giving Australia, published in October 2005 by the department of Family and Community Services, found that 87% of Australians made a donation, with an average donation to non-governmental development organisations of $234. The report also found that 90.5% of Australians earning $52,000+ gave an average amount of $769, or close to 1.5% of their annual income. For a corporate high-flier on a $10 million pay packet, this would represent, at a minimum, an equivalent of donating $150,000 every year.
But it is not all about money, it also has to do with the attitudes and beliefs of corporate high flyers. Over the past 15 years there has been significant progress made by organisations, including Oxfam, in pressing business to embrace the concept of Corporate Social Responsibility. Most progressive businesses agree that CSR is in their long term best interest as well, and are working hard to ensure they lift their standards and practice and become more accountable.
The same should apply to today’s corporate leaders and biggest earners. Their own individual social responsibility should be consistent with how they both earn and spend their wealth, and what difference they make to the lives of people less fortunate than them. After all, we are living in a world where 40% of the population lives on about US$2 per day. To quote another great historical figure, and an Englishman as well, Winston Churchill, ‘What is the use of living, if it be not to strive for noble causes and to make this muddled world a better place for those who will live in it after we are gone?’
James Ensor
Director of Public Policy & Outreach
Oxfam Australia

Published in the Herald Sun on May 25 2007.