Mike Moore: Always the time for giving

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I've changed my mind. I once was cynical about philanthropy and charity. I saw people avoiding tax all week, taking shortcuts and then, on Sunday, dropping a few coins in the plate to appease their Gods and conscience. I was wrong. Well, mainly wrong. New Zealand is not big on philanthropy. After generations of the welfare state and high taxes, we see the state as the provider or, as my hero Michael Joseph Savage, Labour's first Prime Minister, said in defence of the welfare state, as applied Christianity.

Generations ago, when there was no personal tax or social safety net, the rich gave to soup kitchens and charity got a bad name. At the time, we did have some enlightened businessmen such as Sir John Logan Campbell, who gave Auckland Cornwall Park, and Sir Arthur Myers, who gifted parks and introduced a measure of municipal socialism into planning and public works when he was Mayor of Auckland.

Philanthropy is big business overseas, especially in the United States where, for generations, the Carnegies, Hewlett-Packards and now Gates and Buffetts see it as natural to donate billions to good works. Gates now gives more to fight Aids in Africa than the UN agencies.

Billionaire capitalist George Soros gave tens of millions of dollars of equipment, faxes, photocopy machines and telephones during the Cold War to churches, unions and civil society in the Soviet European colonies, figuring if people could communicate they would organise and communist regimes could not withstand that scrutiny.

It helped.

The great universities of Harvard and Duke have billion-dollar endowment funds gifted by grateful graduates. It's expected, a natural way of doing things.

The biggest per capita givers in the US are working-class, conservative Christians.

The smallest per capita givers are liberal public servants who, I suspect, would rather sign petitions and pass resolutions calling for social justice than paying up. That research surprised me.

It's in the area of development in poor countries that I've seen on-the-ground experience of how NGOs and philanthropy can often elbow out corrupt politicians and bureaucrats to get things done. Wealthy philanthropists typically keep it simple, with low-tech, practical, inexpensive ideas.

One great idea was a school playground wheel, which we all remember from our youth. Here's the difference: The wheel is connected to a pump, the water goes up to a tank, advertising is sold on the tank to pay for maintenance. Kids playing on the metal wheel can pump up enough water for 2000 people. Cost? US$20,000 ($26,055).

Peter Watson, expat Kiwi and former head of the US government agency the Overseas Development Corporation (OPIC), put together a great project for HIV/Aids victims in South Africa. Here was the deal. You had to be HIV positive, OPIC covered your mortgage, but then you had to take treatment, the medicine provided by foundations. A great public-private partnership.

None of this can replace good governance, open economies, democracy, property rights or the rule of law to get wealth generated in poor countries. But it helps.

Corporations are waking up to this. There is virtue and profit in doing good; it enhances corporations' reputations. It feels good, it's fun and it motivates staff and customers. A study recently examined shareholder price based on reputation.

A reputation is a business's most precious asset, it's all the goodwill and trust built up over years. It's hard to get, easy to lose. What would happen to the share price value of several major corporations if they could switch places with their rivals?

If Colgate had the reputation of Proctor & Gamble, its stock would be worth 6.2 per cent more, about US$2 billion; if Coca-Cola had the reputation of rival Pepsi, its stock would be worth 3.3 per cent more, an increase of about US$4 billion.

New Zealand is at last catching up. Full marks to the Labour Government and United Future's Peter Dunne, the Minister of Revenue, for at last making some tax changes to facilitate this. But there's still a long and complicated road to follow. Tax and Inland Revenue rules need to be clear, simple and predictable.

The issue of taxing a foundation on money going in and when it goes out, and what is a charity, especially overseas, needs to be simplified. But at least they are doing what National refused to do. This will be a matter that New Zealanders need to look at now, especially estate and tax accountants.

* Mike Moore is a former Prime Minister and Director-General of the World Trade Organisation.

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