A Global Philanthropic Revolution for Economic Well-Being?

More than a century separates the two comments above, yet they come from the same place.

Industrialist-philanthropist Andrew Carnegie believed that instead of “hoarding great sums” and then passing it on to relatives or bequeathing it to good causes upon their death, the wealthy should wisely invest in the economic well being of their communities while they are alive. Carnegie gave away more than $350 million in his lifetime because he believed the rich had a moral obligation to make the world a better place.

Acs, a professor and director of the Center for Entrepreneurship and Public Policy in the School of Public Policy at George Mason University, argues in his book that philanthropy is an underappreciated economic force that can be used to create “a self-sustaining process in which wealth creation is supported alongside social innovation and opportunity.”

According to a 2015 survey conducted by J.P. Morgan and the Global Impact Investing Network, the trend for social impact investing (also known as philanthrocapitalism and entrepreneurial philanthropy) is growing. Survey respondents currently manage $60 billion in impact investments worldwide. Yet those investments amount to less than one-half of one percent of all assets managed globally.

Two regulatory changes last year may open the door for investments that help grow the economy.

Last September the IRS removed tax penalties for foundations that make impact investments that produce below market rate returns, which experts say could have huge effects on asset allocations of the future.

In October the Department of Labor rescinded a rule that provided extra scrutiny to pension funds making “economically targeted investments.”

“Investing in the best interests of a retirement plan and in the growth of a community can go hand in hand,” said U.S. Secretary of Labor Thomas E. Perez when the change was announced.

The National Advisory Board on Impact Investing would like Congress to go even farther by providing tax incentives that lower corporate tax rates for qualified impact businesses, lower capital gains rates for investors supporting qualified impact businesses, allow impact investors to write off losses as a charitable tax deduction, or allow individuals to deduct contributions to U.S. impact initiatives.

There is a growing social movement that is intimately linked to philanthropy. Effective altruism is the process of looking at philanthropy with the eye of data and reason while asking, “Of all the possible ways to make a difference, how can I make the most difference?” Or, in simpler terms, how can we do good better?

In practice, effective altruism is controversial. It claims that some charities are better than others or that an organization is simply hacking at the branches of a problem rather than digging at its roots.

But when talking about employment struggles in a place like Door County, the formula for what makes a good charity isn’t as easy to follow.

“There are charitable rating services that some people swear by and others think are inherently flawed by the nature with which they look at things,” said Bret Bicoy, president and CEO of the Door County Community Foundation. “There are huge arguments as to what constitutes a good charity.”

So in a place like Door County, it boils down to personal opinion on what the true problem with our workforce is. If you can decide that the real issue is housing, education or small business support, then you can narrow down where your dollars will be best put to use.

“The first place you look when providing adequate labor is education,” said Bicoy. “Most school districts have charitable entities affiliated with them. There are ways for us to make contributions on a regular basis. There are scholarships that provide to the community. They have a tremendous amount of money for our young people to go to school and get a higher education. Those are the kinds of places that you make those investments.”

Northeast Wisconsin Technical College offers endowment scholarships in which most of the donated dollars are invested and the scholarship is drawn from the returns. This endowment fund essential runs in perpetuity, continually offering scholarship money for our young work force to get a higher education and contribute more to the community. A donor can specify the criteria under which the scholarship is given, such as the requirement for Door County residency or current employment at a Door County business.

For younger learners, all of Door County’s public schools have some form of fundraising for different programming. The Southern Door Community Foundation started in 2001 and provides financial support to programs and facilities at Southern Door schools. In the past, the group has donated tablets to classrooms, improved Wi-Fi access, and raised funds for bleachers at the athletic field.

But higher education is intimately tied with brain drain and the loss of the county’s young educated class. So, depending on your view of the problem, perhaps your dollars would be better spent in giving them an easier way to stay in the county.