It's the season of giving

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.

Generations ago, when there was no personal tax or social safety net, the rich gave to soup kitchens and charity got a bad name. People of my political persuasion believe "society" through government programmes should have the dominant responsibilities, after the individual's responsibility to themselves and family. However philanthropy is big business overseas, especially in the US where, for generations, the Carnegies, Hewlett Packards, and now Gates and Buffetts see it as natural to donate billions to good works.

Bill Gates now gives more to fight Aids in Africa than all 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, 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, Princeton and Duke have billion-dollar endowment funds gifted by grateful graduates. It's expected, a natural way of doing things.

The biggest per capita given in the US are working class, conservative Christians. The smallest per capita given 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. The Muslim world, where the state often plays little role, is amazingly generous on a personal level, charity being one of Islam's most basic instructions.

Development

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, low-tech, practical, inexpensive ideas. I met a wealthy car dealer who had donated half a million wheelchairs to Africa and India. 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 2,000 people. Cost? US $20,000.

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.

Microsoft is putting computers into 32,000 African schools. 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 in the absence of good public policies, these ideas can work or work alongside government's.

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 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 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 $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 $4 billion.

I still believe governments have a role, they need to provide the conditions for growth and a safety net, but private generosity and good business sense that goes with those who have created great wealth can provide a third way to alleviate poverty and give people opportunities.

Mike Moore is a former director-general of the World Trade Organisation and former prime minister of New Zealand.