The Necessity for Philanthropic Involvement in Economic Development

By Claire Gerdes

Jeff Raikes, previous President of Microsoft’s Business Division and CEO of the Bill and Melinda Gates foundation as well co-founder of the Raikes foundation, described philanthropic work as a critical balance of the heart and the mind.

“One of the beauties of philanthropy is that a lot of it comes from the heart—caring about improving the world or contributing to people having a better life. At the same time, you want to make sure that passion—that heart—is directed in ways that will really make a difference. So that sense of rigor—that use of the mind to drive what we do—is very important.” (Jeff Raikes)

Raikes has carried his extensive experience in the business world over to his work with the Gates foundation as well as with his own philanthropy, the Raikes foundation. In an interview, Raikes discussed what he believes are the main roles or purposes for philanthropies and why they are necessary to economic development in the world. One of the most important points that Raikes made was that philanthropies have the ability and the desire to take risks that other people will not or cannot take. For example, tax payers would not be in favor of their tax dollars going towards projects that would be considered high-risk because their money could end up being “wasted” if the project were to fail. Instead of the government carrying out such projects, philanthropies can provide the “risk capital” that is needed to fund them. Once there is significant evidence that the projects can efficiently perform the task they are meant to, the government may be able to provide the funds needed to continue the project at a reduced cost in order to reach a greater number of people. This shows the sheer necessity of philanthropic work; it is the bridge between ideas with life changing potential to actually changing lives. Both Bill Gates and Jeff Raikes have spoken to the fact that they know not every project will be successful, but every project teaches a lesson. This in itself demonstrates why governments cannot do what philanthropies are doing because many of the large-scale philanthropic projects require “risk capital”.

As mentioned earlier, Raikes described heart and passion as the two main components of philanthropic work, neither of those are money.

“We believe firmly that great philanthropy is not about writing a check. It’s about giving your time, your energy, and your talents to create the kind of world you want to live in.” (Jeff Raikes)

While the business side of a philanthropy and the money management is of obvious importance, ultimately, the main focus of philanthropic work needs to be creating “the kind of world that you want to live in”, as Raikes stated. The involvement of philanthropies in economic development is necessary because it is work that people have chosen to do because they have a passion for it. This passion combined with the available “risk capital” are what make philanthropic work so valuable to global development.