Special 19: The Great Philanthropists - Andrew Carnegie: The Starting Point of Modern Philanthropy
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.
It's such an honor that you take a few minutes of your day to join me. Randall, on this edition of Around with Randall. I had an interesting convergence of two things come together. Number one was a question from a listener, Bob, who actually is out in Idaho asking about the Great Philanthropist series that I have taken a break from.
Number two was had a discussion with a donor for an organization that I work with that their client. And sometimes I do this to kind of help their estate planning thought process. And I do that on behalf of the client. And they got into the conversation, which was about how do we give away money. And I talked about what our subject is today, the convergence that I mentioned is the great point to series returns, where we try to learn a little bit about some of the people in our history that on today that have been forerunners at making the world a better place, the essence of philanthropy.
And today we look back into history a little bit, which was what I was talking about with that particular donor and his wife, Andrew Carnegie, and I had concentrated this is number 19 of the Great Philanthropist series that I stick in during the different episodes of the podcast. And ironically, I think I always, for the most part, done it about people living and yet maybe the most influential philanthropist in the course of history was Andrew Carnegie, and failure to bring him forth sooner is kind of an error on my part.
So we'll take a shorter version today of the Around With Randall podcast and take a deep dive and see if we can learn something from Andrew Carnegie. I'm sure it's a name you're familiar with. I think as we go further along in history with him, you know, not being here with us on earth in the last 100 plus years, that his importance loses its profound ness.
Andrew Carnegie was the steel magnet of the Industrial Revolution, born into poverty in Scotland and then immigrating to the United States. His life became professional. Life became that of understanding how to take steel and make it part of everything that is the growth of that particular time frame, not only in the United States, but around the world. Interestingly enough, he figured out this methodology, kind of the vertical integration of steel in leveraging what they called the Bessemer process.
So how they manufactured steel. So how he made it and then he would be able to sell it and then have the capture of these huge markets at the time, in the late 1800s and into the early 1900s. Steel was the driving force that was allowing our cities to grow. It's what allowed skyscrapers to be built. And so before that, a lot of our construction was built in brick, but that had a limitation of anywhere from 4 to 6 stories floors because of the stability factors in fact, most were only 2 or 3.
Steel allowed them to go to the sky. Carnegie manufactured or, you know, U.S. steel manufactured it. And then he had the vertical integration to sell it at a time when it was necessary for almost anything going on. And what came of it was he became amongst the robber baron class, as they were called, the ultra wealthy of the late 1800s and early 1900s.
He is mentioned along the lines of J.D. Rockefeller and J.P., J.P. Morgan Chase Pierpont, John Pierpont Morgan as the leading industrialists and eventually for two of the three philanthropists in the United States. Where did Carnegie's money come from to provide him the opportunity for philanthropy? In his early 60s, he sold, which will tell you how much money J.P. Morgan had.
He sold U.S. steel to J.P. Morgan for cash, which put nearly 400 and some million dollars in early 1900 monetary terms in his pocket. Today, that would be billions. And he was left with the conundrum what do I do now? And the real understanding of his philanthropy is from this point forward, it's the last quarter of his life, or the last 15% of his life, that he had all of this money and not sure what to do with it.
And what he ended up was the final outcome is he gave away more than $350 million, $1 billion in today's valuation, to various causes. He really purposefully thought about trying to give away 90% of his wealth before he died. And this was revolutionary in terms of thought. What did he give to? Well, there were four things that I think were the kind of the subsectors of the nonprofit world, which really wasn't even a nonprofit world by professional standards, but things he believed in.
Number one is he's most known for libraries. He built and gave money to be built more than 2500 libraries throughout the United States and around the world. Number two was educational and research. So he founded things like the Carnegie Institution for science. He Carnegie Mellon, Mellon University. Third is culture and arts. And for at least my family, particularly my wife, classically trained musician Carnegie Hall.
And if you've never been there, it's fabulous. Even though it was built long time ago, it is still an amazing place. The fourth was is he was very much into the idea of what I would call peace and global stability. Things like the Carnegie Endowment for International Peace. All of them, though, have a centralized pattern. And this is kind of where we begin to shift into what's the goal of each one of the 19?
What is it we can learn from this? There's a trend here.
Carnegie believed heavily in the idea of investment into opportunity or growth.
Not capital projects of institutions, not just about direct relief. It was a requirement that there was a commitment locally, individually, whatever, to offer people a chance for self-help.
That the ability for people to grow was a matter of great opportunity. But not everybody had that opportunity in the world that he lived in. When we think about the wealth disparity, disparity in the late 1800s, early 1900s, which drove us to the constitutional elements that brought in the IRS in 1913, taxation and the idea of Teddy Roosevelt very famously trying to break apart these monopolies, monopoly busting is that not everybody had that opportunity.
The world in which we live today, where if you really pay attention and you do the right things and you study, you probably have a chance. It's maybe not equal, but a chance to do something with your life. Those days that did not exist. Education was for the rich. Public education was around, but not prevalent or important enough as it is today, that you had to be more lucky than you did good in terms of getting out of different cycles of poverty or of familial generational despair.
And this connection in his philanthropy was all about how do we elevate humanity, but not just elevate by direct giving, but by giving people an opportunity to invest in themselves? And thus, when the libraries, it was the emphasis on gaining knowledge, self-improvement, on education and research, it was focused on long term intellectual infrastructure that people could invest in themselves and then also produce things that would benefit society.
That in the old art arts and culture, that it's enrichment for public good. One of the things that was original in Carnegie Hall was it was there's cheap tickets. This was available to the general public. And finally, in peace and global stability. It was about diplomacy and conflict reduction. All that's to say is, is that the core framework of all of these things manifested itself into the book he wrote, which is what I recommend to the donor that I started with top of the show, because their real question is they had accumulated wealth, was now how do we give it away?
Because they begin to realize, we've got to do something here. And they felt a kind of a, a pent up anxiety with we've been in the acquisition mode. How do we transition to the giving mode. And my recommendation was you need to read the gospel of wealth. And having read it multiple times myself. First thing I would do is recommend you to read it.
I think it'll give you a framework of how people who are accumulators think about nearing the post. Maybe last 30% of their life. What is the value of what I've done? And in the gospel of wealth, I think there's four key components, three key principles. Maybe the best way to put that is, is that wealth, according to Carnegie, is about trust that the wealthy are stewards, not owners, that they have an obligation to redistribute what they've accumulated into the community, to make the community a better place.
There's lots of arguments about how to do that. In today's world, we have Mackenzie Scott, who has obviously some process that we are not totally aware of because she doesn't do any media, interviews or talk about it much that she just drops trust based philanthropy. Here's $10 million. I love what you're doing. Go figure it out and do it better.
Two other donors who and philanthropists who are very specific in terms of the ROI, what I give to, what I don't give to, and I have certain restrictions. Neither one, I think is better than the other. But the philosophy that Carnegie first developed, I think, in writing and then in public view was, is that wealth is an obligation to redistribute to the places that's going to make the community a better place.
And the number two, you should do it while you're living that. Yes. State giving is really important. We look at the great work that, has been done with the Giving Pledge. We did an episode, on this, actually was a blog post where there's some concern about it actually succeeding at the level at if they people thought it would.
But state giving is important. But what Carnegie advocated was that an active distribution of one lifetime is a good thing, and that the goal should actually be to avoid a large state or delayed philanthropy. The third thing is, is what we were discussing earlier, maybe the kind of one of the tenants of the connection between all the things he really believed in and gave to at the highest levels is strategic over charitable relief, meaning that direct aid can cause dependency and that it's about self-help.
He prefer to funding philanthropic funding opportunity that enables self advancement.
Strategy. Long term engagement. The fourth is the focus on this opportunity. Libraries. Education. Knowledge. Access. These are tools that people can use to improve their own condition.
I think one of my favorite quotes from them that kind of exemplifies all of this is when he said, the man who dies rich dies disgraced. We have a responsibility to look in our world and find ways to make it better. It's kind of the first time that it had been articulated from a purely philanthropic perspective. In writing The Gospel of Wealth, and it's become, I think, an under discussed.
But the core of how we look at philanthropy today.
So why did he give? It was about a moral philosophy that there is inequities, inequality, particularly in his time in this industrial era, and that a few people have a personal narrative that can rise from poverty. But in his experience, he started with nothing. But not everybody has that opportunity, and that people want to find ways to help others.
And that for really wealthy people, there's a tension. And that's what this individual, this donor in this couple I was dealing with. That's what they were really harnessing inside of themselves. Trying to figure out, to try to equalize is that they built well through aggressive manners, legal, effective. But all of a sudden there's conditions in the world that they're looking at going, well, not everybody has what we have, and we're taking care of our kids and won't even take care of our grandkids.
But what about all those other people? I have found, and I mentioned this in, conversation recently, that there isn't a day at least I try awfully hard to not forget, to realize, to appreciate, and to embrace that there are circumstances in my life of success which is obviously not that of Andrew Carnegie, but nevertheless important to me, that are total outcomes of where I was born and to whom I was born to.
I had nothing to do with it. I was born into a family, and particularly parents that drove a lot of lessons and a lot of behaviors, characteristics that I hold very true today, that I believe in, that I embrace. And I'm to I was born into a country where there's a lot of opportunity.
Tension of what it is I have and what is it that I deserve is what he was talking about, and that people with resources have this tension protect a little bit later in life. He also had this ethical conviction interpretation of the value of the essence of philanthropy, love of mankind, love of humankind, that it was a responsibility.
But it also, in his case, was reputational correction that he had acquired so much. He lived in large mansions. He lived, you know, a very wonderful life in terms of what he could access and what he could do, who he could have supported. Well, philanthropy could be a mechanism for him to change the way people think about him, not only in the moment but over time.
And it's interesting. Things like Carnegie Hall are things that we tie to him. But how many times you've been in your life you've ever heard of us? Steel and Carnegie? And that's the point. He's an early adopter, maybe amongst the first and certainly the first to probably write about it, about this idea of wealth distribution as a social responsibility.
All this is to say is, is that you can find these kinds of people in our community, and in many ways they may be amongst the most fervent or present, but we don't tie them to Carnegie's name that these are people who are thinking about long term and impactful and ability to lift up lives, not just direct charity aid.
And this is why we have bigger things like endowment, like we endow positions and scholarships because we're looking for multiple generational effect of the dollars that we have, that it's about strategic investment capital or otherwise. It's just not the building like the libraries, it's the books. It's the opportunity to make sure people have access to them. Maybe the way to think about this, to really understand Andrew Carnegie, is asking or thinking about it in this manner.
How much of today's philanthropy is truly enabling opportunity versus responding to need? I'm not against need. In fact, I'm for it. There are people who need to eat. There are people who don't have shelter, but the true essence of philanthropy isn't just about that immediate moment, but the issues that surround it. And that's what Carnegie was talking about.
How do we get people an opportunity to get out of those circumstances to better themselves? And that's what you could go back into your community and ask others. If we had a way of not just feeding people, but helping people not need food insecurity, food kitchens, food pantries, things of that nature. Would you be willing to support us?
That's a much different question than we feed this many people. Andrew Carnegie was the one who drove these thoughts about not only is there an inequity of wealth distribution, but the wealth distribution that's unequal needs to be redistributed, not just for direct care, but for to make the society less dependent on these direct reliefs and elevate everybody and their opportunities.
That's worthy of strategy. That's the alignment of where our nonprofits fill gaps in those holes. So it's all we talk about for a prize. I don't want to do things. Government is not that efficient. How do we elevate not just the direct mean, but the people's lives that we serve? That's the essence of Andrew Carnegie. And there are people like that in our community.
And if we talked about that opportunity, and however you serve your particular mission, health care, education, you know, basic social service, the more likely we would be to raise large dollars. If you haven't read The Gospel of Wealth, I highly recommend it. You'll see these patterns, and I think it's important to realize that if we really leverage the knowledge and the journey that Andrew Carnegie went through to get to these final conclusions, we probably would elevate philanthropy in in major ways, both collectively in our community, but individually for our nonprofits.
That's what we're trying to figure out. And today, the great philanthropists, Andrew Carnegie, maybe we can think about it just a little bit differently from one of the originals who set the standards that we think about in philanthropy. In the nonprofit world today. We'll jump back into a normal edition in the next edition of Around with Randall. Thanks for taking some time.
And don't forget, make it a great day.