The Charles G. Koch Charitable Foundation has for some years supported programs in law and economics at Virginia’s George Mason University. Last year the foundation provided the support ($3 million over five years) needed to bring economist Vernon Smith and his entire experimental economics team to the school so they could continue their groundbreaking work using laboratory-based experiments to test economic theory and apply it to such policy problems as analyzing financial market bubbles, structuring electricity deregulation, and auctioning the electromagnetic spectrum. Not long after Smith and his team arrived, Sweden’s Nobel committee awarded him the prize for economics along with Dan Kahneman of Princeton.
Part of Smith’s time at the university is spent as a fellow of the school’s Mercatus Center, which was started in 1997 with a $10 million dollar grant from Koch.
Charitable giving, economist Milton Friedman famously argued in Capitalism and Freedom, should not be part of what the corporation does. A recent article in Harvard Business Review (December 2002) by Michael E. Porter and Mark R. Kramer, however, takes exception to this view. The authors contend that Friedman’s argument rests on two questionable assumptions. First, “that a corporation’s social spending comes at the expense of its economic results.” Second, that corporate philanthropy “provides no greater benefit than is provided by individual donors.” Properly planned corporate philanthropy, they argue, can improve a company’s competitive context, as well as produce social benefits that outdistance any obtained by individual giving.
The authors point to Cisco for an example of how one company’s philanthropy improved its competitive edge while simultaneously improving the lives of thousands of needy people. As the leading producer of network equipment and routers that tie computers to the Internet, Cisco saw its own growth limited in the 1990s by the shortage of network administrators. The company could supply the networks, but there weren’t enough trained people to keep them operating.
Building off an existing, quite conventional program of donating computers and other equipment to schools, some of Cisco’s engineers designed a curriculum to teach the school’s teachers how to maintain the systems they had received. The new training program proved extremely successful, and from it “Networking Academies” was born.
Today, over 9,000 academies across the nation and world—mostly in low-income areas—train people who previously had few opportunities to become system administrators. Not only is the company helping move people off welfare into high-paying careers, it’s supplying itself with a steady stream of well-trained professionals who expand its entire high-tech sector and help keep Cisco the leading company of its type in the world.
Where to Give?
One of the five pillars of Islam is zakat, or almsgiving. Traditionally, Muslims give 2.5 percent of their income away. But the Washington Post reports that close scrutiny of American-based Islamic charities accused of funneling money to al-Qaeda has many Muslims concerned about where to send their gifts.
The fear is two-fold, Mohammed Arozullah tells the Washington Post: “We don’t want our money to go to some bad organizations, and I don’t want my name in some kind of database.” According to the Post, Muslims are giving less to mosques and international groups, and more to groups that defend American-Muslim civil rights. “Some U.S. Muslims also said they avoided institutional charities altogether, either by handing money directly to needy people in their communities or by wiring funds to relatives to distribute overseas.”