An interesting speech - see half way down.
Trusteeship in a Time of Change A Tale of Two Gardens
In this session I want to discuss three key concepts:
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charities and stewardship
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charities and radical ideas
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charities and risk
I want to begin by taking you for a walk around two gardens. The first
is at Chatsworth House in Derbyshire. This is of course a complete
misnomer; a classic example of British understatement. Chatsworth is a huge
palace palming itself off as a mere house. In France, it would be a
chateau; it is worthy of a Bourbon or a Majesty. But what is really
remarkable is its gardens. The whole landscape around Chatsworth has been
carved out to create a unifying vision of the Duke of Devonshire’s idea of
what a perfect countryside environment should look like. It’s landscape as
backdrop. And it is worth remembering that this vastly expensive edifice
and grounds were built on the profits of that brutal, dangerous and
exploitative business – early coal mining.
There is an amazing water cascade and in the1840s James Paxton, who
later built Crystal Palace, designed an enormous greenhouse which at that
point was the largest green house in the world. It housed exotic plants
from all around the globe. It also was an expression of power and wealth.
It had huge underground heating systems, prodigious boilers, 30 miles of
pipes. Of course it was ruinously expensive to operate and fell into disuse
during the First World War. When taxes rose and cheap labour was in short
supply, it was then demolished.
Visiting Chatsworth is to be impressed by the scale of vision of the
rich aristocracy but one gets no sense of something created for public
benefit, at all. Chatsworth shouts “wealth”, and “look at me”. It
encapsulates aristocratic pride, power and status.
On the other hand take a walk around the University Botanical Gardens in
Cambridge. These are far smaller than Chatsworth. They only extend over 40
acres and have been going since 1846 - almost at exactly the same time as
James Paxton was creating the Chatsworth greenhouse. What strikes you when
you walk round these gardens is that they are dedicated to a scientific
approach to the world. A fantastic range of trees and plants support
research which goes on there all the time. Currently they are doing a lot
of work on sustainable horticultural; water and fertiliser use, weed
control etc. There is a greenhouse - on a modest scale- so it has not been
demolished. The University Botanical Gardens are a tribute to what
charities create – public benefit for the long term. Chatsworth is the
plaything of the rich, The University Botanical Gardens represent a
serious, combined effort of generations of brilliant people studying botany
for the long term good of humanity. The Botanical Gardens are not a display
of wealth or power; rather demonstrate the serious use of a wealth of
talents for common purpose. The men and women who have worked there over
eight generations, have lain down strata of intellectual property – for the
common good.
If you walk around many of the best cities in the world, I would argue
that what makes them great is the fact that many of their assets are held
for the long term in public ownership. This is particularly true of cities
like Oxford and Cambridge but it is equally true of London with
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its parks and museums. What all these represent is a concept of
stewardship; assets held for the public good in the long term. No one can
benefit from them personally. You can go down to the betting shop and put
your shirt on the 3.30 p.m. at Tadcaster with your own money but you cannot
do that with trust moneys – that is the key difference. Trusteeship brings
with it notions of stewardship and long term care that are at variance with
short term profit maximisation or the adulation of individual wealth that
has become such a feature of our economic system over the last 30 years.
What is also powerful is that because these buildings, gardens etc are held
in trust, it means that lots of people can use them. And this space allows
more academics and students to develop, engage in blue sky thinking, and
undertake experiments. We too often forget that civil society in its
broadest definition – including the universities – is the research arm of
society. So many of the great ideas and inventions that the private sector
cash in on were created in the public domain. Anthony Hilton in a recent
Evening Standard article mentioned Professor William Janeway’s book ‘Doing
Capitalism in the Innovation Economy”.
This highlights the little understood fact that most of the big American
technological breakthroughs have been a result of state and foundation
funded research, not private enterprise. It was blue sky funding which paid
for the research which developed the algorithms which underpin Google and
which funded research that first discovered the technologies which Steve
Jobs brilliantly assembled into the iPhone. Professor Janeway’s take on
this is that, “venture capital success only happens in sectors of research
where the state invested at sufficient scale in the translation from
scientific discovery to technological innovation.” In other words, the
state does all the risky hard work and only when it has got to the point to
be a pretty safe bet, does the venture capital industry get involved. To
this I would add that charities have also played a key role in funding this
type of deep research.
As a result Professor Janeway says four out of the five venture capital
investments are either in the information communication technology or
biomedical sectors because this is where the government’s money goes. There
has been very little venturing outside these areas.
The point here is that most government money goes to universities which are
charities whose structure encourage long term research not geared to a
particular product. It is that deep research which produces the
intellectual property that can create system changing breakthroughs.
Professor Janeway also argues that it is not necessarily so much the money
that creates innovation but pools of clever people and role models and
where do you find those? but in universities, research institutions, or
hubs.
The ideas and the thinking behind the books, and blogs, tweets,
publications that come from universities are but one example of the torrent
of ideas that civil society organisations create.
Another point:
People often criticise charities for not “going to scale”. However, I would
like to put a contrary view. One of the problems that has developed over
the last 30 years is the development of huge institutions that are “too big
too fail”, particularly the banks. A resilient system is a network system
with a large numbers of players rather than an oligopoly of a few dominant
players “too big to fail”. The stewardship mind set rarely breads the
desire to go to massive scale. I believe that is a strength, not a
weakness. In the modern world we will increasingly talk about networks of
organisations and individuals and seek to find ways of
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creating alliances between individuals and organisations to allow them to
flourish rather than create great new organisations. The unbundling of the
state that the Coalition Government is encouraging could at its best be
part of this – if genuine public service mutual are established that do not
get hoovered up by Capita, Serco or Assura. I believe the internet will
encourage the development of an ecology of smaller organisations – like
civil society. And on that note it is probably worth contrasting Wikimedia
– and Google. The Wikimedia Foundation is a charity. It turns over US $51m.
Yet is has an amazing presence throughout the world. Wiki has become a
prefix eg, Wikileaks; or Wikipedia. Wikimedia’s phenomenal growth has been
driven entirely by voluntary donations and voluntary effort. Google has the
preposterous slogan “you can make money without doing harm” and then
engages in sophisticated tax planning so that its marginal corporation tax
rate on UK profits is 3.5% rather than the 24% it should be. Wikimedia
Foundation demonstrates as well another aspect of stewardship – the ability
to make a lot with small resources.
The other vital aspect of civil society is at their best civil society
organisations are constantly challenging the status quo. And so often ideas
that have been radical in one generation become accepted and even
conservative in future generations. Take as one example the National Trust.
When Octavia Hill started campaigning to preserve parts of the British
countryside and buildings in the 1880s, this was a radical step. No one
today, I suspect, thinks the National Trust is a radical organisation but
130 years ago it was.
An even more striking example is of course the anti-slavery movement. When
Thomas Clarkson, William Wilberforce and a bunch of Evangelicals and
Quakers decided to challenge the slave trade in the 1770s, it is estimated
that one third of the world’s population was either in slavery or bonded
labour. A voluntary organisation had decided to take on the then equivalent
of Big Oil; Big Pharma and the Arms industry all rolled into one. Can you
imagine doing that today? But they did it. They did it through mass
mobilisation coupled with huge patience and determination.
That was a huge gamble. The point here more than anything else is that
charities are in the risk business. There is a paradox at the very heart of
charity. At the one hand the notions of trusteeship and stewardship for the
present and the future can imply a conservative, conservation mind set. On
the other hand the fact of the matter is that charities operate at the
cutting edge, the coalface of the society. Many charities go where most
organisations care or dare not to go - because there is no money there. You
do not make money out of dealing with disabled children; people with
autism, drug addicts, the needy, the dispossessed, the elderly, the poor –
all the potential beneficiaries of charity. Charities take risks. It is in
their DNA. Without risk, in a sense, charities are nothing. So the Trustee
mind set is a curious one. It has to combine a concept of preservation and
a concept of welcoming challenge. To put it another way charities need to
have a conservative approach to property but a radical approach to ideas.
I believe these two qualities are the essence of charity. I believe too
many people get hung up on the idea that the voluntary principle of
trusteeship is what marks charities out. The volunteer principle is noble
and useful but it is not so much at the heart of charity as the twin
concepts of stewardship and risk. Indeed in those universities which have
colleges, they are charities with paid trustees because the Dons sit on the
governing bodies and are paid.
Now, to shift perspective, I am sure historians will see 2008 as one of
those seminal years in history along with 1929, 1939, 1968 and 1989. We are
still living with the fall out of the end
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of the long boom and the collapse in faith in liberal free markets. The
world economy still has a massive hangover and no government has yet
started to develop a pick me up. As governments seek to tame deficits;
worry about long term trends in demography; reach the limits to growth
caused by environmental degradation, I feel that Harold McMillian’s phrase,
“you’ve never had it so good” will come back to haunt us – we may never
have it so good again. That we cannot continue as before is clear. We have
to find a way to run our economies that delivers genuine prosperity for all
but without endangering the planet. It may sound grandiose but I think the
twin pillars of charity which I have been describing – that is
stewardship and an acceptance of risk, are the essential mental and
emotional ingredients that society needs in order to be able to adapt and
change. I believe there is a lot that the system could learn from civil
society.
In particular I would like to offer you trustees a new opportunity. As you
may know one of the sponsors of this conference is Bates Wells &
Braithwaite and BWB is proud to be in partnership with NCVO, not just in
running this conference but in running a business called Trustees UnLimited
which finds Trustees and non-executives for social enterprises. One of the
constant refrains over the last 10/15 years has been that charities need to
learn from business and need to become more business like. However, I think
the time has come for businesses to become more like charities. In
particular, I am very keen on seeing boards of private and public companies
having at least one director who can represent civil society – a senior
non-executive director to represent a wider view than just the bottom line
and the short term. And where will we find the people to take on this role?
I would suggest in this room and in charities generally. So going back to
my horticultural thoughts, I would like to plant a seed in your minds. You
could become a director on a private company board to represent the concept
of stewardship and a willingness to change and adopt new ideas. The
voluntary sector has been a leader compared with business in terms of the
number of women who hold senior positions – something for which the sector
should be justly proud. I am sad to see that attempts by Lynne Berry and
others to get some leading lights onto the board of public companies have
thus far not succeeded. [It is essential, in my view, that Lynne Berry,
Barbara Stocking and others do not give up with this endeavour.] Their
potential involvement on the boards of leading companies could I am sure be
hugely valuable. There is a lot of evidence to show that boards make much
better decisions when they have a diversity of membership including of
genders rather than when they are a homogenous bunch all locked into group
think. Indeed the Economists’ prescription for de-risking financial markets
is very simple. Take the testosterone out of the room, in particular out of
the dealing floors. You do this by employing women and older men.
In conclusion I would like to take you to America. I was recently in San
Francisco at the Social Capital Markets Conference. It was inspiring. In
particular, the chutzpah showed by some of the new American foundations
such as the Bill and Melinda Gates Foundation, the Omidyar Foundation and
others in embracing the idea that trusteeship of capital brought with it
the right as well to take risks. This may sound paradoxical given what I
have been saying earlier about conservation. But what Bill and Melinda
Gates and others are doing is recognising that a small part of their
capital can be deployed on social investment – seeking to ensure that their
money creates not just a financial but also a social gain. And I was
particularly struck by comments from the Rockefeller Foundation. The
Rockefeller Foundation has been going since the 1880s built on the back of
the profits from Standard Oil. In the 1950s the Rockefeller Foundation was
one of the key funders of the research that resulted in the green
revolution in India which meant that crops yields doubled and more.
Rockefeller funded that research just like governments and other
foundations have always
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funded research. They gave the money away and funded the creation of
intellectual property for the public good. But of course there was also a
colossal private gain; the seed companies, and the fertiliser companies
cashed in on the intellectual property that had been funded by the likes of
Rockefeller. That’s normal, that’s what we expect. The state, foundations
and charities create intellectual property, put it into the public domain
and then companies cash in, be it Apple, Google or Monsanto to name but
three.
But it does not need to be like that. What was interesting listening to
Rockefeller was to realise that they have realised it does not need to be
like that. So this time round as they fund African agriculture they are
doing it differently. This time Rockefeller is giving grants to help
develop agriculture in certain areas but they are also investing, and
taking equity stakes in projects which they have grant funded to get to a
stage of investment readiness. Rockefeller is using new financial tools in
the box. They are not just giving out grants and allowing the private
sector to cash in, they are ensuring this time that they are using some of
the tools of capitalism to make sure that they can get some stake in any
potential upside or capital growth that their subsidy has helped create.
I think that is the way of the future, a more hybrid; nuanced approach. We
need to move away from a binary world where governments and charities are
on one side of the ring and business is on the other. Increasingly we are
going to see organisations that operate across a spectrum, comingling
charity and private sector money and values at the same time. This is going
to be confusing; it is not going to be easy but I believe that the civil
society sector with its historic and abiding concept of stewardship and its
proud record of nurturing and developing new ideas has got to be the seed
bed for the change we all recognise is needed. Civil society needs to
develop these new ideas – as it always has. Civil society needs to help
develop a more responsible capitalism. Civil society has always seen money
as a means to an end – not an end in itself. Civil society needs to spread
the word that money needs to be put back where it belongs as a means of
achieving economic exchange, as society’s servant and not its master. I’d
like to close with a passage from Franklin Roosevelt’s inaugural Address in
1933:
“The money changers have fled from their high seats in the temple of our
civilisation. We may now restore that temple to the ancient truth. The
measure of the restoration lies in the extent to which we apply social
values more noble than mere monetary profit.”
Stephen Lloyd
Bates Wells & Braithwaite London LLP 2-6 Cannon Street
London EC4M 6YH
9th November 2012
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Jon Davies
arnottdavies(a)gmail.com
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*Jon Davies - Chief Executive Wikimedia UK*. Mobile (0044) 7803 505 169
tweet @jonatreesdavies
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