THE BLOG

How Can Billionaires Be a Force for Good?

05/03/2015 10:55 GMT | Updated 05/05/2015 10:59 BST

The annual Forbes billionaires list contains a record 290 new entries this year. Hugely successful entrepreneurs like the founders of Uber and Snapchat rub shoulders with the newly ultra rich beneficiaries of the Chinese economic miracle.

The world's billionaires are worth nearly £4.6 trillion, according to Forbes, which is a spectacular social phenomenon by anybody's reckoning. But does it make the world a better - or worse - place?

Of course the super rich are living examples of extreme and growing inequality in the world, something that caused a deal of hand-wringing among the super rich themselves at Davos earlier this year. The idea that the richest 1% on the planet own a massive proportion of the wealth has underpinned campaigns from Oxfam to the Occupy movement.

For some, the rising number of billionaires are the totems of a system that is fundamentally flawed. In this context, asking those who have benefited most from inequality to use their influence to fix that system seems paradoxical. However, given that the super rich are here; the real question is what we - and they - can and should do about it.

The interesting thing is we've been here before. As my colleagues at CAF have written elsewhere throughout history, entrepreneurial people have made vast fortunes extraordinarily quickly, often on the back of technological change. And some of them have been driven towards philanthropy - to try and do something good with all that money and to recognise the debt they owe to the society that made their wealth creation possible.

So the Elizabethan merchant class threw up hugely wealthy individuals, just as industrialisation did during the Victorian era, and the oil and railroad booms did in early 20th century America. In the early 21st century, there is a new class of these people - app entrepreneurs whose software has gone global, generating vast wealth in a very short space of time.

Perhaps unsurprisingly these periods of intense wealth creation have produced golden ages of philanthropy. And there's still plenty to show for it. In London alone you can walk through Coram's Fields, or shop at Columbia Road flower market, borrow a book from a library paid for by Carnegie, or study at the Cass Business School - all fruits of wealthy individuals moved to make a difference.

Despite that, some would say that wealthy people can have relatively little impact on the big issues of the world - to do that you need policy changes, and movement by governments, not individuals. Others say the focus should be on creating wealth in a more sustainable, more ethical way.

But there is undoubtedly still a big role for philanthropy, even today. If people focus on a large, but achievable end, and use their unique power as philanthropists to take risks and drive innovation in the way we deal with social issues, they can have a profound impact on the world . Bill and Melinda Gates, for example, have had a demonstrable effect in the areas they have chosen to invest, such as preventing and treating malarial infection and education, and also in persuading others to follow suit by promoting the Giving Pledge.

Others are turning to social investment. We see our clients using their entrepreneurial instincts to back charitable start-ups or innovative projects; recycling money through social loans that allow a donation to be used many times.

London is a massive hub of wealth generation. We are finding that it is also a centre for philanthropic giving and social investment and is being promoted as a great city for both. There is already much interest among individuals, and City firms, in the power that wealth gives them to do something for good.

It would be wrong, of course, for philanthropy to simply be a way of salving people's consciences. But the positive side of the increasing number of billionaires in the world is that they do have the opportunity to do some quite amazing things. It's our job to encourage them to do just that.