Gaia Capitalist

The New York Times profiled Gaia Capitalism in "What's Wrong With Profit" by Stephanie Strom: "THIS year, as never before, the line between philanthropy and business is blurring. A new generation of philanthropists has stepped forward, for the most part young billionaires who have reaped the benefits of capitalism and believe that it can be applied in the service of charity. They are “philanthropreneurs,” driven to do good and have their profit, too.

Among them are eBay’s founder, Pierre Omidyar, who wants to use investment capital as well as donations to expand the microloan industry, and Stephen M. Case, the co-founder of America Online, who is investing $250 million in companies that help consumers gain control of their health care. Young companies are involved, too: when Google announced its philanthropic effort this year, it unveiled a venture-capital fund rather than a foundation.

The approach of these philanthropreneurs reflects the culture of the business that brought them their wealth: information technology, with its ethos that everyone should have access to information. By their way of thinking, the marketplace can have the same level-the-playing-field impact, and supply the world’s poor with basic needs like food, sanitation and shelter.

“More and more people are asking who else is going to finance doing good if government isn’t,” said Alan Abramson, director of the nonprofit sector and philanthropy program at the Aspen Institute, a public policy think tank in Washington. “These guys have firsthand knowledge of the market’s power, and they’re asking themselves why they can’t make money and tackle some of the problems once addressed primarily by government at the same time.”

It sounds simple, but the idea of such hybrid philanthropy is upsetting long-held conventions. These new philanthropists view the current foundation model, built on the fortunes of earlier industrial titans like Carnegie and Rockefeller, as hidebound and often ineffective. They have an urge to change the world, and argue that in some cases only the speed of capitalism is fast enough.

Sir Richard Branson, who is 56, has long mixed it up, building his Virgin Group business empire to encompass airlines, cellphones, record stores, credit cards and pet insurance. In that context, his announcement that he would invest $3 billion in the development of alternative fuels through his new investment company, Virgin Fuels, was par for the course, right down to the hubbub that surrounded it.

“We have two separate arms, Virgin Unite, the charitable foundation, which is pure giving, and then this hybrid thing, which is our venture capital-charitable unit,” Sir Richard said. “It may be giving, it may not be giving, depending on how things turn out.”

The promised investment in alternative energy is an example of what that venture-capital unit is doing, deploying the entrepreneurial flair and skills that have made Sir Richard a billionaire to tackle major global issues like poverty and climate change. “Although it’s very risky capital, hopefully it won’t be wasted,” he said.

He considers Virgin Nigeria, the airline he started in 2004 to serve West Africa, another example of such a for-benefit business because, he said, an airline is crucial to wealth creation. “We may fall flat on our face,” he said, “but we’re trying to do good and make money.”

Sir Richard was on the way to Mozambique to explore the possibility of extending the sugar production so abundant across the border in South Africa to that war-scarred country. His idea is to rid the fields of mines planted during Mozambique’s civil war from late 1970s to the early 1990s and plant sugar that could be converted into ethanol, tasks that would in turn put thousands of people to work.

“There are number of challenges all rolled in to one, but that’s why I like it,” he said.

Virgin is also working to create businesses that have the socially beneficial aspects of a charity but produce income to sustain themselves, perhaps with a little help from philanthropy. It has teamed up with Anglo Coal, a subsidiary of the big South African conglomerate, Anglo American PLC, and the United States government, to open a clinic in South Africa that provides basic health care for a fee — and drugs to treat H.I.V. and AIDS, tuberculosis and malaria free. The hope is that the fees generated will cover the costs of the basic services.

“The hospital cost $1.5 million,” Sir Richard said. “If it saves 60,000 lives, that’s good entrepreneurialism as well as good charity work.”

He said he would not try to defend Virgin’s efforts from charges that they are really thinly veiled marketing tactics.

“If I’m 90 years old and people look to the Virgin brand and say that’s the brand they respect most in the world, I would be happy,” he said. “Now, if we can in my lifetime come up with a fuel that is a clean fuel and does something to help save the world from global warming, that will be good for the brand, something everyone who works for Virgin can be proud of, but it will also be a good thing for world, too.”

Excerpted from the New York Times "What's Wrong With Profit" by Stephanie Strom 11-13-06