Invisible Hand of the Philanthropist

Invisible Hand of the Philanthropist

How Nonprofits’ impact on our economy affects you and me

by Yee Ong

 

Many jobs have vanished in this struggling economy, where the California unemployment rate stands at 12.5%, and people’s concern for their jobs has understandably led them to save up for rainy days in an uncertain future.  Aside from income, the subprime crisis last year has wiped out a substantial portion of many people’s wealth either through the stock or real estate market.  People naturally spend less in this environment, especially on nonprofits.  Many look at this situation as a direct result of our economy, but what people often fail to do is realize that such action can actually negatively impact the economy which in turn affects themselves.

Allow me to illustrate my point with the following example.  Tourism has always been an important part of the Bay Area’s economy.  Our beautiful weather, and the richness and diversity of our arts, cultures, and values make the Bay Area a popular tourist spot.  Nonprofits such as Family Tree, the Humane Society, Senior Coastsiders, Planned Parenthood Golden Gate, American Heart Association, Los Altos History Museum, Los Altos Christ Episcopal Church, and Samaritan House create economic value in our society that many people fail to notice.  They help keep our air clean, and our crime, poverty, and illiteracy rates low.  They also create employment and allow our money to be channeled directly to these great causes.  Employment in these areas leads to consumer spending which comprises two-third of our economy.  Furthermore, their contributions to beautify our community and make it a more pleasant place to live will directly impact home values for home owners.  The chain effect goes on.

The “invisible hand” was first introduced by Adam Smith, the father of modern economics, in arguing for the benefits of a free market.  It implies that people’s pursuit of their own interest, as if directed by an invisible hand, will lead to the welfare of the world.  It plays down the importance of the government’s role in our economy. 

The Invisible Hand of the Philanthropist, at first glance, may seem to contradict the theory to pursue one’s own interest.  However, it really describes the fact that charities are also an important player in our economy in addition to the private and government sectors.  Nonprofits create true economic value by allocating resources to where the private and government sectors often fail to prioritize.  People usually think that their contributions to nonprofits are just for the benefit of others or to satisfy their conscience.  What they often fail to comprehend is that there exists a third element, which is creating true economic value in our society.  The Invisible Hand of the Philanthropist seeks to bring about the awareness of this important element and how nonprofits can positively impact people like you and me through our economy. 

I want to bring about this awareness because I feel that this is a critical time when it matters the most.  This is a call to action.  People act according to their expectations and what they perceive to be true.  For instance, people will consume more immediately when the inflation outlook is dreadful.  This is a reason why the Fed is constantly managing consumer’s inflation expectation.  Similarly, people will not act until they become aware of the true economic impact that charities have on them. 

The need of charitable contributions is increasing while the supply of it is decreasing rapidly in our current economy.  There are more people living in poverty while donations to nonprofits diminish along with people’s income.  The current state of our government’s finances is not helping either.  The delinquency of funds and services provided to nonprofits are disturbing and its impact on our society will be troubling if our community does not act now.  2009 is coming to an end and the holiday season is soon arriving.  For the sake of our economy and for everyone who needs us most at this time, Invisible Hand of the Philanthropist serves to communicate to everyone the message: “Play your part in the economy’s future by contributing to    nonprofits!”

 

My Inspiration

I want to dedicate this philanthropic effort to a great person named Mr. Chin Kiat Moe, also known as Ciku.  He is not a well known public figure or a celebrity.  He is simply a selfless and humble person who has helped many children from all walks of life, including myself.  Ciku has shown me how to look at the world from a different perspective and inspired me to do good for others since I was 12.  He was my badminton coach in Malaysia before I immigrated to San Francisco in 1991.  But he is truly much more than that to many people as he has helped many children and ones in need in countless ways throughout his life.  And he did it solely from the good of his heart and sought no recognition.    

Badminton, probably the most played Olympic sport in Asia, is the national sport in Malaysia.  Its popularity is very much like how basketball, baseball, or football is to us here in the United States.  Ciku was once the national team coach.  But rather than continuing this enviable career, he left about 40 years ago to dedicate his life to helping children who loved the sport but could not pursue their interest due to financial hardships and various difficulties. 

Many of his students had to travel for hours on public transportation to seek his training.  On weekends, Ciku offered them a place to stay at his place so that they could avoid the commute.  Besides shelter, he also provided food to the children and made sure that none were starving.  He strung their racquets for free and provided them with the necessary equipment if they could not afford them.  Under his wings, innumerable players have made it to the national team and become top players in the world.  Many who did not continue to pursue a career in badminton have been guided by this great man to achieve other successes in life. 

He disliked dishonesty and often taught his disciples about ethics and doing well for others.  He also made sure that everyone did well in school. If he found out about anyone suffering academically, he would expel them from his training program.

He helped anyone who needed his assistance regardless of their background or ethnicity.  His students included Indians, Chinese, Caucasians, African Americans, Malays, Indonesians, Australians, and many others.  Whether your parents were a high government official or a plumber, Ciku treated everyone with equal care and attention.  He was also one of the few badminton coaches in Malaysia at that time who would give equal opportunity to the female athletes to do well in the sport.  Many of the women national team players were brought up by him and they are very grateful to him to this day. 

In 1995, the Youth and Sports Ministry's parliamentary secretary S. Vigneswaran awarded Ciku with the Special Coach Award. However, much of the good deeds he has done have not been recognized.  For instance, about ten years ago he volunteered to do some badminton coaching for children in Africa.  I have no doubt that he did much more than that when he was there.  He is currently volunteering his time to help people with special needs learn and enjoy the sport. 

His “children” are now all over the world including Hong Kong, Malaysia, Singapore, Australia, United States, India, Africa, England, Canada, and many other countries.  They always remember his good deeds and visit him whenever they return to Malaysia.

Several articles about this great man have been written by prominent newspapers:

http://thestar.com.my/sports/story.asp?file=/2009/7/5/sports/4259136&sec=sports

http://www.redorbit.com/news/health/304084/ciku_brings_life_to_the_disabled/index.html

http://www.badmintoncentral.com/forums/showthread.php?t=22057

Anyone with as big of a heart as Ciku and who has done so much good for others should be recognized and role-modeled after.

Yee Ong is the founder and Portfolio Manager of YSO Capital Management, LLC.  He is the author of an investment book titled "The Strategist's Mind: The Art of High Return, Low Risk Investing."  Ong is a CFA charterholder and holds a Bachelor's degree in Economics from UC Berkeley.