Virtue:
Munificence
Other names:
Magnificence
Definition:
Willingness to spend large amounts of your own money to do something important.
"The virtue of expending money proportionately to the importance of the need"; "the virtue of accomplishing something grand with money for a high purpose" (Deferrari)
Advice:
Empirical Research:
Case examples:
Gifts of the Holy Spirit
Further reading:
Vices opposed:
Stinginess
Extravagance
Case Study
ReplyDeleteIn her memoir, Tough Choices, Carly Fiorina explains how one of her first projects after becoming CEO of Hewlett-Packard was to restore the company's founding emphasis on practicing the virtue of munificence. "In early 2000 Debra Dunn and I began a conversation about how to focus HP’s philanthropic efforts more effectively. Like everything else in the company, philanthropy had become an overlarge collection of good but incoherent, discrete and underfunded projects. Although HP employees had a lot of passion, all these projects were disconnected from the rest of the business and weren’t a high priority for anyone on the executive team. As CEO, I felt it was my job to set the tone at the top. Exercising our responsibilities as a corporate citizen of the world wasn’t just a nice thing to do; it was an integral part of how our company would do business. We would do well and do good.
...
"In education we concentrated on identifying and mentoring high school students from disadvantaged communities to achieve competence in math and science. We provided scholarships and internships to these students, and we worked closely with high schools and universities. These kinds of efforts certainly made a difference in young people’s lives, and they became core programs for many schools. They also helped our company do well over the long term: the IT industry will not have enough talented engineers and scientists unless we reach and educate those who are today underaccessed and underserved.
"At the same time, we focused on community development through access to technology, training, entrepreneurship and partnership. Whether in Houston or South Africa, San Diego or India, every community touched by the people of HP is better for it. We committed management time, attention and money in these communities for a period of three years. We focused on building sustainable programs and capabilities and did much good." (Fiorina, Tough Choices, ch. 23)
Case Study
ReplyDeleteIn Mackenzie Busch's The Paperboy, entrepreneur-philanthropist Timothy Busch explains the meaning of the saying that you have to spend money to make money. "You have to keep investing in your assets. I think a lot of CEOs will stop putting money back into their business in the interest of paying dividends to investors. A good example is the two DoubleTree hotels we own with Hilton. We’ve invested well in the Irvine Spectrum DoubleTree, but we haven’t touched the Santa Ana one, and now we’re paying the price. It’s having problems, so we’re spending about $5 million to rebrand, and we should have a very nice hotel after it’s done. But now we’re going to have to figure out how to drive our room rates up, and we already have strong occupancy numbers. So, you really have to keep consistently reinvesting in your business. So many people will say, 'Let’s spend another two years planning this.' But by the time you’ve spent two years planning, your plan is irrelevant. Eventually, you have to accept some risk and just do it."
Timothy Busch points to the Napa Institute, which trains young Catholics for leadership in an increasingly secular society, as an exemplary case of morally worthwhile investment. "I started it because I knew there was a need for it in the marketplace, and it’s been successful. I think it can be even more wildly successful. But that’s an example of something I created where I didn’t sit around and say, 'Let’s talk about it for two years first.' I just did it. St. Anne’s was the same way. We started that school in ninety days. And taking those kinds of risks is why most jobs are created in small businesses today." (Busch, The Paperboy, ch. 7)
In Mackensie Busch's The Paperboy, entrepreneur-philanthropist Timothy Busch explains how perseverance is necessary in order to realize and implement a (theoretically) brilliant idea. "To stay competitive, you’ve got to keep churning talent. Also, I think 'Market-Based Management is our management style, which encourages everybody in the business to think of new ideas. But then those ideas have to be implemented and replicated in other [hotel] properties, and then continued, so they can’t stop. We can’t just say, 'Hey, great ideas! Oh yeah, we did it.' And then do an end zone dance. I want our people asking, 'What are we doing about that right now?' Or 'What’s next?' Because that’s what all good businesses do. They have discipline in execution, and they plan for the future. Take Whole Foods. Look at how complex that business is, but they’ve got discipline, and they know how to execute. They’re not perfect, but they’re always striving for perfection. I’ve always been impressed with that." (Busch, The Paperboy, ch. 8)
ReplyDeleteCase Study
ReplyDeleteIn his book, More Than a Hobby, Hobby Lobby founder David Green recalls his mother's customary refrain whenever he would tell her about his latest success in the business world. "But what are you doing for the Lord," she would ask. "Three or four years after her death, I was attending a large convention of our church in Tennessee. Missionaries from all over the world gave presentations on their work. I paid close attention, remembering how my mother had always given special care and effort to mission funding.
"Flying home after the meetings ended, I was looking out the airplane window when something unusual happened. It seemed that a quiet voice inside my spirit said, You need to give $30,000 for literature. One of the speakers had talked about the need for more printed material in his particular field.
"My first reaction on the plane was that this was far too much money to consider. The company wasn’t nearly big enough to afford this. Where had that number even come from, anyway? Impossible . . .
"But the impression wouldn’t go away.
"God, I don’t have $30,000, I silently prayed. But . . . you’re serious about this, aren’t you? Well—I suppose I could write four checks for $7,500 each, and postdate them a month apart for the next four months.
"I sat there pondering this option. I did some calculating in my head. Maybe this would work after all.
"When I reached home, that is what I did. I put the four checks in an envelope, took a deep breath, prayed that I could make good on them, and mailed them back to Tennessee. When the church official on the other end called to acknowledge my gift, he made an intriguing comment. 'The very day your letter was postmarked,' he said,'was the same day that four African missionaries had a special prayer meeting for literature funds. Looks like God answered their prayer!'
"Something clicked inside me at that moment. Maybe God has a purpose for a merchant after all. Maybe he has a place for me.
"I am happy to be able to report that we made good on all four of those checks. It wasn’t easy. But the dollars worked out in the end. And I had been stretched in a good direction." (David Green, More Than a Hobby, ch. 14)
Case Study
ReplyDeleteIn his autobiography, Made in America, Wal-Mart founder Sam Walton explains how he strives to ensure that his approach to philanthropy is consistent with his company's core values of hard work, creativity and striving for excellence. "We're not satisfied that the traditional methods by which charitable foundations are operated really meet our criteria. Some people have crowed a great deal about all their philanthropy over the years, but too many of these foundations, I suspect, were only begun as tax shelters without much real sense of purpose. Many of them seem to have become very nice places to work for a small group of folks who have built up pretty thick crusts of administration and bureaucracy. Those are two of the things we have fought the hardest to keep out of our company, so naturally we don't want them clogging up our nonprofit efforts.
"We are going to insist that whatever program we support incorporates those same values. When it comes to college educations and scholarships, for example, I've always favored programs that require the recipients to work and kick in some of their own money. For that matter, I've always preferred to hire people who had to at least partly work their way through school - no doubt because of my own background. The secret lies in motivating kids who aren't getting educated today to want to put themselves through school, and to make them understand the rewards they can expect when they do." (Walton, Made in America, pp. 302-03)
Case Study
ReplyDeleteIn Eat Mor Chikin: Inspire More People, Chick-fil-A founder S. Truett Cathy recalls the example of Martha Berry, whose work with young people in the mountains of northern Georgia helped inspire Cathy to found the WinShape Centre. "The more I learned about Martha Berry, the more inspired I became. She was born to a well-to-do family in 1866 and grew into a beautiful young woman with plenty of suitors. She easily could have lived a life of leisure.
"Then one Sunday afternoon Miss Berry walked over to her favorite reading spot, a log cabin near the Berry home. As she read she sensed someone was watching her. She looked up and saw three barefoot boys looking at her through the window. She invited them in and asked a few questions. Her biography, Miracle in the Mountains, describes the encounter:
"Where did they go to school?
"'Ain't got no school. They was one o t'other side the ridge, but it's fer boys livin' thetaway beyon' the gap.'
"Martha went on with her questioning. 'Don't you go to Sunday school either?'
"The tallest boy stared. 'What kin' of school?'
"'Where they teach you about God and Jesus.'
"The three were more surprised than ever. 'They's somethin' to learn about 'em?'
"'They tell you Bible stories, too.'
"'Oh, we 'uns got a Bible, on'y Pa cain't read it.'
"So Martha Berry immediately began to tell the boy stories from the Bible - exciting stories of David, Samuel, and Abraham, and they begged for more. Then she gave them ginger cakes and invited them back the following Sunday. There would be more cake, and lemonade too, if they would wash their arms and hands every day of the week." (131)
Eventually, these early encounters led Miss Berry to found a boarding school for mountain children who otherwise had no access to education. "Although destitute, students did not attend Martha Berry's school for free. They had to work on the adjoining farm to generate income for the school. In each of these children, born into circumstances that might have led to the same life of poverty their parents lived, Miss Berry saw a spark of promise that she nurtured and fanned until it became a flame of hope."
Cathy founded the WinShape Centre for troubled youths on the same Mountain Campus where Martha Berry had established her own school. "The first step, we believed, was to reopen the dormitories. Dr. Shatto said we would need at least fifty students, so we started figuring out what it would take to get fifty students up there. We immediately created a scholarship program, offering a $10,000 four-year scholarship for each worthy student. Chick-fil-A paid half of the scholarship, and Berry paid the other half. We promoted the scholarship program across the nation, primarily targeting high school students working for Chick-fil-A restaurants.
"College scholarships were nothing new at Chick-fil-A. Eleven years earlier we had begun offering $1,000 scholarships to worthy team members who worked with Chich-fil-A.
"Sixty-eight students with WinShape scholarships of $10,000 started at Berry in fall of 1984, thirty-four boys and thirty-four girls. At this writing, in 2002, we have 125 students on the Berry scholarship. We've twice raised the scholarship grant, which now is $24,000 per student, to meet rising tuition costs, and still divide the cost equally between Chick-fil-A and Berry. Since the inception of the WinShape Centre, nearly 780 students on scholarship from WinShape have attended Berry." (132, 135) (Cathy, Eat Mor Chikin, pp. 131, 132 & 135)
Case Study
ReplyDeleteEven as he slowly transitioned towards retirement in 1913, Heinz Ketchup founder H. J. Heinz remained personally and financially committed to improving his home city of Pittsburgh, as Quentin Skrabec, Jr. explains in H. J. Heinz: A Biography. "The industrialization of Pittsburgh's North Side brought with it many of the evils of capitalism. The old German neighborhood became run down, and immigrant families packed into old houses...The houses were also being used for prostitution and saloons. Gangs were common in the streets. The neighborhood environment would be a major problem for...the Heinz plant that was attracting 40,000 visitors a year. Heinz was a lover of Pittsburgh, and he was determined to improve the city rather than leave it.
"Heinz went to get advice from real estate agents, and they advised him that the situation was irreversible. Heinz, however, believed the location needed to be improved. He worked with friend and lawyer James Kinnear to form Progress Realty Company. Both had experience in such real estate improvement efforts as the upscale Oakland and East Liberty suburbs. This real estate effort would be a model for future civic-minded industrialists. Progress Realty started to purchase hundreds of houses. A block was cleared for the building of the Sarah Heinz House, but other houses were renovated and rented out. The effort turned out to be highly successful as well as profitable. Heinz had upgraded the area surrounding the factory." (Skrabec, Jr., H. J. Heinz, pp. 197-98)
Case Study
ReplyDeleteJ. C. Penney founder James Cash Penney retained an interest in his agricultural roots throughout his career. As David Kruger explains in J. C. Penney: The Man, the Store and American Agriculture, one of Penney's ambitions was to use his vast rural landholdings for the improvement of American agriculture, which was struggling during the early 1920s. "For Penney, one of the most troubling revelations from his own agrarian studies was that the greatest cattle herds in the United States were typically dispersed upon the deaths of their owners. Through his extensive reading and personal research, Penney realized that American breeding herds historically had an average life of just ten years, with only a few lasting beyond twenty, in contrast to the multicentury durations of purebred herds in Scotland and England. The herd dispersions in the United States had a detrimental effect on the quality of American cattle, which affected American farmers and, ultimately, the J. C. Penney stores serving them." (33)
Penney resolved to use his considerable resources to improve the quality of America's cattle by endowing certain herds to prevent their being broken up after his death. "He decided the basis for his cattle-breeding endeavor would be 'upbuilding,' essentially selecting a promising breed and breeding better cattle from it, not for personal self-aggrandizement but for the betterment of farmers nationwide...After looking at a variety of New York farms as a site for his emerging operation, Penney finally found the one he wanted one mile outside Hopewell Junction, a tiny Dutchess County hamlet southeast of Poughkeepsie...In December 1921, Penney purchased the Dutchess County property, personally christening it under the name Emmadine Farm. Soon after renaming the farm, Penney decided that Guernsey dairy cattle would be his choice for the farm's breeding project, necessitating the search for a Guernsey cattle expert who could help transform his vision into reality."
Penney would enjoy great success with both Emmadine and his retail company. He was positioning himself "to do something few American businessmen would ever accomplish: continue a remarkable business career while making remarkable contributions to agriculture and agrarian people." (Kruger, J. C. Penney, pp. 34-35)
Case Study
ReplyDeleteAs David Delbert Kruger explains in J. C. Penney: The Man, the Store and American Agriculture, one of James Cash Penney’s most significant agricultural projects was Emmadine Farm, which sought to improve the lackluster quality of American Guernsey cattle. Penney invested heavily in Emmadine Farm to ensure that it would continue to benefit the American farmer long after his own passing. “In 1936, Penney formalized his own commitment to Emmadine Farm by creating the Foremost Dairy Association, endowing an organization that would sustain his efforts with the Guernsey breed for no fewer than sixty additional years. After that period, the association would be dissolved and the herd’s ownership and operational assets bequeathed to the University of Missouri.”
According to Kruger, “Penney’s endowment ultimately inspired another Guernsey breeder and former business colleague to pledge a similar donation to Cornell University. In 1943, J. M. McDonald likewise bequeathed his entire Guernsey herd and his seventeen-hundred-acre dairy farm outside Cortland, New York, to Cornell University, effective upon his death…The impact of Penney’s own ongoing Guernsey operation on American agriculture continued to be lauded as well, even by academics such and Sarah Gibson Blanding, dean of agriculture at Cornell University. ‘No one can be a resident of New York State for long, particularly a person whose interest is in agriculture and food production, without having heard of the grand job Emmadine is doing,’ Blanding wrote to Penney in a 1943 letter. ‘I hope sometime when I am in that part of the state I may have the pleasure of visiting the farm.’” (Kruger, J. C. Penney, p. 55)
Case Study
ReplyDeleteJ. C. Penny founder James Cash Penney continued his agrarian philanthropic endeavors to the end of his life, as David Delbert Kruger explains in J. C. Penney: The Man, the Store and American Agriculture. “As he embraced his tenth decade of living, Penney remained convinced that these activities were essential to his own vitality. The annual sales at [Penney’s] New York farm gave Penney an additional platform to vocally and visually remind people not only that he was sustaining his sound mind and body, but also that he fully intended to continue improving [his] Foremost Angus herd until his one hundredth birthday in 1975, if not beyond…”
“As a nonagenarian, James Cash Penney had an ongoing passion for agriculture that was as much about improving America’s future as it was a nostalgic celebration of its past. Concurrent with his Foremost Angus breeding at Emmadine Farm, he and his wife, Caroline, continued to actively support 4-H organizations, awarding generous scholarships to deserving members nationwide, regularly visiting the National 4-H Center, and attending regional 4-H Leader Forums around the country.” (258)
In the late ‘60s, Penney worried that the 4-H Center was starting to languish and made a personal goal of improving it. “The National 4-H Foundation Advisory Council elected Penney as honorary chair for the $8 million renovation and expansion, and Penney then persuaded First Lady Pat Nixon to join him as honorary co-chair. Penney not only solicited funds from donors, including the J. C. Penney Company and about 150 business leaders, but gave $250,000 of his own money to the cause, a gift his company subsequently matched…In April 1970, at age ninety-four, Penney was delighted to return to the National 4-H Center with his wife to formally announce the renovation and expansion. Penney then joined Secretary of Agriculture Clifford M. Hardin and Nixon’s daughter in grabbing shovels to kick off the ground-breaking ceremony.” (260) (Kruger, J. C. Penney, pp. 258 and 260)
Case Study
ReplyDeleteBorn Sarah Breedlove to former slaves in the Deep South, Madam C. J. Walker rose from poverty to become the wealthiest black businesswoman in America through her cosmetics product line. Ultimately settling in Indianapolis, she rubbed shoulders with the city’s most notable residents, but she was well aware of the housing and employment problems faced by the black community at large. “By 1910,” explains Walker’s biographer and descendent, A’Lelia Bundles, “African Americans lived on blocks with the working-class Germans, Italians and Irish who remained in the increasingly black residential area that extended east and west from Indiana Avenue. All but the most well-off still had out-houses, coal and wood stoves and coal-oil lamps in their neatly kept homes, a mix of Victorian cottages, two-family doubles, two-story wood-frame flats and long rows of cheap one-story frame tenements.” (111)
The Indiana Avenue neighborhood was a difficult place to live. “Its twenty-nine saloons and fifteen poolrooms – many of them ‘nothing but gambling places’ – enticed the idle and the underemployed young men who congregated along its busy corridor. For the majority who resisted the temptations of the streets, the Young Men’s Christian Association at 443 Indiana Avenue provided a much-needed haven. Despite its cramped and poorly equipped facility, the converted storefront was filled seven days a week with scores of boys and men enrolled in Bible studies, physical education classes and reading groups. The first-floor gymnasium – one-third the size of a regulation basketball floor – was so small that the number of team players had been reduced from five to three. The upstairs meeting room stayed in such demand that there often were as many as three organizations in line every night to use it. Jerry-rigged showers and battered lockers occupied an adjacent coal shed. ‘It is utterly impossible,’ pronounced [the prestigious black newspaper] the Freeman, ‘to do the work that needs to be done in the present inadequate quarters.’” (112)
In October of 1910, during the Indiana Avenue Y committee’s campaign to raise money for the renovation of the YMCA, Madam Walker pledged an unprecedented $1,000. “The Freeman, which called Madam Walker ‘the first colored woman in the United States to give $1000 to a colored Y.M.C.A. building,’ showcased her photograph in an article that was read all over the country. At the time she claimed ‘an annual income of $1,000 per month,’ making the pledge a near tithe of her annual earnings.” (117) (Bundles, On Her Own Ground, pp. 111, 112 and 117)
Case Study
ReplyDeleteIn his book, Thinking Outside the Box: The Wine Group Story, Arthur Ciocca, founder of Wine Group, Inc., explains how sacrificing short-term profits in order to achieve long-term goods became part of his company’s philosophy shortly after it won independence from Coca Cola. “Three or four months after the transaction, I had my hand forced by what started as an incredibly unfortunate event. Someone in the cellar made a mistake and 25,000 cases of vermouth had developed a tartrate precipitate at the bottom of each bottle. Under Coke-NY, if the product was shippable and wouldn’t harm anyone, they would invariably suggest that we sell it to avoid the short- term hit to earnings, even if it would turn off consumers in the marketplace.
“I’ll never forget [associate] Lou Quaccia’s phone call announcing this particular piece of bad news. It meant a $250,000 hit to earnings, something we most certainly could not afford. Because the precipitate was hard to see through the green glass, no one would ever notice. But after mulling the matter over, Lou and I finally concluded we didn’t buy this company to behave like Coke-NY and we weren’t in business to sell marginal products. Lynn Bates, our financial conscience, agreed, so we decided to destroy the product.
“Had we realized what a profoundly positive example this decision would have on the organization, we would have made it more easily. Destroying 25,000 cases of vermouth can’t be done inconspicuously. Before the day was over, every single plant worker knew what had happened and a switch clicked throughout the facility. You could almost feel it from that moment on. People realized this was a whole new ball game. If that’s the way these new owners were going to act, they recognized their responsibility to step up to the plate too. That $250,000 hit to earnings was paid back many, many times over with improved morale and productivity.” (Ciocca, Thinking Outside the Box, pp. 61-62)