[Editor’s note: This is part of continuing series of profiles of civic and philanthropic heroes.]
By Claire Gaudiani
Philanthropy helped develop ideas for creating wealth.
Philanthropy always suggests giving money. Philanthropy, though, actually helped to develop ways to make money.
Two examples include development of the stock market and pensions.
Large percentages of the population have stock and pensions, two ideas brought to us by philanthropy, that is, by a charitable gift that shaped new ways to build wealth.
In 1929, Albert Cowles, head of his own investment management firm and a wealthy man, contributed the funds to establish the Cowles Commission at the University of Chicago. He wanted to enable economists to work more closely with mathematicians and improve economic research.
With this gift, he helped launch the field of econometrics. This field has yielded the fundamental principles and tools that have shaped the modern stock market.
The Commission moved to Yale in 1955 as the Cowles Foundation. The research continued.
Nine of the scholars supported by Cowles funds received Nobel Prizes in economics for the work they did at the Foundation developing and improving the analytical tools available to investors and their advisers.
Important ideas like portfolio management and economic modeling to study macroeconomic policy instruments emerged from their work and put math and statistics at the service of economics.
This research structured major changes that benefited millions of working people, retirees and those who received charitable donations from the economic growth that US, and eventually global, markets generated.
Cowles gift created gifts for about 75 years, making a gift that has kept on giving.
Claire Gaudiani is a professor at The George H. Heyman Jr. Center Center for Philanthropy and Fundraising at New York University and the author of The Greater Good: How Philanthropy Drives the American Economy and Can Save Capitalism.
Other columns by Claire Gaudiani:
Helping hands [9.20.04]
Change agent [10.11.04]
Retailing generosity [10.25.04]
Prescription for change [11.22.04]
Whitewashing history [12.06.04]
Breakthrough philanthropy [12.20.04]
Critical thinking [01.03.05]
Tsunami lessons [01.17.05]