Placing a cap on one’s pay is not normally the first act of an incoming chief executive, but that is exactly what Sacha Romanovitch has done. When the 46 year-old from Devon takes charge of accountancy firm Grant Thornton next month, she has limited her own wage and is implementing a scheme to split the firm’s profits between staff – similar to that in operation at John Lewis – which could boost salaries by 25 per cent.
“I have strong beliefs about business and the part it should play in society and I’m always thinking about what could I do that will personally make a difference,” Ms Romanovitch told the Telegraph. “Business,” she says, “needs to have a social purpose”.
Such soft words would make Gordon Gekko choke on his cigar smoke, but Ms Romanovitch is not alone. In April, Dan Price, boss of Seattle technology start up Gravity Payments, decided to introduce a new minimum wage of $70,000 (£47,000) for staff while reducing his own $1 million salary by 90 per cent to the same amount.
Meanwhile, last week Scottish oil billionaire Sir Ian Wood became the 138th person to sign up to the Giving Pledge, created by Warren Buffet and Bill Gates five years ago, committing some of the world’s richest people to agree to give away more than half of their fortunes before they die. Sir Richard Branson and Lord Ashcroft are among the other British Billionaire ‘give it away club’ signatories. Following an annual meeting of the group at a luxury resort in Virginia last week, Sir Ian admitted, “I was possibly the only one there who didn’t have his own private jet”.
Whisper it quietly in the wine bars of Canary Wharf, but modern day philanthropy is sweeping through the business world – and it isn’t just CEOs and billionaires who are giving it away. Even those starting out are also pledging to give away a cut of their salaries too.
Billionaires pledge fortune to charity: what they said
A survey published last month consulting more than 2,000 working people across Britain found 44 per cent thought meaningful employment that helped others was more important than a high salary, while 36 per cent said they would be more committed to work if their company benefited society.
Much of the change, research suggests, is being driven by that modern tribe known as the “millennials” – those born between the early Eighties and the 2000s – despite the fact they will earn far less than their parents ever will. Today’s average 30-year-old would need to save £33 a day for three decades to achieve the average wealth of today’s 60-year-olds. Of those millennials who responded to the study, 53 per cent would work harder if they were making a difference to others.
Such is the mantra of the fast-growing British movement called “earning to give” which encourages young people to go into the most lucrative careers their skills allow, in order to give the money to specially-chosen charities which are vetted for effectiveness. So far, 200 have signed up to 80,000 Hours, a not for profit organisation founded in Oxford in 2011 which is part of the movement and whose name refers to the length of the average career.
Christopher Smith, 24, a strategy consultant at OC&C Strategy Consultants, is among them. The Oxford graduate gives away 16 per cent of his salary, which is over £50,000 a year. “While I’d be a terrible fireman – I’m neither very fit nor athletic – I can work as a business strategy consultant and still save lives,” he says. “I find that hugely exciting and empowering.”
Smith grew up in Reigate, on the outskirts of London, and his parents also pledge 10 per cent of the household income for charitable causes. He signed up to the earning to give pledge in his final year at Oxford University. Initially, to donate 10 per cent, but now nearly double that.
“Every time my salary increases I adjust what I am giving away to reflect that. I probably now give away £9,000 a year but still live a very comfortable life. I live in a shared rented flat in Lewisham and pay £750 a month including council tax and bills. I’m not really thinking about getting onto the housing ladder, a housing deposit can tie you down. I think people sometimes overestimate the sacrifices involved.”
Cathy Pharaoh, co-director of the Centre for Charitable Giving and Philanthropy at Cass Business School in London, has been researching philanthropy since 1995. Next month she will publish a major piece of research – alongside City Philanthropy –on this new altruism among employees in London. For her, the banking crisis and exposing of nefarious activities in the financial industry have made people reassess what money means.
“I think there’s been a recognition that straight-forwardly seeking profit is narrow and limiting and can lead to some quite bad behaviour. There is a bit of a re-thinking about money and ethics which has been prompted by an era of disappointment and public trust.”
But also there is a wider feeling, that after years of rising inequality, money is no longer being seen as the font of all happiness. In the words of Chis Anderson (curator of the Ted Talks series of inspirational lectures) it is a bad time to be evil.
Meet the bright young things earning to give
Alex Foster, 26, earned £45,000 a year as a graduate at Rothschild, giving away £25,000 a year. He is now CEO of his own Old Street based start-up, which has a $1m turnover, and gives away everything over £15,000 a year of his £30k salary.
“From childhood I wanted to be an engineer. I planned to study hard, go to a good university, then build dams and bridges in Africa to help improve people’s lives. But a conversation with my younger brother, Edward, changed all of that.
He wanted to be a doctor, and to help people similarly, but he’d been thinking about what would happen if he didn’t make it. Someone else would fill that job, perhaps even better than him.
It made me think really hard about engineering and I came to realise that if you’re serious about making a difference, you have to do something other people can’t, or won’t. And so, I resolved to earn as much money as possible and give away everything I could.
I started in banking. While studying for an engineering degree at University College London, I worked at Citibank earning around £10,000 and giving away half of it. After graduating, I joined Rothschild, and gave away everything I earned above £20,000.
Then in 2013, I launched my own start up. I thought it would be a better use of my skills and with the potential to make enough money to do a serious amount of good.
My basic weekly budget is £100 a week, after rent. I sleep in a room in friend’s basement in Canning Town which is very cheap, although there is only room for a single bed. Before that I lived in another basement room in Camden. My friends called it the man cave.
It’s quite easy to hang out in bars and not drink, then slip away without spending much. I have everything I need – last year I gave myself a small pay rise to buy clothes and I need stuff like my iPhone for work, so I get gadgets like that anyway. I still eat well and have discovered the joys of long weekends rather than holidays. People don’t realise how much money they burn.
My girlfriend is totally cool with it, but she doesn’t ever stay at mine. My parents don’t give me any financial support and they are very proud – although I think they are a bit worried I’m going to give away my inheritance one day. They are hoteliers in Cambridge and have always brought me up to believe in hard graft.
I give the money away by standing order to the Against Malaria Foundation, the Schistosomiasis Control Initiative, and Deworm the World. I chose them for the effectiveness of how my money is spent. It’s a crude way of measuring it, but I suppose I could save 5,000 lives over the course of my career.
I recently came out as doing this on Facebook. It is kind of embarrassing. I certainly didn’t tell anybody in banking because they would just think it is too weird. Once people hear they can forget everything else they know about you.
Obviously things might change in how much I give away because my circumstances change. If I have children – I have always said I will put money aside for them. But I would encourage anybody to do the same.”
Adam Gleave, 21, is a student at Cambridge looking to go into finance or tech. Last summer, he spent 12 weeks as a quantitative trading intern, on a £75,000 p/a salary, giving away £12,000.
“When I was interning with a quantitative trading firm last summer, £100 on a meal didn’t seem extortionate. And then I realised that’s more than I normally spend on food in an entire week.
When you work in the City your concept of money changes drastically, and that can be quite dangerous. I gave away 50 per cent of what I earned last summer, but I also became less concerned about how much money I spent.
I’m now back at St John’s College, Cambridge, where I’m a third-year computer scientist. I had heard vaguely about effective altruism before coming to university. I was also quite sceptical of how charities do it, so seeing someone take a rigorous approach to assessing charities and work out what you needed to give to make a difference was really good. I wanted to be a software developer, but having encountered Earning to Give, my thought was to maximise my earnings. So I’m looking to go into either finance or entrepreneurship, because it makes sense to use my skills somehow.
I’ve pledged to give away 20 per cent of my income already and I think that if I’m working in finance I should really be giving away about 50 per cent, maybe more and mostly to international health charities. I think most of the sacrifices I’ll make will be in terms of leisure time. Trading in general is better than banking, but you’re still doing solid 60-hour weeks that’s the culture when you work in finance.
I don’t see actually giving away the money as much of a sacrifice because I just don’t really care about what money can buy anyway. I don’t need to have the latest piece of technology and that is certainly true for lots of my friends. When I’m older, children are obviously quite expensive but I won’t want to send them to a private school. My parents rolled their eyes a bit when they first heard but I think they are supportive now. They are a little concerned I’m not going to save enough for myself, I still think it is totally appropriate that people should save money for themselves, but we need to ask ourselves how much we really need.
There are still a lot of unknowns to debate, but I can be fairly certain that it is going to have a positive impact on the world.”