Andrew Carnegie was the richest man in the world. But he didn't want to claim the title for long.
Instead, the business titan decided to give away his money. He spent the last chapter of his life donating almost all his wealth. And in the process, Carnegie used the same sharp thinking that helped him accumulate billions to ultimately give the money away. In many ways, Carnegie's lasting legacy is more about the money he donated and the good it did, rather than the wealth he accumulated.
Scottish-born Carnegie (1835-1919), who grew up in a one-room cottage, came to America at age 13 as a poor immigrant. He rose from railroad employee to savvy business investor to iron and steel magnate. In the last 18 years of his life, he shifted gears from accumulating wealth to sowing seeds for others to attain wealth.
He tackled philanthropy with the same intensity as his business dealings. Rather than simply donate to worthy causes, he devised an overarching philosophy to solve what he called "the problem of Rich and Poor."
"He feared the long-term effects of wealth inequality," said Andrew Larsen, author of "The Man Who Loved Libraries: The Story of Andrew Carnegie."
Focus On Giving Like Andrew Carnegie
In his 1889 essay the "Gospel of Wealth," Carnegie wrote, "In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so." And he added that charity should also "give those who desire to use the aids by which they may rise; to assist, but rarely or never to do all."
On the road to fulfill his vision, he founded the Carnegie Foundation of New York in 1911. He also launched programs to advance international peace and public education.
Among his many charitable initiatives, he laid the groundwork to build more than 2,500 free public libraries around the world. When he initially proposed the idea in 1881, public libraries were rare.
"Andrew Carnegie believed that the main goal of philanthropy should be to support the system that made wealth possible," said Leslie Lenkowsky, a retired professor at Indiana University and philanthropy expert. "He saw his libraries as a way to create opportunity to help people achieve their own level of success and wealth."
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Given his humble origin, Carnegie reflected often on how he amassed such riches. He wondered how so much wealth winds up in the hands of so few.
Carnegie favored capitalism over socialism. He sought to deploy his funds to empower more people to succeed.
Carnegie believed the richest people should give back to help those who could accept such help and prosper. He proclaimed that the duty of a wealthy person is to "consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer ... to produce the most beneficial results for the community."
"He wanted to expand wealth rather than redistribute it, to use philanthropy in ways that create opportunity for more philanthropy in the future," Lenkowsky said.
Like Berkshire Hathaway's Warren Buffett, who has pledged to give away much of his fortune rather than leave it to his children, Carnegie rejected the notion that wealth should stay within families. Instead, he sought to establish organizations — including well-funded trusts and institutions — that would promote his ideals in perpetuity.
"He felt that the children had to make their own way in life just as he did," Lenkowsky said. "He felt they should succeed or fail on their own."
Never shy about voicing his opinions, Carnegie spent his later years making sure he disbursed his money on his terms.
"He felt it should be given away in your lifetime," Lenkowsky said, citing Carnegie's famous quote, "The man who dies thus rich dies disgraced."
Carnegie: Call Out Rich Peers For Selfishness
Carnegie's view of philanthropy clashed with the prevailing attitude of the time. Many business barons who emerged during the second half of the 1800s — the rise of industrial America — created family dynasties with their wealth.
Carnegie excoriated most of his fellow millionaires as "misguided, vain and selfish," writes David Nasaw, author of "Andrew Carnegie," a finalist for the 2007 Pulitzer Prize for biography. Carnegie berated them for their unwillingness to harness their wealth to enrich the community.
Indeed, Carnegie pursued big, broad goals such as advancing world peace. But his efforts didn't prevent war from erupting in 1914.
"When World War I broke out, he retreated from view," Lenkowsky said. "The big lesson is humility. Even the wealthiest guy in the world couldn't prevent world war. It's better to look for more realistic goals" to leave a legacy.
His giving transcended his personal likes and dislikes. While he was not religious, he launched a program to fund church pipe organs.
"He felt religious piety encouraged a strong work ethic and clean living," Lenkowsky said. "And that ultimately translated into wealth and prosperity."
Spark Vibrant Debate Over Philanthropy
Today's philanthropists can take many lessons from Carnegie. For starters, the avowed capitalist acknowledged that even thriving businesses could not solve all societal problems on their own.
"Industry leaders can learn from Andrew Carnegie that there are needs people have that for-profit ventures could not address," said Maribel Morey, Ph.D., founding executive director of the Miami Institute for the Social Sciences in Coral Gables, Fla.
He also laid out his philanthropic philosophy in great detail in his public writings and speeches. In today's parlance, he embraced transparency in presenting his giving strategy.
"He felt an obligation to explain his giving and had enough of a thick skin to respond to critiques," Morey said. "He got pushback," which sparked a vibrant public debate about the role of philanthropy that continues to this day.
She says that some critics argued that Carnegie was trying to burnish his image after violent labor disputes rocked the Carnegie Steel Company. Others questioned whether a tycoon like Carnegie was best suited to decide how he could improve the lives of the masses.
Yet Carnegie didn't claim to have all the answers. At age 72, he solicited advice from friends on how to give away his money.
In January 1908, he wrote letters to VIPs in his circle, including Theodore Roosevelt and Grover Cleveland, asking them how they would "put to the best use" $5 million or even $10 million.
When President Roosevelt didn't reply, Carnegie sent him a second letter.
"You have a hard task at present but the distribution of money judiciously is not without its difficulties also and involves harder work than ever acquisition of wealth did," Carnegie concluded in his note.
Andrew Carnegie's Keys:
- Self-made business titan who grew up poor in Scotland, but later defined how the wealthy can improve society.
- Lesson: Rather than just donate money to charities, articulate an ambitious vision for how philanthropy can propel others to amass wealth. Then follow through by creating organizations to fulfill the vision.
- "In bestowing charity, the main consideration should be to help those who will help themselves."
