Pittsburgh should be a rusted ghost town. It emerged during the industrial age as a leading producer of glass, iron, steel, and aluminum, but today the Steel City no longer has mills within its limits.
Unlike other cities where fleeing industry spawned a meltdown, Pittsburgh continues to thrive. It excels in 21st century fields such as robotics, cybersecurity, biotech, higher education, and health care. Although its economy still faces headwinds, Pittsburgh is one of only three US metropolitan areas judged by the Brookings Institution to have fully recovered from the recession.
How did Pittsburgh pave the way for sustained prosperity even as its initial industries faded? Largely through philanthropy.
Steel magnate Andrew Carnegie was perhaps foremost among the visionary philanthropists of nineteenth- and early twentieth-century Pittsburgh. Built in 1901, his Carnegie Institute and Library Complex equipped the city with a world-class reference center, music hall, modern art museum, and natural history museum. Carnegie built seven other library branches around the city and in Pittsburgh’s steel mills. He followed these gifts with a premier technical school, which later became Carnegie Mellon University when it merged with the Mellon Institute of Industrial Research, created by Pittsburgh-born banking scions Andrew and Richard Mellon.
To be sure, working conditions were pitiable in Carnegie’s Pittsburgh plants when he was bestowing large gifts on the city. But as a local politician said in 1892, “No matter how Mr. Carnegie got this money, he has it. If it belongs to the working people this is a good way of getting it back, and why not take it?”
Although Pittsburgh today is not perfect, its philanthropic tradition has helped it build a high-tech post-steel economy around educational and scientific institutions founded (often with private wealth) during the industrial heyday. This history of private spending for public ends offers an example that wealthy citizens of other cities should heed. Bangalore is one such city. It is at the forefront of leading industries, most famously business-process outsourcing. As in industrial-era Pittsburgh, Bangalore’s boom has spawned vast fortunes while leaving daunting shortcomings in health and education. The time is ripe for Bangalore’s wealthiest to redouble their philanthropic efforts while the city’s economy remains robust.
Bangalore has a surprising amount in common with Pittsburgh a century ago. The city’s emergence as a high-tech center began in the 1980s and 1990s, when local government initiatives succeeded in attracting investment by major foreign companies (pdf). Texas Instruments established a groundbreaking presence in 1985, followed by such firms as Microsoft, Hewlett-Packard, Motorola, Oracle, and Cisco. Indian software and outsourcing pioneers such as Infosys and Wipro sprang up as well.
Half of India’s total biotech revenues come from Bangalore and almost 70% of the country’s semiconductor designers work there. Software exports from Bangalore and the surrounding state of Karnataka last year topped $15 billion from more than 2,000 companies. Business-process outsourcing exports totaled nearly $3.3 billion.
According to the most recent Forbes list, thirteen of India’s one hundred richest people (including five from high-tech industries) live in Bangalore and some are already using philanthropy to fuel development in the city and beyond. This February, Azim Premji, chairman of the IT goliath Wipro, became the first Indian signatory of the Giving Pledge, an initiative of Warren Buffett and Bill Gates that invites the world’s wealthiest individuals to pledge at least half their assets to charity. He has donated more than $4 billion to his foundation, which partners with the Indian government to promote education in rural areas, and established a university in Bangalore.
Kiran Mazumdar-Shaw, India’s richest self-made woman and the head of biotechnology giant Biocon, established Bangalore’s Biocon Foundation in 2004, which has built a cancer hospital that accommodates patients who cannot pay and launched a series of ambitious health care initiatives. Other Bangalore philanthropists have donated their time and expertise in addition to money. Infosys cofounder Nandan Nilekani now leads the Unique Identification Authority of India, a government effort to provide every citizen with a secure ID.
Bangalore’s philanthropists can also help other parts of the country replicate some of their city’s economic success. According to the 2011 census, for example, only 74% of Indians aged seven and above (and 65% of females) are literate, but in Bangalore (pdf), these rates are 88% overall and 85% for women. Basic education and literacy are natural targets for philanthropy throughout India—especially girls’ education, long recognized for its powerful payoffs.
While many of Bangalore’s philanthropic efforts are too new to evaluate, the instinct behind them is enlightened self-interest at its finest. Those who have prospered in Bangalore are working to cultivate an educated workforce that can feed the city’s firms and to support health care and sanitation programs, cultural centers, and other initiatives that can help make their city—and their country—a better place to live and invest.
With a population of more than 9.5 million people, Bangalore needs investment on a massive scale. Beyond supporting brick and mortar projects such as schools and hospitals, therefore, Bangalore’s donors should help build a stronger philanthropic sector to encourage giving by billionaires, millionaires, and even the middle class. This entails creating forums for discussion and debate around effective philanthropy, developing reliable sources of information to make potential givers aware of philanthropic opportunities, and—perhaps most important of all—fostering a transparent and accountable nonprofit sector with organizations capable of using donations effectively. Many Indian foundations prefer to run their own programs rather than nurture existing local nonprofits. This should change.
Such initiatives—alongside efforts by government and firms—are essential if Bangalore is to maintain its rising fortunes no matter what happens to its current lifeblood. Outsourcing is, by definition, a mobile industry that can find new homes should India’s comparative advantage erode.
Without question, Pittsburgh is different from Bangalore and its full experience may not be easily replicated. But philanthropy need not be comprehensive to be effective. Rather, it must be innovative, showing the way toward new solutions and helping fill gaps in societies where there are too few rich and too many poor.
Pittsburgh’s tradition of farsighted philanthropy laid the foundation for economic strength over the long term. Similar investments in education, health, and other fields could do the same for Bangalore.