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US Economy

Bill Conway, a co-founder of the Carlyle Group asks how would you use $1 billion to create jobs for the poor?

This is a very interesting initiative, rather similar to the pay-back theme of Warren Buffett and others of considerable wealth who are suggesting that their wealth should be used in constructive ways to improve the world.

I want to go further than this, and encourage those with ability to use their creative energy not only to make money profit but also to create valueadd for society. My conclusion is that if decision makiing had a focus on valueadd as much as it does on profit, then the world economy would be more stable, more sustainable and also profitable.

There are many quite well known economists who would like to see a better metric about economic health than GDP growth, stock market and commidty indeces and business profit using money as the measure. The TrueValueMetrics (TVM) initiative suggests that it is value that should be at the center of this rather than money. Critics of TVM point out that value is subjective, difficult to quantify and therefore 'it cannot work'. I argue that even though these characteristics are real, value is still very important and should be at the center of a system of meaningful metrics for a smart society.

The fact that value is subjective means that it has the potential to be right for everyone, rather than just right for those that make the rules. There can be value as seen by an individual, a community, a region (like a State), a country, and a global average. The different value profiles mean something and reflect culture, priorities and many other factors. Different value sets make trade ... arbitrage ... in value something that has relevance in a market oriented optimization system.

The quantification of value may be done using a concept that originates with money cost accounting ... the standard cost, or in this case the standard value. Everything can be 'relative' within a standard value universe. Modern technology makes it possible to 'crowd-source' different groups to get at the standard value profile that reflects their values. While a currency may be used as a measure ... the value is not a currency per se.

Money accounting is very powerful in part because it has a double entry structure which makes the system more robust than it would be without its critical construct of integrated balance sheet and operating statement. The TVM system similarly has state, progress and performance that are sililar to the accounting construct. State is a value balance sheet. Progress is the change in value balance sheet from the beginning to the end of the period. Performance is the net resource consumption relative to the progress achieved.

The capitalist market economy has been very good at directing resources towards money profit investment and guiding the related decisions to improve productivity. But it has not been very good at making the not-for-profit world productive, whether this is government or the not for profit non-governmental organizations. Value accounting would change the dynamic and make it possible for objective performance assessment to be done in a routine way just like corporate accounting and its related financial reporting.

The TVM initiative has one more important difference. Money accounting and management information systems are all designed to inform from the perspective of the organization. The society and the community are not part of the system of metrics at all. In the case of TVM it is society and specifically the community that is the reporting entity, with organizations subsidiary within the society. All of the ideas that are important in making sense in a complex organization are equally valid in making sense of a complex society.

The methodology for TVM as a syastem of metrics is relatively simple. It will have an important impact if this can be linked with a structure that has an ability to mobilize resources in a suitable manner. The challenge is to get the right mix of financial capital, human capital, natural resources, operational framework and dataflows mobilized and organized. I see this possible using existing local bank branches and community colleges reaching out to local business, charities and governance organizations. Funding for economic activities would originate from privately owned financial resources and would flow into economic activity as equity ... not loan, and not grant. The expectation is that there would be valueadd arising from equity investment.

The idea is basic ... but potentially very powerful. It has the potential to address the lack of resources to satisfy critical needs at the 'base of the pyramid' (BOP) and make resources that flow into the humanitarian assistance and charity sector more accountable with performance metrics that are relevant.

I worked in the Horn of Africa during the famine of the 1980s. Why is there a famine in Somalia now? The answer is that a profit based resource allocation system is going to ignore these situations until they are embarrassing and then it is too late. A value based system would alleviate this to a great extent, maybe completely.
Peter Burgess

How would you use $1 billion to create jobs for the poor?

World-class financier and philanthropist Bill Conway, 62, of McLean plans to give away at least $1 billion before he dies, much of it in the Washington region. He wants your ideas on where to donate.

No joke. This is for real.

Sure, there are a couple of catches. Conway, a co-founder of the Carlyle Group investment company, is especially interested in helping the poor and long-term jobless. So, please, no e-mails asking him to pay for your Caribbean vacation or a new master bedroom suite.

Also, he’d like to avoid simple giveaways. He’s done a lot of those already, donating tens of millions of dollars to local charities that provide food, shelter and health care to the needy. Since November, he has contributed $6 million to the Capital Area Food Bank, which helps feed 380,000 people in our region.

Now, as Conway prepares to give away 50 percent or more of his net worth estimated at more than $2 billion, he’s begun thinking about how to use the money to create something more lasting.

“So much of what I do now is stopgap. Somebody’s hungry; we give money to the food bank,” Conway said in an interview in his Pennsylvania Avenue office. Although such help is necessary and worthwhile, he said, “It would be far better if we had a more permanent solution.”

Conway is intrigued by a recent suggestion from his wife, Joanne, to use his wealth to create large numbers of productive, self-sustaining jobs for the poor.

“More effective than giving away half my fortune before I die is finding a way to help people have a good-paying job,” he said. That would help not only the newly employed, but also their families and the rest of the community.

“If I’m going to create 1,000 jobs, or 10,000 jobs, or whatever the number is, wouldn’t we all be better off?” With jobs, he said, people “have a home; they go out to eat; they have a life.”

Conway’s search for what he calls “a big idea” to guide his philanthropy raises a timely question for the Washington region and the nation: What’s the best way to harness private charity to do the most good for society?

Needs are growing because of the slow economy. Government safety nets are shrinking because of tight budgets.

Meanwhile, some of the wealthiest members of the baby boom generation are actively looking for ways to give back to the community. The nation’s two richest men, Bill Gates and Warren Buffett, have urged their fellow billionaires to pledge to donate at least half their wealth before dying.

Conway said the impact could be enormous if other billionaires joined him in creating jobs. “If everybody who was in the Forbes 400 said they were going to create 10,000 jobs, by my mathematics, that would be 4 million jobs,” he said. America has about 14 million unemployed people.

Conway became interested in helping the poor in the early 1990s, when he started giving muffins to homeless people he saw on the streets near his office. He’s motivated in part by his Roman Catholic faith; he regularly attends St. Patrick’s Church in Northwest and Little Flower Church in Bethesda.

“Generally, I have a strong interest in trying to help people who are maybe not as lucky as I am,” Conway said. “I’ve been well rewarded in this world. I’m more worried about the next one.”

In theory, few people are better suited to finding ways to create jobs than Conway. As one of three businessmen who founded Carlyle in 1987, he helped build a financial powerhouse with high-level Washington connections and stakes in more than 200 companies employing more than 600,000 people.

Nevertheless, Conway says he doesn’t know the best way to create large numbers of lasting jobs. “Maybe you could ask your readers to help us,” he said.

He said one possibility would be working with top universities on an Institute for Job Creation. Another would be investing in infrastructure. A third would be helping charitable organizations expand.

Some local experts have recommended helping people get community-college educations or similar job skills. Lisa Mallory, director of the District’s Department of Employment Services, noted that the city has 35,000 unemployed people — who in many cases aren’t qualified for 51,000 available openings.

“I think [Conway’s] investment would be best spent investing in individuals and in those persons’ success,” Mallory said.

What do you think? E-mail your ideas to Conway at Copy me in at

Conway said of his wealth: “I wake up a lot of mornings and I think, ‘Well, what I am supposed to do with this?’ ” Maybe you can

Billionaire Conway impressed with public’s ideas for creating jobs for poor

By Robert McCartney Columnist September 28, 2011

There’s nothing like $1 billion in available cash to get people’s attention.

Local philanthropist Bill Conway said he’s been “overwhelmed” by the responses he’s gotten since my Sunday column asking for ideas about how to spend most of his vast wealth on charity. Specifically, he is looking for ways to create sustainable jobs for the poor.

Conway has received more than 700 e-mails. They range from one-sentence suggestions to multi-page presentations with spreadsheets and financial cost-benefit analyses. One of my favorites, from a reader in Oakton, was to invest in “technical schools” to teach people electronics repair, aircraft mechanics, plumbing or other skills.

“A lot of good technical jobs go unfilled because our colleges / universities have become money machines and overlook some of our most basic needs,” the e-mail said. “Get our grass roots moving again!”

Conway has heard from welfare recipients, college professors, the mayor’s office and legions of philanthropic groups eager for funds. It’s going to require at least a month of study to pick which ones to support.

Bill Conway is one of three founders of the Carlyle Group. (Astrid Riecken/FOR THE WASHINGTON POST)

“We’ve really created a tiger here. I’m going to have to help solve the jobs problem by hiring people to help me evaluate the proposals,” said Conway, who lives in McLean and is a co-founder of the District-based Carlyle Group investment firm.

Overall, Conway has been impressed by the quality of what he’s received. “Many of them have been very, very creative and thoughtful. I think a lot of them have some merit,” he said. “Of course, there were some ideas that were a little crazy. I’d rather not say which ones.”

Because I had the foresight (for once) to ask people to copy me in on the responses, I’ve seen most of them. I haven’t had time to read them all (apologies to those neglected), but I’ve looked at enough to form an impression.

Some proposals were easy to predict: Lend money to small businesses struggling to expand. Train the poor to repair the region’s infrastructure. Hire unemployed construction workers to rehabilitate foreclosed houses.

Others were offbeat: Encourage grocery stores to hire additional clerks to replace self-checkout machines. Invest in what the writer confidently described as a revolutionary (although still unpatented) anti-cancer drug. Have people spend five minutes drawing triangles, squares and circles, and use the results to “create a shared mental model” that will “tilt the axis of human history a few degrees.” (This last one came from a man who claimed to be a PhD candidate at Virginia Tech.)

Only a few were mere personal appeals for charity, such as from a suburban Maryland man who asked Conway to cover moving expenses so that his wife and son could come from Colorado to live with him.

I was struck by people’s gratitude toward Conway. It was refreshing, in our jaded era, to see so many notes sincerely thanking someone for trying to make a positive difference.

(There were exceptions. A Bethesda corporate tax lawyer suggested cynically that Conway was offering to spend $1 billion to help the poor in coming years because he was “feeling a little guilty about all the insider government information and contacts his group has benefited from.”)

It also was sobering to see so many worthy goals that aren’t being met because money is tight. A man in Springfield said he needed a six-month, $20,000 loan to open a group home for intellectually disabled adults in Reston. A woman in Accokeek said a charter school in the District needed funds for medical and counseling services to prevent ninth- and 10th-grade students from dropping out because of medical problems or neglect or abuse at home.

Above all, I was impressed by the degree of difficulty in the challenge that Conway has set for himself. He doesn’t want to give handouts or create temporary jobs. He’s looking for projects that will result in permanent positions.

That could mean that the projects generate enough revenue to continue to pay salaries even after Conway’s $1 billion runs out. It’s a hard task creating such positions, even for established companies with abundant resources — just look at the unemployment rate. Only a handful of the proposals seemed designed to be self-sustaining in that way.

Conway said he also might focus on providing training and education for people so they can get jobs that already exist. “What came across in many comments was that there are jobs out there, but there’s a mismatch in skills,” he said.

There’s still time to send in your ideas. E-mail Conway at, and copy me in at mccartneyr@washpost. com. I look forward to reporting the “winners” later this year.

Robert McCartney ... Washington Post Columnist
Published: September 24 | Updated: Friday, September 23, | Follow up: 10:40 PM September 28, 2011
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