The Washington Post reported recently that William Conway, co-founder of the major private equity firm Carlyle, is asking the public how to use $1 billion of his $2.7 billion fortune to create jobs. Here's an answer for Mr. Conway and America's other 413 billionaires: Build a bridge.
One of the most urgent economic problems facing the U.S. is the deplorable state of the country's roads, bridges, railways and other essential networks. In its latest report card in 2009, the American Society of Civil Engineers gave U.S. infrastructure a D. A recent report from the Organization for International Investment concluded that this poor infrastructure "is eroding the country's ability to attract and retain dynamic global companies that create high-productivity, high-wage jobs."
But even if the problem is apparent, fiscal constraints and partisan gridlock are frustrating government efforts to address it. There is, however, an untapped, independent source of money for infrastructure needs: billionaires like Mr. Conway.
According to the most recent Forbes list, the 400 wealthiest Americans have a total net worth of $1.53 trillion. The top 50 alone hold more than $700 billion in personal wealth.
Why shouldn't these citizens have the opportunity to invest directly in infrastructure projects of their choice, along with incentives to do so? Their donations could be combined with public funds, and they would receive tax benefits and naming opportunities. To avoid bridges to nowhere (or, say, to a donor's private island), billionaires would select from a list of critical projects defined by an independent commission or department of transportation. And to prevent waste or diversion, donors could place money into an escrow account. Funds would then go to contractors when each stage of the project is complete.
Many wealthy Americans are already generous philanthropists. Investor Stephen Schwarzman, for instance, donated $100 million to the New York Public Library, whose main branch is now the Schwarzman Building. Entrepreneur Eli Broad pledged $600 million to Harvard University and MIT to establish the Broad Institute. History is filled with examples of gifts made by families with names like Carnegie, Rockefeller and Mellon.
None of this philanthropy has gone to public works, which have remained the domain of government. But what is the difference between an Eli Broad Institute and a William Conway Bridge? If anything, a bridge benefits society more. And it benefits the donor, too: Potholes and traffic jams are no fun, even in a chauffeured Bentley.
There is a precedent: Ottoman-era Turkey lacked a budget for the provision of basic services. To fill the void, more than 35,000 private foundations, known as vakif in Turkish, funded public-works projects and municipal services, from water systems and schools to hospitals, bridges and roads. Many modern Turkish foundations have continued to supply traditional infrastructure—the Sabancı Foundation, for example, has built more than 120 schools, hospitals, libraries, orphanages and other facilities. These assets are then transferred to state ministries, which run them.
Given the scale of U.S. infrastructure needs, it may seem that even the wealthiest Americans lack the financial firepower to make a measurable difference. And indeed, the funds needed for some projects are huge. Only a few ultra-wealthy donors could meaningfully contribute to a $10 billion-plus rail tunnel between New Jersey and New York City. But billionaires could fund significant portions of smaller projects that are still crucial for jobs and growth: $800 million to repair a portion of the Boston-New York-Washington train corridor, or $100 million to speed construction of the Dulles metrorail project, which will link Dulles International Airport to downtown Washington, D.C. Smaller projects could be built for even less.
To be sure, this is not a long-term solution. Infrastructure will continue to require substantial government investment. Individual contributions, however, can fill gaps, jump-start projects, and catalyze others to think creatively about how they can contribute to America's economic foundation. This would create jobs directly and set the stage for a stronger economy in the future, when individual contributions would not be so sorely needed.
Savvy investors can already buy shares in infrastructure such as toll roads with an eye toward turning a profit. This is similar to President Obama's proposed infrastructure bank, which would include private investments. But highways, bridges and the like also present prominent philanthropic opportunities, with the returns in public welfare and tangible legacies for donors and their families. Even a sewer grid could be sexy with the right billionaire's name attached.
Finally, visible gifts for infrastructure would be in the enlightened self-interest of donors. Good infrastructure is good for business. Gestures of clear value to the public are a wise idea at a time when anti-Wall Street sentiment and calls to redistribute wealth are on the rise.
Mr. Landow is associate director of the Civil Society, Markets, and Democracy Initiative at the Council on Foreign Relations. Ms. Lobel is associate director for foundation relations at the Council on Foreign Relations.
This article appears in full on CFR.org by permission of its original publisher. It was originally available here (Subscription required).