Frank J. Hanna is CEO of Hanna Capital, LLC in Atlanta. He invests as a merchant banker in financial service businesses, and manages a hedge fund. Hanna has started and backed a number of successful businesses
during his investment career. Prior to going into the investment business, he was a corporate attorney. Through a number of different philanthropic groups, Hanna has supported and been involved in the issues of educational and religious liberty, and continues to serve and advise various public policy institutions that further these causes, including the Acton Institute, the Becket Fund and the Federalist Society. Hanna also founded the Solidarity Association, which works closely with the Vatican on a variety of issues. Hanna is a frequent speaker to various groups and mass media outlets
regarding issues of faith as they
pertain to the businessman. He has often spoken on philanthropy, and what he feels are new paradigms developing in this area.
Frank J. Hanna, III : Investing in Society's Bedrock
Frank J. Hanna accepted the David R. Jones Award for Leadership in Philanthropy at The Fund’s Leadership Network Conference held in Colorado Springs this October. Hanna, founder and CEO of Hanna Capital, has been involved in education for the past 25 years, most recently serving as co-chairman for the President’s Advisory Commission on Educational Excellence for Hispanic Americans. He has been instrumental in the foundation of three new Catholic schools in Atlanta, one of which serves underprivileged Hispanic immigrants. That school has also served as a focal point for urban renewal, as a village has been created around the school to serve the entire community. In November 2007, Hanna was awarded the prestigious William E. Simon Prize for Philanthropic Leadership from the Philanthropy Roundtable.
Philanthropy is becoming an increasingly important topic in our society, and it is something of an evolving phenomenon. We all know that value creation is the act of bringing something out of nothing, and it seems to me that people are now seeking to realize value through the act of philanthropy.
First, let me state that value is more than just money - value is anything that’s worth something. Therefore, value creation is not only possible in philanthropy, it is actually the only reason for philanthropy to exist - to bring about value.
Over the last decade, I have felt compelled to study philanthropy. I was very fortunate to have grown up in an entrepreneurial family. My great grandfather and his brother came to this country and were both in business for themselves. My great grandfather had three sons, all of whom were in business for themselves. And then my grandfather had three sons, all of whom were also in business for themselves.
And then, my father had two sons, and now my brother and I are in business for ourselves. That is not genetic. There’s a cultural teaching there. It can seem genetic, but it’s not genetic.
It is a cultural osmosis. Now if only we can study that and figure out how to teach it. It can be taught. I know because that is what my father did with my brother and me.
I will speak to you today about investing in our society’s bedrock, but a subtitle of the talk might be: “What is the highest and best use of our intellectual and financial capital?” Or, more simply put: “How ought we best spend it?”
Recently, there was an article in The Wall Street Journal - a laudatory article extolling Ayn Rand’s Atlas Shrugged. I can still remember the thrill I had when reading that book when I was in college.
She did such an incredible job of explaining and praising capitalism. But, in the end, Rand was unmoored or perhaps “mis-moored”.
She anchored her defense of capitalism and freedom in her view of man’s desire for, and right to, unvarnished selfishness. I believe that concept is wrong on several accounts.
First, it conflicts with the data. The happiest people in the world are not the ones who are the most selfish. In fact, those folks tend to be very unhappy - as was, according to her biographers, Ayn Rand herself.
Secondly, whether or not Rand was correct in justifying selfishness (which I don’t think she was), there will never be enough folks who agree that “selfishness is a good thing” for anyone to ever hope to succeed in governing society through that premise.
And finally, I think her thesis is in conflict with man’s transcendent nature, which brings us back to philanthropy, and man’s love for humanity.
As I mentioned, I was fortunate to grow up in a family that trained me in the principles of entrepreneurship; so by 1995 I had reached a point at which I had more money than I needed to feed my family. The question that then presented itself was: “What do you do with what is left over?”
What I’m about to say may sound a little controversial to you at first, but I ask you to stick with me to the end of my talk. You may still disagree with me, but we’ll see.
I am not going to give you a Randian defense of private property and freedom, but one I think is more in accord with reality.
How many of you own slaves? How many of you own your own children? How many of you own your own spouse? By “own” I mean of course treat them as chattel. Most of us no longer think of a spouse or a child as “chattel”, although some have in the past, and some still do today.
Now let me ask you how many of you act as if you own your own life, like chattel. As if it is something you can do with whatever you please. The world tells us that our lives and our money are ours to do with as we please, but I’m not sure that’s really right.
The astrophysicist from MIT, Alan Guth, said that “the universe is the ultimate free lunch.” I agree. The earth and all the things in it are a free lunch. The first men and women in history found cold streams from which to drink. Apples and pears to eat. Deer, rabbit, and pheasants to hunt, and fish to catch.
The first humans drank freely of the waters they found, ate of the fruit of the trees, hunted the game, and caught the fish. Thousands of generations have been free to do the same.
I don’t find anything accidental in that bounty. The goods of the earth are not merely available to those who chance upon them. They’ve been placed here to provide the fundamentals to all men and women who have ever lived or who ever will live.
Nothing in subhuman creation ever comes to be with a label saying this thing is meant for this person, but not that one. For this group, but not that one. People of this sort, but not of that sort. Instead, both in the beginning and now, God provides all the riches of the material world for all people to use as he directs.
In other words, the goods of the earth have not merely an existence, but a purpose, and a particular destination they are intended to reach.
I’m not advocating socialism (although I know it’s going to sound a little bit like that right now). What I am saying is that there is no person to whom the goods of the earth are by nature denied. There is no person who, in principle, lacks the right to drink the water or pick the fruit or hunt the game or catch the fish. The goods of the earth have a universal destination, they are meant for each and every one of us all.
When we judge that they are ours alone, to use as we please, we become like the banker who gets so used to having the money in his bank, that he starts thinking of it as his own money. When we begin to think that we, and we alone, own the blessings that have been given to all, that is when we start to have problems.
Now you may ask me how we can justify private property. From time immemorial, experience has shown us that private ownership is generally the best way to draw forth from the earth the maximum benefit for the most people.
In the 1200s, St. Thomas Aquinas listed three ways in which private ownership yields a society that’s ultimately wealthier, better ordered, and more harmonious than one that does not.
He notes that, first, people tend to take better care of their own property than they do with community property. Second, when some of the goods of the earth are clearly designated “mine” and others “yours” and are recognized by law as such, there tend to be fewer disputes within society and communities are more harmonious. Finally, if I know I will own, and thereby will be able to use and enjoy the fruits of my labor without the undue influence of others, I will likely work harder to draw from them all of the fruits and the goods that they can yield.
And for these three reasons, St. Thomas Aquinas argued that smart societies should promote and protect the ownership of private property.
So, while private ownership generally does allow me, if I choose, to keep my goods from you, and for you, if you choose, to keep yours from me, selfishness isn’t the primary justification for it.
The strongest justification for it lies much deeper and has consequences more profound. Private ownership promotes a wealthier and more harmonious society by creating incentives for owners to treat their goods better, and to bring forth from them greater wealth than there would otherwise be.
This is the benefit of private property that is overlooked by so many who denounce it as selfish and seek to abolish it in favor of the poor. By dividing goods into “yours” and “mine” and giving me dominion over my own property and you dominion over yours, everyone ends up a little bit better off.
Having said that, I don’t think my wealth is meant merely for myself, nor is yours meant solely for you. And this is where you start to see disagreements among some conservatives, even among some economic conservatives.
So, we must ask ourselves: What does that mean for me, right now, while I’m not retired and am still alive and still actively involved in creating and growing businesses?
If we grant that my wealth is not meant merely for me and for those I love, than who is it meant for? And how should I get it to them? I don’t have my wealth lying around in cash. It’s tied up in businesses and investments.
Am I supposed to dismantle all of my businesses and give the proceeds away like Mother Theresa? Am I to live a life of poverty? Should I just give it all to charity when I die? If not, what must I do today, and how should I do it?
I like to use the term “non-essential wealth”. I have non-essential wealth, and you probably do too. Non-essential wealth is the wealth we have leftover after we have provided for the fundamentals, insofar as we’re obligated to provide them. The fundamentals are the things we really need to ensure that we develop as we ought and become as productive as we ought. But after that, it’s non-essential wealth.
Benjamin Franklin said: “He does not possess wealth that allows it to possess him.” What I think he meant by this is that money misused can seriously damage those who receive it, particularly when those people are young and come into wealth before their characters have been formed by diligence and virtue.
Non-essential wealth can stifle initiative. Helen Keller said, “Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”
Non-essential wealth threatens or impoverishes humility and gratitude. These are the people that F. Scott Fitzgerald wrote about. He said:
“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them. It makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.”
And those are the people that Alexander Pope was speaking of when he said, “We may see the small value God has for riches, by the people he gives them to.”
Non-essential wealth threatens our identities. There is an old Yiddish proverb that says “with money in your pocket you are wise and you are handsome and you sing well, too.” When you have non-essential wealth others suddenly begin to treat you with greater deference than they did before you had money. This can lead to an initial period of elation that then is overcome by fear and a sense of isolation, and finally cynicism.
Non-essential wealth can distract us. It can also increase frustration, because of the law of rising expectations. The more we expect from something, the more vulnerable we are to disappointment and the unhappiness that comes from it.
For example, if I order room service and it costs me $50, and they forget the bacon, then all of a sudden the ability to afford a $50 breakfast becomes more of a source of angst than a source of enjoyment. If you’re paying $50 for it, you expect the bacon. On the other hand, if you go to the local diner and they forget your bacon, you think, okay, it’s just a little diner.
These are some of the perils of non-essential wealth.
Having said that, I should also state that wealth, in and of itself, is a good thing. Money is a good thing. It facilitates the transfer of goods and services. It increases the interdependence of human beings.
But when we fail to use our non-essential wealth to provide for the common good, we’re not only acting uncharitably, we’re withholding from others the goods that, by the universal destination of goods, are theirs.
Now, Ayn Rand would roll over in her grave if she heard me say that! She’d say there is no way this guy read my book! But I did. I simply believe that what she advocated was less in accord with reality than what I’m describing now.
There is another important distinction. I’m not arguing that giving to others is something that should be mandated by the state. I believe that when the state starts to mandate giving, it is ruined. Because giving is something that comes from the heart.
Now, it may be true that we must use our non-essential wealth for those who lack the fundamentals. But that doesn’t mean that by using our non-essential wealth to help those who lack the fundamentals, that we must cease to own it.
Because remember, ownership of private property helps society. We may be called to retain ownership of our non-essential wealth, while living in accordance with the ethical demands implicit in its ownership, and the universal destination of goods.
Indeed, some persons may even be morally obliged to retain ownership of their wealth in order for it to continue to grow so that it benefits society for years to come.
In other words, there are ways we can use our wealth that do not conflict with our vocation to be virtuous toward others. In fact, there are ways in which our wealth is an essential element Ñ a particular individual vocation we have. Because the creation of wealth can, in fact, be a vocation. And so long as we continue to create it efficiently, we have a general obligation to do so. The ability to do that is a gift that we ought not to squander.
Now, as I said before, money is not the only type of value that can be created. This is where we can begin to consider philanthropic investment of our capital.
I think we should make investments in the very bedrock of our society because I think the bedrock of our society is the virtue of our society.
Everyone here believes in freedom, but we all know there is a difference between freedom and license. Freedom only works when there is virtue, otherwise it becomes mere license.
Take Europe, for example. What is surprising to me is not that Europe has been in decline, but that the decline has been so gradual. I maintain that Europe had an incredibly strong bedrock of virtue, birthed out of 1900 years of Judeo-Christian society. The reason their society hasn’t crumbled all at once is because that bedrock is so strong.
But they are eating into that bedrock, and we are eating into ours. If we do not work to build it up, eventually it will all be gone.
Take another example. I’m from Atlanta. For a long time it seemed that the only thing anyone wanted to talk about in Atlanta was Michael Vick. I’d be amazed if you don’t know the story about Michael Vick.
The problem with Michael Vick is that no one ever taught him virtue. They taught him how to play football, but no one ever taught him virtue.
Now, you may be thinking: “Look, he’s a grown man, he knew better than to be cruel to animals. Anyone knows that.” But do they? Do they just know that?
We all say he should simply know better. Before this came out, folks cheered for Michael Vick, barely noticing the illegitimate children by different women, none of whom were his wife. No one says a thing about that. We wait until he mistreats dogs, and then we show outrage.
But let me tell you something. Over the course of their lives, those children and their mothers are going to suffer more from his mistreatment than those dogs.
When you have a child with no inclination of being a real father to that child, that is mistreatment of a creature. In this case, a human being. It is incredible. The man can mistreat women and children, and we don’t say a thing. But he mistreats dogs, and we go bananas.
I’m not defending Vick, nor am I prosecuting him. I’m saying that when we let that kind of thing go, and are afraid to talk about virtue, we become just as blind as Michael Vick was to those dogs and their suffering.
We have a multibillion dollar porn industry that treats women worse than dogs. And we don’t speak up until someone does something to a dog. I know you can say the dog has no choice and the woman does. But check out the backgrounds of some of these women and tell me what kind of choices they have. What kind of virtue have we, as a society, taught them?
The philosopher Josef Pieper has noted that the Latin word for virtue is virtus. It means manliness. The German word for virtue, tugend, derives from the verb meaning to be capable. So virtue is not just external good behavior and respectability. It is not just that a good human being is a human in a higher manner than a bad one.
A virtuous man is, in every respect, more capable. Thus, “virtuous” is the word we use to describe a person who exercises his essential abilities and realizes his potential. He is doing what is good, not because he must, but because he chooses to do so.
I’m a financial entrepreneur. I’m always looking for the point of maximum leverage for my investments, whether in business or philanthropy. And, I’ll tell you, if we build a society of virtue, everything else will take care of itself. And if we abandon the teaching of virtue, nothing else will matter.
At the end of the day, our American culture will not survive without virtue. This is part of what The Fund for American Studies is about. They are teaching young people about the virtue of the American experience.
I try to focus much of my philanthropy on the core truth about the human person. Either there is something transcendent there, or there is not. And if we get that wrong, all of our policy will be wrong.
This is why, in my belief, our public schools are failing in so many places around the country. We treat children as if there is no transcendence. If there is no transcendence, why should someone be virtuous? Remember, virtue means to be fully a man or a woman. If there’s no transcendence, we need not be more than animals. And animals, while wonderful, are not virtuous.
We don’t like to talk about virtue, because we’re afraid. We have somehow convinced ourselves that no one in society can speak of an ideal, unless he or she always lives up to the ideal.
Well, none of us can always live up to the ideal. Not one of us is perfect. But we can still acknowledge an ideal. And if we fall short, that doesn’t make us hypocrites. It means we fell. Hypocrisy is when someone knowingly does one thing while simultaneously arguing for the opposite behavior; it is not the failure to live up to an ideal.
We have a fear of offending others by identifying an ideal. Even those of us in this room criticize political correctness, only to engage in our own social correctness. We can criticize cruelty to dogs, but not illegitimate childbearing.
But if we are afraid to say it, how in the world is Mike Vick, and those like him, going to learn it? This is what has happened in our schools and in our culture. If we are unwilling to say people should get married before they have sex, how do we expect Mike Vick to know that?
Our failure to acknowledge an ideal reflects a deeper deficiency in our souls. It reflects the idea that we’re actually afraid of acknowledging the absolute.
Its no wonder then, that the Left dominates the political and societal debates. Once they scare us away from our reliance on something absolute, it’s all over.
Somebody asked last night at dinner, “why is Hollywood winning? Why is Hollywood so powerful?” I believe it is because we don’t insist on the ideal, on the absolute.
When we fear acknowledging an absolute, when we get to where we can’t even identify truth, we end up fearing the expression of truth. If we fear truth, we can’t even do math correctly! And more importantly, we can’t raise our children because we don’t know what to teach them. And if we don’t do that, then all the rest is window dressing.
Parents say, “I just want my kids to be happy. Whatever works for them.” We all want our children to be happy. Of course we do. But what does that mean? Aristotle said the happy man is the man of virtue. We all know that when you act honestly, bravely and generously, you are more likely to be happy then when you act dishonestly, cowardly and miserly.
But if this is happiness, remember that it is something that doesn’t just happen. It has to be taught.
If we don’t have a moral awakening, and if we do not invest in it, as The Fund for American Studies has, we are doomed. Because the only real competitive advantage we have in this country, versus the rest of the world, is our bedrock, our culture, and the people of virtue who build that culture.