We respectfully disagree. The keenly anticipated initial public offering, which aimed to raise $354m, is another important step towards fully engaging the mainstream capital markets in the fight against poverty.

As we reported in the chapter of Philanthrocapitalism called “philanthropreneurship the eBay way”, Yunus made similar comments about the successful IPO of Compartamos, a Mexican microfinance bank, in 2007, and about the efforts of philanthrocapitalist Pierre Omidyar, the founder of eBay, to encourage the development of for-profit business models for microfinance.

As we concluded in the book, “a big opportunity for philanthropists may be to back ideas that, if they succeed, would profitably solve social problems, but which have a higher risk of failure than commercial providers of capital, including venture capitalists, are willing to bear. Bearing the risk of ascertaining whether the idea can be pursued profitably is well suited to philanthropy. If the idea is a dud the money can be counted as a donation to the cause of increasing human knowledge; if it only works as a non-profit, philanthropists can choose to keep funding it; whilst if it succeeds, the philanthropists can let for-profit investors take it to scale while they, having played a crucial catalytic role, can put their philanthropic risk capital to work elsewhere.”

The SKS IPO is a case in point. Whereas Compartamos got its seed funding from charitable sources, such as the Accion microfinance network and the Mexican billionaire Alfredo Harp (Carlos Slim’s cousin), SKS was seeded by traditional mainstream investors, including Sequoia Capital, a Silicon Valley venture capital powerhouse, and Sandstone Capital, as well as George Soros and Indian outsourcing billionaire (as well as noted man of integrity), Narayana Murthy.

Hopes are now high that other for-profit investors will put their money into the emerging for-proft “bottom of the pyramid” marketplace. Already this is expanding beyond the traditional microcredit pioneered by Yunus at Grameen. SKS has already sold 12.5m micro-insurance policies. Ignia, an investment firm co-founded by Alvaro Rodriguez, the chairman of Compartamos, and backed by investors including Omidyar, is seeking for-profit opportunities in firms providing a range of services to the poor, from health care to low-cost housing to schools.

”By offering an IPO, you are sending a message to the people buying the IPO there is an exciting chance of making money out of poor people. This is an idea that is repulsive to me,” says Yunus. ”Microfinance is in the direction of helping the poor retain their money rather than redirecting it in the direction of rich people.” A better way to look at it is to see the emergence of a win-win, in which investors can profit by putting their money to work to help poor people enjoy a higher standard of living.

Certainly, profiting from providing services such as microfinance to poor customers can feel uncomfortable. Yet the experience of Compartamos shows the benefits that can flow from it. High interest rates were charged – upwards of 70% a year – but the profits Compartamos earned attracted lots more capital into Mexican microfinance, greatly extending the availability of credit to poor Mexican borrowers who would otherwise have had to go without or turn to real – ie, really nasty – loan sharks. Had Compartamos remained a non-profit, Mexican microfinance would almost certainly have stayed far smaller, with many of its current clients left worse off. Now the combination of economies of scale and competition from new entrants is starting to drive down interest rates to less alarming levels. Expect the SKS IPO to initiate similar trends in India.

Yunus has been busily developing a rival business model to the for-profit bottom of the pyramid sort. Called “social business“, it aims to earn a profit but not to return any money to investors. The most notable example so far is a joint-venture between Grameen and Danone to provide yoghurt enhanced to promote basic health to poor Bangladeshis. He is, reportedly, also to appear in the Simpsons cartoon later this year. It is not known if he will try to recruit Marge to a classic Grameen-style all-female lending circle, but Homer had better not try to start a for-profit microfinance institution in Springfield. Doh!

The newly published annual billionaires list in Forbes magazine confirms the first of those predictions. The super-rich are bouncing back faster than the global economy – the world’s billionaire count has jumped from 783 in 2009 to 1,011 now. The philanthrocapitalists have also continued giving, as demonstrated not least by Bill Gates’s recent $10 billion pledge at Davos.

The big “news” from this year’s Forbes list, however, is that the richest person in the world today is neither Bill Gates (number one on the list for most of the past decade) nor Warren Buffett (his partner in philanthropy, who once knocked Gates off the top slot) but the Mexican telecoms tycoon Carlos Slim. This is not such a huge surprise, since Slim has been catching up with Gates and Buffett over the past few years – though given the fact that estimating the wealth of the superrich is more art than science and Forbes found less than a 1% difference between the fortunes of Slim and Gates, it may be no coincidence that the magazine’s choice as top dog happened to be the one likeliest to generate the most headlines. (How boring if Gates had been the richest yet again.)

That said, the Forbes ranking provides a great opportunity to test the new number one against the ‘good billionaire guide’ that we set out in the book.

The first rule for a good billionaire is to earn your money fairly in competitive markets (some think that Gates falls foul of that rule since Microsoft has had a few run-ins with the antitrust authorities, although one could argue that since Microsoft was forced to pay some substantial fines as a result it has paid its dues ). Critics have certainly slammed Slim for his iron grip on the Mexican telecoms markets, which he won when they were privatised (his BBC biography says that he controls 90% of the country’s landlines).

The second rule is the billionaires should pay their taxes. We do not have any evidence to go on with this one. Mexico is known as the major economy with the lowest rate of tax revenues relative to GDP. But we have no information regarding Slim’s own contributions, and whether he bucks that trend. If you know, please do tell us.

The third rule is that billionaires should be disproportionately generous, to reflect their substantial wealth, and the fourth, that they should be thoughtful about giving in a way that maximises its positive impact. The good news is that when we wrote the book, Slim had just pledged to give away $10 billion, which is not Gates-like or Buffett-like generosity, but is a decent showing. He has also appeared alongside Shakira as a show of support for her philanthropic work in Latin America, to which he has given an unspecified amount of money (almost certainly small change to him). However, we have heard very little about his philanthropy since. It may be that Slim is giving it away in secret but, on the whole, we think that well-known philanthrocapitalists should be talking about their giving – to encourage others and to be transparent.

Slim has certainly spoken sceptically about philanthropy in the past and has argued that “poverty is not fought with donations, charity or even public spending, but that you fight it with health, education and jobs.” This argument seems rather feeble to us. Yes, investing his money can create jobs and wealth but that’s not the whole answer to the world’s ills – his philanthropy could have a massive impact on poverty.

Our advice Carlos, for what it’s worth, is to give giving a chance. In fact, we even predicted you would in our start of the year forecast for philanthrocapitalism in 2010. If you’re too busy for now making money then why not let someone else spend it, say by matching the Gates donation for vaccines, or, perhaps even better, adding to the endowment of some other foundations working in global health to create a bit of competition for Gates. Go on, you might even enjoy it.

Gazing into our crystal ball, we see philanthrocapitalism continuing to surge ahead as givers and governments realise that philanthropy is going to be the driver of much of the social innovation that tackles the symptoms and causes of our current economic mess. This surge in activity will be increasingly controversial, as philanthrocapitalists take on more challenges that are inherently political, at home and overseas. So, recognising that most of these forecasts will be wrong (though we can only hope!), here are our specific predictions for the year ahead.

1) A wave of mega-gifts from a new cohort of American philanthrocapitalists. In the United States, the IT sector has created scores of billionaires, some of whom have got the giving bug but there are still plenty who haven’t, yet. We think Apple founder Steve Jobs is ripe to join the movement: the icon of cool is starting to get some bad press for his lack of generosity (something that happened to both Bill Gates and Warren Buffett shortly before they made their first big gifts); he is a cancer survivor, which as well as giving him a sense of his own mortality, is also an experience that has motivated the giving of a number of other wealthy donors such as Michael Milken and Lance Armstrong; most of all, he is a born problem-solver, so would probably love it. 

An outside bet for a new tech philanthrocapitalist is Microsoft CEO Steve Balmer – yes he’s still busy with his day job and has no time for philanthropy but why not follow Warren Buffett’s example and hand a slice of his fortune to someone he trusts to give it away.

2) New giving by American billionaires will be outstripped by donors from emerging markets. 2010’s biggest donor will probably be a Chinese billionaire that none of us has yet heard of. Or maybe one of India’s super-rich, steel magnate Lakshmi Mittal perhaps, will leap to the top of the giving tables. Perhaps Mexican telecoms tycoon Carlos Slim will start to do something really substantial with the $10 billion he has already pledged to give away. We’re not sure where exactly it’s coming from but something big is going to come from the emerging markets. It would be great to see a new wave of philanthrocapitalists in Africa. Sudanese mobile phone guru Mo Ibrahim is looking a bit lonely at the moment, so here’s hoping that the super-rich of Africa decide that it’s time to do their part – 2010 would be a great opportunity for South Africa’s billionaires as the eyes of the world will be on their country due to the soccer World Cup.

3) Malaria will be the cause of the year, centred on the World Cup in South Africa. The Malaria No More campaign, backed by Bill Gates and a bunch of corporate sponors including Rupert Murdoch’s Newscorp, has been gathering momentum in 2009 and its publicity is due to peak around the global media event of the year in the summer of 2010. With the world focused on Africa, political leaders and the continent’s super-rich will be under pressure to show that they are committed to the fight to stop this preventable disease that kills a million people a year.

4) Football may be the big sporting event of the the year but the big celebrity philanthropist of 2010 will be a golfer, as Tiger Woods redeems his reputation by spending far more time with his foundation – which is already quite impressive, but could be far bigger. His private life may be a mess but Tiger is certainly a fighter, so we expect him to come back in 2010 with some big giving to rescue his reputation.

5) On the theme of redemption, we’re expecting a bumper year of giving from the financial sector. Goldman Sachs made a good, but far too small, start in late 2009 by pledging half a billion dollars to help small businesses in America. But far more is needed if the reputation of bankers as a force for good is to have any chance of being restored. The public outcry over financiers’ pay isn’t going to go away and the bankers need to show that they’re doing their bit, corporately and personally, to take on the challenges of the economic crisis.

6) 2010 is the year when for-profit philanthropy and social investing goes to scale. 2009 saw the creation of Global Impact Investing Network, bringing together philanthropists, ethical banks and mainstream banks to push the cause of social investing. 2010 will see the flotation of Indian microfinance company SKS, a landmark in the development of ‘bottom of the pyramid’ businesses that serve the needs of the poorest and turn a profit for investors. More philanthropists are likely to focus on how to take the lessons of microfinance and apply them to supplying other services demanded by the poor. Watch this space.

7) Another major celebrity will join the list of those known as much for their commitment to giving as for what made them famous in the first place. In the book we profile Bono, Angelina Jolie, Shakira and Chinese film star Jet Li as examples of effective “celanthropists”, who are allying their celebrity with professional philanthropic support organisations in partnership with mega donors, big business and even governments. Our top tip to go big in 2010? Matt Damon, who lately has been spending a lot of time getting to grip with the details of what is going to be one of the biggest issues facing the planet in the coming decades, access to water.

Mass philanthrocapitalism will go from strength to strength. Kiva.org will get over its recent difficulties and sites like GlobalGiving will find new ways to enrich the donor experience to stimulate giving. But the big story in 2010 will be Facebook Causes as millions of people use their social networks as a force for good by, say, ‘giving’ their birthdays – celebrating another year by getting their friends to donate to charity rather than buying them a new pair of socks.

9) Philanthropy will start to take on tougher foreign policy challenges in 2010, increasingly in partnership with government. Afghanistan and Pakistan are top of Secretary of State Hillary Clinton’s ‘to do’ list next year but have so far received little attention from philanthrocapitalists. In 2009 this started to change as the State Department hooked up with social media gurus to think about how to use the internet to take on extremism in the Middle East. Afghanistan and Pakistan are crying out for aid that actually gets kids educated, supplies villages with water, gives people jobs, empowers women – the list goes on. Here’s a cause that’s ripe for innovation from the philanthrocapitalists.

10) Getting involved in the ‘war on terror’ is going to be controversial but so will much of the best philanthropy in 2010. From Bill Gates’s efforts to reform America’s schools that are annoying the teaching unions to George Soros’s new initiatives to remake economics, philanthrocapitalists will increasingly court controversy. But if it helps create a better world, that is the sort of controversy worth having.

Happy new year!

In a press conference with Jeff Sachs, who we describe in the book as the world’s first “celebrity economist”, Shakira committed ALAS (”wings”), a new foundation founded by several Latin American artists, to monitoring the implementation of these plans, which she expects to be in place within a year, to achieve the goal of “the institutionalisation of space that defends the rights of children.”

Shakira goes about her philanthropy in a serious, professional way that could not be more different from the popular stereotype of celebrity philanthropy. As Sachs pointed out, the ALAS agenda for early childhood development is “moving forward with unique speed”. Shakira has “raised this to the top of the agenda very quickly and appropriately”, as she first obtained commitment in principle from Latin American leaders and then repeatedly challenged them to act upon it.

The global economic crisis has only added to the urgency of this campaign, she says, promising to raise a red flag to alert Latin America’s governments to the crisis and get them to “put plans in place to protect children in poverty from dying of hunger.”

In May, ALAS held an event in Mexico City at which over $200m was pledged to the cause by Mexican billionaire Carlos Slim and Howard Buffett, who runs a large foundation endowed by his father, Warren Buffett. She and her colleagues in ALAS clearly mean business.

Matthew wrote an article about the event, and how it demonstrated Shakira’s serious approach to effective philanthropy. Unfortunately, in the editing, what was intended as a light-hearted comment expressing Matthew’s amusement that he, Howard Buffett and his son, a lady from the Catholic Relief Society, and Shakira’s talented philanthropy advisor, Trevor Neilson of Global Philanthropy Group, made an unlikely bunch of “groupies” mutated into an unfunny and inaccurate reference to “hangers on”. Sincere apologies to all concerned. The article is here.