This is a key question many of us are constantly striving to assess and answer; particularly, as we learn from successes and failures, and try to optimize our resources for large-scale and sustainable impact. What are the best and most effective ways to improve our world, and make it more equitable and just? How do we level the playing field for people who live in poverty?
It’s important to do your due diligence. It’s important to think about what really resonates with you and your story. However, while diligently assessing how you can have the greatest impact is critical, it’s just as important to not get stuck in “analysis paralysis” mode. There is no magic bullet or perfect solution out there. We live in a complex and ever changing world. It’s critical to mix smart analysis with action, taking risks, and the willingness to learn and think big to address pervasive issues such as the global water crisis and poverty.
Michael Hobbes just recently wrote an insightful article on this topic in the Huffington Post, after spending months talking to more than 40 researchers, development practitioners, foundation employees, and other Silicon Valley philanthropists. Michael asked them about the difficult business of giving money away.
This piece is very comprehensive and hones in on how Mark Zuckerberg can best give his $45 billion away. From his conversations with a comprehensive community of doers, thinkers, and change-makers; Michael heard about “promising ideas scaled into oblivion, donations that disappeared into corrupt governments, groupthink disguised as insight”, as well as “projects that worked, that scaled, that matched the ambitions of the new philanthropy while avoiding its blind spots. And it turns out that some of the best ideas are the ones Zuckerberg is the least likely to hear in Silicon Valley.”
While I don’t fully agree with all of the author’s conclusions, particularly with regards to microfinance which has demonstrated tremendous success in many areas (including water and sanitation), I do think this is an informative read. And while I don’t think there’s any magic bullet when it comes to international development, I am a strong advocate of using every tool possible in the toolbox (philanthropy, impact investing, policy change, microfinance, and in some cases direct cash transfers).
See below pieces of the article that most resonated with me:
- “Today 25% of the biggest philanthropic donations came from people under 50.”
- “Zuckerberg has interest and expertise in technology, and there’s nothing inherently wrong with making bets on gadgets or innovations that have the potential to help the poor. But as he does so, he should acknowledge that the silver-bullet promise of technology only works at changing the world when it’s combined with political will and popular demand. Until he finds a way to engineer those (please don’t), he should focus on the small ways, at the margins, where technology can improve people’s lives, 8 percent at a time.”
- “Zuckerberg shouldn’t be afraid to fail; he should approach philanthropy like a venture capitalist, testing out ideas to scale up later on. Bypassing legacy institutions is what Silicon Valley CEOs are good at, right? All those consultants must strike them as the charity equivalent of taxi medallions.”
- “Still, running a charity does require fully understanding problems before you try to solve them. “Move fast and break things” is a fine mentality for Facebook, where the consequences of a few bad lines of code are mostly limited to a drop in revenue or an exodus of users to Snapchat. Applying the same philosophy to health or education or criminal justice has consequences that can’t be shrugged away.”
- “The U.S. has more than 85,000 foundations and 1.5 million charities. Most major charitable causes, things like curing cancer, regularizing immigration and providing early education, are already covered by dozens of capable—and overlapping—organizations. In its annual survey of philanthropists, Grantmakers for Effective Organizations reported that 80 percent of donors wanted to see more collaboration between their grantees. But only 13 percent were willing to consistently pay for it.”
- “Under the standard philanthropic model, billionaires set up a foundation and give it a huge endowment. Every year, the foundation has to give away at least 5 percent of its total value. Meanwhile, the other 95 percent gets invested in blue chip stocks, hedge funds, foreign currencies, whatever will keep the total endowment the same size. That’s how foundations like Rockefeller and Ford exist in perpetuity: Do-gooders work on one side of the building finding things to donate to, while bankers work on the other side, making sure there’s more to donate next year.”
- “Recently, though, donors have started to reject this model. Giving away a trickle of money each year is unlikely to live up to the verbs—transform, reimagine, revolutionize—the new philanthropists use to describe their goals. Besides, why should 95 percent of your money just sit there in hedge funds and Halliburton stock, especially if you think you can do just as much good with the money you invest as the money you give away?”
- “Zuckerberg is going even further, giving up on a foundation entirely and putting all of his charity money in a corporate form with no limits on how to spend it. He’s not interested in making his money back. He just wants the flexibility to fund charities or companies or both. Which explains why one of Zuckerberg’s most recent donations wasn’t a donation at all. It was $10 million in seed capital for an education startup called Bridge International Academies, a chain of private elementary schools that wants to deliver education to the world’s poorest students.”
Here are some interesting concluding quotes:
- “So, when Zuckerberg hears pitches from companies seeking to solve the world’s problems, he shouldn’t ask them if they have a plan to grow, or an ambition to exist in perpetuity. He should ask himself whether he really wants them to replace the systems that already exist, or simply make them better. Because successful companies don’t just disrupt other companies—they disrupt economies, governments and the people who depend on them. That’s not something that Zuckerberg ever had to worry about, but he has to start.”
- “In the end, though, Zuckerberg’s greatest impact might be in the model he sets for other philanthropists. The Giving Pledge, which encourages billionaires to donate the majority of their wealth to charity, has attracted more than 142 commitments totaling more than $400 billion. The Founders Pledge has convinced 151 startup executives—most of them look about 19—to devote a portion of their exits to philanthropy. Charitable giving in the United States has nearly quintupled since 1994, and shows no signs of reverting back to opera houses and Harvard.”
- “Zuckerberg’s money alone is not enough to change the world, but his influence on this generation of givers might be enough to change philanthropy. If he’s successful, he’ll show them the value of going slowly. He’ll hire people who come from the places he is trying to save and who have been affected by the problems he’s trying to solve.”