The New Wave Of Philanthropy
January 15, 2007 Natalie Ghidotti
Entrepreneurial philanthropy. Planetary philanthropy. Venture philanthropy. Innovative philanthropy. Hybrid philanthropy.
These are the terms that have been used to describe a new wave of philanthropic giving. These are also the terms that were heard throughout the recent two-day Slate 60 conference, which brought together the country’s top 60 philanthropic donors.
With their limos waiting outside, donors gathered at the conference to discuss the future of philanthropy and share (or boast, depending on the situation) their successful foundations and charitable programs. Unlike decades ago, these men and women didn’t send their foundation directors to discuss the details of their philanthropic efforts. They took the stage themselves to talk excitedly about addressing education in Atlanta, cleaning the water in Africa, understanding the global climate crisis and fighting AIDS in Third-world countries.
“I think if our country used a little more of the same kind of philosophy we’re using here in this room, it would be a hell of a lot better world than the one we’re living in right now,” said media mogul Ted Turner, who has been on nine of the 10 Slate 60 lists.
Turner inspired the creation of the Slate 60 list when in 1996 he bemoaned the influence of the Forbes 400 list of richest Americans, saying it discouraged the wealthy from giving away their money for fear of slipping down the rankings. Turner and the team at the online magazine Slate hoped that creating a list of top charitable gifts would inspire rich Americans to compete in a more beneficial way.
Looking around the room at the Slate 60 conference, held at the Clinton Presidential Library in Little Rock, Ark., one couldn’t help but think that Turner’s vision became a reality. Headline-makers such as Steve Case, Larry Page and former President Bill Clinton spoke about their convictions to make the world a better place. And, many of these wealthy Americans believe philanthropy and entrepreneurship can go hand-in-hand.
“We should be looking for ways to create a more hybrid approach to philanthropy,” said Case, former chairman of AOL Time Warner and chairman of The Case Foundation. “I believe it’s better if we can blur the lines between business and philanthropy.”
Case is a proponent of building businesses that are more mission-driven. His new company, Revolution, seeks to invest in companies that give consumers more choice and control over everything from healthcare to cars. One of these companies includes FlexCar, which connects people who want to share a car rather than own one. Case sees FlexCar as hybrid philanthropy, giving consumers an alternative to car ownership while helping reduce pollution and energy consumption.
“We’re looking to build companies that can save the world,” Case said. Take for instance Accelerate Brain Cancer Cure, or abc2, a nonprofit the Case family started in hopes of accelerating research to find the cure for brain cancer, which killed Case’s brother, Daniel, in 2002. Case has also created a venture capital fund, Braintrust Accelerator, which invests in companies working to cure brain cancer. A share of any profits made will go to abc2.
Then there are Bobby Shriver and Bono, of the band U2, who created Product (Red), a business model that sells products and services with the (Red) brand. Companies such as Motorola, The Gap, Nike, American Express and Apple are selling (Red) products and giving part of the proceeds to The Global Fund to help eliminate AIDS in Africa.
“We want [these companies] to make money,” Shriver said. The companies are contracted for five years to give 40 percent of their profits from (Red) products to The Global Fund.
Shriver has been criticized for his recent comment when he said he hoped people at The Gap made enough (Red) profits to purchase a house in the Hamptons. But he and others believe entrepreneurial philanthropy is a win-win for everyone involved.
But older philanthropists such as William Gates, Sr., co-chairman of the Bill and Melinda Gates Foundation, say entrepreneurial philanthropy is just a tangent. “There have been entrepreneur philanthropists for decades,” he said. “To say this is the modern thing that all these young people in philanthropy are entrepreneurs as distinguished from [something else]. I think it’s nonsense.”
Many people would argue that the Gates Foundation is an example of entrepreneurial philanthropy with its focus on garnering good returns for its investments, but Gates Sr. disagrees. “There’s nothing unusual about what we’re doing,” he said. “The notion that we started something new is nonsense. It’s an enormous insult to people like the Rockefellers. We may have more money than anyone else to spend, but that doesn’t make us different in kind – just in size.”
“He’s completely wrong,” said Shriver in response to Gates’ stance on entrepreneur philanthropy. “Bill [Gates], God bless him, said we would never get done the three things that Bono and I told him we were going to do. But he said he would give us a small grant anyway because he thought we were trying hard. We accomplished it all. People don’t believe it when you tell them you’re going to do something new.”
DISRUPTIVE TECHNOLOGY TO DISRUPTIVE PHILANTHROPY Many people questioned Larry Page and Sergey Brin when they recently unveiled their plans for Google.org – the $1 billion philanthropy arm of Google created to fight poverty, disease and global warming. The two men believe for-profit status for Google.org is the answer to solving many of the world’s problems.
“I do think it’s good for people to make money doing philanthropy,” Page said. “For us, a lot of these things are investments just like normal business deals, but we don’t really expect to make a lot of money right away. They aren’t nonprofits, but they’re less-profits. Maybe they’ll take 10 years to pay off.”
Said Page, “There’s a huge amount of money that exists in the 501(c)(3) structure, but we figure we can get some leverage by doing things out of that structure that other people aren’t doing.”
But Google also dabbles in more traditional philanthropic efforts, such as its Google Grants program, which lends nonprofits across the country the company’s leading marketing expertise. Approximately $100 million has been given to 1,900 organizations that have used Google’s keyword advertising to connect with their target audiences.
And although Google and its founders have made headlines when it comes to venture philanthropy, they do still recognize that philanthropy can’t always be at a profit.
“There are a lot of institutions out there that can’t be for-profit that need ongoing funding,” said Sheryl Sandberg, vice president, global online sales and operation for Google and a Google.org board member. “I’m on the board of a charter school organization in California. If I wanted to open another school tomorrow, I could raise the $5 million by this afternoon, literally. If we want to fund the continuation of the schools we’ve already built, that is so difficult. [The question is] how do we build and scale organizations that can last?”
GIVING MORE Building self-sufficient organizations takes money, and the good thing is that American citizens seem to be giving more away. In fact, the $4.3 billion donated by the Slate 60 in 2005 accounts for only a fraction of the some $260 billion Americans donated last year.
“Private citizens have more opportunity to do public good than any other time in American history,” said President Bill Clinton as he addressed some of the country’s richest citizens.
This new power comes from the fact that a significant concentration of the country’s wealth is with people who understand they need to give back, he said. It also comes from ordinary citizens who give generously, such as the $1.2 billion given to the 2004 tsunami relief effort (half of which was given through online donations).
And, of course, the future of philanthropy is also in the hands of future billionaires such as Justin Rockefeller and other young adults who want to continue their parents’ good works.
Rockefeller, 27, sits on the board of the Rockefeller Family Fund and is also co-founder of his own 501(c)(3), Generation Engage, a nonpartisan, youth civic engagement initiative. Rockefeller attended the Slate 60 conference not only to drum up interest in Generation Engage, but also to learn how to be a better philanthropist.
“I’m here wearing two hats – that of philanthropist-in-training or grant-giver with the Rockefeller Family Fund and grant-seeker for Generation Engage,” he said.
Generation Engage was born out of Rockefeller’s frustration with how foundations funded youth get-out-the-vote efforts. Rockefeller and others felt that foundations placed too much emphasis on voter registration, the easiest form of measuring success, versus promoting responsible citizenship in between elections.
“I actually think a lot of foundations, frankly, waste a lot of money funding these kinds of efforts,” he said.
With his unique situation and infamous last name, Rockefeller knows he has a great opportunity to position Generation Engage as a 501(c)(3) worthy of the many dollars that have been earned in the room. He also understands he has much to learn from these donors.
“Regardless of last name, philanthropy is not innate, and one must learn to do it well.” NPT