Maybe twenty years ago, there was still such a thing as a philanthropy “establishment.” It was centered in New York, with outposts in places like Chicago and Boston, and very much shaped by august institutions like the Ford and Rockefeller foundations, along with the Carnegie Corporation. There weren’t many big funders on the West Coast or in the Southwest, and only a few individual mega-donors who were active.
Then, all hell broke loose. First came the rise of West Coast philanthropy in the late 1990s, with the emergence of several giant foundations rooted in tech wealth and bearing such names as Hewlett, Packard, and Gates. Next, a growing array of living mega-donors started to arrive on the scene, loaded with cash from boom times—not just in tech, but in finance, retail, media, real estate, and other areas. Many did things their own way—sometimes creating professional foundations, other times not. A massive gift from the publishing magnate Walter Annenberg in 1993 to improve public schools and, four years later, Ted Turner’s $1 billion pledge to boost the United Nations, presaged a new era in which the super-rich deployed huge sums of money to achieve very specific goals. (With ever more wasted along the way, as some said about Annenberg’s record education gift, which left hardly a trace in its wake.)
In just the past decade, the world of philanthropy has grown even more crowded with newcomers, further splintering it and ensuring its lack of any cohesive, shared mind-set. In turn, that fragmentation reflects what has happened with America’s upper class as a whole. The stampeding wealth boom of recent decades, spread across many industries and regions, hasn’t just vastly expanded the ranks of the rich; it’s greatly diversified who these people are and how they think.
The wealthy are still almost entirely white, yet otherwise they are an ever more varied bunch. And so are the biggest givers.
Among today’s top philanthropists are millennial techies who don’t remember a time before the Internet—and octogenarian real estate barons who grew up during the Great Depression and have never sent an e-mail. There are donors who didn’t go to college—and those with a raft of degrees. There are those who got rich in a few short years, and those who’ve spent many decades building their fortunes. Some givers were born on third base, while many others are tapping self-made wealth.
Women have always played a huge role in philanthropy, but today that role is larger than ever, and an unprecedented number of women donors are giving away their own money or inherited wealth, as opposed to their husband’s.
Today’s philanthropists come in every political stripe, from far-right libertarian donors to progressive Democrats—with most somewhere in between. They are diverse in other ways, too. You’ll find Christians and (many) Jews, and mega-donors from all parts of the country—well beyond the new economy hot spots.
Southwest oil money may sound like yesterday’s news, but these fortunes are now bigger than ever before—powering a growing wave of giving that, among other things, is reshaping cities like Houston and Tulsa. In Chicago, old money and new money are working together to create a philanthropy boom town. The north woods of Maine have been roiled by controversy as one of the state’s richest women has used her fortune to buy vast swaths of wilderness and push for a new national park. A top donor in Missouri has given millions to remake education and public policy in that state, while the heir to a chain of retail stores has used his grantmaking to move North Carolina’s politics sharply to the right. The biggest arts philanthropist in America has focused her giving not in New York or Los Angeles, but in Arkansas. In Colorado, which is now home to five billionaires with a combined net worth of nearly $40 billion, philanthropy is surging as never before. The same can be said about Washington State, which has twice as many billionaires today as it had a decade ago—and also more jockeying for influence among the super-rich on such issues as education and guns.
It’s not so easy to generalize about all these people or their giving. There’s an old saying that “if you’ve seen one foundation, you’ve seen one foundation,” which reflects how idiosyncratic philanthropy often is and the diversity of causes and approaches that donors get behind. Lately, that’s become all the more true.
The path that donors take to large-scale giving can be wildly different. William Ackman, who became a billionaire through hedge funds, told me that he decided to become a philanthropist in college, long before he had any money, after reading the social justice theorist John Rawls. Another hedge fund billionaire, John Arnold, told me that his philanthropic journey began at a checkout aisle of the supermarket, when he saw a magazine touting the “fifty best nonprofits in America.” Arnold, who was making a lot of money and thinking about giving back, bought the magazine and made his first $25,000 donation to one of the groups on the list. Still another finance billionaire, Steve Cohen, was slowly drawn into ever larger giving over many years. He shrugged when I asked him about a $275 million pledge he’d recently made, for veterans’ mental health, his biggest ever. “It just seemed right,” he said. His son, Robert, had served as a U.S. Marine in Afghanistan and had tipped Cohen off about the epidemic of suicides among returning soldiers.
Herb Sandler, a retired banker, told me about growing up Jewish on New York’s Lower East Side and instinctively siding with the underdogs of the world. Later, after making a fortune in banking, he would act on his social justice beliefs in a big way. Eli Broad, the billionaire benefactor in Los Angeles, described to me his urge to give back to a city that has been so good to him. Shelby White, another philanthropist who directed millions to her hometown—in her case, Brooklyn—suggested something similar to me.
Robert Schulman, who’d gotten rich from hedge funds, said that his turn to giving flowed from the simple fact that he and his wife, Nancy, had more wealth than they needed. “We realized we had enough money,” he told me. “We had an apartment in the city and a big house in Westchester. I was not interested in private planes or private boats….Our children and our children’s were not going to want for an education or a retirement.”
Schulman said that, for many driven businesspeople, money is a “way to keep score.” At some point, though, the actual usefulness of having more declines sharply. “The marginal utility of going from being worth twenty-nine million dollars to being worth thirty million is entirely different from the marginal utility of going from being worth one million to two million,” he said. “The marginal utility of going to thirty million is close to zero. It’s not going to change anything….You can only eat at one good restaurant a night.” As the money calculus changed, Schulman and his wife found themselves drawn more into philanthropy, eventually creating their own charity to help survivors of domestic violence and at-risk youths.
When the Giving Pledge started, one smart move of the Gates team was to ask each pledger to submit a public letter declaring their intentions. Olivia Leland, in coordinating the pledge, was struck by how seriously joiners took these letters, often going through many drafts to get them exactly right. The result is a growing treasure trove of quite personal documents that offer insights into the motives of some of America’s biggest philanthropists.
Several themes run through the letters, starting with the sense of gratitude that Eli Broad mentioned. People who’ve done extraordinarily well are often very grateful to the institutions that have helped them along the way, as well as to the broader society in which they’ve thrived.
Brian Chesky and Joe Gebbia, the founders of Airbnb, who met at the Rhode Island School of Design, each described how that school had opened up their sense of possibility. Both aim to use some of their billions to ensure such experiences for others. “I want to devote my resources to bring the moment of instantiation, when someone who has an idea sees it become real, to as many people as I can,” wrote Gebbia.
The hedge fund billionaire Glenn Dubin captured the sentiment of many pledgers in writing that “philanthropy is my way of giving thanks to the opportunities I had had and my personal attempt to perpetuate the American Dream.” Priscilla Chan told me something similar, saying about her rise from an immigrant family to become a successful doctor: “I would never have had access to all those opportunities were it not for all the people who supported me along the way….I wanted to give back.” The idea that “with wealth comes responsibility,” as another pledger put it, is voiced often by top givers. One global study of high-net-worth individuals found that for nearly half who engage in philanthropy a “sense of responsibility” is a top motive.
Another theme in the pledge letters is a keen awareness among these billionaires of just how lucky they’ve been and, by contrast, how many people are unlucky. Warren Buffett has famously attributed much of his success to “winning the ovarian lottery”—that is, being born as a white male to middle-class parents in an America on the cusp of the postwar boom. George Kaiser, the son of Jewish refugees from Germany who had gone into the oil business in Oklahoma, said much the same thing: “I suppose I arrived at my charitable commitment largely through guilt,” he wrote. “I recognized early on, that my good fortune was not due to superior personal character or initiative so much as it was to dumb luck. I was blessed to be born in an advanced society with caring parents….As I looked around at those who did not have these advantages, it became clear to me that I had a moral obligation to direct my resources to help repair that inequity.”
Many pledgers point to their parents’ generosity to explain their own commitment to giving. Sidney Kimmel, who made his fortune in apparel before moving into the entertainment industry, wrote: “I learned as a young boy that sharing with others is the right thing to do, a lesson I observed from my father’s willingness to share even our meager means with those less fortunate.” Pete Peterson remembered his father, who owned a Greek diner, “feeding countless numbers of hungry poor who came knocking on the back door of his restaurant.” Lynn Schusterman wrote: “I was raised in a household in which giving back was a core value. One of my fondest childhood memories is holding my father’s hand as he visited less fortunate elderly people who had no one else to care for them.”
The study of the global wealthy mentioned earlier found that the most often cited reason for giving was “personal fulfillment,” and that point comes up a lot in pledge letters. Peterson wrote: “As I watched and learned from my father’s example, I noticed how much pleasure his giving to others gave him. Indeed, today, I get much more pleasure giving money to what I consider worthwhile causes than making the money in the first place. As I checked with other philanthropists, I found this was a very common experience.” Indeed, it is. Bill Ackman wrote: “Over the years, the emotional and psychological returns I have earned from charitable giving have been enormous. The more I do for others, the happier I am. The happiness and optimism I have obtained from helping others are a big part of what keeps me sane.”
The psychological returns from philanthropy are well documented. “It is a fact that givers are happier people than non-givers,” wrote Arthur Brooks, an expert on giving who now leads the American Enterprise Institute. Brooks cited a range of research, including studies that have shown how giving affects one’s brain chemistry, producing a “Helper’s High.” The positive mental returns from giving explain how initial modest philanthropy can snowball into something much bigger. Bill Gates has expressed deep satisfaction in a vast philanthropic enterprise that, to the outside, can look rather joyless and technocratic. “It’s the most fulfilling thing we’ve ever done,” Bill Gates has said about his and Melinda’s large-scale giving.
Ed Scott, who made a fortune in Silicon Valley, in the unsexy niche of “middleware,” told me about the immense pleasure he got from his first real gift. He made it through his church, after his pastor spoke one Sunday about a congregant who was a low-income single mother. A waitress, she struggled to get around by bus and juggle the demands of caring for two children, one of whom was disabled, while working eight-hour shifts. Listening in the pews, Scott and his wife thought the solution to her woes was pretty obvious: she needed a car. So the Scotts anonymously donated money to buy her a minivan. They learned in a later sermon how it had transformed her life. “I saw things differently from that point forward,” Scott said.
Before then, Scott had been laser-focused on his business career. “My goal was one thing: make money. That’s all I thought about. I was just like everybody else. I was interested in going to work, getting the stock options, and getting the big hit. If anyone had told me to care about something else, I would have said, ‘Get out of my face. You’re crazy.’ ”
But after he sold a company he had help start and scored a few other big hits, Scott was set for life—and then some. “I made more money, way more, than I ever thought I’d make in my wildest dreams.” Scott had only a limited interest in spending that money on personal things. He told me: “I realized that unless you’re a very greedy person, you can’t actually spend more than ten or fifteen million dollars on yourself.” So, starting with the minivan, he began to give away his extra money, and in larger and larger amounts, eventually becoming a leading donor to groups fighting global poverty and disease.
Other top philanthropists have spoken of their giving with a mixture of obligation and practicality—namely, that if you’ve somehow ended up with the means to try to solve big problems, you’d better get cracking.
The eBay billionaire Pierre Omidyar and his wife, Pam, wrote in their pledge letter: “Our view is fairly simple. We have more money than our family will ever need. There’s no need to hold on to it when it can be put to use today, to help solve some of the world’s most intractable problems.” The Facebook co-founder Dustin Moskovitz wrote: “As a result of Facebook’s success, I’ve earned financial capital beyond my wildest expectations. Today, I view that reward not as personal wealth, but as a tool with which I hope to bring even more benefit to the world.” Paul Allen, the Microsoft co-founder, said much the same thing: “I believe that those fortunate to achieve great wealth should put it to work for the good of humanity.” He added: “In recent years, I have felt a growing sense of urgency about the mounting challenges confronting our planet. Through my giving, I seek to tackle climate change, prevent dangerous epidemics, save Earth’s most iconic species from extinction and restore our oceans to health, before it’s too late.”
Melinda Gates has said simply: “It’s the right thing to invest back in society if we want to have an equitable and just world, and if you’ve been lucky enough to have some extra wealth and income.”
The sociologist Paul Schervish at Boston College has long explored how the wealthy think and why they give. He’s said that, whereas most of us accept that we can’t much change the world around us, and so we live within existing institutions, the wealthy are far more likely to believe they actually can change the terms of society. “Great expectations and grand aspirations occupy people across the financial spectrum,” Schervish writes. “What is different for wealth holders is that they can be more legitimately confident about actualizing their expectations and aspirations.”
Schervish describes this as a sense of “hyperagency,” which he calls “the fundamental class trait of the rich,” and a key to understanding these people—and their philanthropy.
That sense of hyperagency can certainly be found in the Giving Pledge letters, many of which are filled with proud details of the impact that pledgers have already had with their giving. “One of the most memorable moments in my life was at a charity dinner I was attending for a breast cancer cause,” wrote Ronald O. Perelman, who’d made his billions through a sprawling conglomerate. “A woman approached me and said, ‘I just wanted to say thank you—because of you my sister is alive.’ ”
Perelman went on to describe the backstory: About how he’d met a cancer researcher, Dennis Slamon, who was doing groundbreaking work but was unable to find enough funding for a critical study. “The idea of funding this immediately appealed to me. I have always been interested in giving to projects that may not get done otherwise….I asked Dr. Slamon what he needed and then told him to get to work.” The result of that research was Herceptin, a breakthrough drug for treating certain types of breast cancer.
Other philanthropists tell similar stories—about seeing a problem or opportunity and then taking action that makes a difference. Ed Scott recalled to me how he convinced an international aid group he worked with, Compassion Africa, to begin a more aggressive testing and treatment program for the HIV-infected children it worked with, many of whom were expected to die. He put up $750,000 as seed funding for the effort, which included hiring a top immunologist. Other donors eventually followed. Scott believes his intervention ultimately saved numerous lives.
Few ordinary people will ever have such an experience—of knowing that other people are living because we did something to give them that chance. When giving has impact, the empowerment that comes from it tends to spur greater giving.
Laura Arnold—who along with her husband John, a former hedge fund manager, has given away over $700 million since 2011—told me that the amazing thing about having a foundation is that you can move beyond grumbling privately about the problems you read about in the newspaper. “We love the fact that we’re able to do something about it,” Arnold said. “Instead of just being outraged, we try to channel that outrage into a solution that we think is constructive and a better alternative.
Alexandra Cohen, who’s also helping give away a multi-billion-dollar hedge fund fortune, told me she had the “best job in the world” because she doesn’t have to be an idle bystander to suffering or misfortune. She can take action and “make a difference in someone else’s life.” Like so many philanthropists, Cohen learned to give from her parents—or more, precisely, her working-class mother, who always had an eye out for needy neighbors in their impoverished Puerto Rican neighborhood in Manhattan. Cohen came to be the same way when she grew up, with a reflex to help solve people’s problems. Yet now—thanks to her marriage to Steve Cohen—she has an almost fantastical ability to do so. That might entail giving $3,000 to a waitress down on her luck at her favorite IHOP, as Cohen once did. Or giving $50 million to build a new pediatric emergency department at New York Presbyterian Hospital.
The Cohens haven’t signed the Giving Pledge, but are likely to give away much of their wealth—which now stands at $13 billion. That pile is three times greater than the Rockefeller Foundation’s endowment. It will almost certainly grow larger still in coming years.
Anyone with a bit of spare cash can read a story in the paper—about, say, gun violence or melting ice caps—and then write a check to an outfit working for solutions. What’s different about the rich is that they can give on a scale, and with an impact, that most people can’t imagine. Schervish writes: “Those of us who are not wealthy pool our charitable gifts with those of others, and many of our gifts are anonymous. But wealth-holders, instead of simply being participants in a charitable effort, can create new charitable organizations or operating foundations on their own. What takes a social movement for ordinary people to accomplish, wealth-holders can do relatively single-handedly. They don’t just find worthy charitable causes; they found them.”
That said, even the wealthiest donors—if they’re smart—know there are acute limits to their power. You might imagine those rarefied annual retreats that bring together Giving Pledge members as suffused with hubris. But Melinda Gates has described people’s attitudes in those meetings as “very humble.” She explained: “If you’re in the area of philanthropy, the problems are so large and you know you’re only a small piece of trying to figure this out.”
A final motive for big-league giving worth flagging is that many wealthy people aren’t keen to see much of their fortunes one day going to estate taxes—or, maybe even worse, being passed down to their children.
No billionaire has spoken out more strongly than Warren Buffett about the corrosive nature of inherited wealth. As early as 1986, Buffett told Fortune magazine that the ideal amount of inheritance to leave your kids was “enough money so that they would feel they could do anything, but not so much that they could do nothing.” That sum, he estimated at the time, was probably a “few hundred thousand dollars.” Later, when Buffett pledged most of his wealth to the Gates Foundation, he said: “I’m not an enthusiast for dynastic wealth, particularly when 6 billion others have much poorer hands than we do in life.”
Bill and Melinda Gates read the Fortune article before they were married, and agreed strongly with Buffett. Bill has written: “Melinda and I are strong believers that dynastic wealth is bad for both society and the children involved. We want our children to make their own way in the world. They’ll have all sorts of advantages, but it will be up to them to create their lives and careers.”
Mike Bloomberg has been even more forceful on this point: “Inheriting too much money at one time destroys initiative, distorts reality, and breeds arrogance.” Another billionaire, John W. Jordan II, echoed that sentiment in his Giving Pledge letter: “While I have taken care of my children and want them to enjoy comfortable lives, I do not believe that those who provide their offspring with luxuriously upholstered lives serve them well but rather saddle them with a terrible burden. The trappings of extreme wealth are quite dangerous if not intelligently and responsibly directed….We all know second and third generation wealth where the recipients were actually born on third base but think and act like they hit a triple.”
The core motives that the rich have for giving help explain the “why” of their philanthropy. But the context of their lives plays a huge role in explaining the “how” of that giving.
The sociologist Francie Ostrower spent years in the 1990s looking into this area, first as a graduate student and later as a professor at Harvard. Elite philanthropists, she wrote in her book Why the Wealthy Give, “live in a milieu in which giving is the norm, and characterize philanthropy as an obligation that is part of their privileged position.” Ostrower detailed the many ways that the wealthy are pulled into giving through a web of organizational and social ties.
An attention to status is definitely part of the equation. Philanthropy functions as “a mark of class status that is connected to elite identity,” Ostrower writes. How giving plays out, though, in terms of what donors support, depends on the affiliations they have. For example, Jewish donors have their own strong networks, with set norms and favored causes.
Schervish makes similar points. Donors are often spurred by a sense of identification with others, he writes, starting with people most like themselves, which is why so much charity tends to flow to institutions that donors have a direct connection with, particularly religious institutions, arts organizations, and schools. But identification can also take the form of empathy for the less fortunate, especially for donors who’ve struggled at points in their life.
One way to get a handle on the newer philanthropists—and how they wield influence—is to look at how they got rich in the first place. When the wealthy get into giving they tend to turn to friends for guidance, who are often peers in their industry. They may kick in for the same causes, use the same philanthropic advisors, and embrace the same approaches as others around them. If you want to better understand today’s new donors, a good place to begin is with the philanthropic tribes they belong to.
No industry is producing more big new donors these days than tech, which has spawned enormous fortunes in an era of rapid digital breakthroughs and expanding global markets. Who are these people and how do they think about philanthropy?
The first thing to understand is that there have been two waves of tech philanthropy. The first was in the 1990s, when some of the top fortunes of the early computer boom were harnessed for giving. Bill Hewlett and David Packard both endowed massive foundations, and in 2000, another industry pioneer, Intel’s Gordon Moore, gave $5 billion to create a foundation. That same year, the Bill and Melinda Gates Foundation was launched, seeded with a $27 billion gift from the couple. Gates’s early partner in founding Microsoft, Paul Allen, had started a foundation in 1988 but stepped things up as the new century began with big giving for brain research. Pierre Omidyar and Jeff Skoll of eBay were two other tech winners who turned to large-scale philanthropy during this period, as did Quark founder Tim Gill and GeoCities founder David Bohnett, both with a focus on LGBT rights.
Steve Case, the co-founder of AOL, started his foundation in 1997, with his wife, Jean. Michael Dell, the PC computer billionaire, also worked closely with his wife, Susan, to create a foundation that got going in 1999. Another tech titan turned philanthropist from that go-go era is John Morgridge, who built Cisco Systems into a giant in the 1990s—and then sank the bulk of his winnings into a foundation he ran with his wife, Tashia. The couple who had founded Cisco, Sandy Lerner and Leonard Bosack, made far less money than Morgridge did—and ended up giving most of it away. Irwin Jacobs, the billionaire who founded Qualcomm in the 1980s, also went on to become a major philanthropist. A range of other early tech winners also became donors, like Mitch Kapor, the founder of Lotus.
The second wave of tech philanthropy has unfolded since about 2010. That was the year Mark Zuckerberg made his $100 million pledge to improve Newark’s schools. Two other Facebook billionaires soon joined Zuckerberg in large-scale giving: Sean Parker, who set up a major new foundation in 2015 and has emerged as a large-scale donor to medical research; and Dustin Moskovitz, who is moving growing sums of money through the foundation he set up with his wife, Cari Tuna. The couple plan to give away all their wealth while they’re still alive.
Facebook riches have also been channeled to philanthropy through Jan Koum, who put aside $600 million in a donor-advised fund after scoring a huge windfall from the sale of WhatsApp to Facebook in 2014. That same year, Oculus co-founder Brendan Iribe gave $31 million to the University of Maryland, which he had dropped out of, after selling Oculus to Facebook. Jim Swartz, whose firm, Accel, was one of the earliest investors in Facebook, is now deeply engaged in philanthropy with his wife, Kathy.
Meanwhile, the billionaire founder of Salesforce, Marc Benioff, has lately emerged as a leader of the tech philanthropic community in the Bay Area, working with his wife, Lynne, to make huge gifts for hospitals and seeking to rally other donors to give more in the region. Benioff is also pushing tech start-ups nationwide to set aside a chunk of their firm’s equity for philanthropy, as he did when founding Salesforce. Both the Google co-founders, Sergey Brin and Larry Page—who together have a net worth of more than $75 billion—have started setting aside sizeable chunks of wealth for philanthropy. Brin parted with $850 million between 2011 and 2014, funds that helped build up a large foundation and support a wide array of causes. Page, who gave away $177 million in 2014 alone—including $15 million in emergency funds to combat Ebola—has also been quietly building up a major foundation, which is named after his father. It now has well over $1 billion in assets. Eric Schmidt is a third Google billionaire plowing big bucks into philanthropy, working with his wife, Wendy, to sound the alarm on environmental threats, among other interests.
Any number of other tech people are also giving, at varying levels, such as Twitter co-founders Evan Williams and Jack Dorsey; PayPal co-founder Peter Thiel; the venture capitalist Marc Andreessen; the angel investor Ron Conway; LinkedIn founder Reid Hoffman; and Tesla’s Elon Musk, who’s giving interests include taming the “existential threat” posed by artificial intelligence. Beyond these big names, plenty of other tech winners have lately been turning to philanthropy, such as Mike Krieger, who started Instagram. Along with his wife, Kaitlyn, Krieger is putting money behind criminal justice reform, among other issues. The couple has been helped along in this work by the philanthropic operation piloted by Cari Tuna and Dustin Moskovitz.
Quite a few of today’s younger tech donors are in touch with one another and, increasingly, have a shared outlook on philanthropy.
For starters, most believe in starting to give early. “People wait until late in their career to give back. But why wait when there is so much to be done?” Zuckerberg said after he joined the Giving Pledge in December 2010. “With a generation of younger folks who have thrived on the success of their companies, there is a big opportunity for many of us to give back earlier in our lifetime and see the impact of our philanthropic efforts.”
Zuckerberg made his first big gift before Facebook even went public, and he’s not the only tech entrepreneur who is turning to philanthropy while still very much engaged in business. More wealthy techies want philanthropy to complement their careers, as opposed to something they turn to later, after they’ve made their bundle. And they’re being egged on by other techies to give early. “There’s no better time to start than the present,” wrote Sean Parker in an essay on “philanthropy for hackers” in the Wall Street Journal, around the time he put $600 million into his foundation.
This sense of urgency stands in sharp contrast to the past. Early tech titans like Bill Hewlett and Gordon Moore waited until retirement to ramp up their giving. Bill Gates didn’t establish his foundation until after he’d been running Microsoft for over twenty years.
Not so today’s techies. And it’s not just that the younger tech donors want to start earlier; many want to move faster, too, with some aiming to give away all of their money in their lifetimes. These folks aren’t interested in creating foundations that exist in perpetuity, long a common choice among donors.
Why the focus on moving big money sooner rather than later? The top reason is to have more impact. In particular, tech donors like Dustin Moskovitz have stressed the value of deploying resources early to solve problems that will otherwise grow and become harder to solve later.
This readiness to give early, and give big, is already amplifying the influence of tech philanthropists, as we’ve seen with Zuckerberg—a person, of course, who already wields immense power through a business that reaches 1.7 billion people. In earlier times, a young entrepreneur would never have tried to shake up K–12 education with a $100 million gift just six years after starting his company. But get ready for more of that kind of thing.
Another trait of tech philanthropists that amplifies their influence is how they scout out causes. In Silicon Valley, you often make your fortune by solving a problem that nobody else has solved—or, ideally, is even working on. Many techies are bringing the same mind-set to their philanthropy. “I talk to a lot of clients about identifying the gaps,” said Nick Tedesco, who works at JPMorgan Chase’s Philanthropy Center in San Francisco and advises emerging donors. Before that, he was with the Giving Pledge team at the Gates Foundation, where he came to know many top philanthropists and their different styles.
Tech donors are less interested in fortifying existing institutions and causes, and more intent on “putting their philanthropic capital into underfunded areas,” Tedesco told me. They ask “Where is there a lack of funding and where can my funding have an impact.” These givers also put a big focus on “catalytic philanthropy. People are looking to back systemic philanthropy that attacks problems at their root causes and not just treat the symptoms.”
The hunger to change whole systems is nothing new in philanthropy. The earliest entrepreneurs who become philanthropists, including Rockefeller and Carnegie, were chasing the same goal with their money. And the staff of plenty of legacy foundations, like Ford, think in similar terms. That said, most of today’s philanthropists aren’t so ambitious and, instead, tend toward a more cautious, stewardship approach to giving. They direct money to universities, hospitals, art museums. Or they gravitate to groups already well along in trying to solve established problems, whether it’s curbing climate change or reducing HIV infections.
Tech philanthropists do some giving along these lines. But their main interest is in leveraging their money to create change on a grand level. That these donors think in such grandiose ways has made them an easy target of critics, often from philanthropy’s old guard. Making change is not like creating software, say veteran funders—who’ve often been quick to cluck their tongues when efforts funded by Bill Gates or Mark Zuckerberg founder on the shoals of social complexity.
Tech donors aren’t daunted by such disapproval. In their day jobs, failure is commonplace: nearly all tech superstars have at least one dud start-up or product under their belt. If something doesn’t work, you learn what you can and try something else. There’s even a conference, FailCon, dedicated to dissecting efforts that flopped.
While older foundations are hardly allergic to risk, and get a bad rap as invariably cautious, tech donors are more ready by disposition to embrace the adage that philanthropy “is society’s risk capital.” When they swing, they’re more apt to be eyeing the fence. Some are looking for the philanthropic equivalent of a “unicorn” (a start-up that attains at least a billion-dollar valuation). This trait makes them more potentially powerful in society, and certainly more disruptive—in ways good and bad.
Another hallmark of Silicon Valley culture that the new donors bring to their philanthropy is a focus on learning from others and collaborating. As competitive as the tech world is, it’s also a hugely collaborative place, where information flows widely and people build on one another’s ideas. “Tech entrepreneurs understand the many is better than the one,” Tedesco said. And as these people embrace philanthropy in a big way, they are looking to their peers for guidance and are engaged in lots of talking and comparing of notes.
Such collaboration is hardly unique in philanthropy but it’s worth spotlighting to better understand how this community is evolving with their giving. It’s not just that many more dollars are flowing out of Silicon Valley aimed at changing the world; it’s that many more conversations are happening within it about how best to do that.
Many techies like to think they are on a grand mission to improve life on earth with new breakthroughs, and so philanthropy is a natural fit with their worldview. But the moral blind spots of these leaders can be enormous. For instance, Facebook and Google—companies that were founded by active philanthropists and that also engage in extensive corporate charity—have both engaged in elaborate tax avoidance schemes using offshore subsidiaries. Apple, which has lately been celebrated for its big turn toward philanthropy under CEO Tim Cook, is an even worse offender, pioneering new forms of tax avoidance that have allowed it to stash billions in profits in foreign tax havens, outside the reach of the U.S. Treasury.
One analysis found that Apple’s tax avoidance schemes allowed it to avoid $2.4 billion in taxes in 2011 alone. Microsoft, Yahoo, Adobe, Netflix, and other tech companies have used the same strategies—resulting in huge losses in government revenue at a time when budget cuts are hurting many of the people and causes that tech philanthropists say they want to help.
Finance is another industry where vast new fortunes have been minted in recent years—a quarter of U.S. billionaires have made their money in this sector—and now big philanthropy has begun to follow.
You might think of this turn as signaling the emergence of a kinder, gentler finance sector, and partly that’s so. Supposed greedheads are happily parting with far more of their money than most people might ever imagine. But philanthropy is also giving U.S. financial elites one more way to wield influence, expanding their reach into new areas of American life, such as education and public policy. No picture of Wall Street’s immense power these days is complete without a grasp of the new, high-octane philanthropy emerging from this world.
For a long time, the hedge fund star George Soros was one of the few well-known philanthropists from finance. Then Warren Buffett emerged with his huge pledge to the Gates Foundation in 2006. By this time, too, the Robin Hood Foundation, which was started in 1988 to channel Wall Street donations to anti-poverty groups, was becoming far more visible, holding annual galas that raked in tens of millions of dollars.
More recently, a growing torrent of money has been coming from a wide array of finance donors. Over two dozen industry leaders have signed the Giving Pledge, including the top hedge funders Jim Simons and Ray Dalio—both of whom have ramped up their giving in recent years, parting with hundreds of millions of dollars. Between the two of them, though, they still have another $30 billion.
Then there is Stanley Druckenmiller, a retired hedge funder who gave away over $75 million in a recent year and has quietly built up a foundation with over a billion dollars in assets. Among other things, Druckenmiller is the single biggest backer of the Harlem Children’s Zone. Julian Robertson, a billionaire in his eighties who was once known as the “Wizard of Wall Street,” has been giving away as much as $100 million a year, with big checks going to environmental groups and education reform outfits. Denny Sanford made his fortune in credit cards and now is getting rid of it at a rapid rate, giving away nearly a billion dollars in the past decade. Charlie Munger scored big as Warren Buffett’s partner—big enough that he’s given away over $200 million since 2013. Steve Cohen has stepped up his philanthropy in the years since he survived a federal probe of insider trading at his hedge fund, giving away hundreds of millions of dollars, with his wife, Alex, taking the lead.
David Gelbaum has quietly given away much of his hedge fund fortune to liberal groups like the Sierra Club and the American Civil Liberties Union (ACLU), as well as to conservation and veterans’ causes. Steve Schwarzman, the private equity billionaire, has made huge gifts that include $300 million for a U.S.-China scholars exchange program. David Rubenstein, another private equity winner, has been called a “patriotic philanthropist” because he has focused some of his giving on monuments, buildings, and documents of historic significance. Tom Steyer is a retired California hedge funder who has lately become a major player on climate policy. Paul Singer has bankrolled right-wing think tanks among other causes. John Paulson is the hedge funder who gave $400 million to Harvard and, before that, $100 million to the Central Park Conservancy.
Beyond these many philanthropists from finance, there are still others, including some of the billionaires already mentioned: John Arnold, a former Enron trader who started a hedge fund and then retired to focus on philanthropy that aims to improve education, public pensions, health care, and more; Pete Peterson, whose money comes from private equity and is focused on public policy; Sanford Weill, the former head of Citigroup, who has given away more than $1 billion, mainly for hospitals and medical research; Herb Sandler, the progressive philanthropist who made his money from a savings and loan association; and Bill Ackman, who became a billionaire through his activist hedge fund investing and who now is taking an equally activist approach to philanthropy. A number of billionaires from finance have become well known for their support of charter schools and education reform groups, including Charles Schwab, Stephen Mandel, and Paul Tudor Jones. Jones had founded a charter school in the Bedford-Stuyvesant section of Brooklyn, New York, and later helped start the Robin Hood Foundation.
I could name many additional donors coming out of finance, like Jeremy Grantham, Seth Klarman, Louis Bacon, George Roberts, Glenn Dubin, Kenneth Griffin, Michael Milken, Henry Kravis, and Leon Black. What generalizations might we offer about this crowd, and about Wall Street philanthropy as a whole?
For starters, the scope of giving by finance leaders is surprisingly large. These people have a reputation for greed, and a zeal for making money that is so intense that ethics may fall by the wayside. That reputation is well deserved, but philanthropic currents have long run through this world, and they’ve grown stronger in recent years. The growth of the Robin Hood Foundation, Wall Street’s favorite charity, is a good barometer of what’s been happening. That group pulled in $195 million in contributions in 2015, up from $64 million in 2005. Many of the largest financial firms have robust employee giving programs, and some have even required employees to contribute. Bear Stearns, the investment firm that collapsed in 2008, compelled employees to contribute 4 percent of their bonus money every year to charity. Goldman Sachs may well have produced more major philanthropists than any firm on Wall Street. Goldman givers include Henry Paulson and Larry Linden, both of whom focus heavily on the environment.
The biggest of the new finance donors, by far, are emerging from hedge funds and private equity—which makes sense, since that’s where the greatest fortunes have been made. Yet even the most active of these philanthropists, like Simons and Dalio, have barely scratched the surface of their fortunes. Others take a more traditional approach, of leaving philanthropy to the end of their lives. Carl Icahn, as mentioned, has only given modestly so far, but has said that nearly all his money will go to charity. Then there is someone like David Tepper, who’s worth $11 billion and has been an active philanthropist, but not yet at a level that can make a dent in his fortune. In short, whatever giving we’re seeing now from Wall Streeters is nothing compared to what lies ahead.
(Here and throughout the book, I use the term Wall Street broadly, since finance is very much a national industry, and in the past decade it’s grown greatly in places outside New York—as has the philanthropy fueled with finance dollars.)
This industry hasn’t become just more national in the past decade or so; it’s became more cerebral. A lot of the new finance money has been made using sophisticated strategies to predict the markets, and the hedge fund world in particular has some notably intellectual billionaires. Soros is the best known in this regard, as the author of numerous books and articles. Jim Simons ended up with $15 billion by parlaying his math genius into trading gains; he’s the most successful of the so-called “quants” who have proliferated in finance, using quantitative skills to master markets. Plenty of other finance billionaires have gotten rich primarily by monetizing their intellectual prowess. Also key to this crowd’s success has been predicting trends, using leverage, and being willing to make risky bets.
These traits help explain a few features of finance philanthropy: first, many of these donors understand complicated areas that involve science, such as climate change and medical research; second, they appreciate the importance of research and the role of expertise; third, they are often drawn to sophisticated grantmaking strategies developed with expert input; and fourth, some are ready to put big money behind efforts that may well fail. In these respects, the finance donors have some similarities with the techies.
Many philanthropists from Wall Street are quite ideological. They rank among the biggest backers of Washington think tanks and hard-hitting advocacy groups, as we’ll see later in the book. They tend to have a keen faith in the power of markets to solve problems, which can drive their giving in various ways—most notably, the outsized support by Wall Streeters of the school choice movement. You can also see their belief in markets in other areas, like the environment, where they’ve sought to create new financial incentives for ecological progress, and on global development, where some see a huge potential for social enterprises to combat poverty, for example, through helping small farmers make more money.
These examples aside, Wall Street donors overall tend to be more drawn to a stewardship model of philanthropy than are the techies. For all the cowboys in finance, people mainly get rich in this industry by posting strong returns year after year, while steadily expanding the pile of money they’re working with. That’s different from tech, where you score big by conquering unsolved problems or blowing up existing industries. Finance types are more comfortable with the status quo, and a lot of their giving goes to boost elite universities, arts institutions, hospitals, and land conservation trusts. Compared to techies, they’re more into charity than change.
Finance philanthropists are conservative in other ways, too. Traditional gender roles are more pronounced in this sector—in ways that play out in giving. Often, it’s the men who make the money and the wives who give it away, dealing with day-to-day details when it comes to where to give and how much. While their husbands ascend to the pinnacles of finance, the wives climb to the peak of the social sector. Joan Weill may be the best example of this, serving on innumerable boards and committees of top nonprofits in New York, like the Alvin Ailey American Dance Theater, even as her husband became a leader in banking. This division of labor remains a good old-fashioned recipe for how to become a power couple. Still, it’s best not to read too much into the fact that the wives often hold the checkbooks. Nearly all philanthropic couples set the overall direction of their giving jointly.
A last point about Wall Street philanthropy: Even more so than tech, the generosity of this community is marked by moral contradictions. Many of these donors have gotten so rich to begin with thanks to a financialization of the U.S. economy that some analysts believe has been a key driver of inequality. Instead of primarily serving the real economy as it once did, the argument goes, finance has come to focus more on its own profits—siphoning wealth away from the real economy and into the pockets of extravagantly paid middlemen.
Then there’s the fact that massive wealth accumulation by many of finance’s biggest winners—in hedge funds and private equity—has been fueled by historically low tax rates on capital gains for the past two decades, not to mention the “carried interest” loophole that has exempted some of their earnings from taxation as regular income. These tax policies cost the government many billions in revenue even as Washington budget cutters whack programs benefiting the same populations that, say, the Robin Hood Foundation seeks to help. Of course, the financial world also played a leading role in crashing the U.S. economy in 2008, with vulnerable low-income communities taking the biggest hit.
Yes, Wall Streeters are indeed giving at a record level—but with little acknowledgment of their role in fueling some of the problems their philanthropy is trying to solve.
When you look closely at today’s top finance donors, you’ll find that few of them, as individuals, had much to do with the meltdown of 2008 and many would be fine with paying higher taxes. Still, you can understand why the largesse of these folks doesn’t exactly generate universal acclaim. Many Americans hold the far upper class, and especially Wall Streeters, responsible for the nation’s deep economic woes—and aren’t impressed when they sprinkle around a sliver of their vast winnings for charity. Nor is there universal enthusiasm when the crowd that brought us derivatives and synthetic CDOs sets out to fix public schools or end poverty in Africa.
Tech and finance have produced most of the largest fortunes in the past two decades, and in both sectors, creative and hard-driving leaders have often scored the biggest rewards. In turn, many of these people bring intense, restless energy to their philanthropy. Some come to wield far more influence through giving than they ever did in business—an important point to remember in thinking about wealth and power these days. What people do with their billions can affect society much more than how they made that money.
The titans of the old economy—rising in sectors like energy, real estate, and retail—have also become richer than ever during recent boom times, and many of them, too, have lately turned to philanthropy on an unprecedented scale, with implications for the rest of us. These donors are often less creative in their giving, but they well understand how to turn money into power.
The explosion of new wealth in the old economy over recent years is a story that has gotten little notice, with so much attention focused on Wall Street and Silicon Valley. In fact, these gains have been striking. As mentioned earlier, the Koch brothers have added some $70 billion to their combined fortunes since 2005 as the value of their industrial conglomerate has soared. That wealth exemplifies the riches that can still flow from such “dirty” businesses as oil refining and petrochemical production. While the Kochs have famously converted some of their wealth into hard political influence, through election spending, they’ve actually had greater impact by backing a wide array of libertarian and conservative policy institutes over many years. (More about that later.)
The wealth of the Walton family has also grown by an additional $70 billion or so since 2005, thanks to a rise in Walmart’s stock, which helps explain why the Walton Family Foundation has moved to greatly expand its giving for charter schools, as well as to put in place a huge new environmental program. In fact, the Waltons now rank among the very largest green philanthropists in the United States—exerting a very different kind of influence here than in education, with a big focus on preserving rivers and waterways.
Look through the ranks of the Giving Pledgers and you’ll find several oil tycoons who have far more money now than they did fifteen years ago (although less than they did five years ago, before oil prices crashed). One is Harold Hamm, who plans to devote his billions to fighting diabetes. He’s bringing enough new money to this area to be a potential game changer. Another is Richard Kinder, an energy billionaire who is busy putting his stamp on Houston, exemplifying an approach to philanthropy that’s popular among many old-economy billionaires—which is to focus locally and help remake particular cities and regions.
That’s the strategy of George Kaiser as well, who also got his start in oil and later moved into finance. Now he’s one of the most influential people in Oklahoma thanks to his philanthropy, which touches many corners of that state and particularly Tulsa. Eli Broad made his fortune in homebuilding and insurance—and has used it to help shape modern Los Angeles, as I’ll discuss in more detail later.
In Boston, Amos Hostetter Jr., who founded an early cable television company in 1963, is the single biggest philanthropist in town, working with his wife, Barbara, through the influential Barr Foundation, which pumps money into education, the arts, and more. Philip Anschutz—who started out in oil and went on to build a corporate conglomerate—is now the top philanthropist in Colorado, supporting hundreds of nonprofits in Denver and across the state. In Chicago, Lester Crown became a billionaire by diversifying his father’s material services company (think gravel) and now controls stakes in diverse companies, including the Chicago Bulls. Through his eighties, Crown remained a pillar of the Chicago establishment, a role solidified by his family’s growing philanthropy, which touches many parts of life in the city. Arthur Blank made his fortune as the co-founder of Home Depot—and now ranks among the top philanthropists in Atlanta, a city where he also wields influence as owner of the Atlanta Falcons football team.
Most of these people are older, some in their eighties, and they’ve taken an old-school path to influence. They’ve made their money over many decades, not in a flash of inspiration in sectors with red-hot growth. They’ve devoted both their time and their wealth to issues in their communities—and have, in the process, emerged as key power players. Their philanthropic giving has often worked in tandem with political donations and civic leadership roles—a familiar recipe for influence that nowadays is fueled by ever more money, along with more ways to turn wealth into power.
These old-school types aren’t interested in dazzling anyone with their creative brilliance. Some, like Hostetter, operate well out of the spotlight, exercising clout without leaving visible fingerprints—at least that the average citizen can see. Some don’t mind being known as bulldozers. Eli Broad is highly visible and, by his own account, a man who will readily be “unreasonable” to get his way. That ability to twist arms served him well in building two Fortune 500 companies.
There is a big difference between getting rich over decades in the old economy, by building sprawling corporations or real estate empires, and getting rich quickly in tech or finance, where vast wealth can be generated with fairly small organizations, like hedge funds or Internet businesses. Big companies are more complex and bump up against a wider range of players in society. This path to wealth can entail endless wheeling and dealing—including with politicians and regulators—which results in a strong understanding of how power works across different sectors of society. So while old-economy barons may lack fancy new ideas for creating systemic change, they do know how to get stuff done—including against formidable odds.
One corner of the old economy to watch closely is real estate, where some tycoons are turning to big-time giving after decades of assembling vast property portfolios. In California, John Arrillaga and Richard Peery, two billionaires who made a fortune by becoming the biggest commercial landlords in Silicon Valley, are now emerging as one of the top philanthropists in that region, along with John Sobrato, another local real estate billionaire. In New York City, aging real estate barons like Stephen Ross, Leonard Stern, and Jerry Speyer have long exercised influence over the city’s politics and development patterns. Now, as they step up their philanthropy, they’re looming large in Gotham in other ways, too.
Nearly all the new mega-givers who have emerged in the past fifteen years have made their fortunes in business. But that background plays out in different ways for different donors. Some see the skills and mind-set they used to build their wealth as all-important in shaping how they dispose of it. Sean Parker, for instance, has argued that technologists like himself will be successful in philanthropy to the degree they stay true to a “hacker” philosophy, which includes an anti-establishment bias, a belief in data, and “a nose for sniffing out vulnerabilities in systems.” If they operate this way as philanthropists, which Parker intends to do, they could have a huge impact.
Many of the new donors embrace a venture investing mind-set. They believe that, to succeed as philanthropists, not everything they try has to work out. Rather, what they need are a few major hits—breakthroughs that can more than compensate for whatever flops occur along the way. Philanthropists who have made their money by placing big bets, like the hedge funder Bill Ackman, apply some of the same criteria they have used in investing to evaluating possible grants.
Other donors have sought to bring management strategies they used in business to solving social problems. Eli Broad, as I’ll discuss later, has sought to improve public schools by recruiting and training new leaders for K–12 systems. Herb Sandler, who built a banking fortune with his wife, Marion, partly through acquiring other companies, shares Broad’s focus on identifying and empowering strong leaders. Sandler is also a fanatic for due diligence, investigating philanthropic opportunities with the same rigor that allowed him and Marion to avoid missteps as they assembled a sprawling savings-and-loan empire. Michael Dell’s foundation, based in Austin, Texas, and chaired by his wife, Susan, puts a big emphasis on data and metrics—both hallmarks of Dell Computer, which beat competitors in the PC market by keeping operating costs low and being a leader in supply chain efficiency. Larry Linden, the former Goldman Sachs partner mentioned earlier, has used his understanding of complex financial deals to pioneer new ways to preserve large swaths of rain forest. His small Manhattan-based foundation is a leader in conservation finance and environmental markets.
There are obvious risks when star business leaders turn to philanthropy, thinking they have some special edge over those who’ve come before them in trying to solve social problems. Just because you’ve built a Fortune 500 company or invented new software or beat the S&P doesn’t mean you’ll have the faintest clue about helping third-graders learn to read or bringing drinking wells to Africa.
The smart donors coming from business are acutely aware of this pitfall. “I’m not a person who says ‘I built a great business therefore I know how to build a great philanthropy,’ ” Glenn Hutchins, a successful private equity investor, told me. “I’m very mindful that they are two very, very different kind of things.”
Hutchins’s father had worked overseas on issues of agriculture and rural poverty, and Hutchins himself grew up being taught that helping others was just what “you always did.” But, watching his father, he’d also learned that tough problems weren’t solved overnight by smart outsiders who parachuted in. “You need to have some degree of humility and perspective on which of your skills are applicable and which are not.”
Many philanthropists could use more of Hutchins’s humility. Chances are, though, that they’ll end up plenty humble after they’ve been giving for a while. The more ambitious donors are, the more likely they are to fail as they take on dauntingly complex problems. There may be no philanthropist, for example, who has failed more often and more spectacularly than Bill Gates. The fact that he’s unfazed by missteps that have cost hundreds of millions of dollars may reflect how he experienced even greater failures leading Microsoft, such as spending big to develop new products that flopped or missing out on the rise of Internet search engines. “Google kicked our butts,” Gates once said. Gates learned to be philosophical about mistakes, saying, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” He is hardly alone among philanthropists, many of whom had failures in their business careers before coming to philanthropy.
Whatever the exact background of the new donors and whatever their learning curve turns out to be as philanthropists, a common thread among them is that they tend to have a strong sense of empowerment, or hyperagency. They have enough money to try to make change in society, and they know it. What’s more, they often feel an obligation to put that power to use.
Such people are not new in America. But what’s different now is that, in this second Gilded Age, there are so many more of them than ever before. Hyperagency has met mass hyperaffluence, and nearly every corner of society is being affected as these trends converge in philanthropy.
The rapid growth of a new, much larger class of empowered donors adept at using private wealth to shape public life would be an unnerving shift in any democracy. But what’s especially troubling at this moment in American life are the divergent trajectories of the wealthy and the general public when it comes to a sense of civic efficacy.
Even as more members of an expanded upper class have come to feel more sure of their ability to make things happen, many ordinary Americans feel the exact opposite way: skeptical that their voice matters or that democratic institutions can solve problems. Barely half of U.S. citizens bother to vote, and well over a third don’t identify with either political party. Distrust of government has lately stood near an all-time high. A 2012 survey found that 48 percent of respondents agreed with the statement: “People like me don’t have any say about what the government does.”
The empowerment gap between the wealthy and the general public wouldn’t be as troubling if the economic and social views of the donor class tracked closely with how ordinary Americans see the world. But, as discussed in the last chapter, that’s not the case; the wealthy often want different things for society than their fellow citizens do.
And the rift goes deeper. A common take on Donald Trump’s rise in the 2016 election cycle is that he channeled rising public anger at a cosmopolitan elite who many believe has come to dominate American life. That elite is real and, at its very center are the new philanthropists—economic winners who are adept at converting wealth into power by bankrolling armies of experts and advocates. For all their noble motives, the mental distance between the givers and tens of millions of Americans who feel shut out of today’s progress could hardly be greater.
Whether you agree with the goals of particular donors is less important than what all this means for U.S. democracy—and the cohesion of our society.