It’s the morning of April 16, 2011, and the X PRIZE Foundation is holding its annual Visioneering meeting. This, in our parlance, is the process of brainstorming incentive competitions to solve the world’s grand challenges. To help us do the big thinking, we invite top entrepreneurs, philanthropists, and CEOs for a weekend best described as a cross between a mini-TED and Mardi Gras.
This year the meeting is being hosted by the chairman of Fox Filmed Entertainment, Jim Gianopulos, at its Los Angeles studios. The only room large enough to hold everyone is the commissary. The walls are flat white, decorated with photographs of film icons from Cary Grant to Luke Skywalker, but it’s a different kind of crowd, and few pay these images much mind. Nor does anyone have much to say about box office returns or points on the back end, but there’s a lot of talk about creating African entrepreneurs, reinventing the technology of health care, and increasing the energy density of batteries by an order of magnitude.
Over the years, I’ve been lucky enough to host many similar meetings and meet many similar people, and what seems to unify them is exactly what’s on display today: a high level of optimism, a magnanimous sphere of caring, and a hearty appetite for the big and bold. Perhaps this is to be expected. These are the same captains of the digital age who, with the stroke of HTML code, have reinvented banking with PayPal, advertising with Google, and commerce with eBay. They’ve seen firsthand how exponential technologies and the tools of cooperation can transform industries and better lives. They now believe that the same high-leverage thinking and best business practices that led to their technological success can bring about philanthropic success. Taken together, they constitute a significant force for abundance and a new breed of philanthropist: a technophilanthropist; a young, idealistic, iPad jet-setter who cares about the world—the whole world—in a whole new way.
Where did this breed come from, what distinguishes them, and why they constitute a force for abundance is the subject of this chapter, but before we get there, some context is useful. Large-scale philanthropy, based in the private, not the public sector, is a relatively recent historical development. Going back some six hundred years, wealth was concentrated within royals whose sole goal was to keep that money in the family. This sphere of caring expanded during the Renaissance, when European merchants tried to mitigate poverty in big trading cities like London. Two centuries ago, the financial community got involved. But it was the titans of industrialization known collectively as the robber barons who really rewrote the rule book.
The robber barons were transformative. In less than seventy years, they turned America from an agricultural nation into an industrial powerhouse. What John D. Rockefeller did for oil, Andrew Carnegie did for iron and steel, Cornelius Vanderbilt did for railroads, James B. Duke for tobacco, Richard Sears for mail-order retailing, and Henry Ford for automobiles. There were dozens more. And while robber baron rapaciousness has received much attention, contemporary historians are in agreement: it was also these gilded age magnates who invented modern philanthropy.
Certainly scholars have gone back and forth about most things robber baron, including the nature of their charity. Not long ago, BusinessWeek wrote: “John D. Rockefeller became a major donor—but only after a public relations expert, Ivy Lee, told him that donations could help salvage a damaged Rockefeller image.” Great-great grandson Justin Rockefeller, an entrepreneur and political activist, disagrees: “John David Sr., a devout Baptist, started tithing from his very first paycheck. He kept meticulous financial records. His first year in business was 1855. His income was $95, 10 percent of which he gave to the church.” Either way, that $9.50 donation was only the beginning. In 1910 Rockefeller took $50 million worth of Standard Oil stock to create the foundation bearing his name. By the time of his death in 1937, half of his fortune had been given away.
Carnegie, though, was an even bigger donor, and it’s to Carnegie that most of today’s technophilanthropists trace their roots. When Warren Buffett wanted to inspire philanthropy in Bill Gates, he started by giving him a copy of Carnegie’s essay “The Gospel of Wealth,” which attempts to answer a tricky question: “What is the proper mode of administering wealth after the laws upon which civilization is founded have thrown it into the hands of the few?”
Carnegie believed that one’s wealth must be used to better the world, and the best way to do so was not by leaving the money for one’s children or bequeathing it to the state for public works. His interest was in teaching others how to help themselves; thus, his major contribution was to construct 2,500 public libraries. While “The Gospel of Wealth” wasn’t popular in Carnegie’s time, much of his philosophy is now shared by many of the technophilanthropists, though, as we’ll soon see, exactly who to help and how to do so is where today’s generation and yesterday’s benefactors diverge.
In 1892, when the New York Tribune attempted to identify every millionaire in the United States, the newspaper came up with 4,047 names. An astonishing 31 percent of them lived in New York City. And when it came to giving back, these millionaires gave back to whence they came. There is scarcely a museum, art gallery, concert hall, orchestra, theater, university, seminary, charity, or social or educational institution in New York that does not owe its beginnings and support to these men.
Such regional myopia is to be expected. The robber barons worked in a world that was local and linear. Poverty in Africa, illiteracy in India—these were not pressing issues in their lives or businesses, and thus these industrialists kept their dollars in the neighborhood. Even Carnegie was prone to the tendency, as every library he built, he built in the English-speaking world.
This local mind-set was not restricted to the ultrawealthy in the West. Take, for example, Osman Ali Khan, known as Asaf Jah VII, the last nizam of Hyderabad and Berar, who ruled from 1911 to 1948, when these states merged with India. Khan was proclaimed the richest man in the world by Time magazine in 1937. He had seven wives, forty-two concubines, forty children, and a net worth of $210 billion (in 2007 dollars). During his thirty-seven-year rule, he spent a fair amount of his fortune on his people, building schools, power plants, railways, roads, hospitals, libraries, universities, museums, and even an observatory. But despite such largess, Khan focused his charity entirely in Hyderbad and Berar. Like the robber barons in America, even the richest man in the world kept his wallet close to home.
Much has changed in the past few decades. Jeff Skoll, the first president of eBay turned media mogul turned technophilanthropist, says: “Today’s technophilanthropists are a different breed. While the industrial revolution focused philanthropy locally, the high-tech revolution inverted the equation. There’s a different mentality now because the world is much more globally connected. In the past, things that happened in Africa or China, you didn’t really know about. Today you know about them instantly. Our problems are much more interrelated as well. Everything from climate change to pandemics have roots in different parts of the world, but they affect everybody. In this way, global has become the new local.”
When Skoll cashed out of eBay in 1998 for $2 billion, he too took his philanthropy global. He created a foundation to pursue a “vision of a sustainable world of peace and prosperity.” The Skoll Foundation attempts to drive large-scale change by investing in social entrepreneurship. According to Skoll, social entrepreneurs are “change agents,” an idea he explained further in an article for the Huffington Post:
Whether the issue is disease and hunger in Africa; or poverty in the Middle East; or lack of education across the developing world—we all know the problems. But social entrepreneurs, I believe, have a genetic deficiency. Somehow, the gene that helps them look past the impossible is missing … By nature, entrepreneurs aren’t satisfied until they do change the world, and let nothing get in their way. Charities may give people food. But social entrepreneurs don’t just teach people to grow food—they’re not happy until they’ve taught a farmer how to grow food, make money, pour the profits back into the business, hire ten other people, and in the process, transform the entire industry.
In its first ten years, the Skoll Foundation awarded more than $250 million to eighty-one social entrepreneurs working on five continents. These entrepreneurs, in turn, have spread their goodwill into wider spheres. “Take Muhammad Yunus,” says Skoll, “who started the Grameen Bank and helped lift a hundred million-plus people out of poverty around the world; Ann Cotton, who has educated over a quarter million African girls through her organization Camfed; and Jacqueline Novagratz, CEO of the Acumen Fund, who is affecting the lives of millions of people in Africa and Asia.”
Backing social entrepreneurs is only one example of the new direction taken by today’s technophilanthropists. Investing in triple-bottom-line companies, as the Rockefeller-backed Acumen Fund does, is another. Acumen is an entirely for-profit company, but it makes those profits investing in businesses that manufacture goods and services urgently needed in the developing world—reading glasses, hearing aids, mosquito nets—and selling them at very affordable prices. Then there’s eBay founder Pierre Omidyar’s Omidyar Network, an organization that makes for-profit investments to pursue its mission of “individual self-improvement” in key areas such as microfinance, transparency, and—of course—social entrepreneurship. “If they [the technophilanthropists] can use their donations to create a profitable solution to a social problem,” writes Economist New York bureau chief Matthew Bishop in his book Philanthrocapitalism: How the Rich Can Save the World (coauthored with Michael Green), “it will attract more capital, far faster, and thus have a far bigger impact, far sooner, than would a solution based entirely on giving the money away.”
In choosing to blur the border between nonprofit and for-profit, they are also attempting to redefine charity. “The new philanthropists,” continues Bishop, “believe they are improving philanthropy, equipping it to tackle the new set of problems facing today’s changing world; and to be blunt, it needs improvement—much philanthropy over the centuries has been ineffective. They think they can do a better job than their predecessors. Today’s new philanthropists are trying to apply the secrets behind that money-making success to their giving.”
One concept lately gaining momentum is “impact investing” or “triple-bottom-line investing,” whereby investors back businesses that generate financial returns and meet measurable social or environmental goals. The practice often gives investors a further reach than traditional philanthropy—and this practice is growing. According to the research firm the Monitor Group, what was $50 billion in impact investments in 2009 is on pace to reach $500 billion within the decade.
Another of those secrets is a hands-on approach. “It’s no longer ‘I write the check and I’m done,’” says Paul Shoemaker, executive director of Social Ventures Partners Seattle. “Now it’s ‘I write the check and that’s the start.’” And when they start, the technophilanthropists do much more than just bring financial capital to the table; they bring their human capital as well. “They bring networks, connections, and the ability to get high-level meetings,” says Shoemaker. “When Gates decided to fight for vaccines, he built a team and led that team into meetings with world leaders and the World Health Organization. Most organizations can’t get into those rooms, but Gates could, and it made a huge difference.”
There’s one last distinction between the new-breed philanthropists and the older generations, and it may be the one that has the biggest impact. The majority of the robber barons got generous in their august years, but many of the technophilanthropists were billionaires before the age of thirty-five, and they turned to philanthropy right afterward. “Traditional philanthropists have typically been an older lot,” says Skoll. “They’ve made their fortune, retired, and then toward the end of their life started giving it away. And they were less ambitious in their philanthropy—it’s easier to write a check to build the opera house than it is to go out and tackle malaria, or AIDS, or other global issues. Many of today’s technophilanthropists have the energy and confidence that come from building global businesses at such a young age. They want to tackle audacious goals like nuclear proliferation or pandemics or water. They think they can really make a difference in their lifetimes.”
All of these differences have compounded, turning the technophilanthropists into what Paul Schervish of the Boston College Center on Wealth and Philanthropy calls hyperagents. As Matthew Bishop explains, hyperagents “have the capacity to do some essential things far better than anyone else. They do not face elections every few years, like politicians, or suffer the tyranny of shareholder demands for ever-increasing profits, like CEOs of most public companies. Nor do they have to devote vast amounts of time and resources to raising money, like most heads of NGOs. That frees them to think long term, to go against conventional wisdom, to take up ideas too risky for government, to deploy substantial resources quickly when the situation demands it—above all, to try something new. The big question is, will they be able to achieve their potential?”
And as we shall see in the next few sections, more and more, the answer to Bishop’s question appears to be a resounding “yes.”
Naveen Jain grew up in Uttar Pradesh, India, the son of a civil servant. He became a student of entrepreneurship at a very early age. “When you are poor,” he says, “and basic survival is your concern, you have no alternative but to be an entrepreneur. You must take action to survive, just as an entrepreneur must take action to seize an opportunity.” Jain’s actions and opportunities ultimately put him on a trajectory to Microsoft, and then, through his founding of InfoSpace and Intelius, onto the Forbes 500 list.
“My parents drilled into me the importance of an education. It was a gift they themselves never had. I remember how my mother quizzed me in mathematics first thing in the morning and would often demand, ‘Don’t make me solve this for you.’ Little did I know that she couldn’t solve it because she had never been taught math in school. Today we have the technology, through AI, video games, and smart phones, to quiz every child on the planet and assure them access to the best education available.”
Jain signed on as the cochair of X PRIZE’s Education and Global Development Advisory Group, and is now focusing his wealth on incentive competitions to reinvent education and health care in the developing world. “Technology allowed me to create the capital I now use for philanthropy,” he says, “and I can think of no better use of these resources than to focus on eradicating illiteracy and disease around the world. What is truly amazing is that today we actually have the tools to make this happen.”
Jain is not the only one who feels this way. The 2010 Credit Suisse Global Wealth Report estimated that the world has over 1,000 billionaires: roughly 500 in North America, 245 in the Asia-Pacific region, and 230 in Europe. Finance professionals note that these numbers are probably off by a factor of two, since many choose to hide their wealth from public scrutiny. Taking a step down the economic ladder, the next group, known as “ultra-high-net-worth” individuals, cuts a broader swath, ranging from $30 million in liquid assets to centimillionaires. In total, in 2009 the number of ultra-high-net-worth individuals was just over 93,000 worldwide. Not only are these numbers higher than ever before, these individuals are giving like never before.
“The Internet’s rich are giving it away, their way,” proclaimed the New York Times in 2000. By 2004, charitable giving in America had increased to $248.5 billion, the highest yearly total ever. Two years later, the number was $295 billion. By 2007, CNBC had taken to calling our era “a new golden age of philanthropy” and Foundation Giving reported a record-setting 77 percent increase in new foundations established in the past decade, an addition of more than 30,000 organizations. Certainly those numbers dipped during the recent recession: 2 percent in 2008, 3.6 percent in 2009. The ten-year low was in 2010, but that was also the year Bill Gates put $10 billion toward vaccines, the largest pledge ever made by a charitable foundation to a single cause.
2010 was also the year that Gates and Warren Buffett, the two richest men in the world, announced the “Giving Pledge,” which asks the nation’s billionaires to give away half their wealth to philanthropic and charitable groups within their lifetimes or at the time of their deaths. George Soros, Ted Turner, and David Rockefeller signed up almost immediately. Skoll too was an early joiner, as was Pierre Omidyar. Oracle cofounder Larry Ellison, Microsoft cofounder Paul Allen, AOL creator Steve Case, and Facebook cofounders Mark Zuckerberg and Dustin Moskovitz have all signed on as well. As of July 2011, the total had risen to sixty-nine signatories, with more joining all the time.
That the technophilanthropists are proving to be a significant force for abundance is not a question. They’ve already impacted all levels of our pyramid, including those that are hard to reach. Mo Ibrahim, a Sudanese telecommunications tycoon, recently established the Ibrahim Prize for Achievement in African Leadership, which awards $5 million (and $200,000 a year for life afterward) to any African leader who serves out his or her term within the limits of a country’s constitution and then leaves office voluntarily.
But the best news is that most of these technophilanthropists are still young, so they’re just beginning their journey. “As some of the smartest people look at where to focus their energies next,” says PayPal cofounder Elon Musk, “they are now attracted to the biggest problems facing humanity, particularly in areas such as education, health care, and sustainable energy. Without suggesting complacency, I believe it is very likely that they will solve the many challenges in those areas, and the result will be the creation of new technologies, companies, and jobs that will bring prosperity to billions on Earth.”