Size Matters

Not since the Madoff business have I been asked for my opinion by more people than I have since Warren Buffett began his highly publicized assault his very rich peers on behalf of big money philanthropy.

Some of the questions I have received are predictably voyeuristic – the endless fascination with the lives of the super-rich and famous. Hate to disappoint, but even when I might have something interesting to say along these lines I wouldn’t tell the press.

Most of the questions, though, reflect a real puzzlement that goes beyond fascination. What does it mean about the current state of philanthropy? What will it mean for the independent sector? What are the implications for the rest of us who may be altruistic and generous but can hardly match the munificence of the 40 richest? What will happen with all that money?

Here are some of my responses:

• About 30 years ago, when $1m was still real money, a noted, now deceased philanthropically inclined businessman was celebrated widely for a $1m gift he made. His son, then an undergraduate student, retorted, “my father always told us, nobody really gives until it hurts.” In other words, that $1m hardly impacted that family’s lifestyle or bank account. Similarly, with almost no exceptions, none of these very generous billionaires will stretch themselves so that they will worry where their last $b is or if their children or grandchildren will be in soup lines.

• At the same time, it is an extraordinary amount of money that will accrue to the public good and is a reflection of 2 overlapping but quite distinct motivations:

  1. Some of the donors espouse that there is a noblesse oblige – an obligation to repay the world for at least some of the good fortune which they accumulated. After all, they more than most know that you cannot take it with you and there is a limit as to how much one can really spend on lifestyle, no matter how grand.
  2. As important, and more far-reaching in impact, is the sense that we have allowed profound inequities in our societies, especially over the last decade or so. In a deep, if not always articulated way, these super wealthy folks know how much they have benefited from public policies which favored them, all too often on the backs of the middle and working classes. It is as if they are saying, we cannot seem to get our public policy right, but we better get our private values right.

• This may speak to motivation but it doesn’t speak to the question of whether this leads to good philanthropy. After a long period of time where spend-down approach was out of favor and perpetuity was a preferred goal it has clearly resurfaced as a powerful trend. Of course, some of this spend down is simply transferring private assets to private foundations, which means that philanthropy benefits, but at no particular predictable pace. Others, though, clearly intend to spend these large sums in a discreet period of time. Will that lead to wiser, more thoughtful, more impactful, and more effective philanthropy? Maybe. To spend that much money wisely will require hard work, thoughtful focus, and a level of awareness of what private philanthropy can and cannot do. As every philanthropist and most foundation professionals can affirm, that is much easier said than done. Even Warren Buffett acknowledged that, for all of his money, this challenge was beyond him so he joined forces with the Gates folks, on whose judgment he chose to rely. To be sure, his is not the typical path. It remains to be seen whether this will lead to a true new golden age of creative, thoughtful, and wise philanthropy, or simply largesse to the big institutions which can most readily absorb these funds.

• Which brings us to the e question: What about the supposed windfalls to the so-called not for profit/ngo sector? Well, my guess is that money of this scale will not be scattered randomly and widely. The sector is severely undercapitalized, even more so than it was only 3 years ago. But that doesn’t mean that most organizations in the voluntary sector have the capacity to scale up, or event that they should. Let us hope that as new money comes on line for charitable purposes, there will be a real commitment to add quality and capacity to struggling but deserving organizations. Further, let us hope that there will be a willingness to take worthy risks, to reserve some money for the creative start-ups which would otherwise escape notice by deep pocketed funders, and at the same time, to avoid the too easy tease of philanthropic fads in lieu of serious thinking.

• Finally, what about you and me? Are we somehow flawed in our commitment if we look for ways to engage our own families in philanthropic endeavors that may outlast our own lives? Are there new standards that say that one is a lesser philanthropist if one doesn’t announce a commitment to spend down ones assets in ones lifetime? I hope not.

• Let us hope that the real message of this very public and overwhelming statement of charitability is that there are too many out there whose needs are too great, the world is in too fragile a state, and the public will has proven sorely lacking. Even those who can most easily ignore or hide from these needs must not do so. Nor may any of the rest of us.

Richard Marker serves as an advisor to foundations, independent funders, and not-for-profit organizations; he is a Senior Fellow in Philanthropy at NYU’s George Heyman Jr. Center for Philanthropy. Richard specializes in strategic philanthropy and planning and regularly blogs at Wise Philanthropy.