TheHealthandTech.Foundation
PhilantropyInstitute
Joaquim Cardoso MSc
January 28,2024
What is the Message:
The landscape of philanthropy is evolving, with a growing trend among the super-rich towards more immediate and impactful giving.
Spearheaded by figures like MacKenzie Scott, philanthropists are adopting a “no-strings” approach, bypassing traditional bureaucracy to get funds to those in need swiftly and efficiently.
This shift represents a departure from the previous era of philanthrocapitalism, aiming to address criticisms of excessive bureaucracy and inefficiency within the charitable sector.
Executive Summary:
The landscape of philanthropy is undergoing a significant transformation, driven by a growing movement among the super-rich towards more immediate and impactful giving. This shift, exemplified by figures like MacKenzie Scott, emphasizes “no-strings” philanthropy, characterized by swift disbursement of funds without traditional bureaucratic hurdles.
Scott’s remarkable commitment to distributing $16.5 billion since 2020, coupled with similar approaches by other influential donors like Jack Dorsey and Brian Acton, highlights a departure from the previous era of philanthrocapitalism.
Scott’s remarkable commitment to distributing $16.5 billion since 2020, coupled with similar approaches by other influential donors like Jack Dorsey and Brian Acton, highlights a departure from the previous era of philanthrocapitalism.
Philanthrocapitalism, once hailed for its metrics-driven and business-like approach to charitable giving, has faced criticism for its bureaucracy and lack of flexibility.
The Bill & Melinda Gates Foundation, for instance, developed a reputation for efficient, data-driven grant-making, and poured billions of dollars into eradicating diseases such as polio. Thanks, in large part, to its efforts, Africa was declared free of wild poliovirus in 2020. The foundation’s efforts to tackle malaria and improve sanitation have saved countless lives.
Despite significant wealth growth among the super-rich, global giving remains relatively modest, with substantial portions of fortunes remaining untouched. This disparity underscores the urgency for more effective philanthropic strategies.
The emergence of no-strings philanthropy represents a paradigm shift, aiming to address criticisms of inefficiency and bureaucracy within the charitable sector. By empowering charities and streamlining the donation process, this approach seeks to accelerate the pace and impact of philanthropy. Embracing flexibility, trusting charities’ expertise, and prioritizing swift action are recommended to further enhance this trend and effectively address pressing global challenges.
Overall, the transition towards no-strings philanthropy signifies a recognition of the limitations of previous models and a commitment to more impactful giving. With its potential to catalyze positive change and address urgent needs more effectively, this approach heralds a new era in philanthropy.
Philanthrocapitalism, once hailed for its metrics-driven and business-like approach to charitable giving, has faced criticism for its bureaucracy and lack of flexibility.
According to “The Economist” this kind of “no-strings giving” is not completely new. The William and Flora Hewlett Foundation, set up by a tech tycoon, has long given “unrestricted” grants that do not specify how they must be used. Since 2015 the Ford Foundation has put $2bn into its Building Institutions and Networks (build) programme, which hands recipients five years of funding, including a chunk of money dedicated to investments in the organisations themselves.
The same article reports that “many former supporters have now accepted that making the world a better place differs greatly from the business of making money. In the market, self-interest focuses minds, competition means bad ideas do not thrive, and resources are naturally drawn where the pay-offs are largest.
But, in philanthropy, donors rarely operate on the basis of rational judgment. People who see a problem up close have ideas about how it might be solved. They may have personal experience of it or personal attachment to the cause. They often work together, rather than in competition. And ngos do not operate in an efficient market. There is no single metric for a charity’s success comparable to profit in business. Charities rarely go under. “This is an environment that fundamentally differs from the market-based economy,” says Harvey Fineberg, president of the Gordon and Betty Moore Foundation, set up in 2000 by the co-founder of Intel and his wife. “It is based on partnership, rather than rivalry.”
Examples and Statistics:
- MacKenzie Scott, after receiving a substantial stake in Amazon, has committed to giving away billions of dollars with no strings attached, distributing $16.5 billion since 2020.
- Other prominent figures like Jack Dorsey and Brian Acton are following suit, opting for unrestricted grants and faster disbursement of funds.
- Traditional philanthrocapitalism, marked by heavy bureaucracy and metrics-driven approaches, has faced criticism for its inefficiency and lack of flexibility.
- Despite the wealth growth among the super-rich, global giving remains relatively small, with significant portions of fortunes remaining untouched.
Conclusions and Recommendations:
The shift towards no-strings philanthropy signals a recognition of the limitations of previous approaches and a desire for more effective giving.
By empowering charities and streamlining the donation process, this new model aims to accelerate the pace and impact of philanthropy.
To further enhance this trend, it is recommended that philanthropists continue to embrace flexibility, trust charities’ expertise, and prioritize swift action in addressing pressing global challenges.
- The Institute for Policy Studies, an American think-tank, led one study of people who have signed the Giving Pledge, a promise to give away the majority of their fortunes in their lifetimes. It found that the combined assets held by the 73 living pledgers who were billionaires in 2010 rose from $348bn to $828bn in 2022.
- Now, the hope is that the new no-strings approach — which some call “trust-based philanthropy” — could increase the pace and efficacy of giving in a way that philanthrocapitalism did not. Its aim is to do that by getting money out the door faster, and shifting decision-making power from donors to charities.
This approach has the potential to catalyze positive change and address urgent needs more effectively than traditional philanthropic models.
NAMES MENTIONED
- MacKenzie Scott: Received a 4% stake in Amazon following her divorce from its founder, Jeff Bezos. She has committed to giving away her wealth and has distributed $16.5 billion since 2020.
- Jack Dorsey: Co-founder of Twitter and Square, who has established the fund “Start Small” and donated $1.5 billion, largely in unrestricted grants.
- Brian Acton: Co-founder of WhatsApp, along with his wife, Tegan Acton, they practice no-strings philanthropy through their group, Wildcard Giving, donating tens of millions of dollars every year.
- Anand Giridharadas: An American author, mentioned for his book “Winners Take All: The Elite Charade of Changing the World,” which criticizes the old ways of philanthropy.
- George Soros: A financier, mentioned as one of the billionaires who has given away more than 20% of their wealth.
- Jeff Skoll: Former boss of eBay, also mentioned as one of the billionaires who has given away more than 20% of their wealth.
