We know that ultrarich people can be very good at giving their money away. Think of Bill Gates, who started a massive and well-respected charitable empire and has given his way off the top of the Rich List. Or George Soros, whose political contributions often overshadow the billions of dollars he has given to uncontroversial programs like the U.N.'s Millennium Villages project.
We also know that the wealthy can make very puzzling philanthropy decisions. Think of the private equity baron Henry Kravis, whose $100 million gift to Columbia Business School will enrich a demographic (Ivy League MBA students) that hardly needs a boost. Or hedge fund honcho John Paulson, who gave $100 million to the Central Park Conservancy despite it already being insanely well-funded.
The idea that you can take the Kravises and Paulsons of the world, and teach them to be more like the Gateses and Soroses, is the root premise of GiveSmart, a new, Gates-funded initiative from the Bridgespan Group. In order to teach good giving to aspiring philanthropists, Bridgespan — the nonprofit consulting arm of Bain & Company — made a slick, fancy website featuring short videos (which, unfortunately, can't be embedded) of roughly 50 ultrawealthy people talking about their philanthropic giving. They rolled it out today, on Giving Tuesday, with a giant Bloomberg article.
The results are enlightening for non-billionaires as well.
The first and most glaring lesson of the GiveSmart videos is that a lot of people simply have too much money. On some level, it's impressive that David Rubenstein could go from the son of a postal service file clerk to a private equity kingpin who, according to his video snippet, cannot conceive of a way to spend a meaningful percentage of his net worth during his lifetime. But it's also illustrative of a tax regime that has allowed the wealthy to keep most of their money out of government's clutches. (If liberals need additional arguments for raising taxes on the wealthy, they could just send out GiveSmart's videos of billionaires puzzling over how they could possibly get rid of all that money.)
The second lesson to be drawn from GiveSmart's video montage is that much of high-end philanthropy is self-serving.
This is hardly a new point, but it's rare to find such candid explanations of why rich people actually give money away. Just listen to just one of the GiveSmart exemplars — hedge fund manager Paul Tudor Jones — explain why he got into philanthropy in the first place:
I was about 32 years old, I was sitting on my couch, Sunday night, 60 Minutes, Eugene Lang comes on. A piece on him where he went back to his elementary school and told those kids that if they graduated from high school he'd put them through college. I was at that time a very self-absorbed, a very egocentric human being, but my life was hollow. And I saw that, and I saw how this businessman with no prior experience or training just felt like, I've just gotta get in the game and do something. And that had a big impact on me. I realized that life was about more than just worrying about myself, my needs, who I was. There was something definitely missing. So the next day I picked up the phone and called him.
These days, Paul Tudor Jones is credited with being one of the best philanthropists on Wall Street. His Robin Hood Foundation is a money-raising machine, and does laudable anti-poverty work in New York City. But notice that the reason he began giving money away in the first place wasn't to fix a problem he observed in the world. It was to fix a problem he observed in himself.
As a result, while Jones might have gotten some temporary soul relief out of his decision to mimic Lang and sponsor his own band of elementary school students in Bed-Stuy, he ended up failing abjectly when it came to actually helping the kids. Jones says in the video that when a group of Harvard researchers came to evaluate his class, they found that his money was doing little, if anything, to create measurable improvement in the students he sponsored, relative to non-sponsored students.
This kind of outcome is common. The wealthy don't just give to well-run charities whose missions they support — they give to charities that flatter them with awards, charities run by their business associates, and charities that are prominent in their social world, no matter how effective they are.
Selfish philanthropy isn't necessarily a bad thing — as long as the money actually gets results. If you're a person whose life was saved by a prostate cancer treatment that resulted from a medical confab organized by Michael Milken (another one of Bridgespan's video testifiers), you don't necessarily care if Milken became more charitable in order to burnish his reputation after his securities fraud scandal.
But charity that is both selfishly motivated and ineffectual is a bad thing. And that's the problem GiveSmart is trying to fix.
There is very little rhyme or reason to the actual advice GiveSmart has collected from its billionaires. Some of GiveSmart's donors (Milken, Julian Robertson) have started their own foundations, while others (eBay's Pierre Omidyar) counsel against starting them. Some (Pete Peterson) have targeted domestic political issues, and others have tried to solve global health problems. Most share the attitude that charitable giving, however it's done, should be treated like a business. ("The best donors constantly evaluate the top and bottom of their 'portfolio,' and think about ways to get better results over time," GiveSmart says.)
Of course, charity isn't quite like a business. Even the best-run and most financially flush charities experience setbacks, and just having a hedge fund manager apply his financial acumen to, say, AIDS research doesn't guarantee success. Indeed, most ultrawealthy people would probably have a bigger impact by giving their money to established and well-run foundations rather than creating their own, as Warren Buffett did when he cast his lot with Bill and Melinda Gates.
But I like the idea behind GiveSmart, even if its execution is a bit messy. If we're not going to tax away the excess wealth of our nation's plutocrats, we can at least encourage them to avoid wasting it on pointless vanity projects.