How to give money and keep your integrity in the 2020s.
Joe Lonsdale Apr 9, 2023 @ Joe Lonsdale
The word philanthropy comes to English from the Greek φιλανθρωπία (philanthrōpía). The word has two roots: phil[os] — to have an affinity for or to love — and anthrōpos — mankind. Together, they form philanthropy, or “love of mankind.” And that’s what philanthropy is supposed to be about, as opposed to, say, Phillipos, phil-hippos (horses): Philip, a man who loves horses.
Today, most of the Phil's I know do not love horses; but more troubling, most “philanthropists” have inverted the meaning of philanthropy, from “love of mankind” to “loved by mankind.” In other words, in our culture a lot of philanthropy has become a virtue signal, a way to cynically seek attention and love from others, rather than to love others. Philanthropy-turned-virtue-signal lacks virtue. And further: because what is popular and trendy has many others working on it, and whatever is broken tends to be marred by special interests or taboos, this decayed form of charity tends to miss the biggest areas of need where philanthropy can make a real difference.
The problem has been brewing for years, but feels especially acute in the 2020's: in the United States in the past, for example the mid-to-late 20th century, when many institutions were fundamentally sound, you could do basic philanthropy and sometimes fix things around the edges and be rightly applauded for it. When most institutions are aligned with society, you can give money to them, take the nameplate on a building or program, feel loved by your fellow man and have done some good, and call it a day.
But when there’s incontrovertible evidence that things are deeply broken in society, you have to fix the broken things. Anything else has a massive opportunity cost. Today, “around the edges” philanthropy or institutional vanity philanthropy — with some exceptions — have the simple and destructive effect of subsidizing dysfunction.
We can call the two sides of this framework subsidy-philanthropy versus solution-philanthropy. Here are a few examples.
Instead of philanthropy that works to confront the conditions and policies that lead to drug addiction and street homelessness, people pay for the needles and tents. As the problem worsens, the charity costs more and more.
Instead of philanthropy that confronts the decadent leadership and thousands of unnecessary ideological administrators in our universities, people endow new scholarships to “help” the students as costs explode and results decline.
Instead of philanthropy that upends bad public monopolies like in healthcare and prisons, people give money to nonprofits that cozy up to those monopolies, hoping for access and name-recognition.
Subsidy-philanthropy is based on the premise that more money going in will improve a system or process. For a broken system, this is totally incorrect.
Mackenzie Scott — the ex-wife of Amazon founder Jeff Bezos — has given away vast sums of her post-divorce fortune rather injudiciously. In 2020 and 2021, she became the nation’s main funder of so-called “racial equality” causes, to the tune of more than a billion dollars. In many cases, that meant giving huge checks to a bevy of organizations without commensurate scrutiny.
Peter Savodnik reported in The Free Press about the results of the dubiously-given check at a small college in the throes of the 2020 “racial reckoning.”
Faculty say morale is at an all-time low. “It feels a little like a banana republic,” one professor said. Every faculty member I spoke to asked that their departments not be revealed. There are only 100 professors at the college and, as one put it, “there’s no trust.”
…As for the Scott gift, “that secured her against criticism, against the board pushing back,” one professor said. “But it had nothing to do with what she had done. It had to do with her skin color and her gender. That’s it.”
This isn’t to pick on Mackenzie Bezos. She has given away more money — and faster — than just about anyone. The speed and scale are unconventional. But where I object is the extreme conventionality of the giving itself. Where is the energy to pursue solutions, to go after these problems at the root, rather than throw money at people?
Compare that with solution-philanthropy: by measuring recidivism and employment after incarceration, rewarding success, and holding underperforming programs accountable, we could lift up hundreds of thousands of lives and have a hugely positive impact on many communities in need. This would be a high-effort, high-effect form of philanthropy. To most, that is less attractive than low-effort, low-effect alternatives we see from hundreds of criminal justice groups. Why?
Well, the prison guards' unions are powerful and take courage to confront. Taboos take courage to confront. In a similar vein, the education leaders won’t give you an honorary doctorate for cutting waste and nonsense. The homeless activists will call you inhumane if you fight homelessness at the root, make government spending accountable to results, and put the activists out of a job. Lacking courage, and seeking easy approval without controversy or hard work, our society has made “charity” synonymous with pouring money into the organizations that make up the non-profit industrial complex.
This is where you come in. Entrepreneurs getting into philanthropy must ignore the “experts” and embrace their own entrepreneurial instincts, if they expect to see entrepreneurial-level results. We need entrepreneurial-level results!
In business, great entrepreneurs know that the way to maximize their impact is to find a gap in the world. You win by identifying something that's broken, surrounding yourself with the smartest and hardest working people you can find, and motivating them to see what's possible and to solve the problem with you, with persistence over time in the face of challenges. To succeed, you must be drastically better than existing competitors, or do something new altogether. This entrepreneurial instinct has served many people well; unfortunately, most give it up as soon as it’s philanthropy and no longer “business.”
Treating philanthropic work as if it’s a totally separate endeavor than entrepreneurship is a huge mistake. In reality, good entrepreneurship and good philanthropy come from the same place: how could the world work differently tomorrow than it does today? Which conventional thinking is wrong, and why is it wrong?
It's as if the sharpest business minds lose 30-40 IQ points — and lose their courage — as soon as they wade into philanthropy. That’s a tragedy, because the odds are strong that these people, who already proved they could transform the world once, could do it again. They could pursue an outcome a hundred times more impactful than the existing projects. But vanity and praise are strong drugs, and at a time when culture vilifies extreme success it’s not difficult to see why many successful people take the path of philanthropy-as-virtue-signal.
There is a typical playbook: the founders surround themselves with people with whom they would never build a business. An old friend they trust, senior government bureaucrats, various academic “experts” — these are the standard people who build charities, so they must know something, right? No! In many cases those hired just one level down in the philanthropic organizations are the sort of employees a great entrepreneur would know to actively avoid if they were trying to build a company — those who are obsessed with social pathologies and identity politics, among other things.
Entrepreneurial frameworks are powerful tools, like Phil Knight’s rules at Nike, which exemplified his legendary leadership.
Our business is change.
We’re on offense. All the time.
Perfect results count -- not a perfect process.
Break the rules: fight the law.
This is as much about battle as about business.
Assume nothing.
Make sure people keep their promises.
Push yourselves push others.
Stretch the possible.
Live off the land
Your job isn’t done until the job is done.
Dangers:
Bureaucracy
Personal ambition
Energy takers vs. energy givers
Knowing our weaknesses
Don’t get too many things on the platter
It won’t be pretty.
If we do the right things we’ll make money damn near automatic.
The intellectual challenge is to reconcile those values — strong and clearly stated — with Knight giving $500 million to Stanford. Where is the battle? Where is the rule breaking? Nowhere to be found; this is philanthropy, not business, so rules are to be followed. Adjusted for inflation, that $500 million is more than the total amount of money Leland Stanford Sr. gave to found his university in the late 19th century. Why have so few entrepreneur-philanthropists in the last century sought to create new institutions, rather than continue to endow the current ones?
Based on dozens of examples I have seen, with a few notable exceptions, it appears to be very difficult for a person already in their late 70's or 80's to reorient themselves and their frameworks of how the world operates. This is problematic in part because a decent investor has tended to double their wealth every 5-7 years the past several decades; if you are 35 years older, you tend to have 32x to 128x as much wealth. And as the math suggests, this is the most influential demographic of philanthropists active today.
As challenges and institutional dysfunction mount, many entrepreneurs who formed their intellectual frameworks of the world in their youth — making up their minds in their 30's or 40's — struggle to challenge those assumptions about our institutions as they enter their 70's or 80's. Those frameworks usually include things like giving to universities, to museums, to orchestras and operas, and the like.
It is sadly the case that very few of the traditional institutions are safe giving targets, if you created wealth in your lifetime and your values mean anything to you. The universities are in many cases against independent thought; the museums have turned against our history; the musical institutions have embraced divisive racial politics.
Our philanthropists' frameworks and respect of these institutions were likely correct decades ago — when these institutions were more or less aligned with American values. But today many of these same cultural institutions are engaged in outright cultural destruction.
Elon Musk describes a similar problem: "If you care about the reality of doing good and not the perception of doing good, then it is very hard to give away money effectively. I care about reality. Perception be damned." My version of this dilemma would be the question: would you rather be liked, or fight for a better future?
Do you want the mainstream press to like you; or are you okay being "controversial", but achieving a meaningful impact on a huge number of lives? To be loved, or to love mankind?
It sure seems like for many of the biggest money givers, the answer is to be loved. As noted above, Mackenzie Scott has given away more than just about anyone, and it resembles the giving of thousands of others. Does anyone believe that her giving will be memorable, say in a century, for its results?
It might not make a difference to her whether her philanthropy has destructive cultural effects, given that the intent of the giving in the first place was likely to make a point – and to ride the wave of 2020 that saw all manner of people and organizations engage in extreme virtue signaling. At the height of that period in the summer of 2020, Scott herself wrote the following:
There’s no question in my mind that anyone’s personal wealth is the product of a collective effort, and of social structures which present opportunities to some people, and obstacles to countless others.
That seems to be the mindset: one of penance rather than altruism. And it seems to have "worked". The press doesn’t love Jeff Bezos, but they definitely love his ex-wife, who has given away more than ten billion dollars already and isn’t close to being done, all while implicitly apologizing for having come into the fortune.
The sheer scale of this uncritical giving project is a tragedy, because philanthropy can and should be an important part of society, especially in helping the least well off. But the ideas promulgated by divisive, race-based charities are obviously not effective for advancing “racial justice.” And there isn’t any real discussion of the types of policy and cultural changes that would actually make lasting change for real people who are part of minority groups in the U.S.
On some level, if you actually believe that you’re fighting real problems, if you actually believe that a system is causing harm, then of course you’re going to be attacked. Of course the system's special interests will lash out at anyone who threatens to solve the problems. Those who are unaccountable or benefitting from dysfunction will hate you for doing the right thing. The simple corollary of this is that it should be hard to do real philanthropy while being lavishly praised for it. That the opposite is true speaks to just how far a lot of “Big Philanthropy” has fallen. It’s corporate, woke, mainstream, lame — and most of all, ineffective.
What we need is the courage to confront real problems; the courage to be disliked; and the courage to buck one’s own peer group, even when it stings — no, especially when it stings. That is the mark of the dissident philanthropist. And in today’s age, the dissident philanthropists tend to be the most effective.
If you want legacy institutions to praise you, try doing something worthless and status-quo instead. Don’t experiment at all. Don’t try things that are taboo and unacceptable to the people who define what counts as “philanthropy.”
The next generation of informed givers aren’t going to hand money over to far-left commissars running what should be neutral institutions like orchestras and universities as an activist organization. They will be assessing the real virtues of the philanthropies, and starting things themselves. So, my advice to the would-be philanthropists out there is as follows:
Be daring. Be entrepreneurial. Don’t obey arbitrary customs. Don’t work with people you wouldn’t have in your personal circle or your business. Let your values and integrity attract aligned allies. And when the special interests of the corrupt system show up to protest and scream at you, you might be onto something.
We don't create our top companies around political ideology, and it's also not a winning recipe for effective philanthropic organizations. Outside of religious groups and conservative intellectual outfits, the vast majority of people working full time in non-profits tend towards the left, which is not by itself a problem. But Michael Lind has written in Tablet about the fascinating anti-intellectual trend within much of the left-NGO complex. Why is it that every left-oriented charitable organization seems to have a full-blown political bent to it, indistinguishable from a party group?
“Who decides what is and is not permissible for American progressives to think or discuss or support? The answer is the Ford Foundation, the Open Society Institute, the Omidyar Network, and other donor foundations, an increasing number of which are funded by fortunes rooted in Silicon Valley. It is this donor elite, bound together by a set of common class prejudices and economic interests, on which most progressive media, think tanks, and advocacy groups depend for funding.”
Philanthropy certainly doesn’t need to be political in the opposite direction just because most left-wing philanthropy has abandoned intellectual freedom. But doing great work is very difficult in a poor intellectual environment dominated by rigid ideologies. Even many of my older friends who are moderates and believe in capitalism — people I respect — have generally let their foundations be conquered by ideologues from this class of people obsessed with identity politics and "the correct way to think".
This creates a real opportunity for work that bucks trends and ignores the judgments of a stagnant political class. There is a huge gap of unexplored opportunity, and that should inspire us! If we don't rely on "experts", and approach problems for ourselves, we can accomplish amazing things. The Ocean Cleanup is a fantastic example: built by engineers and entrepreneurs, backed by engineers and entrepreneurs, and immeasurably more effective than any environmental scheme dreamed up by an unimpressive bureaucrat or activist.
We can use the latest in technology to save thousands of children from trafficking and abuse. We can give directly to the poorest people in the world in effective ways. We can make sure that the poorest American children have the choice to go to better schools. Efforts like these bypass the “experts.”
Some of our thoughts on philanthropy are informed by our work with the Cicero Institute, which is having immense success making state governments more accountable — and dismantling the malign influence of crony businesses and NGOs. The rule that one must be willing to withstand vicious attacks from special interests and activists is one that my friends and I have learned from experience. But with strong values, an informed worldview, and a knowledge of what works, it is possible to use our wealth and influence to make a real difference and to help millions of people.
I hope you will take these frameworks and incorporate them into your own work. If it’s giving, think more critically; if it’s building an organization, be more entrepreneurial; and if you’re looking for efforts to work alongside and partner with, you know where to look.
So, the choice is up to you. What will you fight for? What are you willing to risk? Each of us has to decide what we really care about and who we want to be. For me, believing in a higher power makes this choice easier, and I have always taken inspiration from the simple and beautiful Hebrew saying: תִּיקּוּן עוֹלָם — Tikkun Olam, ‘to repair the world.’ That is the mandate.
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