What motivates billionaires to shed wealth in the name of philanthropy? For some, it’s a sense of social responsibility, or a desire to support a cause to which they have personal ties. For others, it’s the incentive of tax write-offs, the ability to bolster a reputation, or simply feeling better about oneself—what some might consider a well-disguised act of selfishness. But any way you slice it, giving is good. It’s laudable. It improves the lives of those who are impoverished or marginalized, and sustains the planet on which they live. Nobody could argue with that.
But solving some of the most complex and intractable issues of our time is a Titanic-sized iceberg with a multi-trillion-dollar price tag—and the giving of America’s billionaires is akin to what lies just above the surface.
The average American gives 2.1% of their disposable income to charity. Yet, in total, the 20 richest Americans donated just 0.8% ($8.7 billion) of their collective net worth in 2018. If you exclude Warren Buffett and Bill Gates—who gave a disproportionately high amount, at 3.9% and 2.6%, respectively—that plummets to just 0.3% ($2.8 billion). And yet, the collective wealth of America’s 651 billionaires has jumped by over $1 trillion since the beginning of the pandemic, to a total of $4 trillion as of December 2020. Combined, the top 10 billionaires alone are now worth more than $1 trillion.
Imagine the impact that could be made if each of America’s 651 billionaires gave 2.1% of their wealth. It would amount to roughly $84 billion. Now, what if they gave 5%? It would amount to $200 billion, which amounts to $1 trillion over a 5-year period—enough to quite literally change the world. So, the question is: What will it take for this transformational change to happen in philanthropy?
Capitalism: Broken, But Built for Justice
Motivation matters. And it’s evidenced by the fact that when the tax code changed in 2018, America’s most generous billionaires gave half as much to charity as in the previous year—slashing giving by $54 billion, according to the IRS. Individual giving fell 3.4% adjusted for inflation overall. So, it’s easy—even trendy—to confuse capitalism with greed. But it’s important to note that capitalism wasn’t originally set up to disenfranchise those less fortunate.
Sure, America’s first foundations were established by wealthy businessmen, with the aim of creating a tax buffer and gaining stature. But that also means we gained a system that allows for the accumulation of wealth and the discretionary disposal of it. In other words, philanthropy wouldn’t be possible without capitalism as it was originally built. That said, the system as it currently stands is massively skewed—with the richest 90 people owning as much wealth as the bottom 50% of the country’s income earners combined. This means the problems that capitalist philanthropists aim to solve are rooted in the same economic system that allowed them to generate such colossal wealth in the first place.
However, philanthropists with such high levels of wealth do have the opportunity to generate unprecedented levels of social change by making unrestricted, venture philanthropic grants to organizations who have passed all the due diligence tests. In the right hands, with a well-guided process and intent, this type of giving can lead to large-scale social impact. Mackenzie Scott is a great example of this potential. With less than a year as a public philanthropist under her belt, and little more than a few close activist and non-profit advisors, she has already given away more than what any of the country’s biggest givers have in their entire lifetimes, with the exception of five individuals. As someone who’s stated that she doesn’t believe her wealth belongs entirely to her—she’s a beacon of what could be. But in most cases, philanthropic capital ends up misdirected, overly controlled, and given in small, fragmented quantities—restrained from generating the level of impact we need to see in the world today.
So, how do we shift this and transform capitalism to become a force for good? In order to generate systemic change to solve the world’s most pressing issues, we need big, bold action from willing billionaires. Period. And that means that they take three steps in this direction:
- Meet with and listen to the community of Skoll Foundation social entrepreneurs. These individuals have passed every due diligence test with flying colors over the past decade, and are ready to bring solutions for global, large-scale social impact to the table. These entrepreneurs know how to catalyze philanthropic support to unlock more capital from the global capital markets, and in ways that ensure people living in poverty are treated as a market to be served—rather than a problem to be solved. Today’s average, unrestricted philanthropic grant should be in the range $50-100 million, at least. Billionaires have so much to gain by making a big bet on these entrepreneurs and the systemic change they can unleash in today’s society. These billionaires’ vision and philanthropy needs to reflect today’s economic realities, challenges, and opportunities.
- Act with urgency. We need an upgraded version of The Giving Pledge—with a more urgent, ambitious, and time-bound call for philanthropic giving that is much more aligned with the massive needs of the world right now. While it is inspiring that 220 individuals and families have signed the Pledge over the past 11 years, the pace at which giving is taking place from this group of wealthy individuals is too slow. It states that it “is an effort to help address society’s most pressing problems by inviting the world’s wealthiest individuals and families to commit more than half of their wealth to philanthropy or charitable causes either during their lifetime or in their will.” For some of the world’s youngest billionaires at age 29 or 40, we could be waiting for the next 50-70 years before they fulfill the pledge—and with 2 billion people still lacking access to safe water and sanitation, and living in poverty. We simply can’t wait that long.
- Put more women at the helm, leading this change. From philanthropy, to business, to impact investing and Environmental, Social, and Governance (ESG) investing—women in leadership and decision-making roles are demonstrating incredible results. Research shows that women’s global wealth is projected to rise to at least $81 trillion by 2023. It also shows that businesses founded by women deliver 2X higher revenue per dollar invested than those businesses founded by men. In addition to Mackenzie Scott—who’s demonstrated that women can engage in philanthropy in a powerful way—Kristen Venick has proven that making big, innovative bets is a game changer. In her role as the Director of Corporate Giving at Niagara Bottling, she’s been responsible for allocating nearly $20 million in grant capital to Water.org’s and WaterEquity’s innovation journey. Then there’s Cristina Ljungberg, Co-Founder of The Case for Her, a philanthropic investment portfolio addressing key women’s health issues. She was also a founding member of the Maverick Collective—a women-led initiative dedicated to venture philanthropy, innovation, and global health. Imagine if more women followed their lead, and established a new normal for philanthropy, where it became common to give strategic, unrestricted capital—grants with an average size of $50-500 million—that supports social entrepreneurial organizations capable of producing unprecedented systems change? What if we elevated this type of giving—demonstrating that this is where innovation and the “bang for your buck” lies? Anything less is simply not enough to make a transformative dent.
Imagine the much-needed disruption to today’s status quo that this would create. The good news is that some forward-thinking, innovative philanthropists are already headed in this direction—creating a sustainable future, and setting a critical new trend. These are the innovators, the disruptors, and the leaders. So now the question is: Where do today’s billionaire philanthropists want to play—in the past, in the present, or in the future? The future of philanthropy depends on making big, billion-dollar bets on innovators and other social entrepreneurial organizations that can produce transformational systems change in the world. And perhaps women will be the ones who take over this new chapter and show us how it’s done.
About Lebec Consulting
Lebec Consulting is a female-led firm that specializes in advising corporations, foundations, high-net-worth individuals, financial institutions, and entrepreneurs on how to achieve their greatest social impact through strategic philanthropy and impact investments. With sustainability, innovation, and systems change at the center of our strategy, we think outside the box and look beyond traditional philanthropy. Our goal is to provide these key stakeholders with the best possible roadmap to achieve impact in ways that will truly reverse the tides of global inequality.
McKinsey. The Case for Stakeholder Capitalism. November 12, 2020.
Forbes. Charitable Giving Took a Hit Due to Tax Reform. January 18, 2019.
Pew Research Center. Trends in Income and Wealth Inequality. January 9, 2020.
Inequality.org. Updates: Billionaire Wealth, U.S. Job Losses and Pandemic Profiteers. February 24, 2021.
The Academic Times. Elite Philanthropy Mainly Self-Serving. March 26, 2021.
Jacobin Magazine. The Problem with Capitalist Philanthropy. February 26, 2018.
This is Capitalism. Philanthropy and Capitalism: You Can’t Have One Without the Other.
Stanford News. Stanford Scholar Addresses the Problems with Philanthropy. December 3, 2018.
Rockefeller Philanthropy Advisors. System Shifts in Philanthropy – Giving Credit Where Credit is Due.
Fast Company. Corporate Donations Shouldn’t be Band-Aids. Big Bets on Social Enterprises Will Make More Change. January 20, 2021.
Forbes. Charitable Giving is Broken – Here’s an Easy Way to Fix It. March 29, 2021.
CBS News. Darren Walker: How the Head of the Ford Foundation Wants to Change Philanthropy. April 4, 2021.
Fox Business. How much do billionaires donate to charity? November 26, 2019.
Deloitte. Thirsty for Change: The Untapped Potential of Women in Urban Water Management. January 23, 2017.
Council on Foreign Relations. Closing the Gender Gap in Development Financing. July 11, 2016.
Boston Consulting Group. Women-Owned Startups Deliver Twice as Much Per Dollar Invested as Those Founded by Men. June 6, 2018.