How Tech Entrepreneurs Are Disrupting Philanthropy 2
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HOW TECH ENTREPRE- NEURS ARE DISRUPTING PHILANTHROPY By Nicole Bennett, Ashley Carter, Romney Resney, and Wendy Woods revolution in the field of philan- trants—including Facebook’s Mark Zucker- A thropy is brewing, driven by Silicon berg and Dustin Moskovitz; Skype founder, Valley’s young tech billionaires. The Nicklas Zennström, in Europe; PayPal co- founders of eBay, Facebook, PayPal, founder and current head of Tesla Motors, Napster, and other transformative compa- Elon Musk; and Napster cofounder, Sean nies are applying their bold vision and Parker—are investing their fortunes in brash, nothing-can-stop-me attitude to some hopes of making a dramatic difference. Ac- of the world’s most pressing social prob- cording to media reports, nearly 25% of the lems. Their drive and entrepreneurial spirit money given away in 2014 by the top 50 make them less concerned with the status philanthropists in the US came from tech quo and completely open to disruptive entrepreneurs age 50 or younger, compared innovation. The sheer scale of their wealth with 19% in 2013 and 4% in 2012.1 (See the and their commitment to giving it away exhibit.) mean that these philanthropists could have a huge impact on the issues they prioritize. These tech philanthropists are bringing What’s more, their approach—with its fresh thinking and new approaches to the emphasis on data, transparency, speed, and field of philanthropy. impact—could mark a new chapter in philanthropic giving. Rethinking Philanthropy: Seven Once criticized for their relatively low lev- Principles els of giving, today’s tech billionaires are Traditional foundations—which award quickly making up for lost time. Microsoft’s grants to applicants on the basis of need Bill Gates paved the way with the Bill & and worthiness—have made enormous Melinda Gates Foundation, which since its contributions to society. But they follow a founding in 2000 has dominated tech-fund- business model that relies on large endow- ed philanthropy. Now a new wave of en- ments to support giving in perpetuity, For more on this topic, go to bcgperspectives.com Tech Entrepreneurs Have Made Substantial Philanthropic Donations Over the Last Decade— Especially in 2014 DONATIONS BY THE TOP 50 AMERICAN PHILANTHROPISTS % total ($billions) 9.8 4.0 50.7 7.4 15.5 4.1 3.3 10.4 7.4 7.7 10.2 100 Technology 80 60 Gates/Buffett Family wealth 40 Finance 20 Other businesses 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sources: “The Philanthropy 50,” Chronicle of Philanthropy, https://philanthropy.com/interactives/phil-50; BCG analysis. which has given rise to a professional class Google cofounder Larry Page, and former of individuals who evaluate, select, and Oracle CEO Larry Ellison have combined continuously review grantees. forces to defy death, with Ellison alone donating more than $430 million to an- Today’s tech philanthropists challenge that ti-aging research. As Thiel puts it, “I believe approach with an inherently proactive ven- that evolution is a true account of nature, ture capital mind-set. Rather than wait for but I think we should try to escape it or proposals to come to them, they actively transcend it in our society.” Musk’s founda- seek places to put their money. They also tion donates millions in areas such as prioritize speed and rapid impact. Deter- human space exploration. His cornerstone mined to see results in their own lifetimes, project, SpaceX, aims to create a space-far- they’re willing to make big, often risky bets. ing civilization to help sustain Earth’s Some even treat their philanthropic invest- resources. Gates has brought the same ments like venture capital endeavors, ap- approach to global health, challenging the plying creative equity models to ensure a scientific community to move past the return and demanding measurable results traditional goal of controlling malaria and to justify further giving. instead eradicate the disease completely. Although the results that these new philan- 2. Use business expertise to innovate. thropists will ultimately deliver over the Many of today’s tech philanthropists use long term remain to be seen, they’re deter- their technical expertise to tap into new or mined to disrupt the field—just as they did unconventional channels for social change, in their respective industries. Seven princi- building social networks, creating new ples summarize their approach. intellectual property models (to make products with a potential social impact 1. Seek breakthrough solutions. Many of accessible to those in need without forgo- today’s tech philanthropists are “swinging ing commercial profit), and deploying new for the fences,” investing major sums in technologies. Thiel built on his experiences breakthrough, sometimes controversial, in the start-up and investing arenas to solutions to social problems and unafraid establish Breakout Labs, which uses to take on high-risk projects. PayPal co- philanthropy to support a growing portfo- founder and venture capitalist Peter Thiel, lio of early-stage companies in areas | How Tech Entrepreneurs Are Disrupting Philanthropy 2 ranging from food science and biomedicine ing and rapidly fine-tuning new models be- to clean energy. The group provides fore scaling them up can mean the differ- “radical science companies” too risky for ence between a breakthrough innovation traditional venture capital with capital, and a wasted investment. Tech philanthro- network support, and access to partner- pists are all too familiar with good ideas ships in order to “change the world and launched before they’re ready and bad take our civilization to the next level.” ideas killed too late in the process. Either mistake is costly. What’s new about the 3. Trust in the power of data. Big believ- prototyping approach for philanthropy is ers in the clarity that data can deliver, tech not the piloting of new ideas, which has philanthropists monitor and measure gone on for decades, but the speed with outcomes and hold their investments to a which ideas are tested and the willingness high degree of accountability—not out of to walk away if an idea fails—as long as an aversion to risk but to ensure that there is a lesson learned. As Parker ex- they’re maximizing the impact of every plains, “We must move fast, make concen- dollar spent. Data and metrics are essential trated bets based on our convictions, and for gleaning the insights needed to evalu- have the courage to make mistakes and ate the success of a chosen approach. learn from them.” Similarly, in a letter an- Evidence-based approaches in philanthro- nouncing the gift of 99% of their Facebook py, also known as “effective altruism,” use shares to the Chan Zuckerberg Initiative, data not only to evaluate ongoing results Zuckerberg and his wife, Priscilla Chan, and outcomes but to identify areas in wrote, “We must take risks today to learn which to invest. For instance, Mike Krieger lessons for tomorrow. We’re early in our (cofounder of Instagram) and his wife, learning and many things we try won’t Kaitlyn Trigger, recently partnered with work, but we’ll listen and learn and keep Moskovitz and his wife, Cari Tuna, to improving.” support the Open Philanthropy Project, believing that its values of “open-minded- 5. Embrace an “open source” mind-set. ness, rigorous analytical thinking, and Tech philanthropists prize transparency transparency” are aligned with theirs. The and sharing of data, ideas, insights, and Open Philanthropy Project identifies solutions. Like open-source software important but relatively unaddressed development, this approach taps into the problems and funds feasible approaches to expertise of many and can accelerate solving them, as determined by rigorous progress. Openness also eliminates dupli- analysis, research, and ongoing data cation of effort and increases the odds of gathering. maximum impact from the invested dollars. Last year, Parker announced the 4. Employ a rapid cycle of testing, creation of the Parker Foundation to failing, and learning. Another hallmark of “aggressively pursue large-scale systemic tech philanthropists is a “prototyping” change in three focus areas: Life Sciences, approach to solution building that involves Global Public Health, and Civic Engage- rapid cycles of testing, failing, and learn- ment.” The foundation’s planned structure ing—continually refining a path forward will support an open-source approach before moving to execution. This agile within a network of partners, enabling mind-set, which is standard in software leading scientists in each field to carry out development, accelerates outcomes collaborative research. Scientists receiving through collaboration and a constant cycle foundation funding are encouraged to of learning and improvement. Failing is share their findings early on with other acceptable as long as valuable lessons are scientists in the foundation’s network, learned along the way. regardless of institutional affiliation. Parker hopes that promoting the sharing New solutions take time to develop and of data and findings will lead to the next may go through many stages of trial and big breakthrough in the treatment of error before they’re ready for launch. Test- immune diseases. | How Tech Entrepreneurs Are Disrupting Philanthropy 3 The Collaboration for AIDS Vaccine ly in their philanthropic endeavors, they of- Research, initially funded by the Bill & ten cross paths, funding some of the same Melinda Gates Foundation, operates on a giving entities and exchanging advice. similar principle. It was founded in the belief that the successful development of 7. Expect financial returns. Today’s tech an AIDS vaccine will require a collabora- philanthropists often have no qualms tive approach emphasizing the sharing of about reaping financial returns from their scientific information and the standardiza- investments—a “venture philanthropy” tion of techniques and analysis. approach that combines doing good with making money. For instance, Thiel’s 6. Recruit top talent and stay personally Breakout Labs makes grants that convert to involved.