Today's philanthropists are more ambitious, get more involved, and demand results

- February, 2003

A few months ago, when fundraising for Camp Okizu, the SF Examiner quoted me as saying, "It is not about our money, but about changing the world. Those of us with money have to know we are the CFOs for God." This is an assertion that Andrew Carnegie held as well: "that personal wealth beyond a family's needs should be regarded as a trust fund for the benefit of the community". Further, he believed that the money should be given during the benefactor's lifetime to ensure that it accomplished the maximum good.

Carnegie would surely have given an approving nod to the latest generation of philanthropists. The spectacular late-1990s runup in the stock market created a generation of newly super-rich executives and entrepreneurs worth hundreds of millions, if not billions, of dollars. Even after the sharp decline in the market, the ranks of the very wealthy have never been stronger--and many are now working almost as hard at giving their fortunes away as they did at amassing them.

Perhaps because of the personality traits that have served the new wealthy, their philanthropy expects more.

• It's more ambitious: Today's philanthropists are tackling giant issues, from remaking American education to curing cancer
• It's more strategic: Donors are taking the same systematic approach they used to compete in business, laying out detailed plans that get at the heart of systemic problems, not just symptoms.
• It's more global: Just as business doesn't stop at national borders, neither does charitable giving. Donors from William H. Gates III to George Soros have sweeping international agendas.
• It demands results: The new philanthropists attach a lot of strings. Recipients are often required to meet milestone goals, to invite foundation members onto their boards, and to produce measurable results--or risk losing their funding.

All of this requires a new level of involvement by donors who are actively engaged in projects that become passions.

The trend started in late 1997 when cable-TV mogul Ted Turner anted up an historic $1 billion pledge to the U.N.--and challenged wealthy "skinflints" to do likewise. Then, two years later when the world's richest man, Bill Gates, pumped a staggering $16.5 billion into his foundation the rest of the new wealthy were challenged to act.

However, for every one of these big-money donors, there are reports of hundreds of other modestly wealthy individuals who have embraced philanthropy in creative, new ways. In each case, these big-money philanthropists are placing bets on key ideas and becoming hands-on in their design and implementation. They have heeded Carnegie's celebrated call to employ in the service of their communities the same smarts and diligence that made them rich.

If the trends of the past quarter-century continue, charitable giving in this decade alone could be a trillion dollars more than it was in the previous one, says Erik D. Smith, author of a recent Global Business Network report on philanthropy. The coming philanthropic flood, adds Smith, "would be similar to having a hundred Andrew Carnegies carrying out their own free library programs, except they'd be doing it in 10 years rather than the 37 years that Carnegie's library giving spanned."

Donors, meanwhile, face problems of efficiency and scale that the corporate world has long since overcome. If philanthropy were an industry, it would be a highly fragmented, remarkably inefficient array of enterprises. On the giving side, tens of millions of donors and foundations give a total of more than $212 billion a year to charitable causes. "There's a lot of money just sloshing around out there," says Melissa A. Berman, CEO of Rockefeller Philanthropy Advisors, which assists wealthy individuals in developing and managing their charitable giving. "Half of all the giving is not used optimally." And most foundations dole out only the required minimum of 5% of their assets annually, preferring to perpetuate their own organizations rather than put more muscle behind their stated cause.

Many of the new philanthropists are trying to bring badly needed discipline and organization to the field, helping to more effectively match up the growing philanthropic capital with the most urgent social needs. That has led to another critical difference in the new philanthropy: active partnering among long-established private foundations, corporate funds, and individual donors.

More than a new approach or method of giving, however, the new donors are underwriting a remarkable era of creativity and innovation. Many of them are corporate or entrepreneurial dropouts who wanted to work in the nonprofit sector. And they are heeding the most important message that Andrew Carnegie delivered more than a century ago: "The day is not far distant when the man who dies leaving behind him millions of available wealth will pass away unwept, unhonored, and unsung. The man who dies thus rich dies disgraced."