When a Silicon Valley firm goes public, it can result in scores of employees instantly becoming millionaires. But what happens then? Following is an excerpt of a San Francisco Chronicle op ed written by Kerry Olson and Dave Katz, co-founders of the Firelight Foundation:
Wealthy folks will eventually have to ask themselves an important question: What should I do with this money?
As a couple who was fortunate enough to face that question when we benefited from Juniper Networks’ IPO more than a decade ago, we would urge [IPO firm] employees to consider devoting a share of their newfound wealth to philanthropy.
They are well suited to charitable giving, but not just because they have money. They’ve proved that they rapidly can build a successful, innovative organization from scratch – as well as identify needs within a community and then meet them. Skills like these are crucial to solving the difficult social, scientific and political problems plaguing our world today.
Previously unimaginable lifestyles will be within reach – but so will the ability to help people and causes in life-changing ways. And while it may be tempting to take care of all the friends and family who come calling, an ad hoc approach to charity can grow overwhelming – and lead to well-intentioned but counterproductive giving.
The Bill and Melinda Gates Foundation provides an instructive model. The Gates foundation’s investments in vaccinations and antibiotics have saved millions of lives and generated billions in economic activity in Africa. Such willingness to try new approaches to solving social problems – and to evaluate candidly whether they’re working – comes directly out of the culture of entrepreneurship embodied by [many] Silicon Valley firms.
As governments around the world pull back, the philanthropic sector will be a critical force in meeting global needs. In what is called the “Giving Pledge”, 81 billionaires have committed to give more than half of their wealth to charitable organizations. This level of philanthropy, over $37 billion by Warren Buffett alone, is historically unprecedented.
Warren Buffett most lasting contribution will not be his money; rather that he has successfully leveraged his social network and the media to inspire other billionaires to give extraordinary wealth for charitable good. He is reshaping the way the rich think about money and giving.
And in the same way Warren Buffett has used media to get other billionaires to pledge their fortune to charity, people all over the world have used social media to raise money and inspire their network to join them in giving.
Indeed, according to Blackbaud, people are 200 times more likely to donate to a cause if their friends ask them to support a charity, in comparison to receiving an e-mail solicitation from the organization. This is part of a distinct cultural shift – you no longer have to be a professional to be a fundraiser.
With the rise in connected giving will come the use of social data for fundraising. Seventy percent of Millennials ages 20-35 report they prefer to give online, making online giving as the #1 preferred method of giving.
The IDC, a technology research firm, estimates that the total amount of data doubles every two years. Social media data is a major part of this growth. Marketers are interested in the “social network value” of a customer– how one person’s purchase influences others to buy a product. Similarly, nonprofits are becoming aware how a donation can have a ripple effect in the donor’s network.
–Matt Bishop, founder and CEO of iGiveMore
The Obama administration drafted some of the world’s largest food and finance companies to invest more than $3 billion in projects aimed at helping the world’s poorest farmers grow enough food to not only feed themselves and their families but to earn a livelihood as well.
President Obama and the leaders of four African countries introduced the group of 45 companies, the New Alliance for Food Security and Nutrition, at the last summit meeting of the Group of 8 industrialized nations. The alliance includes well-known multinational giants like Monsanto, Diageo and Swiss Re as well as little-known businesses like Mullege, an Ethiopian coffee exporter.
The U.S. administration also reported on the progress of what is known as the L’Aquila Food Security Initiative, the largest international effort in decades to combat hunger by investing in the fundamentals of agriculture, including seeds, fertilizer, grain storage, roads and infrastructure. The initiative, first agreed upon by the Group of 8 leaders at their meeting in L’Aquila, Italy, in 2009, was a pledge to put $22 billion into food and agriculture projects. Although much of the money had previously been earmarked for agriculture projects, about $6 billion was new. Apparently most all of the $22 billion is budgeted and appropriated, and over half of this disbursed.
Here’s a thought-provoking question: Would your organization have given Gandhi a grant? How about Martin Luther King?
Speaking on the state of philanthropy, Dr. Bob Ross, the CEO of The California Endowment, said: “I shudder to think what would have happened if Martin Luther King, or Gandhi, or Cesar Chavez had submitted a grant application to us.”
He made this observation while discussing the ways his organization tries to push the boundaries on risk-taking while also being conscious of its mission, its appetite for risk, and the political and cultural climate in which it operates.
Generally, he said, foundations are very risk averse.
And of course, what impacted the audience was the thought that we could possibly pass on supporting someone who would go on to change the world in a really big way. Or that we already had.
Even before the Occupy Wall Street movement highlighted the role and power of corporate America in this nation’s wealth divide, according to researchers on corporate philanthropy, corporate foundation grantmakers felt “disconnected.”
It must be even more difficult since the occupiers targeted Wall Street and a spin-off, the 99% Movement, is marching on corporate shareholder meetings. Think of the quandary of corporate foundation staff: seen by the critics as factotums for a corporate agenda, seen from within their corporations as “do-gooders” perhaps not as connected to the “strategic” corporate agenda as bottom line-focused employees, and seen by themselves as people engaged, or wanting to be engaged, in philanthropy.
The researcher suggested corporate philanthropy is in that dreaded moment of “paradigm shift.” This is usually a term contributed by consultants and think tankers, but maybe it does apply in the corporate world as well.
Putting this in context: “We need a new narrative about who we are, a narrative about value creation, how we’re creating more value for society.”
60 percent of Americans think that business is best equipped to solve our nation’s social problems, compared to a much smaller percentage who would turn to government.
[Excerpt of an article by Rick Cohen]