More wealthy people than ever are putting philanthropy at the heart of their family values. And they want their money to do absolutely the most good it can. But this very desire can stop them from even getting started.
Choosing how to do good isn’t easy.
‘It seems so simple,’ says Peter Cafferkey, CEO of Boncerto, the philanthropy consultancy. ‘So many people walk into it thinking it’s going to be simple, but they quickly run up against road blocks.’
The sheer range of good causes worthy of support can make would-be philanthropists freeze. ‘There’s so much to choose from, so much to do,’ says Cafferkey. One person he’s worked with was so overwhelmed that she did nothing for two years. ‘She was stressed about not doing anything, but also a bit terrified about doing something.’
‘Pressure to be the next Bill Gates’
Such stress stems partly from the way philanthropy has been thrust into the spotlight in recent years. ‘Before, the approach used to be, “We’ll do something good.” Now there’s pressure on people that you have to be the next Bill Gates, you have to have a long-term vision or plan. And you do. But if you talk to Bill Gates, he didn’t start off with a plan.’
Cafferkey’s advice is, ‘Just do something. Let’s get going.’
You might not get it right first time, he says, but you’ll learn from your mistakes. ‘There’s a measure put on the philanthropic sector that’s different to everyday careers or business. You learn as you’re doing in business, you learn in a career, you find your passion. And the same is true in philanthropy.’
When Eric Friedman, author of Reinventing Philanthropy, decided several years ago to donate a substantial percentage of his income to charity, he wanted to maximize the impact of his giving. But when he sought advice, there weren’t many people around who could help him.
So he learnt as he went along.
‘Some problems are more worthy’
Over the years, he’s come to believe philanthropists should consider three principles:
Prioritization. ‘Some problems are more worthy than others,’ he says. ‘I’m not suggesting there’s an objective answer to which are more worthy, but I’ve seen a lot of people say, “Well, you really can’t compare two problems. The arts and healthcare, for example, are so different.” Well, as a donor you have to be able to choose one or the other.’
Cost-effectiveness. Philanthropists need to research how much good their money will do. ‘Are we good at the mission? There might be a really important mission where we’re not good at solving that problem, or at creating an efficient solution.’
In that case, he says, ‘I guess maybe address a different problem. Or maybe the challenge would be to find cost-effective solutions.’
He points out that while prioritization is philosophical and value-based, cost-effectiveness is empirical. ‘I think you have to combine the values with the empirical analysis.’
Impartiality. Maybe you have an affinity with your old university or a healthcare project that has touched your life. ‘But just because those are things I’ve had experience with doesn’t make them the most worthy donations.’
To be impartial, you have to be open to other things, he says. Like Cafferkey, Friedman gives the example of Bill Gates. ‘In the 1990s he would donate millions of dollars to well-known universities to build computer science buildings. And I was actually in college when he built a building at my university, The Gates Computer Science Building, a fantastic building.’
Now, though, Gates’s priorities have changed. ‘He has gradually transitioned to global health,’ Friedman says. ‘And he speaks about the realizations that he had over time through learning more and being open.’
Friedman, too, has become more open. ‘I think it’s something that happens over time. It’s not something that happens all at once for people.’
‘Pick towards the top of the list’
Dr Bjørn Lomborg, director of the Copenhagen Consensus Center think tank, agrees that philanthropists base their decisions on a variety of factors, including their own specialties and experience. But he argues that they should try to get the most bang for their buck.
Economists at the Copenhagen Consensus Center carry out cost/benefit analyses of the world’s most pressing problems. They then rank the problems to show policymakers and philanthropists how to achieve the best results with limited resources.
‘Our point is simply that, if you have this whole menu of things you can do, please pick towards the top of the list, because it means that for every dollar, rupee or euro, whatever you’re spending, you will do a lot more good,’ Lomborg says.
Unlike when Friedman was setting out, there’s now a lot of research and data to help you start building your legacy. What hasn’t changed is the most important thing: get started.