In a time of global pandemic, economic crisis and rising unemployment, the Gates Foundation’s most surprising philanthropic target is a group often overlooked by donors: billionaires themselves.
In October 2020, The Bill and Melinda Gates Foundation gave $5 million to the TED Foundation’s Audacious Project to “research and overcome barriers to large scale giving by ultra-high net worth donors.”
This follows a similar $5 million donation in 2019 to Lever for Change to “overcome barriers to large scale giving by matching ultra-high net worth donors with high-quality philanthropic opportunities.”
In all, the Gates Foundation has given nearly $18 million to programs aimed at encouraging greater giving by high- and ultra-high net worth individuals (UHNIs) in the last five years alone.
“The goal is to drive as much impact at scale as possible and to create a set of vehicles that enable philanthropists to do that,” says Jennifer Stout, a Gates Foundation deputy director.
The idea of dedicating money to help billionaires give away their own riches began about 10 years ago, says Stout, when Bill Gates and Warren Buffett came up with the idea of The Giving Pledge. This is an agreement by some of the world’s richest people to give away more than half their wealth, either during their lifetimes or in their wills.
“Bill and Melinda found that having other peers to connect with around how you think about your philanthropy is incredibly helpful,” says Stout. “There’s incredible leverage in being able to support other, more and better philanthropy happening in the world.”
From its initial group of 40 signatories, over 210 UHNIs have now signed the pledge. However, the pledge is not legally binding, and some billionaires proved slow to open their wallets. In 2017, ultra-wealthy American families donated just 1.2% of their assets to charity, according to research commissioned by the Gates Foundation. This is less than they would have earned (on average) from simply sitting on their money.
The same research suggested ideas that could “conceivably double ultra-wealthy giving” from $45 billion to $90 billion per year. It is those methods that the Foundation has been pursuing, says Stout.
“Many philanthropists want to give at large scale for social impact and yet the majority of major gifts goes to major institutions like universities or hospitals or museums.” she says. “The notion behind our investments is making it as easy to make large-scale gifts to smaller causes as it is to give to major cultural institutions.”
The $5 million going to Lever For Change will be used to create a pipeline of pre-vetted projects from smaller organizations that it calls the Bold Solutions Network. It helps those smaller organizations with fund-raising, financial modelling and building their budgets, so that UHNIs can fund them in confidence.
“A lot of ultra-high net worth people are still in the act of running their businesses,” says Cecilia Conrad, CEO of Lever for Change. “They want to make sure that they invest wisely, and with due diligence, but they don’t yet have the staffing or the experience.”
The Audacious Project has a similar stable of projects that are ready for funding. “Social entrepreneurs spend far too much time trying to raise capital,” says Anna Verghese, Executive Director of The Audacious Project at TED. ”It is exhausting cultivating donors one-by-one, often over many years, and it is usually only enough to cover annual budgets, which limits the scope of their ambitions for impact.”
Another key advantage is speed, says Jen Stout: “At this moment when people are seeing the need to give big and give now, these types of vehicles enable that to happen more quickly, because they have the infrastructure set up to reach donors and to connect with grantees.”
Lever for Change and Audacious between them have raised over $2 billion for charitable organizations. But the real question is whether such efforts have increased the size of the philanthropic pie, or merely changed the way it is shared out.
“It’s both,” says Stout, although the Gates Foundation could not provide any firm numbers on incremental giving. Even without that evidence, the Gates Foundation’s work is worthwhile, insists Stout: “What we’re doing is convening the actors in this space to think about how to make the ecosystem more dynamic. We’re developing new types of operating models, for new ways to connect donors to these opportunities.”
“We are still a fairly young initiative,” says Verghese. “So, while it’s anecdotal for now, there are already numerous instances of donors supporting projects outside the scope of what they usually fund [and] many of are giving more year over year to Audacious projects.”
Whether or not the UHNIs are actually being persuaded to be more generous, these empowerment programs are set to continue, and billionaires giving millions to help other billionaires give away their own money is likely to remain one of the strangest sights in philanthropy.