Baby Boomer Benefactors Will Redefine Philanthropy
Over the coming decades, those magnates and other 21st century entrepreneurs will invest their wealth in financial markets but, increasingly, will make social investments to improve public health and welfare -- as much as $6 trillion in the course of the next five decades in new philanthropic giving, according to the Center on Wealth and Philanthropy. As they do so, today's Baby Boomer entrepreneurs are redefining American philanthropy just as they've redefined business.
The San Francisco Bay Area is home to many of this generation's most entrepreneurial givers, just as East Coast cities nurtured many in the last large group to revolutionize philanthropy -- the industrial-age benefactors that endowed foundations like Rockefeller, Mellon, Carnegie, Olin, Ford, and my own home, the Pew Charitable Trusts.
Two generations ago, those industrial entrepreneurs identified unmet market needs and generated enormous wealth. As philanthropists, they identified unmet social needs and applied the entrepreneurial strategies of their day to create vital, lasting institutions that tackled the biggest issues of their time -- whether it was creating vibrant cultural institutions, brokering international peace or undertaking the first steps to preserve America's great untouched wilderness.
Today's new philanthropists are different from those forerunners and so are their approaches to giving. They are younger and more diverse, and their wealth stems from a greater array of late-20th century enterprises in business services, entertainment and technology. In the Bay Area, donors like eBay founders Pierre Omidyar and Jeffrey Skoll, Netscape founder Jim Clark, and Industrial Light and Magic founder George Lucas, are just a few of the most recognizable. But there are also thousands of other multimillionaires who are equally committed to distributing their wealth as their billionaire brethren and have created projects like the Roberts Enterprise Development Fund and the Three Guineas Fund.
As diverse as these new donors are, they are consistent in one important way: Their wealth is born of the lightening-fast 21st century business cycle that demands now, more, better, faster.
That ethos is re-energizing today's charitable giving in three ways:
First, modern philanthropists want their dollars to have a more tangible impact. When I speak with new donors about their charitable strategies, I hear "I want results" -- whether it's measured by the number of kids who read at grade level or the number of new registered voters. Their entrepreneurial approach also means these donors often want a hands-on role in realizing those results.
Second, they want to see rapid and demonstrable progress toward long-term goals. Today's donors understand that creating social change is like building market share -- it takes steady resolve as well as a strategic eye. But just as they have demonstrated incremental progress to their investors, these social investors now expect their investments to consistently and clearly yield a positive return. Finally, while these new sponsors are politically diverse, most are rejecting the philanthropic version of the "red and blue Americas" trend. A few voices are urging new donors to embrace ideological conflict by exclusively funding projects based on their "conservative" or "liberal" bona fides and exacerbating the partisan divide in Washington.
Most donors I've met, of all political stripes, are not persuaded by this pitch. They understand that this polarization prevents the very results they seek, making it nearly impossible to reach across philosophical differences to find the common ground necessary to develop workable solutions to complicated problems.
For instance, the Pew Charitable Trusts' investment in wilderness protection over the last decade has preserved more than 170 million acres of North American wilderness -- an expanse more than one and a half times the size of California -- at a cost of just 40 cents an acre. Since 2001, we've placed a special emphasis on preserving one of the Earth's largest remaining unspoiled wilderness areas, the boreal forest in Canada, and have done so by engaging an unusual group of allies -- natural resource development companies, environmentalists and aboriginal governments. As this and many other examples demonstrate, today's philanthropic sector is well positioned to return the measurable results these donors seek and give them the hands-on role they desire.
To coin a phrase, these are not your father's philanthropies. Some of the most dynamic, successful, measurable work underway in the public sphere is driven by America's charitable institutions. One notable example is the Gates Foundation, which has established a new definition of public health success -- it set its sights on nothing less than the dramatic reduction or even elimination of deadly diseases in developing nations. New social investors are increasingly recognizing these facts and finding dynamic ways to partner to achieve the impact they want in real time.
Since America's founding, charitable works have been essential to maintain the health and strength of the social fabric. Today's Baby Boomer benefactors now bring to that tradition a demanding focus on results and an ability to reach across boundaries, seizing opportunities that deliver results. These modern entrepreneurial approaches are precisely what will ensure that the next major era of philanthropy delivers an unprecedented return on investment.