HomeuncategorizedPeter Diamandis Talks About Directed Goals for Billionaire Philanthropists

Peter Diamandis Talks About Directed Goals for Billionaire Philanthropists

July 7, 2015 – In his latest email blast Peter Diamandis talks about “impact pledges.” What are they and how do they differ from the type of investment Bill Gates and Warren Buffett are making to the world’s poor and less fortunate? In the case of these two they have pledged a large percentage of their personal fortunes to doing good and that is admirable. But Diamandis argues that wouldn’t it be better if the pledges were specifically focused on eliminating a global scourge. Here are his words with some minor edits on my part.

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With immense respect to Bill Gates and Warren Buffett, I’d like to suggest an alternative to the giving pledge… an “impact pledge.” Specifically, a pledge where philanthropists actually pledge to solve (i.e. eradicate, eliminate, exterminate) a specific problem, rather than just agree to give their money to philanthropy.

What if today’s billionaires actually “call their shots” and commit to fixing something big? And with $7 trillion in assets held by the wealthiest 1,000 people in the world, the potential for global impact is huge.

This blog was inspired by two different news blurbs last week. First, news that Saudi Arabian billionaire Prince Alwaleed bin Talal announced his decision to donate his entire $32 billion fortune to philanthropy. Second, Sean Parker‘s formation of the $600 million Parker Foundation and his article in the Wall Street Journal titled Philanthropy for Hackers – Today’s young Internet barons should use the talents that made them rich to transform the world of giving.

What is the giving pledge?

The Giving Pledge invites the world’s wealthiest individuals and families to commit to giving more than half of their wealth to philanthropy or charitable causes during their lifetime or in their will. So far, more than 137 of the world’s wealthiest have signed the pledge.

The issue, as Sean Parker points out in his excellent article, is the following: “…$300 billion a year is given to private foundations and public charities, which offer little in the way of transparency or accountability.” He continues, “So while philanthropists like to talk about impact, they seldom have the tools to measure it. This has led to a world in which the primary currency of exchange is recognition and reputation, not effectiveness. These incentives lead most philanthropists to favor “safe” gifts to well-established institutions, resulting in a never-ending competition to name buildings at major universities, medical centers, performing arts centers and other such public places.”

The Alternative: Calling Your Shot

What happens instead, when a philanthropist commits their capital, resources and prowess to solving a specific problem? For example: “I’m going to wipe out hunger in my country… or child marriages… or expand access to clean water.” The mere verbalization of a specific moonshot, or publicly calling your shot, changes everything. It inspires accountability, it focuses team’s efforts, and it attracts the best minds on the planet to help create a massive transformation. It’s the equivalent of Google’s commitment to autonomous cars, Wikipedia’s mission of organizing the world’s knowledge, or Elon Musk‘s commitment to taking humans to Mars. And speaking of, this is exactly what Bill Gates is doing with malaria, polio, and other diseases through his groundbreaking work at the Gates Foundation.

So how do you go about doing it?

I’m continually amazed at the lack of leverage used by most foundations and philanthropists. During “making money phase” of one’s life, people demand tremendous leverage on their working capital. Invest $1 and shoot for 10x or 100x return. But in the philanthropic phase, somehow that desire for leverage is forgotten, and an impact of 30 cents on the dollar, after overhead, is acceptable. But leverage and scale need to remain paramount. So for the philanthropist, billionaire or foundation reading this blog, here are my two recommendations on how to create leverage, change the world and create an impact.

1. Invest in entrepreneurs who passionately desire to solve billion-person problems. The world’s biggest problems are the world’s biggest business opportunities, and if you want to become a billionaire, help a billion people. Call it what you wish, double-bottom-line or triple-bottom-line investing, but as Sean Parker described about today’s young “hacker” entrepreneurs, “…they are intensely idealistic, so as they begin to confront the world’s most pressing humanitarian problems, they are still young, naive and perhaps arrogant enough to believe that they can solve them……In philanthropic work, hackers must constantly ask if they are leveraging their investments. Are they getting out more than they are putting in? On a particular issue, do they have a comparative advantage? It’s important to treat philanthropy as a series of calculated risks: Not every contribution will yield success, some will end in failure, and others, when they succeed, ought to generate exponential returns…..In this model, being wrong is as valuable as being right. Nothing works all the time, and hackers entering the world of philanthropy will be skeptical of any claims that cannot be invalidated.”

2. Create incentive competitions. [To see how prizes are solving global problems type in “prize” in the search window here at 21st Century Tech blog and you’ll find a wealth of examples]. When you create an incentive prize, you clearly define a problem and then challenge the world’s entrepreneurs to solve it. By doing so, you tap into a spirit of competition that brings about unprecedented breakthroughs. Why do incentive competitions work?

Prizes are highly leveraged. If you launch a $10 million prize purse, you can expect teams to cumulatively spend 10 to 40 times capital to try and win the prize. For the $10 million Ansari XPrize, we had 26 teams from 7 nations spend over $100 million to develop a rocket that could take 3 passengers twice to 100km altitude.

Prizes attract untapped talent and stimulate novel solutions. Sometimes the best solution doesn’t come from an expert. I define an expert as the person who can tell you exactly how it can’t be done. And the day before something is truly a breakthrough, it’s a crazy idea. But where inside of government, large corporations or large foundations do we fund and attempt crazy ideas?

Prizes are efficient. You only pay the winner, and you can set a deadline. For prize benefactors, the prize is a fixed amount of capital, not an investment that requires continuous follow-on capital.

Putting up a incentive prize around an audacious (but achievable) challenge tied to clear, simple, objective, and measurable goals is one of the most effective ways to spend dollars to solve big problems.

 

problem-solving

A New Forbes 500 “Impact List”

Today the Forbes 500 list of the wealthiest on Earth effectively gamifies the retention of personal wealth. Give away your fortune, and you might drop from #48 to #192. This perverse incentive of retaining your wealth for stature (for some, not all) is unfortunate. Imagine instead if Forbes, with its armies of investigative reporters, was able to quantify the impact of a philanthropist’s actions? Now imagine a Forbes Impact List, where spending a billion on curing MS or cancer or illiteracy elevates your ranking from #19 up to #3 on a global Impact List?

In this day and age, there is more wealth being created every year. [See the accumulation of wealth by region displayed in the chart below].

 

Global wealth

This is a chance for today’s billionaires to transform success to significance. Let’s identify these global heroes – and celebrate those with the passion to identify and solve the grandest challenges on Earth.

 

world's billionaires

Ultimately, giving money away to a foundation versus spending it on toys or passing it down the line is an old school way of “doing good” for the world. Instead, why not use the genius that created the wealth in the first place to solve problems, the biggest problems?

 

lenrosen4
lenrosen4https://www.21stcentech.com
Len Rosen lives in Oakville, Ontario, Canada. He is a former management consultant who worked with high-tech and telecommunications companies. In retirement, he has returned to a childhood passion to explore advances in science and technology. More...

1 COMMENT

  1. hire someone to manage the donation. for, say, teach literacy to kids. put someone in charge and from time to time check if things are going smoothly.

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