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 post 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 WSJ 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.”
An 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 publically calling your shot, changes everything. It inspires accountability, it focuses your team’s efforts, and it attracts the best minds on the planet to help you on a massively transformative purpose.
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 Actually Create an Impact?
I’m continually amazed at the lack of leverage used by most foundations and philanthropists.
During the success phase (or “making money phase”) of one’s life, people demand tremendous leverage on their working capital.
Invest $1, you shoot for 10x or 100x back (either in returns or value created).
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.
Leverage and scale need to remain paramount.
So, for the philanthropist, billionaire or foundation reading this post, here are my two recommendations on how to create leverage, change the world and create an impact.
Entrepreneurs (aka Hackers): As I teach the entrepreneurs at Singularity University who are interested in solving 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.
So, the first piece of advice is for you to invest.
Invest in entrepreneurs who passionately desire to solve billion-person problems.
Call it what you wish, double-bottom-line or triple-bottom-line investing, but as Sean Parker described today’s young hackers, “…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.”
Parker continues, “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.”
Incentive Competitions (aka Prizes):
Another approach is to incentivize solutions through prizes.
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.
This is what we do at XPRIZE (www.xprize.org) and at HeroX (www.HeroX.com). Here’s why 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 our 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 an incentive prize around an audacious (but achievable) challenge tied to clear, simple, objective, and measurable goals is one of the most effective ways per dollar to solve big problems.
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?
Imagine a Forbes Impact List, where spending a billion on curing MS or cancer or illiteracy elevated your ranking from #19 to #3 on such a global impact list?
In this day and age, there is more wealth being created every year. 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.
Ultimately, giving your 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? Now is your chance to make an impact.
And if we all make an impact, we truly will create a world of Abundance.
Image Credit: Smit/Shutterstock.com