Rich to the rescue
Among the more than 8 million millionaires in the US, making a global difference is becoming 'the cool place to be.'
These are exciting times in the traditionally quiet world of philanthropy, as a growing cadre of the newly wealthy promises to change the world – as well as the face of charitable giving. Among the recent developments: •The pool of potential wealthy donors has mushroomed in the past two decades, and includes more than 8 million US millionaires. The number of family foundations has risen 60 percent in six years.Skip to next paragraph
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•Bill Gates and the Google and eBay teams have made a splash with blockbuster donations and innovative approaches to giving.
•An intergenerational transfer of wealth of more than $15 trillion dollars is projected in the US over the next 15 years.
•The number of nonprofits here has doubled in the past five years to more than 1 million, heightening the competition for resources.
Despite some high-profile gifts recently, however, a spike in overall giving has yet to occur. Americans' generous donations rose by 6 percent last year to $260 billion, keeping pace at a relatively stable 2 percent of GDP over time. Yet many see signs of significant change ahead, as super-rich philanthropists show the way for others joining the ranks of the wealthy.
"Because of their collective prominence, they tend to make people aspire to be like them ... and to see philanthropy as 'a cool place to be,' " says Tom Watson, strategy officer for Changing Our World, a philanthropic consulting firm.
The young corporate leaders sharing their wealth at midlife (rather than in their wills) also herald a new style of giving. Keen to "make a difference" in the world, they are zeroing in on serious global problems and taking an active role that aims at specific results. Mr. Gates's leaving Microsoft to concentrate on foundation work is the most prominent example.
"There's a lot of younger, impatient money, if you will," says Marcia Stepanek, editor of Contribute magazine in New York. "Donors used to be content to write checks.... Now there are lots of strings attached – not only specific targets, but MBA-type metrics.... It's almost seen as an investment with expectation of a quick return."
A few are blurring the boundaries between business and charity. Google founders Larry Page and Sergey Brin intend to spend $1 billion on for-profit as well as nonprofit ventures through their Google.org charitable arm. Any financial returns on for-profit funds, they say, will be plowed back into the charity.
Entrepreneurs Jeffrey Skoll and Pierre and Pam Omidyar of eBay are experimenting with nonprofit and for-profit "social purpose" enterprises.
With globalization, corporate leaders involved in cross-cultural alliances are more aware of social and environmental problems perceived as intractable. "The American business sector has found it a little tougher going in places around the world," Ms. Stepanek says. For some, it's a matter of enlightened self-interest. They see that conditions must improve if they are to create new markets.
United Nations studies have shown that key health and poverty problems could be solved if sufficient resources were brought to bear. With governments falling behind on commitments, new philanthropists are stepping in.