It’s not often – well ever, really – that 150 of the world’s 400
wealthiest billionaires gather in one place at one time, particularly to
talk about how they plan to give all those billions away. But that’s
just what philanthropists Bill and Melinda Gates, Warren Buffett, Jacqueline Novogratz, Leon Black and Steve Case – and their peers – gathered together to do this past June.
“The importance of philanthropy is evidenced by the fact that so many prominent individuals took the time to travel to New York
and share their ideas,” says Bill Woodson, Managing Director, Co-head
of Private Banking Americas UHNW Business at Credit Suisse.
Forbes Insights, together with Credit Suisse, used this
unprecedented gathering to better understand how the world’s wealthiest
approach giving back. What we found surprised us: yes, legacy is
important, but not as important as making an impact as quickly as
possible. And billions of dollars can make a tremendous impact — it can
truly change the world. More than half of Summit attendees who
participated in the Forbes Insights/Credit Suisse poll said that they
expected to see a meaningful return on their philanthropic investment
within 10 years, while four in 10 were prepared for an impact that
stretched beyond their lifetime.
And they were risk takers, applying the same aggressive approaches in
their charitable endeavors that they used in their business activities.
Two-thirds invested in either early- or growth-stage philanthropic
endeavors, rather than the old tried-and-true established charities with
long track records. In short: they were looking to make their mark,
take risks, and solve the world’s most intractable problems – the huge
knots that no one had yet been able to untangle.
As a follow up to the historic Summit, Forbes Insights and Credit Suisse conducted a wider study of
some of the world’s wealthiest to gain deeper insight into the
motivations, strategies and financial philosophies of some of the
world’s most charitable givers. The research shed light on the total
lifecycle of philanthropy — from the moment an individual first decides
to use his or her fortune to do good to the legacy he or she plans to
leave behind — and the spirit of giving they hope will live on in their
descendants.
The results of that research formed the basis of Next-Generation Philanthropy: Changing the World,
a deeper exploration of the impulse to change the world and the
mechanisms – both financial and familial – employed by the world’s
wealthiest to do so. Those who participated in our study bring the same
tenacious, pragmatic approach to giving away their wealth as they
brought to amassing it in the first place. This makes sense; the
approach and business acumen that resulted in tremendous success in the
business arena are bound to make the most impact in philanthropy – and
when you get right down to it, business and giving are not really all
that different. Both require a results-driven approach, a strong
strategic vision, the ability to surround oneself with the right team
for the job and the understanding that the biggest risks most often
result in the biggest rewards.
Fifty-three percent found applying their
business experience to their philanthropy an effective and successful
approach to giving – a sentiment that only increases with wealth.
“From the beginning, our projects contained a detailed description of
the goals, often with intermediate milestones, the ways and means in
which they could be achieved, and the achievements measured and
demonstrated. Over the years, we became more experienced in this area
and more sophisticated in defining objectives and tracking to what
extent they could be achieved,” says Swiss billionaire Stephan
Schmidheiny, former owner of construction materials manufacturer Swiss
Eternit Group.
This business approach extends to the way they get the job done as
well: more of our wealthy respondents partner with businesses (40%) for
their philanthropic endeavors than with government agencies (22%) or
other non-profits (28%).
In other words, even when it comes to charity – an arguably
altruistic endeavor – the world’s wealthiest still turn to the
for-profit sector to maximize their impact. Indeed, three in 10
reported they had encountered numerous hurdles in engaging with
government infrastructure in their efforts to give. As with the Summit
attendees, eight in 10 of the wealthiest preferred to give to early- or
growth-stage endeavors, rather than the more established organizations.
Why allow yourself to get snagged in the stickiness of so much red tape
when you can use other channels to move more quickly? Venture capitalism
isn’t just for growing the next Facebook; it can also apply to the cure
for malaria, or educating a generation of poverty-stricken girls in the
third world.
But what surprised us most in our Forbes Insights study was something
that also emerged among attendees at the Summit: not just the scope and
scale of the wealth they plan to disburse, but how quickly they plan to
do so. More than half – 54% — of respondents to the study planned to
leave more than a quarter of their assets to charity. As wealth grows,
so does the impulse to give. Close to half of those with more than $20
million in investable assets plan to leave half or more of their wealth
to charity; nearly 1 in 5 of those with over $50 million in investable
assets plan to give it all away. A massive level of giving, to be sure –
but those with the greatest amounts to give planned to give it away the
fastest. Billionaire Stephen Ross agrees with this sentiment: “I was
brought up with the idea that it is important to give back and not take
anything for granted.” He plans to leave over half of his estate to a
foundation.
Giving on such a massive scale requires a global perspective, to be
sure, and the respondents to the Forbes Insights/Credit Suisse study
noted that there was a greater conversation happening about giving
globally. But that doesn’t mean that the wealthiest aren’t still
impacted in at least some aspects by the forthcoming elections in the
United States. Nearly two-thirds believe that the elections will impact
tax policies – which in turn impact their charitable giving. And half
said the elections will impact the climate for philanthropy.
But one thing is certain: the culture of giving is rapidly becoming
the prevalent one. Fifty-five percent of those with investable assets of
$20 million or more say that they’ve seen a greater culture of giving
in the last five to 10 years, and 73% say philanthropy has become a more
dominant topic of conversation during that time. And the great thing
about those with the greatest means to make a difference is, they’re not
ones to be satisfied just to sit around and talk. They’re the ones who
turn talk into action.
www.forbes.com
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