If you suddenly found yourself with a fortune to give away, this is what might happen: First, you'd go out and talk to a lot of smart people about how to make an impact with your money. Second, you might quickly realize that your dollars will go further if you help people in poor countries rather than rich countries. Third, you could next realize that the capacity of private philanthropy to make a difference in people's lives is small compared to the power of national governments and international organizations to effect change through aid, trade, and finance. So, fourth, you might target policy groups who know how to influence these big entities.
Which means that, fifth, you'd probably one day find yourself on the doorstep of the Center for Global Development, the premier policy shop working to reduce global poverty. And if you were smart, you'd start writing this outfit some very big checks as part of your giving.
That seems to be pretty much the journey that Facebook co-founder Dustin Moskovitz and his wife, Cari Tuna, took over the past few years as this twentysomething couple tried to figure out what to do with a tech fortune that's currently estimated at $6.4 billion.
They talked to lots of smart people, listened carefully, thought hard, and quickly prioritized global health and development in their giving (although they fund domestically, too). Once they tackled these issues, it didn't take long before they got excited about the Center for Global Development. And just last month, the couple's foundation, Good Ventures, made one of its larger grants to date—giving CGD $1.18 million, on top of a $300,000 grant a few months earlier.
This logic chain makes a lot of sense, right? And don't most philanthropists also grasp that policy is an all-important leverage point for improving the world?
Dream on. Pretty much the opposite is true: Most super-rich people, along with a great many foundations, fail to appreciate how national and global policies structure, well, everything. Or why the real Holy Grail of effective philanthropy is to decisively shape those policies with your money.
Instead, a great many funders do good work, but they operate way downstream. They address the symptoms of bad policy as opposed to shaping good policy. They drill wells or build schools in very poor countries as opposed to, say, trying to change trade policies so these countries can more easily export goods, improve their economies, and afford their own wells and schools.
It was this basic insight about the imperative of changing policy that led to the creation of the Center for Global Development in 2001 by Ed Scott, a successful tech entrepreneur who I've written about here. Like many newly wealthy people, Scott's early philanthropy focused on making change on the ground through direct services—in his case, helping children in Central America. But he got interested in pulling policy levers after he realized that the impoverishment of one country he particularly cared about, Nicaragua, was due to insanely high foreign debt. It seemed obvious to Scott that reducing the debt of such countries was a first step in reducing their poverty.
But when Scott looked around for groups that were pushing that obvious idea, he didn't find much. Lots of development NGOs were addressing the poverty caused by murderous debt burdens. Few were trying to alleviate that burden. So Scott teamed up with two veteran policy mavens, C. Fred Bergsten and Nancy Birdsall, and put up $25 million to start CGD, a "think and do tank" in Washington. Debt was its first big issue. Within a few years, CGD had scored a major success by orchestrating a deal that allowed Nigeria to shed $30 billion in foreign debt.
Scott's money was well spent, leveraging significantly greater changes than any spending on the ground could achieve. The Center's total annual expenses never surpassed $5 million during its first years of operation, yet the Nigerian debt relief deal helped Africa's most populous country in multiple ways, including freeing up new funds for human services and making Nigeria more enticing for foreign investment.
There are other examples, too, like what CGD did after the Haiti earthquake. The response of conventional philanthropy was to swamp the country with emergency relief supplies and recovery assistance, all of which was important. But CGD took a different tack. In its own words, it made a successful push "to add Haiti to the list of nationalities eligible to participate in the US’s largest temporary work visa program, opening the door for Haitians to increase their earning potential by 15 to 20 times through temporary employment in seasonal jobs in the US."
Translation: CGD helped a bunch of Haitians escape their devastated country, land jobs in America, and send money back home.
Again, that's leverage: engineering a small policy change in the corridors of power to achieve a big effect—remittances from expatriate workers are far more important to many poor countries like Haiti than any kind of assistance from aid agencies or NGOs.
This savvy approach explains why the Center for Global Development started raising big money from top foundations within a few years of its funding. Hewlett, OSI, Gates, Rockefeller, and MacArthur all came in during 2003. And a year later, CGD landed a $10 million commitment from Gates. Since then, CGD has remained on a strong financial footing, pulling in a broader range of funders and spending around $8-$10 million annually in recent years.
But here's the weird thing: While CGD has proven the amplifying effect of philanthropic dollars spent on policy, and while it has a high-powered board that includes Larry Summers, who recently became chair when Ed Scott stepped down, it's not like a lot of rich people are lining up to write CGD big checks. Donations from individuals made up just 7 percent of CGD's revenue in 2012.
Contrast that with charity:water, the red-hot direct service outfit that raised over $15 million from individuals in the same year for water projects, over half its revenues. Or International Rescue Committee, which raised $36 million in individual contributions that year. Or, for that matter, compare CGD to other policy outfits in DC—like the American Enterprise Institute, which raised 41 percent of its $37 million budget in 2012 from individuals.
Now, just to be clear: The folks at CGD aren't sweating their lack of a large individual donor base. Todd Moss, CGD's chief operating officer (who, FYI, took point on the Nigerian debt work) told me in an interview that things are positive on the funding front. He also said that the Center isn't looking to get bigger, since it's still small enough to ensure staff cohesion and strong collaboration. Ed Scott told me the same thing. “We’re, by and large, happy with the size we are.”
Until recently, I worked at a policy shop similar in size to CGD, so I get that. It was nice, and too much growth does foster bureacracy. On the other hand, there's a reason that the most influential think tanks in Washington operate at a larger scale—pressing all the buttons to move a policy agenda takes a lot of capacity: fighting day-to-day fires, developing new, long-range ideas, hiring enough staff to work both the Hill and the Executive Branch (and overseas agencies, in CGD's case), good marketing to repackage and, yes, dumb down your product, constantly pitching traditional print and broadcast media, leveraging social media, fielding a stable of senior fellows who write books and articles while hitting the lecture circuit, hosting events and conferences, and so on.
Doing all that right—and doing it on $10 million a year—is tough. At that level, missed opportunities and underperformance in certain endeavors are inevitabilities. For example, one of the things that the right-wing think tanks do well is help swing public opinion toward their ideas by connecting directly with ordinary Americans through radio and television appearances and an endless stream of op-eds in publications like the Des Moines Register. All of which costs a lot money.
The public is definitely underinformed on global development issues. And CGD certainly has the expertise, like its great work on why investments in global health have been so effective. But does it have the capacity to effectively target the media with its messages? Is it funding senior fellows writing trade books that are sold in Barnes and Noble and discussed on NPR? I'm not seeing it. Instead, I see people like Dambisa Moyo appearing all over the place, saying that foreign assistance is a big waste. The most effective think tanks don't just work the policy world—they influence the broader battle of ideas.
The center is definitely "punching above its weight," as it has said about itself. But that raises the question: Why not just become a heavyweight?
Which brings us back to the funding. If CGD ever does choose that path, it will need to build a more robust major gifts program. Especially now that it has lost its main sugar daddy in Ed Scott, who remains on the board but no longer has the capacity for very large gifts.
Gearing up to chase big individual donors can be tricky for any organization. It often requires a culture change, especially at the board level, and certainly a change in the president's time allocation. Over at AEI, Arthur Brooks is constantly boarding planes to go chat up donors, and he loves the fundraising, as I've written here. Does Nancy Birdsall want to expand this part of her job? Maybe she does, but you couldn't blame her if she didn't. Most people aren't drawn to policy work so they can spend their days trying to score a coffee date with Eric Schmidt or whatever.
And then there's the challenge of selling CGD to individual donors. I asked Scott why other wealthy people like him hadn't appeared over the years to back CGD at a high level. Scott said that maybe it was partly that his own deep pockets had been so associated with the Center. But he added, “Individuals with money—a very high percentage of them want to do direct service activity, as opposed to leverage their money with policy work... The direct service thing is very emotionally compelling."
What's not compelling to many donors is giving millions to a bunch of policy wonks who sit around in nice offices near Dupont Circle writing reports.
So a big challenge for think tanks in cultivating donors is to educate prospects on why investments in policy offer so much bang for the buck. Here, CGD is ahead of the game. It already does a great job of explaining its work. Its website includes a whole "impact" section that walks readers through important case studies. Reading through these cases really drives home the importance of CGD's accomplishments.
With Larry Summers' entrance as board chair, CGD is well positioned to attract Wall Street types and find its next Ed Scott, or a few such people. After all, finance guys get rich by knowing a bargain when they see one. And there are few better bargains in philanthropy today than funding the Center for Global Development.