Once upon a time, big philanthropy worked like this: After decades of building a great fortune (because it used to take decades), a titan of industry would create a major foundation late in life and, not long after, would pass from the scene—leaving his money to be given away by professional staff.
Andrew Carnegie set up the Carnegie Corporation in 1911. He was dead eight years later. Henry Ford, and his son Edsel, set up the Ford Foundation in 1936. Edsel was dead seven years later; Henry was dead 11 years later, and the Ford Foundation was famously hijacked by its professional staff. John D. and Catherine T. MacArthur would both be dead within three years of creating their big foundation. David Packard never lived to see his mega foundation in action. And so on.
Much big philanthropy still follows this model, or will, and we could name any number of billionaires in their sixties, seventies, and even eighties, who have spent decades building their wealth and still haven't gotten around to large-scale giving. Whether somebody like Carl Icahn (age 78, net worth: $20.3 billion) likes it or not, other people are going to be in charge of giving away most of his money. Ditto for the aging Mars billionaires, and assorted geriatric tightwads. So fear not, philanthropoids, there is still going to be plenty of work spending the fortunes of unmeddlesome dead donors.
A more striking trend, though, and one revolutionizing philanthropy, is the way that relatively young people are making great knowledge economy wealth in a very short time and then cashing out, leaving them with both the resources and time to be large-scale philanthropists—living mega donors—for many years to come.
This phenomenon only really dates back to the late 1990s, when the Internet started to create huge fortunes in a very short time, with some of these new billionaires quickly exiting from their companies and turning to philanthropy. Pierre Omidyar was a textbook example: He started eBay in 1995, became a billionaire when it went public just three years later, and quickly turned over the reins of day-to-day management to someone else, leaving him and his wife with the mental bandwidth to jump headfirst into large-scale philanthropy. (See IP's profiles of Pierre and Pam Omidyar.)
Jeff Skoll is another dramatic example: He joined eBay in 1996, and three years later was able to endow the Skoll Foundation with around $1 billion. (See IP's profile of Jeff Skoll.) The Skoll Foundation instantly became larger than the Rockefeller Brothers Fund, a major funder which had been around for decades.
Both Skoll and Omidyar have now been extremely active living mega donors for well over a decade—with several decades likely to come and billions more left to give.
Other examples abound, like Tim Gill and David Bohnett, two tech entrepreneurs who used their big winnings in the 1990s to immediately plunge into large-scale giving on LGBT issues—giving that helped change public policy on these issues in a surprisingly short time. Both men still have large fortunes and are relatively young. They will remain major living donors for years to come. Michael Dell is an example of a mega donor who's kept his day job all along, with his wife Susan taking charge of the family foundation. (See IP's profiles of Michael and Susan Dell.)
Of course, there is also Bill Gates, who stepped down as CEO of Microsoft in 2000, when he was still 44, freeing him to build the largest philanthropic enterprise ever seen, and one very much designed by he and Melinda.
My favorite recent example is Dustin Moskovitz, one of the Facebook cofounders who now sits on a fortune of over $5 billion at the age of 29 and is ramping up a major new foundation, Good Ventures, led by his wife, Cari Tuna. Moskovitz and Tuna could easily be living mega donors for the next half century. (See IP's profiles of Dustin and Cari.)
All of which brings me to the new billionaire founders of WhatsApp, Jan Koum and Brian Acton, who are said to be worth $6.8 billion and $3.8 billion respectively after Facebook acquired their company for $19 billion last week—a business they started just five years ago.
We'll see how long both men choose to stick around and keep working on WhatsApp. Or whether they're actually interested in philanthropy.
(See my related post on this question: How and When Will WhatsApp Founders Jan Koum and Brian Acton Give Away Their Billions?)
For now, though, let's just ponder the weird reality that either of these guys, whom nobody had ever heard of before last week, could now create foundations bigger than Rockefeller, Carnegie, or MacArthur, if that's what they chose to do—and instantly be major philanthropy power players.
What's so special about living donors? A few things: first, it's different when large-scale giving is directed by living business leaders as opposed to the nonprofit lifers who often run foundations. One reason why philanthropy has moved in such a bean-counting direction is that we live in the age of the living donor. Nearly all the big foundations created by business leaders follow methodologies quite different from the legacy foundations, with well-known examples the Dell and Gates foundations. Omidyar has been even more famously market oriented in his giving. It could be a half century before people like Darren Walker gets their hands on the steering wheel of the great fortunes minted by young tech leaders—assuming, that is, all the money isn't already spent.
Living donors often have a greater sense of urgency about solving problems. Forget normal payout rates and cautious strategies to nurture endowments. Some of these living donors act like they're in a race with destiny, moving wealth out the door as fast as they can. Moskovitz, for example, has said that he wants to spend down that big Facebook fortune while he's still living.
Third, living donors seem more inclined to throw around their wealth to influence policy. Indeed, a number of these donors engage in political giving to complement their philanthropy, something that legacy foundations can't do. That's worrisome for democracy, obviously.
In short, everything is speeding up: how fast great wealth is made, how fast the bulk of it gets deployed for social purpose, and how fast super empowered individuals can move the needle on issues in what's supposed to be a democratic society. Striking stuff. And it will get even more pronounced when some of the other relatively young tech fortunes start to come online in a big way, like those of the Google guys.
When it comes to philanthropy, we need to all fasten our seat belts.