- Billionaires like Bill Gates wield enormous power and influence in the philanthropic realm.
- Many could give more effectively and should learn from MacKenzie Scott's approach, one expert says.
- Hans Peter Schmitz, a professor researching billionaire philanthropy, told BI about the benefits of Scott's approach.
From Bill Gates and Warren Buffett to Jeff Bezos and Mark Zuckerberg, billionaires are the power players of philanthropy.
They might tackle problems that governments won't touch, but it's an open question whether any individual should command such vast wealth and influence.
It's also debatable whether they're donating money in the most effective way; MacKenzie Scott, Bezos' ex-wife, has demonstrated a different approach with her aggressive yet hands-off style of giving.
Hans Peter Schmitz, the Bob and Carol Mattocks Distinguished Professor of Nonprofit Leadership at North Carolina State University, has written extensively about billionaire philanthropists like Gates and Scott. He broke down his views in a recent interview with Business Insider.
Schmitz's responses have been edited for length and clarity.
What sparked your interest in billionaire philanthropy?
I started doing this research because I was a bit frustrated with the lack of reliable research on the wealthy and their giving. I thought that strong opinions for and against billionaires dominate the public discourse, but both sides are weak in supporting their claims. Presumably, better evidence will be helpful in adjudicating the debate.
What have you learned from your research so far?
The research focuses on members of the Giving Pledge and their letters expressing philanthropic motives and identifying preferred causes supported. Demographically, we find an overwhelming dominance of white, male membership. Males also tend to be wealth generators among couples. Across the letters, two causes dominated: education and health.
What are your views on billionaires and their overall impact on society?
It's not possible to generalize, but billionaires' philanthropic contributions likely do not outweigh the negative aspects of wealth inequality. For every Chuck Feeney or 'good' billionaire, there is an Elon Musk or Bill Gates, both with questionable practices. Also, we simply do not know enough about the donative behavior of many billionaires because a lot of it takes place out of sight.
Wealth inequality undermines democracy, even if you have very well-intentioned billionaires. More money is being channeled outside of government without electoral accountability and transparency. Some donations are subsidized via tax subsidies, giving the wealthy even more control over resources. The problem I have with some of the stronger critiques is that they may have some adverse effects on giving.
I think there is a general consensus that philanthropy simply cannot replace government capacity, but it can do certain things well, such as taking on risks that governments do not.
While government is more or less 'permanent,' philanthropy needs to concentrate on things that can be solved and will then no longer require funding at a specific point. For example, the unhoused population is a public policy problem that just isn't solvable by philanthropy. The problem is that we currently have no way of channeling philanthropy so that its effectiveness is maximized.
How do billionaires make sense of their wealth and philanthropy?
They often think that their commercial success translates into great competency in philanthropy as well. Bill Gates is an example.
Gates makes an interesting point about how he is more effective with regard to philanthropy than he was with regard to creating the personal computer. I have to disagree. Yes, the Gates Foundation has 'saved many lives,' but the same result could have been accomplished with more attention to social equity and a more transformative effect on the world.
Gates could learn things from MacKenzie Scott and others, where we do see a very different way of redistributing wealth. There are lots of other good ideas, such as using the estate tax to prevent substantial inherited wealth.
How does MacKenzie Scott's philanthropy differ from how other billionaires typically approach giving, and what lessons can they learn from her?
First, she is strategic in her giving. Second, she tends to invest more directly in social justice issues such as women's rights and Historically Black Colleges and Universities. Third, she has control over who receives her donations via consulting groups that select the top nonprofits in a given field, but limits that control to the front end of the philanthropic process. Fourth, she does not have a powerful grant system or foundation established, and does not want to tell recipients what to do with the money.
So, her 'trust-based' philanthropy is different because it reduces the power of the donor over the recipient. She trusts those closer to the ground to do their job without her micromanaging funded projects.
Other billionaires could learn from this by removing themselves more from the entire philanthropic process and empowering more those who are doing the actual work.