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The tech industry is reshaping philanthropy, one big bet at a time

This Tuesday is #GivingTuesday, where leaders across nonprofit and for-profit industries use social media to promote the end-of-year giving season.

Facebook co-founder Dustin Moskowitz and his wife, Cari Tuna, were the youngest couple to sign the Giving Pledge in 2010, and are widely considered to be pioneers of “effective altruism.”

The year 2012 marked the first #GivingTuesday, the Tuesday after Thanksgiving, where leaders across nonprofit and for-profit industries use social media to promote the end-of-year giving season. Since the holiday was created by the United Nations Foundation and the 92nd Street Y, philanthropy in the U.S. has evolved significantly. Philanthropists are giving larger charitable donations than ever before, their grant-making process has become increasingly data-driven and their aspirations ever more ambitious.

When looking at how philanthropy has changed in recent years and the ways in which it will continue to evolve, two things have become clear to me through my work: Not only have founders of U.S. tech companies played a significant role in increasing philanthropy’s prominence in the U.S., but they are laying the groundwork for future generations of philanthropists to make bigger and bolder grants. This is particularly apparent when looking at tech entrepreneurs’ efforts to create social change at scale.

Let me give you some additional context about what I mean: Roughly 80 percent of the largest donors publicly aspire to create social change, defined broadly as human services, the environment and international development. But only 20 percent of all “big bets” — grants of $10 million or more — are going toward social change. The other 80 percent fall into the institutional giving category, which includes donations to universities, hospitals and cultural institutions.

Tech philanthropists are playing a major role in closing this aspiration gap by making big bets on social change. In doing so, they’re providing future generations with guidance about how to embrace a degree of risk, learn from mistakes, and incorporate advocacy and for-profit investing into their philanthropic efforts. Perhaps most importantly, they’re conveying through their actions the benefits of starting philanthropy earlier in life.

Embracing smart risks is paving a path to creating social change on a larger scale

I’ve worked with several high-net-worth philanthropists on designing and implementing multimillion-dollar grants aimed at creating social change. One of the biggest hesitations to making these large donations is the risk involved. In contrast to institutional giving opportunities, where a gift has a tangible result such as the creation of a new building, there just aren’t as many safe, shovel-ready projects focused on initiatives such as eradicating diseases or reducing concentrated poverty.

Tech leaders have set an example for how to make investments in improving the lives of low-income and minority populations when there is no tried-and-true way forward.

Facebook co-founder Dustin Moskowitz and his wife, Cari Tuna, offer a great example of how tech philanthropists analyze data of smaller-scale initiatives focused on creating social change, and when they find something that has the potential to work on a larger scale, make a big donation to maximize their projected impact. They were the youngest couple to sign the Giving Pledge in 2010, and are widely considered to be pioneers of “effective altruism,” which boils down to using evidence and reason to identify where there are opportunities to do the largest amount of good. The couple’s efforts have led them to make a $25 million grant to GiveDirectly, a nonprofit providing cash transfers to people in extreme poverty, supported by rigorous data of positive results.

Another example of tech philanthropists’ willingness to embrace risk and go far afield to create impact is Microsoft co-founder Paul Allen’s focus on stopping the spread of infectious diseases in the developing world. Allen was the largest private contributor to fighting Ebola, with $100 million in donations, and he has also been funding efforts to help prevent Zika from spreading.

These stories send a clear message to the next generation of philanthropists: Investing in improving social outcomes doesn’t come without uncertainties. But if you’re willing to accept a degree of risk, you’ll have the opportunity to make grants that generate a higher return for society.

Publicly acknowledging missteps offers valuable guidance on how to embrace risk

Tech philanthropists are leading by example in not only how to embrace risk, but how to analyze mistakes and incorporate lessons learned into future giving.

It’s no secret that Mark Zuckerberg received a lot of criticism for his grant to Newark’s public schools. It hasn’t deterred him from philanthropy, or even from continuing to invest in improving educational outcomes.

While the Chan Zuckerberg Initiative made the biggest headlines at the end of 2015, Zuckerberg also wrote about how they’re applying lessons from their $100 million donation to Newark’s schools to their $120 million donation to Bay Area education. In his post, he said:

No effort like this is ever going to be without challenges, mistakes and honest differences among people with good intentions. We welcome a full analysis and debate of lessons learned. But it is important that we not overlook the positive results.

Even the most well-informed philanthropic efforts don’t always achieve their intended impact. For the next generation of philanthropists, it’s these types of private reflection and public statements that will help them understand how missteps should be used as learning opportunities to inform future giving, not as excuses for stepping away from philanthropy or setting less ambitious goals.

Using all the tools to achieve the desired impact, including advocacy and impact investing

The tech community tends to have a broad view of how they can use their capital to create social change, one that combines more traditional nonprofit grant-making with advocacy and even investing in for-profit businesses with social objectives. In doing so, they’ve sent a strong message to future generations of philanthropists that achieving desired social outcomes often requires working with and influencing government, nonprofits and businesses.

Immigration reform is one issue where I’ve see tech communities’ willingness to embrace advocacy in an effort to affect social change. Many tech founders believe the issue is best addressed through groups such as, a 501(c)(4) lobbying organization that’s focused on immigration reform. A number of the tech community’s most successful leaders have supported, including Y Combinator co-founder Paul Graham, Airbnb founder Brian Chesky and Instagram CEO Kevin Systrom.

Beyond lobbying, the tech community has consistently shown a willingness to invest in for-profit companies focused on social change, from Bill Gates’ commitments in pharma and energy to Zuckerberg’s funding of ed-tech companies. In doing so, they’re sending a clear message that when it comes to affecting social change, every dollar should be put to its most effective use, regardless of whether the investment comes with a tax break.

Encouraging more people to pursue philanthropy early in their careers

We’re seeing a new wave of young philanthropists come from the tech community, from WhatsApp founder Jan Koum to GoPro founders Nicholas and Jill Woodman, as well as all of the entrepreneurs I’ve already mentioned.

Having so many self-made tech millionaires and billionaires starting to give back early in their adult lives is shaping philanthropy in a couple of very interesting ways. First, this generation of philanthropists will become increasingly experienced and educated in the process of giving as they progress through their lives. If they are focused on learning, by the time they’re in their 50s or 60s, they’ll be much more effective at achieving their philanthropic goals than if they had only started giving toward the end of their careers.

Today’s tech philanthropists are also setting an example about the role that philanthropy can play in our lives. Because this generation is starting to give earlier in their careers, they’re helping rebrand philanthropy as a lifelong venture, rather than something that’s associated with retirement. This attitude of lifelong philanthropy will hopefully inspire more people to begin philanthropic endeavors at any scale as soon as they’re able to, and do so with increasingly large aspirations.

Chris Addy is a partner at Bridgespan Group and the co-head of Bridgespan’s philanthropy practice. Reach him @Chris_Addy1.

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