“We live in extremely unequal and frankly inequitable times,” says Rockefeller Foundation president Raj Shah. But Shah, who previously worked with US Aid and Bill and Melinda Gates, says he’s optimistic about the long-term future.
“I am an optimist today because I believe most people in Washington and around this country want to live in a more fair and more just world, are willing to work together to get there, and they need leaders who will honor that and bring out those tendencies as opposed to the tendencies that tend to tear us apart,” he said on the latest episode of Recode Decode.
Speaking with Recode’s Teddy Schleifer at the 2019 Code Conference, Shah said that to do the most good, private philanthropies like Rockefeller should be working hand-in-hand with politicians who are “conscientious, more informed, and more evidence- and data-based” than today’s trendy right-wing populists.
“We believe in public-private partnerships,” Shah said. “The greatest hits of the Rockefeller Foundation, and frankly of all of philanthropy, have been efforts to create human progress with the public sector and with the private sector, not trying to replace it.”
You can watch the interview below on YouTube, or listen to it on our podcast Recode Decode — which is available on Apple Podcasts, Spotify, Google Podcasts, and TuneIn; this episode also features an interview with Goldman Sachs CEO David Solomon. But if you’re short on time, scroll down to find a full, lightly edited transcript of Teddy’s conversation with Raj.
Teddy Schleifer: Hey everyone, brief history lesson. A funny thing has happened in the world of philanthropy over the last 100 years. When John Rockefeller set out to create the Rockefeller Foundation — sounds like a pretty good thing — but a lot of people actually thought his idea was pretty bad. A great president with the name of Teddy, Teddy Roosevelt said something along the lines of, “No amount of charity with a fortune can make up for the misconduct required to achieve the fortune.”
Hundred years later, we’re sort of beginning to have that same conversation. People are beginning to criticize philanthropic gifts because it might reflect some misdeeds needed to make that money. The guy who’s in the hot seat today has to kind of manage that conversation. He happens to represent the Rockefeller Foundation, Raj Shah.
We start with some history. Now we’re going to do some math.
Raj Shah: Okay.
Calculators out. In the US last year, Americans gave $400 billion to charity. At the same time, there’s more private foundations than ever, probably more press releases than ever about good work people are doing. American inequality, 40-year high. You can walk around New York, San Francisco, see that something’s wrong. What’s not connecting?
Well, first, thanks for having me, Teddy. I’m excited to be here because we’re very committed to the idea that the tech sector can do a tremendous amount more to lift people up who are locked out of prosperity and opportunity.
The premise of your question is absolutely right. We live in extremely unequal and frankly inequitable times. If you were born in the ’50s and ’60s in America, there was a 90-plus ... In fact, unless your last name was Rockefeller, there was a 90-plus percent chance you would do better than your parents. If you were named Rockefeller, that was a higher bar to achieve. If you look at birth cohorts in the 1980s and 1990s, it’s 50 percent. If you were born in poverty, a kid born in poverty in that earlier era, 50 percent of them would end up in the middle class. Today it’s less than 25 percent.
Just as a thought exercise for this room, so familiar with technology, imagine the world in 1981 compared to the world today and how much wealth has been created and who has benefited, largely the technology sector in particular. Over that same period of time, the bottom 90 percent of American households have seen their real incomes be absolutely flat. So, the structure of our economy has changed because of technology and globalization.
The only way we’re going to change it, to make it more equitable, is thoughtful public policy, renewing, re-inspiring our politics, looking at where science and technology and the tools that allow for such progress can be applied to lift people up. That’s where philanthropy can play a role, as risk capital to bring those ideas forward and to help instigate those solutions.
You said the only thing that could do it is government. Does that speak to the limitations of philanthropy, because a lot ... You know, people in the fundraising business would say, “We’ve given $400 billion to charity. Maybe we need to give $500 or $600 or $700.” Do you feel like it’s a question of a billion here, billion there, or is the idea that private philanthropy is enough to sort of solve the problems of American equality? Is that just a false premise to begin with?
Well, private philanthropy is not going to do it on its own, by no means. In fact, it’s more like the old Margaret Mead quote that, “A small group of committed people working together can solve any problem.” We believe that, but we believe in public-private partnerships. The greatest hits of the Rockefeller Foundation, and frankly of all of philanthropy, have been efforts to create human progress with the public sector and with the private sector, not trying to replace it.
I ran US Aid before having this role. We had a $24 billion budget. Every year, the Trump administration proposes a 30 percent cut to that. No one’s going to make that up with a little increase in private philanthropic giving to the poorest countries in the world. We have to know the game we’re playing. The game we play is how do we help the world’s most vulnerable people around the world in low-income countries and here in the United States, where more and more people are actually locked out of real progress and opportunity, how do we help lift the up? And the answer is technology, science, partnerships with government, advocacy for ideas that can make a difference and raising the consciousness of all of us, that by connecting to that service mission you can lead a good life yourself, but make a real difference in the society around you.
So there’s a new conversation in the philanthropy worlds, as I was mentioning at the intro. For a long time people thought everything with the word “foundation” at the end of it was as good a thing as apple pie and baseball. Right now, there’s a new kind of dialogue about whether or not big gifts, big gift to a school, big gift to a museum, big gift to the Rockefeller Foundation or any other foundation, is a cover-up for the ways in which the wealth has been acquired. They can get good PR out of it without really having to advocate for higher taxes, for other ways to reduce income inequality. Do you think that criticism is fair?
It probably is fair, in that it characterizes some element of modern philanthropy. There’s ... without question, art museums are named after families that have made their money in suspicious ways and put their name on museums to kind of elevate the way people perceive them. The philanthropy I’m most familiar with — I worked with Bill and Melinda Gates when they set up the Gates Foundation, I now run the Rockefeller Foundation — has been really been about solving big social justice challenges using technology, using risk capital, using a 30-, 40-year outlook and taking real risks and making big bets.
When we worked in the early part of 2000, in the 2000s, to set up the Global Alliance for Vaccines and Immunization, we put in place a 20-year project that raised billions of dollars from philanthropists and public-sector partners, restructured the global vaccine industry, vaccinated 670 million children who otherwise wouldn’t have done that and saved 10 million lives in poor countries. Those kinds of wins really do lift up and change the face of poverty and opportunity around the world.
Unfortunately, this current debate, while sexy to discuss, kind of misses the point that those types of grand projects can actually change the face of the human condition.
You see this is as a 5 percent, 10 percent thing, not, in terms of ... The gifts that are not necessarily in the pursuit of a noble aim, but are a pursuit of a good story for the donor to tell. You see that as maybe a 5, 10 percent issue, not the way it’s been characterized recently or at least by critics as a 70, 80 percent issue?
Yeah, that’s correct. I see it as a smaller percentage of total activity in the philanthropic sector. Now, I’d also make the distinction, you mentioned $400-plus billion a year. That’s true. The reality is the vast majority of that is museums and hospitals and universities, all of which is great. I give personally to institutions like that.
Institutions like the Rockefeller Foundation that have been around 100 years, we’ve been fortunate. I had nothing to do with this, but won two Nobel Peace Prizes for the yellow fever and the green revolution that moved a billion people off the brink of poverty and hunger over a 30-year period. Those types of science-based large-scale efforts to lift the human condition broadly is still a very small part of total philanthropic giving. I do hope that area grows dramatically.
Do you think that Americans, or at least people in this room or people in kind of high society have given too little scrutiny to the ways in which big donors give philanthropic dollars? Regardless of whether or not it’s 5 percent or 80 percent, should we at least be asking the question more than we have?
Sure, we should be asking the question. We should be reviewing progress. We have efforts to, for example, end energy poverty around the world. There are 1.2 billion people who live without access to electricity. I doubt any of us would have been productive today if we couldn’t use electricity. We’ve developed some new solutions, off-grid solar systems and new tech capacities, used predictive analytics to identify which of the world’s poorest people who live in the dark will actually pay for power. We think we’re on a path to move 10, 20, 30 million people in India alone out of that condition.
We should be evaluated four, five, seven, ten years from now on, “Did we succeed against that goal?” For each of our program areas, whether it’s saving the lives of 6 million women and children in low-income settings, using predictive analytics and community health, or ending energy poverty using the tools I just described, we should be held accountable. We should publish those results and people should hold us accountable.
That has not happened for a long time. There has not really been a culture of people necessarily driving this.
Well, you know ... No I don’t ... Yeah, I think it’s ... I welcome more, definitely, but I think it’s a mistake to lump the Rockefeller Foundation, the Ford Foundation, the MacArthur Foundation, the Gates Foundation, and some super innovative things I think Laurene Powell Jobs is doing with her philanthropy, and so many others, into the category of “discredited philanthropy.” It’s just not. It’s high-quality, high-impact work focused on measurable results. Most of those institutions now, I’d say for the last 15, 20 years, have been in the practice of pretty rigorous evaluation and publishing performance.
But the sector overall, in my view, should be much more focused on, “What can we do to create policy and political change to make our nations, to make our economy more equal and equitable.” That dialogue, I think, just needs more energy and more investment.
I want to ask you about opportunity zones, which I know you are very passionate about. These are part of the Republican tax bill that are intended to incentivize investments in under-resourced parts of the country. Why should people think that this is not a tax write-off for billionaires?
Yeah, well, first let’s talk about what they are. Opportunity zones are a part of the tax bill, a bipartisan amendment that allows for deferred capital gains tax payments on earned gains that are then invested in one of 8,600 zones that have been designated around the country as opportunity zones.
That’s a lot of the country. Isn’t it about 10 percent or plus?
Well, yeah, it’s about 10 percent, exactly, of the US population. I will say, it’s a population that is 54 percent African American and Hispanic American, 30-plus percent poverty rate and 12 percent which is obviously three, four times the current level unemployment rate. It did target lower income communities and it likely will be a big influx of billions of dollars of investment into those communities.
Our focus at Rockefeller has been helping the cities and community groups have a voice in how those investments are deployed, and making sure that they lift people up in those communities as opposed to, frankly, raising asset prices and pushing them out. Now, some of the activity under opportunity zones will in fact just be a tax gift to those who would have made real estate development investments anyway.
Where they move it over a couple of blocks...
Or they move it over a couple of blocks and they do that. There’s no question that that’s a risk and that’s in fact a reality for some of the law. Our goal, though, is to prove that some places we can crack the code and get it right and see real private investment drive growth, opportunity, and human welfare improvements in some of the tougher communities across the country. This is the biggest tax incentive for such investment post-World War II.
Now, one other thing about the tax bill, going to our earlier point. The tax bill costs America $2.3 trillion over 10 years, according to the Congressional Budget Office. I didn’t get to write or pass the bill. If one could, I personally think and our institution is willing to put resources into advocating for the Earned Income Tax Credit. If you took a trillion of that and put it into the Earned Income Tax Credit over the next decade, you would help tens of millions of working Americans who work hard every day and cannot make ends meet, and you’d spur economic growth and you’d have, frankly, a much bigger impact on poverty reduction and human improvement and opportunity expansion here in America than the way that bill was structured.
To you earlier point, I think foundations, philanthropy, and everyone in this room, frankly, needs to be more aware of these big trade-offs we make in our politics and advocate for data-driven, social science-proven solutions that can actually reshape for the better the nature of opportunity in America.
I want to talk about the obligations of Silicon Valley’s wealthy. As someone who’s spent a lot of time overseas working with poor people, when you see that someone like Larry Ellison has bought a Hawaiian island, what’s your honest reaction to that when you see ... It happens. This is something that happens all the time.
Well, I gotta be honest. My first reaction is, “Gosh, I wish I had a Hawaiian island.” Then I catch myself and I say, “No, that’s not really true.” Well, let’s not get into that. That was the subject of your last speaker. I think that the reality is, it’s a wonderful thing to see people making commitments to give back. We talked about the Giving Pledge, the fact that 200 signatories is a big deal.
Right, we’ll get to that.
I do think an economy driven by luxury items and the manufacturing and sales of luxury items for the uber rich is not the kind of economy that’s going to sustain the country we want to have over time and the global interconnected world we want to live in. I think it’s unfortunate and I think it sets an example that a lot of people aspire to but probably ...
Interestingly, because I did get to work with Bill and Melinda so much, I always found it fascinating that they would use their spare, not even their spare time, they would use their time and intellect and money to sit with me and others in a hut in Nigeria talking to a farmer about how improved seeds would improve rice production, would allow kids to go to school and it would change the nature of the local rural economy. There are flies and it’s hot and it’s uncomfortable. That was probably the opposite of a yachting experience, but in some ways, much more meaningful.
I have had the benefit in my life of being part and overseeing the Haiti earthquake response, addressing famine needs in Somalia in 2011, being responsible for the Ebola crisis, the response in West Africa. People that we’ve brought into that work have said to me the most rewarding things they have done in their lives have been their ability to contribute in that moment of someone’s need to helping others. In some sense, the rewards from this work are much more powerful, I think, thank just pure luxury.
I want to ask you about the Giving Pledge. As you mentioned, you worked for Bill and Melinda Gates for a long time, still mentors to you. MacKenzie Bezos last week gave $35 billion, or a few weeks ago gave $35 billion, a lot of money. There’s a lot of positive buzz about the Giving Pledge. Only about 7 percent of the world’s billionaires have signed it. About a sixth of American billionaires have signed it, a decade in. Is this a policy failure or is this good enough?
Well, the Giving Pledge is important because you want everybody who has means to say, “We’re going to give half our wealth away to make society a better place.” I would love to see it also say that those resources would go primarily to the kind of social justice types of efforts we talked about earlier.
If you weren’t giving money to a new college auditorium.
That’s correct. Right now it doesn’t have those kinds of rules around it.
Right, I mean, there’s basically zero rules. You don’t even have to do it.
And that’s the big issue I have, which is because of the nature of our economy, those families that are part of the Giving Pledge will grow their wealth at 9 percent a year on average and currently, are giving kind of 1 percent a year on average. So getting to giving away half their wealth is getting harder and harder and harder every year that goes by. And while philanthropy is never going to be a solution for policy and politics and changing the nature of our societies, they can have tremendous impact if they moved faster.
At Rockefeller we created a co-impact platform to allow the Giving Pledge and other families who wanted to work with us in a collaborative way to accelerate their giving. It’s been a phenomenal experience. As a result, just in a couple of years we’re seeking to move a million of the world’s most highly impoverished women out of poverty in a number of countries, getting 4 million kids, mostly girls, in school and educated in parts of Africa and Latin America, reducing child mortality — the child death rate — in Liberia by 50 percent through investments in community health.
In all of those, putting in place really high-quality data systems to be able to see what’s happening and optimize performance. My instinct is when Giving Pledges and others touch and see and understand the speed of impact you can have in this world through those kinds of projects, they will be inclined to give much more.
Want to ask another question before we get some folks on the mics. Charlie Munger, not a guy from Silicon Valley, but he has this famous quote which I’m sure you know which was ... He was on the board of Costco and he said that he felt that Costco did more good for the world than the Rockefeller Foundation. He was just using you guys as a stand-in for choose-your-name philanthropy, but it’s this idea that ... I’m curious whether or not you think this has happened in Silicon Valley, the idea that people, maybe you’re a venture capitalist and you use impact investing, maybe you’re a startup CEO which does some good for the environment, that your day job is good enough. Do you see that in the Valley, in tech specifically?
Well, definitely five to seven years ago when I was in government and I’d come to the Valley and visit with CEOs and companies, there was this unstated ... well, actually explicitly stated assumption that because we’re at Facebook we’re saving the world or because we’re at this startup we’re saving the world.
I don’t think people say that now but ...
And they don’t say that now. I think there’s a new responsibility. Frankly I think that we’re having a good conversation about should technology billionaires give more and how can they do it optimally? That’s great. In addition to that, we need to be having a conversation of how can the tools of modern technology that are transforming every part of our life and our society be deployed to lift up and support those who are fundamentally locked out of prosperity and opportunity in the world?
I see every day the opportunity for you if you’re a computer scientist, if you spent your time helping to understand how predictive analytics can identify a high-risk pregnancy in Rajasthan, India. There’s a project we do, before the woman’s even pregnant, we can get three or four antenatal community health visits to that woman at almost no additional marginal cost and prevent either death or disability or child mortality in the first 48 hours of life following birth by that simple intervention.
I saw that Mary Meeker said, was quoting Tim Cook and said, “Apple’s going to be known in the long arc of history as having transformed health,” for its work on health, which is great. I just hope when that story is written, people will look back and say, “It wasn’t just the health of Raj Shah who went for a jog with his iWatch and was tracking his heart rate the whole time, but it also saved the lives of the 6 million children under the age of 5 who will die this year from malaria, pneumonia, diarrhea, and other very simple causes of death — birth asphyxia — that are entirely preventable at almost no real cost.” We need the predictive analytic tools and we need the data visualization systems and we need the architecture to it and we need your help from the tech sector to make that real.
You had a good relationship with Republicans when you were head of US Aid, different Republicans who are now in power. You guys are now funding projects like taking down Confederate statues in New Orleans. I’m just curious how you’ve had to reimagine philanthropy in an age when the safety nets are being cut back and presumably, lots of the priorities that ... I know you guys have made a big push on resilience against climate change. This is a different world in which you’re trying to change than one four years ago.
Yeah. We live in a world today where I think this global tendency towards right-leaning populist leaders is causing really deleterious effects on the nature and the fabric of society and on a future vision of a globally interconnected world. We have eagerly made some investments that are demonstrations of our values. Confederate statues in New Orleans with Mitch Landrieu or efforts to support certain groups on dealing with the crises at the border or efforts to support journalists around the world that are often being persecuted and increasingly, as we heard earlier today, coming under threat. That is so vital for a vibrant civil society everywhere on the planet.
So we’ve done those things, but I’d say, again, the real solution is going to come from a politics that is more conscientious, more informed, and more evidence- and data-based and more willing to understand that we are all in this together. When I was in government, I spent a lot of time, as you mentioned, with Republican leaders in the Senate and the House. I was proud of the fact that we were the only agency at the time to get our budgets increased. We had three major pieces of legislation that were passed on a bipartisan basis, including efforts to fight hunger around the world. I came to appreciate the depth and sincerity that very conservative, faith-driven Republicans had for our global mission of ending extreme poverty.
That has stayed with me and I am an optimist today because I believe most people in Washington and around this country want to live in a more fair and more just world, are willing to work together to get there, and they need leaders who will honor that and bring out those tendencies as opposed to the tendencies that tend to tear us apart.
And as philanthropy, we can be the risk capital that gives people the space and be a bridge between Republicans and Democrats or rural communities and urban communities or low-income countries and Silicon Valley. We will serve as that bridge and that, in fact, is a much more powerful contribution to the world than seeking to solve the world’s biggest problems with our checkbook, which is too small for that task.
Sounds, good. Raj Shah, thanks guys.
Thank you. Thank you.
Recode and Vox have joined forces to uncover and explain how our digital world is changing — and changing us. Subscribe to Recode podcasts to hear Kara Swisher and Peter Kafka lead the tough conversations the technology industry needs today.