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Social Responsibility: How Should Philanthropies Be?

The digital world is affecting not only companies and organizations but also methods of philanthropic giving and corporate social responsibility. The crop of high net worth givers who hail from the technology and digital worlds exhibit marked differences from more old school philanthropies.

Differences from Older Philanthropies

First, they tend to focus more on programs and their workability than their predecessors did. In the words of Forbes, tech philanthropic donors “solve problems rather than salve wounds.”

It’s not that older philanthropies didn’t do this. Reports on programs have always been part of responsible giving. But they focused more on the act of generous giving to those in need or worthy institutions such as libraries and museums. They were not as focused on the metricization of results designed to fix pervasive social problems.

Second, they tend to go for new hypotheses about how to solve social problems rather than proven solutions. In part, as an article on philanthropic giving in the New York Times noted, they are giving money in the same way as they tended to business, just as older generations did. It’s just that, in this case, start-ups and seed money in the digital world go to ground-breaking ideas whose workability will be tested in the future. They approach philanthropy in the same way.

Not only are philanthropists from the digital realm more likely to approach charitable giving differently, they are approaching it in a big way. Forbes notes that 16 years ago, just 19 philanthropies gave $25 million or more to address large social issues. Today, 58 philanthropies do. That’s triple the number in just over a decade and a half.

Placing Bets on Fixing the Problem

In part, the number of philanthropies has increased due to the popularity of the “effective altruism” concept. Especially popular among the West Coast wealthy, effective altruism holds that donors should pick the projects capable of providing the greatest social benefit as efficiently as possible.

West Coast philanthropists Dustin Moskovitz and his wife Cari Tuna, for example, run Good Ventures, a philanthropy whose research indicated a major difference could be made by giving to the Against Malaria Foundation, which provides mosquito nets as a prophylactic against malaria infections in Africa and to GiveDirectly, which provides cash directly to the very poor in Kenya and Uganda.

Yet, both take an experimental approach. While the number of mosquito nets and the amount of cash can certainly be metricized, the ultimate effect cannot. It can take decades for the impact of philanthropic giving to projects like this to become clear.

In fact, new-style philanthropists expect a certain number of experiments to fail, just as venture capitalists do. “I actually expect that most of our work will fail to have an impact, and that is part of doing high-risk philanthropy well,” Cari Tuna told the New York Times.

What Doesn’t Work Is Helpful in Establishing Causes

Large digital philanthropies also take a pragmatic approach to what hasn’t worked. It’s good data.

A revealing example is found in one of the largest tech-based philanthropies, The Gates Foundation. The Gates Foundation donated $650 million toward reducing school size on the theory that small schools equaled better student learning.

However, the data indicated that the net result of their giving was not related to better outcomes. The startling conclusion was that school size had very little to do with student outcome.

However, that conclusion also means that donors may choose not to focus on the area and will, hypothetically, be free to focus on an idea with greater merit.

As Mark Zuckerberg wrote in an open letter to his daughter, “We must take risks today to learn lessons for tomorrow.”