Teaching Millionaires To Be Philanthropists
--Nipun Mehta
3 minute read
Aug 2, 2008


Imagine if someone comes up to you and say, "I'd like to effectively give away $70MM.  How do you suggest I go about it?"  Well, that's exactly what happened to Sudhir Venkatesh (author of Gang Leader For A Day, Sociology professor at Columiba).

Most philanthropists forget to the power of a be-the-change element, and hence their impact is mostly a figment of their imagination (backed by fancy reports from their staff).  However, Sudhir steps it up in a very interesting direction.  Some quotes from his chronicles:

  • I knew that philanthropy is most effective when the donor has a clear understanding of his/her own role and can answer the question, “What is motivating me to give?”
  • First, they confused charity with commerce: that is, they uncritically applied the language of outcome-oriented investment to efforts to change human behavior in social settings. Humans, alas, don’t operate neatly according to market logic, though incentives can shift behavior.
  • Second, donors seem reluctant to talk about their own self interest. Instead of admitting their personal desires, they speak of selfless charity. Of course, donors can do whatever they want with their money, but this attitude doesn’t help them grow.

Three donors wanted to work with him and here were his terms:

I agreed to work with them for one year, but with conditions. Most important, they had to arrive at a “loss figure” — a sum of money that they would give away (to actual causes), but which would be entirely devoted to their own learning. They had to forgo any serious outcome-based evaluations of the families/service providers who received their support. Instead, they had to privilege and pay attention to their own development.

So they came up with $500K as the "loss figure" and another $500k which would be given to the organization regardless of the outcome (to maintain focus solely on their transformation).

The topic they chose was alleviating poverty.  So they actually went to meet poor families in Chicago and New York.  The philanthropists expected money to work like a magic pill, but it didn't. 

They believed that poverty was largely a result of resource deficiencies and organizational inefficiencies: if the poor had more money and their service providers could simply manage their giving more efficiently, change would happen. None placed much emphasis on feelings of self worth, the long-term nature of behavioral change or, most important, that staying above water is itself an accomplishment for a poor household. Everyone modeled their expectations after their family business or other corporate workplaces where they saw the “bottom line” motivate people to meet certain standards of achievement.

Over the year, more than 2 dozen families opened their doors to these 3 philanthropists.  And by the end, philanthropists all realized that money isn't a sufficient condition to change people's behavior, they all felt frustrated and wondered if they should just go back to the predictable commercial sector that they're good at. 

They also learned that, in some cases, process is as important as outcome. For example, service providers who keep families together — despite dramatic improvements — are playing a valuable function in communities where things always fall apart. And even if a child’s grades don’t improve, sometimes staying in school is a huge mark of success for the family.

Fascinating journey.  Philanthropy boot-camp. :)

A generosity boot-camp, though, would step it up even further from understanding motives for giving to understanding basis for interconnection -- imagine if these philanthropists had to live with the "poor" and they left their wallets at home.  Forces clarity in a hurry. :)

Several years ago, few of us were on philanthropy run and just stepped it up by stopping on the streets and spending the night out.  All eight of us will never forget that night.


Posted by Nipun Mehta on Aug 2, 2008