Philanthropic renaissance prompts young billionaires to give - some of - it away
Commerce with a conscience is the new global trend, especially among young techies
Published 15/05/2016 | 02:30
When Mark Zuckerberg's daughter Max was born last December, the Facebook founder and his wife Priscilla Chan announced they would donate 99pc of their Facebook shares - amounting to roughly €40bn - to charitable ventures in their lifetime.
Notably, the new mission-driven organisation, the Chan Zuckerberg Initiative, would be a limited liability corporation rather than a non-profit foundation. This allows the Zuckerberg family to give their money not just to charities but to thriving, for-profit businesses that they believe serve some higher purpose.
While cynics decried Zuckerberg for this decision, his deliberate move makes it clear you can care about your bottom line while also trying to "change the world".
The Facebook boss isn't the only business leader today pushing to invest in, create and develop commercial ventures with social values. This month, Wired magazine devoted an entire issue to the rise of the mission-driven corporate: traditional companies including Unilever, Patagonia and OPower made it on to that list, along with start-ups such as peer-to-peer lending platform Kiva. All of a sudden, it seems, it's cool to have a conscience in business.
It's clear from these examples that a "social mission" doesn't necessarily have to be as lofty as digging wells in Rwanda or distributing vaccinations in India. It could simply be to nurture independent businesses in your local area or bring internet access to more people. Either way, the purpose has to have clear value, and, if it resonates, you go from selling a product to kick-starting a movement.
Take Yancey Strickler, the co-founder and chief executive of crowdfunding platform Kickstarter, which he reincorporated as a public benefit corporation last September.
B-Corps, as these certified companies are called, are legally required to generate a benefit for society, even at the risk of profits. In fact, their boards are legally obliged to take social impact into account even if the management teams change; they also publish a report on their annual impact alongside financial results.
B-Corps say that drawing a line between what you sell and what you stand for can confer a huge competitive advantage.
Outdoor clothing company Patagonia incorporated as a B-Corp in 2012 agreeing, among other things, to share proprietary information with competitors if they believe it will help the environment.
Soon after, its sales started to rise; 2015 was the most profitable year in the company's half-century history.
In 2015, Kickstarter pledged to donate 5pc of profits to fund arts and music education. The crowdfunding pioneer now helps fund more than 100,000 projects, raising $2bn since 2009. And yet it is also three or four times the size of a clutch of younger, hungrier competitors.
Sometimes the vision and business model go hand-in-hand. For example 34-year-old Londoner Jake Hayman worked in the charity sector for a decade before setting up a for-profit start-up called 10 Years' Time, which helps high-net worth individuals donate their money in a way that will have resonate a decade hence.
Hayman's team charges clients up to €35,000 and spends six to 12 months on a charity sector like homelessness, trying to identify underlying, systemic problems and early interventions that can make a difference over the medium-term. His five-month old company has already worked with four millionaires who will make donations worth €7m this year.
What is behind this philanthropic renaissance?
Here's a clue: all of Hayman's clients are in their 20s and 30s. Some made money young - sold a start-up or retired early from a lucrative City career - while others have simply inherited their wealth and don't know what to do with it. This change is largely generational.
A recent Deloitte survey of more than 7,000 millennials from 29 countries found that personal values had the greatest impact on decision-making at work, rather than maximising profit or growing the business.
More than 60pc in senior positions (such as heads of department) have "chosen not to undertake a task at work because it went against their personal values or ethics" and over half refused a job because of the organisation's values.
Julie Hanna, a serial Silicon Valley entrepreneur and Barack Obama's Presidential ambassador for global entrepreneurship, says she has seen a distinct shift in attitude among millennials she employs and advises.
Despite being in an era of what Hanna calls "hyper-capitalism" where profits are the ultimate endgame, the MBA students she speaks to are more interested in business ethics and leadership than they were 10 years ago, and her younger mentees have been taking pay cuts to do jobs with greater meaning.
A pattern is emerging in Silicon Valley: young college graduates are quitting jobs that don't align with their values, and searching for purpose far earlier in their careers than their parents were.
It could be because of the growing disparity in wealth between the generations. For the first time in history, the lives of those who have started their careers in the past decade or so will not be materially better than their parents'. They have therefore had to redefine their ideas of success.
Perhaps the millennial generation can correct the obsession with quarter-to-quarter growth and give commerce its conscience back.
Sunday Indo Business