As President Obama has said, we are facing an "all hands on deck" moment. Recession hangs over the country. Housing sales have fallen to record lows. Public discourse has descended to new depths of intolerance.
Yet there is room for optimism. Savings rates are on the rise. Volunteering is up. Millennials are mobilizing for social good at record levels. And we recently have seen an extraordinary movement started by the most successful capitalists of our time. Its not (yet) about another new iPad app or a new species of collateralized risk. Instead, it's something vastly more powerful.
Earlier this summer Microsoft founder Bill Gates and investment wizard Warren Buffett unveiled a project that could be the greatest contribution of their storied careers: The Giving Pledge. It's a remarkable commitment, an exclusive club focused on philanthropy. Membership requires a mere 10 figures of net worth. Suffice to say, they envision a small fraternity, almost a Billionaire Boys (and Girls) club.
Gates and Buffet have asked-cajoled-pressured a handful of the most financially successful people of our time to follow their impressive lead. The Giving Pledge commits some of the leading lights of our modern plutocracy to donate at least 50 percent of their net worth to charitable causes. Some of the signatories such as Eli Broad, John Morgridge and Ted Turner long have been known for their generosity. Others may give quietly but outside of public view.
The sheer size of the GP is mind-boggling. Analysts have estimated that GP could pour $600 billion into the coffers of various causes. While this pales in comparison to annual government spending and there might be some double-counting (some of these funds might have been donated even without the GP), it still represents a gargantuan sum. For starters, it's double the estimated total amount donated by Americans in 2009. Not bad for a first bite at the apple.
Despite the momentous commitment, the inevitable critiques have emerged. Some have wondered aloud about the prevailing governance of these funds and the potential for mismanagement. There has been criticism of the lack of forethought on follow-up. Others have claimed that these donations could disrupt democracy.
Suffice to say, questions remain. Yet, whether the motives are spiritual or spin, the combined largess of these individuals and their families is indisputable. Their massive generosity could help all of humanity. At a time when our nation is paralyzed by politics and aches for solutions our common problems, I am grateful that Gates and Buffet have started this conversation.
Several in the blogosphere have generated productive ideas on how to improve upon GP and transform it into a more inclusive initiative. Hats off to Ryan Allis for his Millionaires Pledge. I also hope the Everyman Pledge takes shape, a similar commitment that could take it down to another level and bring in a broader group. We already have seen ordinary people dig deep and generate extraordinary results when confronted with crisis - Katrina, Haiti, Pakistan. I am optimistic that we can shift from episodic giving to every-day engagement.
We also need to be mindful of the economic crisis gripping the country. A large number of Americans simply cannot donate 5%, let alone 50%, of their personal savings. Yet these people should be able to take part in this moment. Perhaps they can retain their cash but direct a portion of their personal energies toward civic participation.
The huge swath of people who are hurting financially could convert their compassion into action through simple steps. The low cost and wide reach of technology has made it easier than ever for Americans to make small changes that add up to big results. There are numerous examples. For example, ride-sharing to work; donating under-used household items to those in need; organizing colleagues in groups of shared interests; or finding unique ways to serve in local communities. Whatever the approach, Americans will never run out of ways to lend a hand.
So, giving is great. We all should give what we can, whether manpower, money or more. At the same time, investing might be an even more promising route toward enduring results. To that end, I want to propose that the GP gang also adopt an "Investing Pledge" -- and encourage the rest of the country to jump on board.
The insightful Nate Whittemore has written a terrific piece at Change.org. He noted that there could be a massive return created by bringing GP funds to support sub-scale social enterprises that need cash. Such directed dollars could be catalytic, tackling some of the great challenges of our time.
Very few GP participants have experimented with this approach. To my knowledge, only Jeff Skoll and Pierre Omidyar have done so in a strategic manner. (Full disclosure: the Omidyar Network invested in Ethos Water, a company that I co-founded, in 2004) Skoll and Omidyar have leveraged their personal foundations to drive double bottom line investing in companies and non-profit organizations. An "IP" could be the next step to build on those examples and bring them to scale.
Converting a portion of GP into an IP, specifically designated to scale responsible businesses, could have a dramatic impact on our entire society. With these investors leading the way, it could create a robust new class of investments. Their capital could be a market-maker, defining the category and paving the way for other investors to follow suit.
Clearly there is an opportunity at the so-called "Bottom of the Pyramid." I firmly believe in the power of enterprise-driven models of poverty alleviation. This should be a focus of any IP. However, we need an IP whose reach spans both the developing and the developed world.
Micro-enterprise can uplift billions of people through the provision of livelihoods, but we also need to see business practices changed here at home. We need to elevate those social entrepreneurs building such firms. An ambitious IP could seed a new species of venture funds that reinvented the "2/20" model, wherein the 20 was utilized to fund the next wave of ethical brands instead of enriching the limited partners. Hats off to firms like Legacy Venture which already have tried this approach. Now, perhaps an IP can bring scale to their work, too.
We need the GP to cultivate a culture of philanthropy. Similarly, an IP could nurture the better angels of capitalism. A balanced approach combining donations and investments could inspire all Americans and inject some much needed accelerant into the emerging Economy of Integrity.
If we can make it happen, the GP could be the gift that keeps on giving long into the future.
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