By Dambisa Moyo
LONDON: At this time of year, many people pause to reflect on the true meaning of philanthropy, asking themselves: What is the best way to give? To whom should I give? And, perhaps most importantly, why should I give?
Fifteen years ago, I published Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.
I argued that government-to-government aid, rather than fueling economic growth, inadvertently harms the very countries it is meant to help.
Since then, philanthropists have often sought my advice about their desire to grapple with seemingly intractable challenges, such as extreme poverty or climate change.
In this season of giving, donors should ask themselves twelve key questions when considering how, where, and why to give.
The first question is relatively straightforward: What motivates you? Are you looking to spread joy – for example, by supporting the arts – or alleviate suffering by aiding communities affected by war or natural disasters? Both approaches are vital and commendable.
Second, how can you use your time and financial resources effectively? In a world of competing needs, it’s not just how much we give but how we do it that ultimately determines our ability to effect positive change. For example, consider a philanthropist with $100 million to donate.
While allocating the entire amount to improving education could result in better-resourced schools, students might still struggle to attend due to poor health, inadequate transportation, or malnutrition.
Recognizing this, the philanthropist might choose to divide the $100 million among initiatives supporting education, health, food, and transportation. Yet splitting the funds equally – allocating $25 million to each cause – will inevitably dilute the impact. Such an approach might be enough to prevent conditions from getting worse, but it is unlikely to drive transformative change.
The third question to consider is whether to delegate decision-making to an established organization or create your own philanthropic foundation. Both strategies come with tradeoffs.
Delegating enables you to harness the skills and expertise of teams with proven track records, but there is always a risk that the organization you support will fail to achieve its goals – or worse, exacerbate the problem.
Building and managing an organization gives you the freedom to pursue your personal goals and vision. But over time, this entity’s culture, norms, and bureaucratic processes can diverge – and even conflict – with its founding mission.
As employees become focused on advancing their own careers, the problem the organization was created to address may become a justification for its existence rather than something to be resolved.
Fourth, what is your time frame? Do you expect immediate results, or are you willing to wait for years, perhaps even decades? After all, philanthropy can lay the groundwork for breakthroughs that donors may never live to see.
Fifth, what kind of impact do you want to make? You could spread your resources widely or focus on a single goal – a “moonshot” with a low likelihood of success, such as curing cancer or Alzheimer’s. Though risky, supporting groundbreaking research could have far-reaching consequences.
Sixth, should you collaborate with governments or operate independently? There is a strong case for working with policymakers to provide public goods like education, health care, and infrastructure.
After all, government budgets dwarf even the wealthiest philanthropist’s resources. For example, while Bill Gates’s estimated net worth is $105 billion, it amounts to less than six months of California’s annual state budget.
Seventh, how should you approach innovation? Should you harness technology and data to make your organization operate more efficiently and maximize the impact of your giving?
Alternatively, you could use your philanthropy to drive the development of revolutionary technologies designed to address societal challenges at scale.
Eighth, should you partner with fellow philanthropists or go it alone? Pooling capital could enhance your impact, but working independently allows you to avoid disagreements over who and what to fund. That said, confronting complex challenges rarely allows for a solitary approach.
Ninth, should your giving be public or private? Both approaches offer unique advantages. Public actions, such as signing the Giving Pledge, facilitate the sharing of best practices, inspire others to support important causes, and enable you to compare your efforts to your peers through platforms like GuideStar.
On the other hand, private giving is arguably the purest form of altruism. “Stealth” philanthropy also provides the freedom for trial and error without the pressure of public scrutiny. Although experimentation is essential for tackling complicated problems, public failures can invite criticism and be dismissed as a waste of money.
Tenth, how should you structure your giving? Financial support can take many forms beyond traditional cash donations. While grant-making remains the most common approach, there are compelling alternatives.
Loans, for example, can be structured with extended maturity periods and below-market interest rates, encouraging discipline and accountability by requiring recipients to repay the funds.
Eleventh, should you establish a board of directors to oversee your philanthropic endeavor, and if so, will you reserve seats for family and friends? Opting for a more formal structure – for example, by designating permanent seats for prominent public figures, such as religious leaders or university presidents – can help ensure impartial oversight.
Lastly, what is your exit strategy? Are you planning to wind down your philanthropic efforts by a specific date, or will you establish mechanisms to sustain them indefinitely?
The “run down the clock” approach is exemplified by businessman and philanthropist Chuck Feeney, who donated billions of dollars to academic and technical institutions during his lifetime and died in 2023 after successfully giving away his money. By contrast, the Rhodes Trust and Nobel Prize are designed to exist in perpetuity.
Whether you’re a wealthy donor, a politician, a CEO, or simply a concerned parent, the call to philanthropy resonates with us all. I hope these questions encourage deeper reflection on how to maximize the effectiveness of generosity.
(Dambisa Moyo, an international economist, is the author of four New York Times bestselling books, including Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth – and How to Fix It (Basic Books, 2018).
(Copyright: Project Syndicate, 2024)
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