This may be where we can get cooperation with the russians. And the printers row lit fest continues. Up next, author david kalan talks about modern day philanthropy. Philanthropy. Good afternoon and welcome to the thinking tribune annual lit fest. Id like to. We have a grayhaired approval. I met him in downtown new york city literary regular parties and gatherings that use to invite people, fact brigades and phone brigades before the internet and knew him over the years and went on to work with him when running World Policy Institute and he was at the most National Think tank, we worked closely on a number of projects, so i had the pleasure to read his earlier books, the cheating culture, the moral center, he has written seven of them and i have always been impressed by david because he asks really hard questions. He comes up with an opinion but is very good about seeing both sides and trying to find where things come together and where we can come up with solutions. He is not an ideologue. He is the real deal so i could not be happier to see david in chicago today. I wanted to kick off by throwing out a couple numbers that he talks about in his book the givers wealth, power, and philanthropy in a new gilded age and get this conversation started with. In 2015, nearly 400 billion was given globally, that is 2 of the us gdp and taxexempt organizations hold nearly 3 trillion in assets, quite a lot of money, a lot of people giving to good causes, doing some really good things, trying to save the world. What could possibly be wrong with that . Thank you for that nice introduction, thank you to the festival for having me here and sponsoring this conversation about philanthropy, particularly the big philanthropy, new donors coming onto the scene which is the topic of my book. When i first started writing about thinking about philanthropy, hanging around the nonprofit world back in the 1990s when we first met it was dominated by established legacy foundations, places like the ford foundation, the carnegie operation, the rockefeller foundation, these institutions that have been set up by previous era of industrial, wealthy, gilded age figures. Starting in about 2000, when bill gates begins his largescale giving, things really changed and now the most exciting and Dynamic Force in philanthropy are these new donors who come to the scene, many made their fortunes in Technology Like bill gates, Mark Zuckerberg and other major donors arrived, some made their fortunes in finance, george soros is the most wellknown of those but there are a bunch of others i talk about in my book, jim simons, the top science philanthropist and in many ways very exciting because some of americas wealthiest people are devoting their fortunes or good chunks of their fortunes to solve big problems. On the other hand the wealthy already have quite a bit of influence in american society. In case you havent been paying attention. They have enormous influence in the corporations they run, enormous influence through their political giving which is increased dramatically in recent years and now they are wielding more influence through philanthropy and we tend to not want to criticize philanthropy because it is generally a good thing. On the other hand it is hard to ignore the fact that we had this growing class of what i call supercitizens who have disproportionate power to change Public Policy, to affect society, to chart the course of our collective lives in a way so that is what my book is about and it struggles with the hard questions involved there. Is founder of inside philanthropy which is a fantastic website that delves into what these donors are doing, you have looked at the gamut. The big legacy foundations to these super, new, tech fancy donors, what have you found that has changed so much . Why has there been this shift in the power these donors have . There are a lot of rich people. To give you a couple statistics, in 1982, when the forbes 400 list came out for the first time there were 13 billionaires on the list. The richest person on the list had to billion dollars and you only needed 80 million to get onto the forbes 400 list, the wealthiest people in america. Fastforward to 2017, you now need at least 1. 7 billion to get onto the forbes 400 list. The richest person on the list, bill gates, has 87 billion. The combined net worth of the forbes 400 which has gone up 2000 since the early 1980s, is 2. 5 trillion which is about as much money as the bottom 60 of all us households have put together. Of those people on the forbes 400 list, a good chunk of them have signed something called the giving pledge which i discuss in my book which is Warren Buffett and bill gates came up with this idea of asking all their billionaire friends to connect to give away at least half of their wealth. Many of those people on the forbes 400 list have committed to giving away half of their wealth and they are getting busy doing it in really ramping up their giving. Michael bloomberg being a great example. He is worth 48 billion, he plans to give away almost all that money. He is giving more and more every year. Last year he gave away 600 million. So it is, think of it as we had this huge run up of wealth during this second gilded age and now, that started in the early 80s with reagan and now that wealth is being harnessed to largescale philanthropy and that trend is going to continue and i think what happens to all this money host you have the concept of hyperaffluence and with that goes what you call hyperagency which is fascinating to me at a time when we read about it in the newspapers and we see on the news all the time about any quality, you see people who feel they have been left behind by the policies that come out of washington and brussels and wherever. This feeling that people have no agents, no power to change things. There is a sentence on page 285 that struck me so much, i will read it to you right now, the deck is stacked in favor of those who have the money to amplify their voices. This explains why so Many Americans have disengaged from civic life. Why bother . I would love you to go into more depth on that. It strikes me as a little bit hyperbole but behind every hyperbole theres some meat. This idea of hyperagency is really interesting. One of the things about these donors is they feel when you are a billionaire and you know how to pull the levers of influence you can make stuff happen. One of the people, there is this couple i discuss in my book, john and laura arnold who are john arnold made his money in hedge funds at a very young age, retired to devote his life full time to philanthropy along with his wife laura. They have been some of the most active new givers who came along lately and very idealistic, trying to solve big problems. Lara said something that struck me. When you read the newspaper, when i read the newspaper in the morning and see something that upset me i can do something about it. I have a foundation. Is there a way to do something . I was talking to another donor the other day who was saying the same thing, that she said she read the newspaper looking far for things where she feels like her money can make a difference. She is also married to a Hedge Fund Guy who is worth 15 billion and most of that money will be given away. She sees stuff in the newspaper, we can do something about that. Set up a meeting and write a check and the experience most of us have when we read the newspapers, theres not a lot we can do about it. We can write our congressperson, we can sign online petition in our email box, we can go to a protest or something but there is not a lot of power ordinary citizens have and many people do feel a sense of disenfranchisement, they feel the deck is stacked. Ironically when you see these big philanthropists out there giving billions to solve and tackle problems doesnt make you feel and how much different that is going to make when you have these sort of demigods who can and solve problems, and that sense of disenfranchisement. Interesting perspective. One thing that fascinates me about great portraits of these people, obvious problems, the obvious things they dont do anything about, very interested in the difference, and do something about it, a lot of great examples of billionaires who go and do things, a couple in particular i can think of, and have you found anything in common, and im going to solve the world. Is there an electrifying catalyzing moment about their personalities. What is it that makes people decide to save the world . A couple different things. One thing is family background. The women i mentioned a moment ago. And and her mother was a Problem Solver. Always helping get groceries, or help them through the fruit store and that is the influence alex grew up with. When she found herself with all these enormous resources she never in 1 million years thought would have, now i can solve peoples problems at a larger level. Many of them talk about their family experiences, see their parents help out and give but there is this other kind, and interested in solving problems. Society is run more effectively. And they put some of their power into that so eli pro to, a billionaire who built two fortune 500 companies i talked about in my book. He made his fortune in housing and went into and reinvented the annuities business and then found himself with all this money, and im really good at stuff, how to build organizations and identify talent, and became involved in education, specifically trying to bring better leadership into Public Schools and trained them with the kind of management techniques learned through business. There is that pragmatic handson Problem Solver type. A lot of these people do draw from their business experience to try to tackle social problems which can cut both ways in terms of being good and bad. Host it was interesting culturally to see the differences among the way people talk who are from different countries, the new york east coast donors, the Silicon Valley, super technocrat culture. You do go into a little bit about chicago and i want to put context for the audience, who know these numbers and Chicago Community trust, giving in chicago, looked at basically 10 billion in gifts in the chicago area in 2013 which stayed right here in chicago, 71 , households, individuals, 24 from foundations, traditional public charities, 5 from corporations, there were 107 grants, over 1 million in chicago and three big names, the exposure, how would you characterize chicago, either any outtake they didnt make it, sneak freak for the local audience. Guest chicago has rich philanthropic legacy, and the supercharged, onto the scene, and the next generation errors, more activists, this is one thing you see, the kids come along in a different way. They want to find the cuttingedge techniques, when the crown family, lester crown, and help build this family business, and the origin of that wealth, in different ways and investments, multifaceted conglomerate, a big philanthropic sensibility, strong commitment to giving back, and committed to extending that. This philanthropy extends back or under 50, i think, made his fortune in hedge funds, an example of a lot of donors who turn around in their 40s, have 5 billion and have extra spare change around, made a number of significant gift and theres a lot more where that came from. This is the thing about these people, they often hear about Something Like can griffin, multimillion dollar gifts for institutions, has just begun his giving, you decades of that money. Host it is interesting you mention that, with chicago in the book, chicago having been shaped by mayors, government shrinking, it is unforeseeable, at some point reasonably soon, with private charitable giving, nondefense part of discretionary part of the budget, with government shrinking and private giving going up and when you talk about mayors having shaped chicago i wonder what that means for the future, will people in the future nothing about chicago being shaped by mayors but being shaped by the givers . Guest it is a good question that i grapple with in my book. The longterm trend, more and more private money coming onto the scene, all the wealth built up in the second gilded age gets harnessed for philanthropy and at the same time, government increasingly being squeezed as baby boomers retire and at the state, local and federal level, the discretionary money government has to do stuff do stuff as opposed to take checks, Social Security recipients, shrinking. That really gives them in the drivers seat, you see that in new york quite vividly, this new island park that barry diller, the mogul billionaire is underwriting the new parks projects in new york in decades. 130 million in this part, has leveraged the money from the city and state, wait a minute, why is that money going for parks, this new park is in the west village which is one of the wealthiest neighborhoods in new york and people i like why isnt that new parks money going for crumbling playgrounds in the outer boroughs . There is concerned that these new billionaire givers, barry diller wants a park in the west village, a new park in the west village is coming along. The average citizens who want playgrounds out in East New York or something dont have the power. Host a fair amount of city money going into that. Guest exactly. The vividness in the area of education because you see a lot of School Districts facing crunches with their financing because of state cuts or municipal level cuts and the billionaires stepped in and said we would be helping to help with financing your School District but we have a few conditions, more charters, more teacher accountability, other kinds of things these donors believe i needed to improve education. That is not how we think of democracy really working which is wealthy donors dictating how public systems work in order to keep those systems afloat. Guest another irony, between 2005, and 2014, you have 23,000 gifts of over 1 million to colleges, education, and the arts but you also point out the funding by some of these megarich to Public Information campaigns, think tanks, influencing Public Policy, to actually reduce funding to those areas they are supporting, what gives . Guest if you are familiar with the Public Policy battles of the past few decades, you know that among the big important players in those battles are conservative think tanks, heritage foundation, American Enterprise institute, cato institute, conservative donors built a whole infrastructure of think tanks and advocacy groups and legal groups that pushed to downsize coverlet, cut taxes, and bring about this shift that has resulted in many of these fiscal stresses we are seeing government going through right now. And an Important Role downsizing government for these new problems for government and that class also, and strings attached. On the other hand, and pick up the slack in really important useful ways. A couple that is financing, and hedge funds guy, made his money the whole Foundation Gives money for basic science research, thank god the simons are coming along and playing this role the subject is complicated, you want to cheer these donors who are stepping forward at a time their resources are so valuable but it raises profound questions about who is really in charge. Host you point out a donor gets the same Tax Deduction whether they are giving to a food bank or a think tank and you and i have spent a lot of our careers in think tanks so we are not actively there anymore so we dont have a vested interest. If someone said im running a think tank and fundraising your donors wont be able to take these sections for their gift anymore i would have hit the ceiling but it is a very interesting question. What is the line between what charitable or for the public good, where is the line between what someone is doing to advance their own interests . Do you have answers to this question . Guest it is a tough question because many of these donors are using their philanthropic dollars and their political contributions as two tracks of the same strategy for influence. Tim gill, who made his money in the 1980s, a publishing system called quark, he sold this company that started in his dorm room for 400 million in the 1990s and put half of that money in a foundation devoted to one issue which is lgbt rights and giving millions of dollars to advance lgbt rights into his foundation to advocacy groups and think tanks and to make the argument that led to the Supreme Court decision and that the same time, millions of dollars through a pack that he developed where political giving organizations, he pursued these things at the same time, give to politicians to warm them up to Marriage Equality and advocacy groups, it is a brilliant strategy. If you believe in lgbt rights, this is great and someone like eli road who is pushing Charter Schools in los angeles and just spend millions of dollars, he and a bunch of other donors to kick out all the anticharter Education Board members in la, to put in a procharter group of political leaders, while also giving a lot of money to the foundation, to support Charter Schools. And dislike more alarmed, and excited by it. It is a level of influence and savvy and resources that they cannot fathom having, and how this works, the role of philanthropy and tax deductible dollars, and when you think you have a Tax Deduction for making a gift, probably in the hospital or food bank, a Tax Deduction to push a policy agenda and there is a lot more money, philanthropic money going in that direction. Over the next decade charitable sections take 740 billion house of the tax coffers, which is not small change at all. A small donor when they take Tax Deduction, the benefit is much smaller, and if they are, and all the way at the top, who get more back from the government for each dollar. Is there a way equalize some of that equation . Charitable debt Tax Deduction, active during world war i, there is a consensus that this is a great tax break. It incentivizes all this private giving which is a myriad of different causes and broad bipartisan political backing, i do think all government tax breaks come under more scrutiny, the fiscal screws tightening more and more as the boomers retire and we start to look at everything going out the door, people are going to ask harder questions about what we are getting for this 40 billion, or 50 billion a year in the charitable Tax Deduction the treasury is losing. We are kicking kids off of pell grants, yanking housing vouchers away, and we are cutting aid to the help global advance global health. There needs to be a hard question about the best use of government money. I dont try to answer those questions in my book but we need to answer them in more detail. Host it goes back to the power think tanks can have, getting them going and take some risks with ideas and this idea of foundations and individual donors, to take risks, actually is positive. There might be a good balance of roles, and how would you direct that conversation, for that matter what does business do best. It doesnt do a good job looking over the horizon, and longterm challenges to think about what their constituents are worried about, it is sticking with identifying longterm challenge and sticking with it year after year, philanthropy can do that, but not responsive, some voters get to kick out politicians and bring in a new crew of leaders, much more stability in terms of philanthropists being able to stay with us for years and years. Another thing government is not good at his risktaking. Political leaders are cautious, a big experiment doesnt work out. And advancing the Public Interest over the fetal power of special interest. We see this in washington, highly organized voters are industry that block something ham that is happening important to have Public Interest, Climate Change is a good example, the fossil fuel industry, the coal industry alone employs under 100,000 people, the coal industry alone has been hugely influential particularly in this administration. When you look at what Michael Bloomberg has done as a philanthropist trying to challenge the coal industry, that is an example of philanthropy you want to cheer because bloomberg came along, and given 80 million at least to the sierra club to shutdown coalfired power plants and they succeeded in shutting down over 200 coalfired power plants and that is a great example of a philanthropist putting their thumb on the other side of the scale and challenging Interest Group that might otherwise have hold all the cards. The battle of ideas is interesting, some of the fossil fuel interests are the same interests were philanthropic we influencing the battle of ideas and you bring up in your examination of the role of these big givers, the role they play in either monopolizing certain discussions or amplifying certain ideas and voices they werent and a lot of them you asked about, we are broadening the discussion and bringing more voices out there, can you give more depth to that debate . Education is a great example. He has given probably 700 million to push education reform, one of the big supporters of Charter Schools, tougher rules around teacher accountability, and trying to bring business backgrounds, to bear on education as you see it. I said to him, who are you which Public Education is a democratic institution. And that is dominated by the teachers unions. And they dominated the power, and they gave all the campaign contributions, and they put certain ideas off of the table and opened up to the debates. One of the advantages, bill gates and i cant be voted out of office. That is a strength. Without fear of any kind of political retribution. On the other hand that raises concerns but there is no question that the education reformers put a lot of ideas on the table that didnt previously exist, whether you agree with them or not, chartist, teacher accountability, personalized learning is a new idea they are pushing, the thing is there is a narrow set of ideas, promarket business friendly sensibility. They havent put ideas on the table, and, and delinking properties they put billions of dollars behind that. Have an impact more on traditional philanthropy, the make of foundations. And and at the summit the other day and learning what they are doing, to draw quite a bit on the strategies of impact oriented metrics, tech givers. Is that what is happening and are there other examples you see of new givers who are affecting of the legacy foundation. Guest pretty interesting to watch new kids show up on the block, philanthropy, legacy foundations have been around for centuries and a lot of these philanthropists have been not contemptuous of them, and so many legacy foundations, very dynamic. Sean parker is an example, made his money in naps stuberer and facebook and has turned to philanthropy and new activists coming out of the tech sector and published this manifesto in the wall street journal called philanthropy for hackers. And Something Like that. He had some scathing words to the legacy foundation, bureaucratic institutional, sporadic, whatever we do as new philanthropists, the last thing we will do is create institutions that sit around for the next century getting calcified, put their money in and deploy it now. That is an overstatement. The legacy foundations are not nearly as padded as parker just said many have been trying to pick up their game. I dont know if they are trying to do that because donors are arriving on the scene but the Macarthur Foundation is a great example. Julius dash became president , shes trying to turn the foundation into more of a risktaking foundation that take big risks, one of their signature initiatives is 100 in change, they are going to give 100 million to solve a single problem. Any problem you can apply, a bunch of finalists, heres how we will spend your 100 million to change the world. Macarthur also has got behind Impact Investing through the new initiative called benefit chicago which is being done with Chicago Community trust using private investment dollars to try to advance social improvements. Host if you had a message for chicago philanthropists, what would you tell them . Guest give more fast. A lot of these people, i dont know how many billionaires there are in chicago but a lot of these people signed a giving pledge, took a while to get the money out the door, it is not easy giving away a lot of money. When i was having a conversation with john arnold who i mentioned earlier, not easy giving away 100 million, if you want to find an organization that can take 100 million it is not so easy, these people need to pick up the pace, no point saving this money for a rainy day when it is pouring right now. It is true in regard to Climate Change. Like these the clock is ticking on that issue and a number of major foundations have committed to solving this problem including the Macarthur Foundation that they are not willing to dip into their endowments to tackle Climate Change. My point is your endowment is not going to be worth much 100 years from now when we have a massive Global Crisis underway because of Climate Change. There needs to be more urgency is one of the great things about these new philanthropists showing up on the scene. Many of them feel very urgent, they want problems solved now and they are not planning to create foundations the pay out 5 of their endowment in perpetuity. They want to get the money out and hit the ground running. That is very inspiring to watch. Host you are honest in save book started the conversation, getting questions out on the table, you cant solve all of them in the book, but in conclusion you suggest some path for further discussion about policy approaches and ways to think about what we might do differently, how we might better grapple with tensions between giving and influencing and who gets decisions, you have two minutes left. Summarize those. Guest it is hard to regulate philanthropy because philanthropy is a big thing. You want philanthropists to have a fair amount of latitude. You dont want to ensnare them in red tape. They dont have much accountability or oversight. On the other hand there is a lot of uneasiness, and for good reason that a time when the wealthy have so much power. I suggest at the least we need more transparency. When people are giving money to shape Public Policy we should know who they are. You can give as much money as you want completely anonymously to try to influence what government does. We should not be concerned about that for the same reason we are concerned about dark money and politics that got so much press. Ultimately i suggest we need philanthropists themselves to change their behavior and listen more and be more responsive to communities. Mark tucker berg and Priscilla Chance, Mark Zuckerberg made his fortune through Facebook Lucy and Priscilla Chan, a pediatrician by training they will give away all that money which is worth 60 billion, zuckerbergs stock in facebook. s first big move as a philanthropist with giving 100 million to newark to improve the system and that effort was criticized for not getting enough by in, community participation. I think they really walked away and learned you really need to listen more. When i interviewed priscilla they turned around and gave a bigger gift to schools in Silicon Valley for 120 million and done it completely differently. They listened to all the readers. When i interviewed Priscilla Chan for the book she said i know every one of the School District leaders. They are stakeholders. This is not a topdown effort. It is reassuring that these people can see that the more they are not opposite, and the more they are putting Community Stakeholders in the drivers seat, the more successful they will be, and a threat to democracy they will be. Host it is great to catch up with you and talk, and available to sign books afterwards. Someone can tell us where to go. Any guest thank you for doing this. [applause] thank you for attending the book signing outside the auditorium. [inaudible conversations] [inaudible conversations] [inaudible conversations] that was David Callahan at the printers relit fest in chicago. The next author you