We have a grayhaired approval. Literarily, used by acts for days and phone for days before the internet. So i knew him over the years from the literary world and went on to work with him when i was running the World Policy Institute and he was at the National Think tank. We worked together very, veryk, close me on a number of projects. So ive had the pleasure also to read some of his earlier books, the world center, hes written seven of them. Ive always been so impressed by david because he asks the really hard questions. He comes up with an opinion, but hes very good about seeing both sides in trying to find where things come together and where we can come up with solutions. Hes not an ideologue. Hes the real deal. I could not be happier to see david in chicago today. I want to kick off by showing off a couple numbers he talks about in his new book dream to. , he notes that in 2015, nearly 400 billion, with the beef was given globally to about 2 of the u. S. Gdp and that taxexempt organizations hold nearly 3 trillion in assets. Quite a lot of money. A lot of people giving to good causes, doing some good things come in trying to save theing t world. What could possibly be wrong with that . Well, it thank you michelle for the nice introduction into the festival for having me here in sponsoring this conversation about philanthropy and in particular the big flat feet, the new donors coming onto the scene which is the topic of my boat. I first started writing about thinking about philanthropy, hanging around the nonprofit world back in the 1990s when we first met, it was very much dominated by these established Legacy Foundations. This is like the ford foundation, kerrmcgee ford foundation, institutions set uph by the previous era of industrial wealth, gilded age figures, starting in about 2000 when bill gates begins hisbi largescale, things really changed. And now the most excitingam Dynamic Forces are these new donors whove come to the scene. Bb has made their fortunes in Technology Like bill gates, Mark Zuckerberg another mage donors who arrived. Some have made their fortunes in finance. George soros is the most well known, but theres a bunch of others i talk about in my book. Ginseng into the top philanthropists. In many ways, it is very exciting because you have some of americas wealthiest people who are devoting their fortune or big chunks of their fortune 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 to the corporation they run. They have enormous influence to their political giving, which has increased dramatically in recent years. And now, they are more and more influence through philanthropy. We tend to not want to criticize philanthropy because it is generally a good thing. On the other hand, its hard to ignore the fact we had this growing class of what i call food citizens with disproportionate power to change Public Policy, to affect society, chart the course of our collect their lives in a way. L that is what my book is about an struggle through the hard questions involved there. Is founder of insidee philanthropy, which is a fantastic website that delves into what these donors are doing, youve looked at the gannett, the big Legacy Foundations to these that has changed so much. Why has there been a shift in how much power these donors have . For one thing, bush just a lot of rich people. Just to give you a couple statistics, in 1982 when the forbes 400 list came out for the first time, there was 13 billionaires on the list. The richest person on the list had 2 billion you only needed 80 million to get onto the forbes 400 list, the wealthiest people in america. Fastforward to 2017, we now need at least 1. 7 billion to as get onto the forms for listed the richest person on the list, bill gates has 87 billion. The combined net worth of the 400, which has gone up about 2000 since the early 1980s is to . 5 trillion, which is about as much money as the bottom 60 of all u. S. Household have put0 together. Of those people on the forbes 400 list, a good chunk of them have something called beginning pledge, which i discuss in my book, which is warren buffet ant bill gates came up with this idea of asking all theirir billionaire friends to commit to give away at least half of their wealth. Thei of those people on the forbes 400 list committed to o giving away half of their wealth and they are getting busy doing it and they are 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. G hes giving away more and more every year. Last year he gave away 600 million. I think of it as a huge runup of wealth during the secondd gilded age. And now that started in the early 80s with reagan and nowar that wealth is sort of being harnessed to largescale philanthropy and that trend is going to continue. What happens to all this money just has huge implications. Youve got this concept of hyper affluent and along with that goes something you call paper agency, which is fascinating to me at a time whec we read about it in newspapers on the news all the time about inequality. You see people who have been left behind by globalization, the policies that come out of washington and brussels and wherever in this feeling that people have no agency. They dont have any power to change things. There is a sentence on page 285 but struck me so much i actually wrote it down. 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 little more depth on that. It strikes me as a little bit hyperbole, but behind every hyperbole there is simply. Yes, this idea of hyper agency im glad you flagged as really interesting. One of the things about these donors is they do feel like when you were 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 that i discuss in my book, john amore arnold do i really john arnold made his money in hedge funds at a very young age and retired in his 30s to devote to play fulltime to philanthropy along with his wife, laura. There have been some of the most active givers that have come along lately. There very idealistic, trying to solve big problems. Laura says something that really struck me. She said when you read the newspaper in the morning and i see something that upsets me, i can do something about it. I have a foundation. But is there a way we can do . Something. I was talking to another megadonor the other day who was same sort of the same thing that she says she reads the news paper looking for things where she feels like hermione could make a difference. She by the way is also manager of a hedge fund worth 15 billion in most of that money is going to be given away. So she sees stuff in the newspaper and she says we can do something about it. We will set up a meeting and write a check. The experience that most of us have when we read the newspaper if we gnash our teeth and theres not a heck of a lot we can do about it. I mean, we can write your congressperson or we can find an online petition that arrived in her email box. We can go to a protest or something. But you know, this just not a lot of power that ordinary citizens have been many people do feel a sense of disenfranchisement that they feel like the deck is stacked. Ironically, when you see these big philanthropists out thereic giving billions to solve and tackle problems, it doesnt necessarily make you feel more in franchise he gives you feel like what if my little donation of a couple hundred bucks, how much of a difference will that make if youve got these sort of, you know, demagogues who can deploy the issued resources. Its great these people try to solve problems, but it can kind of feed defense of disenfranchisement, which is dirty pretty great in ourthat sn society. Interesting, interesting perspective. Hi one thing that fascinates me that of course is that these people who have gone out in a bill gates said seek honest problems and do something about them, which is of course what i write about. People dont do anything about. Im interested in the difference between people who see something and do something about it and the ones who dont. Youve got a lot of great examples of billionaires and give zillionaires who go and do things. But there are a lot. A couple in particular i can think of who decidedly do not have such charitable ways. Have you found anything in common among the one who do go out in day im going to solve the world . Is there electrifying catalyzing moment, something about their personalities . Om what makes people decide to save the world . Interesting. Its a couple different things. One thing often his family background. The woman i mentioned a moment ago, her name is alex and she grew up in a workingclass family in Washington Heights and her mother was a really engaged in trying to help people who are a few notches further down. Her mother was a Problem Solver. Her mother was always helping. Get goods for people who dont have them or help them through the thrift store. That is just the influence alex grew up with, was seen every day. When she found herself with all these enormous resources that she never in a million years thought she would have, she was like well, now i can solveha peoples problems on a larger level. In so many will talk about family experiences of seeing their parents help out in caves. But then, there is this other kind of person, which is kind of more of a technocratic, lake interested in solving problems is a kind of golden at golf and feeling my society can and should be run more effectively and therefore they want to put some of their power into that. An eli broder whose a billionaire who built to fortune 500 companies who i talk about in my book, he made his fortune in housing and then he went and aninvented the annuities is meant and then he found himself with all this money and a, you know, im really good at stuff. I know how to manage and build organizations. I know how to identify talent. Theyve become an education, trying to bring better leadership into Public Schools and train them with the management techniques he had learned through this mess. There is that kind of pragmatic handson Problem Solver type. A lot of those in todays philanthropy. A lot of people draw from their Business Exchange to tackle the social problems, which can cute both ways. It was interesting culturally to see some of the differenceses among the way people talk fromm different countries. There is the new york east coast owners and the Silicon Valley, d the super technocratic culture. You do in the boat go into a little bit about chicago. Some of you know some of these numbers. Chicago Community Trust this study called getting in chicago, the kid that basically 10 billion gets the chicago area in 2013. About two thirds of which stayed right here in chicago. And it wrote down to 71 of those were from household individuals. Another 24 from foundations and 5 from corporations. Over a Million Dollars in chicago and of course there are three big names that youve mentioned in the look, the crowns, pritzkers and ken griffin. I am curious from your exposure to all of these different gaming culture is, how you characterize chicago . What makes chicago different and are there any outtakes that didnt make it into the boat . Feel free to speak to a local audience. For the yeah, chicago has had this really rich philanthropic legacy for a long time. And now its going to be kind oc supercharged but with new money thats come onto the scene for old money for the next generation heirs have gotten more activist for innovative in their giving. This is one thing you will see if the kids come along and they want to do the giving in as different way. They want to invest in causes often more progressive, find the cuttingedge techniques. The crown family is really interesting. G. Lester crown, the kind of aliens or pitcher who helped build this Family Business based in materials, in terms of the origin of the wealth which is in different ways that is diffe multifaceted and has philanthropic sensibility and strong commitment to giving back. It is extended that, very diverse for a while. On the other hand, ken griffin is still under 50. He made his fortune in hedge funds and he is an example of a lot of these new donors. They turn around in their 40s and have 5 billion. Ive got some extra spare change around. Hes made a number of pretty significant gifts and theres a lot more where that came from. Thats the thing about these people is they often hear about some whove made multimillion dollar gets to his dictations here. Hes just begun his giving. There will be years and years, decades of that coming. Its interesting you mention that because there is another thread when you talk about chicago in the book about traditionally chicago having been known as being shaped by mayors. One of the major themes of your book is government shrinking has much less capacity. I think you mentioned it is not unforeseeable that at some point reasonably soon therell be more private Charitable Giving in the nondefense discretionary part of the budget. You have this trend of Government Train came in private giving going up. So when you talk about mayors have been shaped chicago, i wonder what that means for the future. Will people in the future not think about chicago being shaped by beginners . Yeah, well it is a good question in the oneday grapple with in my book. The longterm trend is more and more private money coming onto the scene as all the wealth built up in the second gilded age is harnessed to philanthropn and at the same time, government budget being squeezed as the baby boomers retire and can do both at the state, local and federal level. The discretionary money the government has do stuff, new stuff as opposed to Social Security recipient is shrinking. That really does put the figure in the driver seat. You see that in new york quite vividly. I talk about this new island park they buried diller, ailler, medium is one of the new projects in new york in decade. He is by giving 100 dirty Million Dollars to this part, he is leveraged other money coming in from the city in the state and many people are like wait a minute, why isnt that money going for this new park in the west village, which is one ofs the wealthiest neighborhood in new york. People are like wait a minute, why isnt that new park money going for a crumbling playground in the outer boroughs . Space concerns with a givers that he wants a part in the west village and a new park in the west village is now coming along. The average citizens who want playgrounds in East New York orw something dont have the power. Theres a fair amount of the money. Exactly. Where this is most vivid is in the area of education because you see a lot of School Districts facing crunches withdt their financing because the state cant or level caught in the millionaire step and say we are happy to help out with the financing of your schooll distri district, but we have a few conditions. More Charter Schools, more teacher accountability, other kinds of things these donors believe are needed to improve education. That is not how we think of democracy really working, which is wealthy donors are dictating how they work in order to keep the system afloat. I should point to another irony we bring up in the book. Between 2005 and 2014, you have counted over 23,000 gifts of over a Million Dollars to colleges, education, the help in the arts, but you also point out that the funding by some of these megarich to Public Information campaigns, funding think tanks to influence Public Policy to actually reduce spending to the area they are supporting. What gives . Right, so if you are familiar with the big Public Policy battles of the past few decades, you know that among the big important players in the battles in these conservative think tanks, the heritage foundation. The advocacy groups and legal groups which pushed it down guys to cut taxes and to bring about a shift that was resulted in many of those fiscal stresses that we see government government going through right now. On one hand you have a wealthy class that did a very Important Role in downsizing government and these new problems and now that classes stepping forward to bail government out with string attached. So its kind of a troubling picture. On the other hand, many of these wealthy donors are stepping forward to pick up the slack in really important and useful ways one of the donors i look at in my book is a couple that is financed in basic Science Research. Jim simons code Hedge Fund Guy who made his money at a point where sun wants to in hedge funds. He is financing the whole foundation that gives money for basic Science Research which the government is cutting. Thank god jim simons is coming along and playing. Thats why the subject is complicated because in many ways come to your many ways coming ui features these donors stepping forward at this time in the researches of value. But it does have a profound question about whos really ine charge. P its interesting you point out that encountered the same tax reduction whether they are giving to a food bank or to a think tank and you and i have p spent a lot of our careers in the world. So we are not actively there so we dont have much of a vested interest. Was running a think tank in senior donors arent going to be able to take sections anymore. I wouldve hit the ceiling. But it is a very interesting question what the line between charitable or where is the line between what someone is doing to advance their round interest. In do you have answers to the question . The mac its a tough question because many of these donors are using philanthropic dollars in political contributions to todo track the same strategy for influence. Ill give you an example. Tim go, who made his money in the 1980s in a desktop publishing system, which some people remember he turned around and told this company that started his dorm room for 400 billion in the 1990s and you put half that money into a foundation devoted to one issue, which is lgbt right. And hes given millions of dollars to his foundation to to think tanks and a lot of money to legal groups to make the argument that led to that Supreme Court decision and at the same time millions of dollars through a pact that he developed giving a political giving organization any sort of are sued these things the samed time. He gave the politicians to warm up the Marriage Equality while giving to advocacy groups to push that in the same state and its a brilliant strategy. If you believe in lgbt right, you are like what a smart guy, thats great. Then you have someone like eli broder who is pushing Charter Schools in los angeles and just spent millions of dollars, he and a bunch of other donors change to kick out all the anti on the anticharters Education Board members in l. A. And tried to put in more procharter group of political leaders while also giving a lot of money through his foundation. These people are very sophisticated. They are either more alarmed or excited about it. I have raised questions about all of it decodes it is a level of influence inside the inner resources that most cant even fathom hopping. Most people have no idea how this works and the role of philanthropy and taxdeductible dollars in bringing about these changes. Most people think when you get a Tax Deduction making a gift, its probably going to something that the hospital or food they grow whatever. 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 at the top who actually get more back from the government for each dollar. Is there a way to equalize some of that equation . The charitable Tax Deduction has been around now for exactly a century. It was enacted during world war i and theres been a consensus that this is a great tax break because it incentivizes all this private giving which goes to a myriad of different causes and theres been a sort of broad bipartisan political backing for it. However, i do think that as all government tax breaks, under more scrutiny, as the fiscal crews tighten more and more in washington, as the boomers retire and we start to look at everything thats going out the door, people are going to ask harder questions about what are we getting for this 40 or 50 billion a year in the charitable Tax Deduction that the treasury is losing . We are kicking kids off pell grants, yanking section 8 housing vouchers away, talking about tossing people off medicaid. Were cutting aid to help global, the advanced Global Health and so you know, i think theres going to be harder questions as to whether that Tax Deduction is the best use of government money and i think that i dont try to answer those questions in my book. I just point out that we need to start toanswer them more , in more detail. It raises the importance of asking questions and of course back to the value that think tanks can have in getting the discussion going and taking some risks with ideas. And this idea of foundations and individual donors being much more willing to take risks than governments actually is a positive, that there might be a good balance of roles for philanthropists and for government that im not sure theres a consensus for yet what that might be. How would you direct that conversation . How would you ask people to think about what is government do best and for that matter what does business do best and philanthropy do best . A couple things government doesnt do so well , is it doesnt do a good job of looking over the horizon longterm challenges. Politicians tend to think about what their constituents are worried about the moment. So government is not good, also its sticking with identifying a longterm challenge andsticking with it, year after year whereas philanthropy can do that because its not responsive , some voters get kicked out politicians and bring in a new crew of leaders. Its much more stability in terms of being able to stay with issues for years and years. Another thing government is not good at is risktaking because political leaders are cautious. They dont want to do a big experiment that doesnt work out. And finally, government is not good at kind of often advancing the Public Interest over the veto power of special interest so we see this in the washington a lot but theres some small group of highly organized either voters or industry that can block something from happening that is important to happen for the Public Interest. Climate change is a great example,the fossil fuel industry , i mean just the coal industry alone which i mean, employs under 100,000 people. The coal industry alone has been influential particularly in this administration. And so when you look at what Michael Bloomberg has done as a philanthropist trying to challenge the coal industry, that is a great example of philanthropy that you want to cheer because bloomberg came along and gave , has given 180 million at least to the sierra club to help shutdown coalfired power plants and they succeeded in shutting down over 200 coalfired power plants and thats a great example of a philanthropist kind of putting there, on the other side of the scale and challenging an Interest Group that might otherwise have all , hold all the cards. This battle of ideas is so interesting because i think some of the fossil fuel interests are some of the same interests who are philosophically influencing the battle of ideas and you bring up in your examination of the role of these big givers the role that they play in either monopolizing certain discussions or amplifying certain ideas or certain voices that they want and alot of them you ask about ,. [audio lost] which we think of as a Democratic Institution and what he told me is you know, before these farmers came along, that game was very much dominated by teachers unions and they had all the power and they gave all the Campaign Contributions and weve sort of opened up and they put certain ideas off the table and weve opened up these states and one of the advantages we have is you had bill gates and i cant be voted out of office and the on the one hand thats a stretch that they can give money without fear of being a kind of political retribution. On the other hand, that raises concerns but theres no question that the education reformers have put a lot of new ideas on the table that didnt previously exist. Whether you agree with them or not, charters, teacher accountability, personalized learning is a new idea that theyre pushing , the thing is that its been a pretty narrow set of ideas and it seems to reflect their own promarket business friendly sensibilities but what they have done is they had put ideas on the table for challenging residential racial segregation which underlies a lot of the inequality of our system. They had put ideas on the table for making property taxes from education financing which is one of the big pieces we have so much in equity. Theyve been into Charter Schools and teacher accountability and they put billions of dollars behind that and new ideas for sure but not all the ideas of good americans. We havent touched much on the impact of these new errors on traditional philanthropy on the big mega foundations that of course here in chicago we have the Macarthur Foundation and its been very interesting to watch what theyve done over the last couple years with the hundred and change initiative which is a social Innovation Summit in washington and learning more about what theyre doing which to me seems to draw quite a bit on him of the strategies of these new impact oriented metric oriented tech givers. Is that whats happening and are there other examples you see of how the new givers are affecting the Legacy Foundation . Is pretty interesting to watch all these new kids show up in philanthropy because the Legacy Foundations in many cases have been around for centuries and a lot of these new philanthropists have been kind of not contemptuous of them but they had not seen those Legacy Foundations as terry dynamic. Sean parker is a good example, sean parker his money in napster and facebook , the first president of facebook and he published, now hes turned to philanthropy as a young billionaire in these new activists philanthropys coming out of the tech sector and he published this manifesto in the wall street journal called philanthropy for hackers and or after philanthropy or Something Like that and he had a sort of scaling words for the old Legacy Foundations. There are bureaucratic, institutional, sclerotic, that whatever we do, the last thing were going to do is straight institutions that sit around for the next century getting calcified. You should put your money in and deploy it now and thats an overstatement. These Legacy Foundations are actually nearly as path as someone like sean parker suggests and many of them have been trying to pick up their game. I dont know whether theyre trying to do that because the few donors are arriving on the scene but the Macarthur Foundation is a great example. Julius asince he became president , shes really tried to turn the foundation into more of a risk taking operation and that makes big bets and one of their signature initiatives is this hundred and change thing that is called which is there going to give 100 Million Dollars to a single, to solve a single problem and so they, any kind of problem around the world, you can apply so theyve now gotten a bunch of finalists who have, heres how were going to spend your hundred Million Dollars to try to change the world, meanwhile the foundation has also gotten behind impact into this new initiative called benefit chicago which is being done with the chicago Community Trust which is using investment dollars to try to advance social improvements. If you have a message for chicago philanthropists, what would you tell them . Give more fast. A lot of these people are, i know how many billionaires there are in chicago but you know, a lot of these people, even the ones that have signed the giving pledge where they, its taken a while to get the money out the door and you know, its not easy by the way giving away a lot of money. One of the, when i was having a conversation with john arnold who i mentioned earlier, he was saying its not easygetting away 100 million. You want to find an organization that can take 100 million, its not so easy but these people need to like, pick up the pace because theres no point in saving all this money for a rainy day when its pouring right now. And especially thats true in regard to Climate Change. Like, the clock is ticking on that issue. And a number of nature foundations have committed to solving these problems including the Macarthur Foundation. But theyre not willing to dip into their endowments to tackle Climate Change and my point is, your endowment is not going to be worth much 100 years from nowwhen we have a massive Global Crisis underway because of Climate Change and so these people , there needs to be more urgency. And thats one of the great things about these new philanthropists showing up on the scene. Many of them do feel very urgent. They want the Problem Solved now and yet theyre not planning to create foundations without five percent of their endowment in perpetuity, they want to keep the money out in the ground running thats very inspiring to watch. Youre very honest about seeing the book is starting the conversation, getting questions out on the table and you cant solve all of them in the book but you do in conclusion suggests some paths for further discussion about some policy approaches and ways to think about what we might do differently and how we might better grapple with the tension between giving and influencing and who gets the decision. Very quickly, we got abouttwo minutes left, summarize those. Its very hard to kind of regulate philanthropy because philanthropy is so big and as i said, we want these philanthropists to have a fair amount of latitude but you dont want to ensnare them in red tape. One of the advantages is that they dont have to much accountability or too much oversight. On the other hand, theres a lot of needless about this money and particularly at a time when the wealthy have so muchpower, i suggested the very least we need more transparency. That when people are giving money to shape policy we should know who they are and right now, you can get as much money as you want, completely anonymously to try to influence what government does and youshould be concerned about that for the same reason we are concerned about dark money in politics. Ultimately i suggest though that we need philanthropists themselves to change their behavior and listen more and be more responsive to communities. So a great example is Mark Zuckerberg and Priscilla Chan, so Mark Zuckerberg of course made his fortune in facebook, he and Priscilla Chan, his wife was a pediatrician is going to give away all that money which is now about 50 billion of zuckerbergs stock in facebook, his first big move as a philanthropist was giving 100 million to newark to try to improve the Newark School system and that effort was very criticized for not giving enough buyin in a Community Participation and i think they really walked away and learned that you really need to listen more and so when i interviewed priscilla, they turned around and gave me a bigger gift to schools in Silicon Valley for 120 million and have done a completely different today, they listened to all the leaders. When i interviewed Priscilla Chan for the book she said i know every one of these School Districts and they are stakeholders. Theyre not a topdown effort so i think that kind of learning is really reassuring , that these people can see that the more there not often buying power and the more theyre putting Community Stakeholders in the drivers seat, the more successful they will be and also the less threat to democracy they will be. Great, well its been great to catch up with you and talk. I think you said you will be available to sign books afterwards so i think someone can tell us where to go. Any closing . And michelle, thank you for doing this. Great, thanks. [applause] thank you all for attending the book signing, its going to be right outside the auditorium. [inaudible conversation] youre watching the tv, television for serious readers. You can watch any program you see here online at booktv. Org. [inaudible conversation]
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