Zuckerberg and other tech titans are maximizing their impact by dividing "charitable dollars" between philanthropy and social businesses.
As we approach the holiday season, and the tax year end, many of us begin to think about making our charitable donations. This December, instead of just writing checks to the same non-profits you've been supporting for years, I would urge you to consider exercising "conscious capitalism" and investing at least some of your charitable dollars in a "social business" instead. Why? Because while we will always need philanthropic interventions for emergency aid etc, data is beginning to show that market-based solutions are the best at tackling widespread chronic issues because businesses can scale and sustain social interventions in ways charitable donations simply can't. So we need to stop thinking that we can only achieve true social good through philanthropy and instead embrace a hybrid approach that combines charitable giving and social impact investing.
Now it's probably no surprise that as a 30-yr corporate veteran I am a big believer in business. In my opinion, private enterprise is the most powerful social institution of our day and our greatest hope for finally solving social problems in ways that are sustainable, scalable, and replicable. But I am also quite aware of the power of non-profits (and of governments for that matter) and the good that they can do when disasters strike or when there is truly no market-based solution to be found. So you can imagine how delighted I was this week to see that I am by no means alone in this view. Facebook's Mark Zuckerberg demonstrated his support for this idea when he announced that he was putting 99% of his Facebook shares into an LLC called the Chan Zuckerberg Initiative. He did this for the sole purpose of making the world a better place for the next generation. Sounds like a Foundation mission doesn't it? But it is not by chance that he chose to set up an LLC as opposed to a 501C3. Likewise with Google and E-bay.
Here is how E-bday founder Pierre Omidyar explained his decision: "At the heart of our strategy is a flexible approach to philanthropy. We embrace whatever tools necessary--including nonprofit grants and for-profit impact investments-to support high-impact social entrepreneurs and the broader environments in which they work. Our hybrid investment approach is supported by a hybrid organizational structure: we operate both a foundation and a for-profit investment fund under the same roof."
Amen! We need more of these hybrid approaches. We need more non-profits working as "business partners" with companies in ways that clearly benefit the businesses but also equally clearly provide real social benefit. The Word Economic Forum calls this intersection Corporate Social Innovation. I call it smart and pragmatic.
So this year, instead of supporting the antiquated antagonistic view of business vs. philanthropy, why don't you consider joining this hybrid movement and leveraging the power of both business and philanthropy to the greater benefit of all? After all, if it's good enough for these tech titans, isn't it worth taking a look at for yourself as well?